Saylor v. Valles

• Decision Date: 29 October 2002
• Docket Number: No. 22,027.,22,027.
• Citation: 63 P.3d 1152,133 N.M. 432
• Parties: Richard B. SAYLOR, Albert and Gloria Kolb, Sylvia Mock, Paul Tulenko, Val Peterson, Darlene Garrett, Dawn Gastaldo, Merrill B. Thomas, H. Ernestine Thomas, and Geltmore, Inc., Plaintiffs-Appellants, v. Joe VALLES, Richard Kirschner, personally and as Trustee of the Richard Kirschner Trust, Bob McCannon, Robert Pratt, West Bluff Neighborhood Association, a New Mexico Nonprofit Corporation, Grande Heights Neighborhood Association, a New Mexico Nonprofit Corporation, and West Area Residents For Aesthetic And Responsible Expansion Association, a New Mexico Nonprofit Corporation, Defendants-Appellees.
• Court: Court of Appeals of New Mexico

63 P.3d 1152

133 N.M. 432

Richard B. SAYLOR, Albert and Gloria Kolb, Sylvia Mock, Paul Tulenko, Val Peterson, Darlene Garrett, Dawn Gastaldo, Merrill B. Thomas, H. Ernestine Thomas, and Geltmore, Inc., Plaintiffs-Appellants, v. Joe VALLES, Richard Kirschner, personally and as Trustee of the Richard Kirschner Trust, Bob McCannon, Robert Pratt, West Bluff Neighborhood Association, a New Mexico Nonprofit Corporation, Grande Heights Neighborhood Association, a New Mexico Nonprofit Corporation, and West Area Residents For Aesthetic And Responsible Expansion Association, a New Mexico Nonprofit Corporation, Defendants-Appellees.

No. 22,027.

Court of Appeals of New Mexico.

October 29, 2002.

Victor R. Marshall, L. Helen Bennett, Victor R. Marshall & Associates, P.C., Albuquerque, NM, for Appellants.

Stanley N. Hatch, Judd C. West, Hatch, Allen & Shepherd, P.A., Albuquerque, NM, for Appellee Joe Valles.

Michael H. Harbour, Shannon A. Parden, Madison, Harbour, Mroz & Brennan, P.A., Albuquerque, NM, for Appellee Richard Kirschner.

Steven M. Jakob, Jakob & Associates, P.C., Albuquerque, NM, for Appellee Bob McCannon.

Jane Gagne, Cooperating Attorney for the ACLU of New Mexico, Philip B. Davis, Co-Legal Director & Cooperating Attorney for the ACLU of New Mexico, Cooperating Attorneys of the New Mexico Civil Liberties Foundation, Albuquerque, NM, for Appellees West Bluff Neighborhood Assoc., Grande Heights Neighborhood Assoc., and West Area Residents for Aesthetic & Responsible Expansion.

Eric Scott Jeffries, Jeffries & Rugge, P.C., Albuquerque, NM, for Appellee Robert Platt.

Patricia A. Madrid, Attorney General, Elizabeth A. Glenn, Assistant Attorney General, Santa Fe, NM, Amicus Curiae.

OPINION

CASTILLO, Judge.

{1} This case relates to efforts to develop a retail shopping center at I-40 and Coors Boulevard in Albuquerque. Plaintiffs supported the project and Defendants opposed it. After the Albuquerque City Council (Council) approved the development plan, Defendants filed an appeal with district court. Plaintiffs then filed a separate nine count complaint against Defendants. The district court granted Defendants' Rule 1-012(B)(6) NMRA 2002 motion to dismiss for failure to state a claim upon which relief can be granted. Plaintiffs appeal the dismissal. We affirm.

BACKGROUND

{2} Plaintiffs are ten individuals and one corporation, Geltmore, Inc. (Geltmore). Geltmore is the primary developer of the center. The ten individual Plaintiffs support the development. Richard B. Saylor owns the land that Geltmore will buy for the center. The individual Plaintiffs are either members of or have alleged that they are eligible for membership in one of the three neighborhood associations included as Defendants. We have previously addressed other aspects of this dispute in West Bluff Neighborhood Ass'n v. City of Albuquerque, 2002-NMCA-075, 132 N.M. 433, 50 P.3d 182.

{3} Defendants are four individuals (Individual Defendants) and three neighborhood associations. The neighborhood associations, West Bluff Neighborhood Association (West Bluff), Grande Heights Neighborhood Association (Grande Heights), and West Area Residents for Aesthetic and Responsible Expansion Association (WARFARE) (together referred to as Neighborhood Association Defendants) are incorporated under the Nonprofit Corporations Act (Nonprofit Act), NMSA 1978, §§ 53-8-1 to -99 (1975, as amended through 2001). Individual Defendants are alleged to be members and leaders of the three neighborhood associations.

{4} The factual allegations in the complaint are lengthy and complicated. Generally, Plaintiffs complain of Defendants' actions in opposing development of the center. As to West Bluff, Plaintiffs allege that it does not represent the majority opinion of its membership and that it systematically excluded from membership and discriminated against those who did not oppose the development project by failing to provide notification of meetings, failing to use a democratic decision making process, and refusing to allow members to inspect the association's records. As to the other two neighborhood associations, Grande Heights and WARFARE, Plaintiffs allege that both were incorporated after the Council's approval of the development project for the purpose of shielding the activities of Individual Defendants. The specific nine causes of action include: misuse and violation of the Nonprofit Act, §§ 53-8-1 to -99 (Count I); misuse and violation of the Albuquerque Neighborhood Association Recognition Ordinance (Neighborhood Assoc. Ordinance), Albuquerque Code §§ 14-8-2-1 to -7 (rev'd 1994) (Count II); violation of the New Mexico Unfair Practices Act, NMSA 1978, §§ 57-12-1 to -22 (1967, as amended through 1999) (Count III); malicious abuse of process (Count IV); negligent misrepresentation (Count V); fraudulent misrepresentation (Count VI); fraud and false pretenses (Count VII); prima facie tort (Count VIII); and conspiracy (Count IX).

{5} Neighborhood Association Defendants filed a motion under Rule 1-012(B)(6) and were joined in the motion by Individual Defendants. The issue we address on appeal is whether the district court properly granted the motion as to each of the nine counts.

STANDARD OF REVIEW

{6} A Rule 1-012(B)(6) motion to dismiss tests the legal sufficiency of the claim; that is, it tests "the law of the claim, not the facts that support it." McCasland v. Prather, 92 N.M. 192, 194, 585 P.2d 336, 338 (Ct.App.1978). For purposes of a motion to dismiss, we accept all well-pleaded facts as true and question whether the plaintiff might prevail under any state of facts provable under the claim. New Mexico Life Ins. Guar. Ass'n v. Quinn & Co., 111 N.M. 750, 753, 809 P.2d 1278, 1281 (1991). A complaint should not be dismissed unless there is a total failure to allege some matter essential to the relief sought. Las Luminarias of the N.M. Council of the Blind v. Isengard, 92 N.M. 297, 300, 587 P.2d 444, 447 (Ct.App. 1978) (Las Luminarias). In determining whether Plaintiffs' complaint sufficiently alleged the nine causes of action, we adhere to the broad purposes of the Rules of Civil Procedure and construe those rules liberally. Id.

DISCUSSION

Count I

{7} Count I concerns the Nonprofit Act, §§ 53-8-1 to -99, under which Plaintiffs allege that they have a private right to sue. Although Plaintiffs allege violations of the Nonprofit Act, they do not cite any authority in support of their assertion that they have standing.

{8} By statute, several states allow derivative actions by members of nonprofit corporations; however, New Mexico is not one of them. 1 William E. Knepper & Dan A. Bailey, Liability of Corporate Officers and Directors § 12-1(e), at 417 (6th ed.1998). In at least one case, the courts have allowed derivative actions even when the statutes are silent. Id. Whether members of a nonprofit corporation have standing to bring derivative actions is a question that we decline to answer in this case because Plaintiffs' pleadings are deficient in at least two respects. First, Plaintiffs fail to allege harm to the corporation. Derivative actions are suits brought where a corporation is harmed by alleged wrongdoing of its directors and/or officers. 2 Knepper & Bailey, supra, § 18-1(c), at 89. Second, there are no allegations that notice of such harm was given to the directors or officers or, if it was not given, why it was not. 1 Knepper & Bailey, supra, § 12-1(e), at 417 ("It is a necessary condition precedent to such an action that a demand be made upon the board of directors or that an adequate explanation of the futility of such a demand be provided."). Derivative actions, where allowed, can only be maintained by members of a nonprofit corporation. Id. Clearly, Geltmore is not a member of a Defendant neighborhood association. The status of the individual Plaintiffs is less clear, and Plaintiffs allege that at least some of them were prevented from becoming members. We need not reach the question of membership status because Plaintiffs' pleading fails to allege harm or notice. The district court properly dismissed Count I.

Count II

{9} Count II concerns the Neighborhood Assoc. Ordinance which like the Nonprofit Act, contains no language creating a private right of action. See Neighborhood Assoc. Ordinance, Albuquerque Code §§ 14-8-2-1 to -7. The ordinance establishes a process for notifying the City of noncompliance with the prescribed bylaws. See § 14-8-2-4(F). Plaintiffs allege such noncompliance in their complaint. Plaintiffs do not, however, provide any indication that the City intended a remedy beyond that in Section 14-8-2-4(F).

{10} The Court may look beyond legislative intent and recognize a cause of action not expressed in a statute if the state's public policy compels such a determination. National Trust for Historic Pres. v. City of Albuquerque, 117 N.M. 590, 593, 874 P.2d 798, 801 (Ct.App.1994) (Nat'l Trust). In Nat'l Trust,117 N.M. at 594,874 P.2d at 802, we pointed to the controlling New Mexico public policy expressed in DeVargas Savings & Loan Ass'n v. Campbell, 87 N.M. 469, 472, 535 P.2d 1320, 1323 (1975) that "`[i]t seems fundamental that a plaintiff has standing to protect himself against injury as a result of unlawful governmental action.'" (Emphasis added.) In both of these cases, the issue was who may bring an action "to require a public agency to comply with state law." Id. The controlling public policy conferred standing. Id.

{11} On appeal, Plaintiffs cite to Nat'l Trust but neglect to argue why public policy standing applies to them. In their response to the motion to dismiss, Plaintiffs appear to argue that, because they fall within the class of people designed to be protected by these statutes, public policy compels they be permitted a private remedy. Plaintiffs' argument is not persuasive. The public policy in DeVargas relates to standing when "government action" is taken. In this case, Plaintiffs are suing private...