Bransford v. Bransford

Opinion

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1 IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO

2 ROBERT JAMES BRANSFORD, 3 a/k/a JIM BRANSFORD,

4 Plaintiff-Appellant, 5 v. NO. 31, 643

6 MICHAEL BRANSFORD and 7 RANCHO VERANO, LLC, 8 a New Mexico limited liability company,

9 Defendants-Appellees.

10 APPEAL FROM THE DISTRICT COURT OF SANTA FE COUNTY 11 Barbara J. Vigil, District Judge

12 Alex Chisholm 13 Albuquerque, NM

14 for Appellant

15 VanAmberg, Rogers, Yepa, Abeita & Gomez, LLP 16 Ronald J. VanAmberg 17 Santa Fe, NM

18 for Appellees

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1 MEMORANDUM OPINION 2 HANISEE, Judge. 3 {1} Plaintiff appeals the district court’s orders of summary judgment denying 4 Plaintiff’s motion to modify a past settlement agreement between the parties and 5 awarding Defendant Michael Bransford reasonable costs and attorney fees. The 6 district court concluded that Plaintiff’s effort to alter the agreement sought 7 reformation of that contract, a remedy that was unavailable under the circumstances 8 of the case. Further, the district court ruled that as a result of a prior general release 9 signed by both parties, Defendant Michael Bransford was entitled to an award of 10 reasonable costs and attorney fees associated with the litigation of this matter. On 11 appeal, Plaintiff contends that the district court erred in applying the law of rescission 12 to the facts of this case and in determining that the general release was binding on the 13 parties with regard to this matter. We conclude that the district court was correct to 14 grant summary judgment on the motion to modify the settlement agreement, but did 15 err in awarding Defendant Michael Bransford court costs and attorney fees. Thus, we 16 affirm in part and reverse in part. 17 I. BACKGROUND 18 {2} In October 2005, Plaintiff Robert James Bransford, a/k/a Jim Bransford, (Jim) 19 brought suit against his brother, Defendant Michael Bransford (Michael) and his

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1 limited liability company, Rancho Verano, LLC, for breach of a land contract. The 2 court awarded Jim the net profits of the sale of the land, and the parties agreed to a 3 settlement conference as to the remaining points of contention. In October 2006, the 4 parties signed a settlement agreement awarding Jim $350,000.] 5 {3} Following an ensuing dispute between the brothers, Jim and Michael executed 6 a second settlement agreement in May 2007. In that matter, Michael again acted 7 individually and as a managing member of a separate limited liability company, The 8 Rock, LLC. The latter settlement agreement contained a “Full and Complete Release 9 of Claims” provision. The clause stated that “[t]he [p]arties agree to fully and 10 completely release each other . . . from any and all claims upon all matters related to 11 the parties that may or could have occurred at any time, including but not limited to 12 those claims arising out of this dispute.” Furthermore, the settlement agreement 13 provided that in the event that one party violated the terms of the settlement, the 14 breaching party would “be responsible for any ensuing court costs and [would] be 15 required to pay the other party’s attorney[] fees incurred in enforcing the Settlement 16 Agreement.” 17 {4} Nearly three years after signing the first settlement agreement, Jim filed a 18 motion in July 2009 to reopen the Rancho Verano litigation in order to modify the 19 2006 settlement agreement. In his motion, Jim alleged that he was owed an additional

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1 $43,031.48 as a result of a miscalculation of the net profits. The motion asserted that 2 prior to executing the settlement agreement, the parties contemplated land 3 development costs to be $48,188; however, after the settlement had been executed, 4 Jim obtained a copy of the development cost invoice and discovered that the costs 5 instead totaled $5,156.52. Jim contended that the settlement amount was partially 6 based on this figure and that this miscalculation may have been the result of a mistake 7 or it may have been the result of fraud, misrepresentation, and falsification of 8 evidence. 9 {5} In response to this motion, Michael filed a motion to add a claim for court costs 10 and attorney fees. Michael asserted that Jim breached the complete release contained 11 in the 2007 settlement agreement in seeking to reinstate litigation on the 2006 12 settlement agreement. Michael claimed that the reopening of the preceding litigation 13 entitled him to recover costs and attorney fees. Michael then filed two motions 14 seeking summary judgment on his motion for court costs and attorney fees and on 15 Jim’s motion to modify the 2006 settlement agreement. The district court granted 16 both. As to the former, the district court ruled that Michael was entitled to “reasonable 17 costs and attorney fees incurred in this matter both as of now and in the future until 18 the conclusion of [the] litigation.” In granting the latter motion for summary 19 judgment, the district court concluded that Jim’s attempt to modify the 2006

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1 agreement improperly sought the remedy of reformation, whereas the appropriate 2 manner of redress would have been for Jim to file a “motion for rescission and 3 restitution, which requires a return of all sums received under the [s]ettlement 4 [a]greement[.]” The court found that neither a return tender of the settlement proceeds 5 had been made nor had the remedy of rescission been sought; therefore, summary 6 judgment was granted. Following a fee hearing, the district court granted Michael 7 $14,017.65 in attorney fees. Jim’s present appeal followed. 8 II. DISCUSSION 9 {6} On appeal, Jim asserts that he is pursuing damages as a result of 10 misrepresentation and fraud in the calculation of the net profits at issue in the 2006 11 settlement, and does not seek to rescind that contract. He further argues that the 12 general release of the 2007 settlement agreement is not binding on the parties’ 2006 13 settlement agreement because the settlement agreements resolved two separate 14 disputes and involved a different set of litigants. 15 {7} Because an appeal from a grant of a summary judgment presents a question of 16 law, we review the district court’s decision de novo. Bartlett v. Mirabal, 2000- 17 NMCA-036, ¶ 4, 128 N.M. 830, 999 P.2d 1062. “Summary judgment is proper when 18 there is no genuine issue of material fact and the [movant] is entitled to judgment as 19 a matter of law.” Handmaker v. Henney, 1999-NMSC-043, ¶ 18, 128 N.M. 328, 992

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1 P.2d 879 (internal quotation marks and citation omitted). “If the facts are not in 2 dispute, and only their legal effects remain to be determined, summary judgment is 3 proper.” Roth v. Thompson, 1992-NMSC-011, ¶ 17, 113 N.M. 331, 825 P.2d 1241. 4 We view the facts in the light most favorable to the nonmoving party, and we draw 5 all reasonable inferences in favor of a trial on the merits. Id. 6 {8} A settlement agreement is considered to be a species of contract, and we have 7 previously recognized the strong public policy in favor of the “freedom to contract.” 8 Builders Contract Interiors, Inc. v. Hi-Lo Indus., Inc., 2006-NMCA-053, ¶ 8, 139 9 N.M. 508, 134 P.3d 795 (internal quotation marks and citation omitted). Accordingly, 10 the parties to a contract agree to be bound by its provisions and must accept 11 advantages that are often accompanied by disadvantages. Nearburg v. Yates 12 Petroleum Corp., 1997-NMCA-069, ¶ 31, 123 N.M. 526, 943 P.2d 560. When parties 13 freely negotiate a contract and agree to their rights and remedies under it, it becomes 14 the duty of the court to enforce the contract’s terms in a manner that effectuates the 15 parties’ intentions. Id. ¶¶ 24, 31. The court’s role is limited to contract interpretation, 16 and courts cannot redraft the terms of the contract merely based upon the 17 materialization of newly discovered information. Twin Forks Ranch, Inc. v. Brooks, 18 1998-NMCA-129, ¶ 20, 125 N.M. 674, 964 P.2d 838. When interpreting an 19 unambiguous contract, courts must enforce the clear language of the contract.

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1 Nearburg, 1997-NMCA-069, ¶ 23. Except in situations where the contract was created 2 under conditions of fraud, illegality, mistake, or unconscionability, courts do not have 3 the discretion to interfere with the terms the parties have set for themselves. Builders 4 Contract Interiors, Inc., 2006-NMCA-053, ¶ 8. 5 {9} Jim argues that the district court erred in concluding that rescission, and not 6 modification, was the pursuable remedy under the circumstances of this case. He 7 further asserts that the district court erred in ruling that he was liable to Michael for 8 any reasonable costs and attorney fees that Michael incurred as a result of this 9 litigation. As well, Jim contends that the provision of the 2007 settlement agreement 10 awarding attorney fees is inapplicable to the subject matter of the preceding Rancho 11 Verano litigation. We disagree with Jim’s contention as to the modification and 12 conclude that no genuine issue of material fact existed as to this issue, entitling 13 Michael to summary judgment as a matter of law. However, we determine that, based 14 on this court’s recent decision in Benz v. Town Center Land, LLC, 2013-NMCA-___, 15 ___ P.3d ___ (No’s. 31,669, 32,031, August 29, 2013), the district court erred in 16 awarding Michael reasonable costs and attorney fees because the 2007 settlement 17 agreement was not sufficiently specific to release Rancho Verano, LLC as a corporate 18 defendant.

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1 {10} As to the issue of rescission, Jim insists that the preexisting settlement 2 agreement should otherwise remain intact, but that additional compensation is owed 3 to him due to a miscalculation in the net profits of the land proceeds which was the 4 underpinning dispute and basis for the 2006 agreement. He thus seeks reformation of 5 the contract which is “the remedy for errors in the written expression of an otherwise 6 existing agreement.” Twin Forks Ranch, Inc., 1998-NMCA-129, ¶ 10 (internal 7 quotation marks and citation omitted). However, before a court can reform an 8 agreement freely negotiated between the parties, the party seeking to reform must 9 show that the contract did not represent the agreement the parties intended to make. 10 Id. The movant must also present the agreement the parties intended instead to be 11 effectuated. Id. 12 {11} In the present case, the settlement agreement is unambiguous. The relevant 13 provision provides that “Rancho Verano, LLC shall pay to Jim[,] the sum of $350,000, 14 together with interest accrued thereon at the rate of 6% per annum from October 11, 15 2006 until paid in full.” When a contract is specific, clear, and certain, we must 16 enforce the language the parties agreed upon in their negotiations. Nearburg, 1997- 17 NMCA-069, ¶ 23. Jim seeks to reform this contract on the basis that the development 18 costs were not what he understood them to be; yet, he signed the settlement agreement 19 before he obtained an invoice of the actual development costs. See Twin Forks Ranch,

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1 Inc., 1998-NMCA-129, ¶ 21 (holding that the time to inquire about the value of an 2 asset is before and not after the bargain is struck). 3 {12} Additionally, Jim does not cite any documentation in the record proving that the 4 parties considered the development costs to be a numeric determinant in the 5 computation of the settlement sum. Id. ¶ 10. Nor are we alerted to any indication of 6 precisely how and on what basis the parties calculated the $350,000 agreed to. See id. 7 Without proof that the parties contemplated the development costs in the computation 8 of the settlement sum, or the weight given to that as a settlement factor, we can find 9 no affirmative showing of the fraud Jim alleges, nor even mutual mistake or other 10 permissible factor upon which a contract’s reformation may be appropriately based. 11 See Hansen v. Ford Motor Co., 1995-NMSC-044, ¶ 12, 120 N.M. 203, 900 P.2d 952 12 (concluding that a party’s own subjective, unilateral intent is insufficient to establish 13 an inequity in the contract). 14 {13} Thus, the district court was correct to disallow retroactive modification to the 15 contract the parties created in the course of their negotiations on the basis that Jim was 16 unaware of the actual development costs and by indulging the assumption that such 17 would have altered the specific agreement reached. See Twin Forks Ranch, Inc., 1998- 18 NMCA-129, ¶ 21 (noting that there is no proper ground for relief where there is 19 merely a lack of complete knowledge of the facts and the failure of a party to obtain

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1 those facts). In signing the settlement agreement, Jim accepted the burdens of the 2 contract as well as the benefits, and we decline to provide him with an additional 3 benefit under the contract to the detriment of Michael. Nearburg, 1997-NMCA-069, 4 ¶ 23 (“A court cannot change contract language for the benefit of one party to the 5 detriment of another.”). 6 {14} With regard to the district court’s order of summary judgment granting attorney 7 fees and costs, the language of the 2007 general release provision lacks sufficient 8 specificity to conclude that it applies or was intended to apply to Rancho Verano, LLC 9 as a corporate defendant. “[A] general release raises a rebuttable presumption that 10 only those persons specifically designated by name or by some other specific 11 identifying terminology are discharged.” See Hansen, 1995-NMSC-044, ¶ 33. Without 12 a specific designation indicating the corporate defendants to which the release applies, 13 the party “seeking to be discharged must prove by extrinsic evidence that the parties 14 to the agreement actually intended to discharge [that party] from liability.” Benz, 15 2013-NMCA-___, ¶ 32 (internal quotation marks and citation omitted). Here, Rancho 16 Verano, LCC is not specifically designated as a party to be released by the agreement, 17 [RP 147] nor is there any extrinsic evidence in the record tending to show that Rancho 18 Verano, LLC was a party intended to be released by the agreement. Accordingly, 19 without specificity of corporate designation and without any extrinsic evidence

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1 indicating the parties intended Rancho Verano, LLC to be released by the 2007 2 settlement agreement, we cannot determine that Rancho Verano, LLC was an intended 3 beneficiary of the general release. See Benz, 2013-NMCA-___, ¶¶ 32-33. Because the 4 district court granted summary judgment on Michael’s motion for court costs and 5 attorney fees resulting from the purported breach of the 2007 settlement agreement, 6 we reverse and remand for additional proceedings to be held in accordance with our 7 decision in Benz. See id. 8 III. CONCLUSION 9 {15} For the reasons set forth above, the rulings of the district court are affirmed in 10 part, reversed in part and remanded for further proceedings. 11 {16} IT IS SO ORDERED.

12 _________________________________ 13 J. MILES HANISEE, Judge

14 WE CONCUR:

15 _________________________________ 16 RODERICK T. KENNEDY, Chief Judge

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1 _________________________________ 2 MICHAEL E. VIGIL, Judge