Tyler Grp. Partners, LLC v. Madera
| Decision Date | 16 February 2021 |
| Docket Number | No. CIV 19-0777 JB/SMV,CIV 19-0777 JB/SMV |
| Parties | TYLER GROUP PARTNERS, LLC, Plaintiff, v. Bert MADERA; Montie Carol Montgomery and Pitchfork Cattle Company, LLC, Defendants. |
| Court | U.S. District Court — District of New Mexico |
Emilio DeAyala, Buck Keenan, LLP, Houston, Texas -- and -- Joseph M. Zebas, Zebas Law Firm, LLC, Hobbs, New Mexico, Attorneys for the Plaintiff.
Clayton S. Hightower, Sanders, Bruin, Coll & Worley, P.A., Roswell, New Mexico, Attorney for the Defendants Bert Madera and Pitchfork Cattle Company, LLC.
THIS MATTER comes before the Court on Defendants Bert Madera and Pitchfork Cattle Company, LLC Motion for Summary Judgment on Bert Madera and Pitchfork Cattle Company, LLC Resulting from Breach of Duties, filed November 30, 2020 (Doc. 84)("MSJ"). The Court held a hearing on January 29, 2021. See Clerk's Minutes at 1, filed January 29, 2021 (Doc. 98). The primary issues are: whether (i) N.M.S.A. § 61-29-16 bars Plaintiff Tyler Group Partners, LLC's ("Tyler Group") recovery of two-and-a-half-percent of the sale of the Pitchfork Ranch, because Fredrick Harold Tyler ("Tyler") was not a licensed broker under the Commission Act, N.M.S.A. §§ 61-29-1 to -29, at the time of the sale of the Pitchfork Ranch; and (ii) whether the Tyler's sale of surface water of the Pitchfork Ranch was the sale of real property under New Mexico law for which Tyler needed a license under the Commission Act. The Court concludes that: (i) the Commission Act does not bar Tyler Group's recovery, because, N.M.S.A. § 61-29-16 bars recovery only where a person is acting as a broker and is seeking a broker's commission, and Tyler did not act as a broker and is not seeking to recover a commission based on actions as a broker; and (ii) Tyler did not negotiate the sale of water rights, which would be subject to the Commission Act; rather, Tyler negotiated the sale of surface water as a commodity. Accordingly, because § 61-29-16 does not bar Tyler Group's action as a matter of law, the Court denies the MSJ.
The Tyler Group, "a Texas limited liability company, is a foreign entity doing business in the State of New Mexico and maintains its principal place of business in Texas." Amended Complaint for Debt and Money Due ¶ 1, at 1, filed October 2, 2019 (Doc. 8)("First Amended Complaint")(asserting these facts). See Defendant's Ame[n]ded Memorandum in Support of Its Motion for Summary Judgment ¶¶ 1-24, at 4-7, filed November 30, 2020 (Doc. 86)("MSJ Memo")(not disputing these facts).2 Tyler Group's "sole member is Fredrick Harold Tyler, who, at all times relevant to this cause, has been a citizen of Texas." First Amended Complaint ¶ 1, at 1. See MSJ Memo ¶¶ 1-24, at 4-7 (). Tyler does not have a broker's license or an associate broker's license under the New Mexico Real Estate Brokers and Salesmen Act. See MSJ Memo ¶¶ 22-23, at 7 (asserting this fact); Plaintiff Tyler Group Partners, LLC's Response and Memorandum in Opposition to Defendants’ Motion for Summary Judgment ¶¶ 2-7, at 6-9, filed December 14, 2020 (Doc. 87)("Response")(not disputing this fact).
Defendant Bert Madera is a citizen of the State of New Mexico, and is an owner and manager of Defendant Pitchfork Cattle Company, LLC. See First Amended Complaint ¶ 2, at 1; MSJ Memo ¶¶ 1-24, at 4-7 (). Montie Carol Madera is a citizen of the State of New Mexico, and an owner and manager of Pitchfork Cattle.3 See First Amended Complaint ¶ 3, at 1 (asserting this fact). See MSJ Memo ¶¶ 1-24, at 4-7 (). Pitchfork Cattle First Amended Complaint ¶ 4, at 2. See MSJ Memo ¶¶ 1-24, at 4-7 (); Response ¶ 9, at 10 ().
[The] Pitchfork Ranch is a nearly 24,000-acre (35,000) cattle ranch in Lea County, New Mexico (near Jal) owned by Bert and Montie Carol Madera. The ranch has traditionally been devoted to the family's cattle operation. The ranch, however, is located in the Delaware Basin (a productive portion of the Permian Basin in Southeast New Mexico) and the Maderas wanted to increase their income from opportunities related to oil and gas water-related activities, albeit not necessarily from oil and gas production as the Maderas owned little of the minerals.
First Amended Complaint ¶ 12, at 3. See MSJ Memo ¶¶ 1-24, at 4-7 (). After Madera inherited the Pitchfork Ranch from his late father in 2006, Madera decided to sell the property. See MSJ Memo ¶ 1-3, at 4 (asserting this fact); Response ¶¶ 2-7, at 6-9 (). Madera sought out business consultants to increase Pitchfork Ranch's profitability and hired Tyler in 2017 "to assist with developing the water-related sales on the Pitchfork Ranch." MSJ Memo ¶ 6, at 4. See First Amended Complaint ¶ 14, at 4 (); Response ¶¶ 2-7, at 6-9 (). "Tyler was never hired nor tasked with selling the ranch." MSJ Memo ¶ 8, at 5. See Response ¶¶ 2-7, at 6-9 ().
Madera and Tyler made two oral agreements, neither written down: (i) Madera would pay the Tyler Group five percent of the gross monthly water sales that Tyler negotiated; and (ii) Madera would pay the Tyler Group a two-and-a-half percent sales commission fee when the Pitchfork Ranch was sold.4 See MSJ Memo ¶¶ 12-13, at 5; Response ¶¶ 14-34, at 11-19. Tyler sought out prospective buyers and negotiated an agreement for water sales from the Pitchfork Ranch:
Historically, the Madera's were not able to sell fresh water in the amounts required for their surface lease holder Concho (COG) .... Tyler was successful and, in the fall of 2017, negotiated an agreement ("COG water agreement") with COG Operating LLC ("COG") .... During the first month of the agreement, the Madera's received more than $1.3 million in water revenues. Tyler's agreed fee was $67,500 .... COG had fracks scheduled every month for the year of 2018. As a result, the Maderas could expect COG to buy approximately one million (1,000,000) barrels of water per month at two dollars ($2) per barrel, and from that Plaintiff could expect approximately one-hundred thousand dollars ($100,000) in revenues from his five percent (5%) fee.
First Amended Complaint ¶ 15, at 4-5. See MSJ Memo ¶¶ 1-24, at 4-7 (); Response ¶¶ 14-19, at 11-12 ().
"In November 2017, after only one month of water sales, the Maderas shut off the water supply to Concho." See Response ¶ 18, at 12; Defendant's Response in Support of Motion for Summary Judgement at 1-9, filed December 21, 2020 (Doc. 89)("Reply")(not disputing this fact). "In March 2018, counsel for the Maderas, instructed Tyler that ‘[a]ny decision regarding how to handle the Concho matter" needed to be addressed through Charles Peifer, the Maderas’ litigation counsel, resulting in Tyler's removal from the consulting efforts to sell the ranch." First Amended Complaint ¶ 16, at 5-6. See MSJ Memo ¶¶ 1-24, at 4-7 (). Then in September 2018, the Maderas sold the Pitchfork Ranch to Concho for eighty-two million dollars. See First Amended Complaint ¶ 17, at 6; MSJ Memo ¶¶ 1-24, at 4-7 (); Response ¶ 24, at 4 (asserting this fact). Tyler had "no role in the negotiations, not having introduced the buyers to the sellers, and having no first-hand knowledge of the deal's details." MSJ Memo ¶ 21, at 7. See Response at 23 ().
In August, 2019, the Tyler Group brought this action for damages, alleging three causes of action: (i) material breach of contract to pay the Tyler Group the two-and-a-half percent fee of the gross sales price of the Pitchfork Ranch; (ii) fraudulent inducement; and (ii) unjust enrichment. See Complaint for Debt and Money Due, filed August 26, 2019 (Doc. 1). See also First Amended Complaint ¶¶ 20-36, at 6-9.
In November, 2020, Defendants Bert Madera and Pitchfork Cattle Company, LLC (collectively "Madera and Pitchfork Cattle") filed their MSJ and MSJ Memo, arguing that: (i) the Tyler Group cannot show that Tyler's services increased the value of the Pitchfork Ranch; (ii) the Commission Act, N.M.S.A. § 61-29-1 to -29, bars the Tyler Group's recovery as a matter of law, because (a) Tyler did not have a proper broker's license at the time of the sale of the Pitchfork Ranch, and (b) water rights are real property in New Mexico; (iii) the Tyler Group's claims against the Maderas in their individual capacities improperly seeks pierce the corporate veil of Pitchfork Cattle Co., LLC; and (iv) the Tyler Group's unjust enrichment claim fails under New Mexico law. See MSJ Memo at 1-18.
The Tyler Group responded, arguing that (i) increasing the value of the Pitchfork Ranch was not a condition or term of either the Water Sales Fee Agreement or the Ranch Sales Fee Agreement; (ii) the Commission Act does not apply because Tyler was not acting as a broker for purposes of the Act; (iii) the claims against Madera in his individual capacity should not be dismissed; and (iv) the Tyler Group's unjust enrichment claim is appropriate. See Response at 1-26. Madera and Pitchfork Cattle replied, arguing that: (i) they "are entitled to summary judgement because New Mexico precludes real estate sales commissions without a proper license and water rights are real property subject to NMSA 1978, § 61-29-16"; and (ii) there are no disputes of material...
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