Diversified Development & Investment, Inc. v. Heil

889 P.2d 1212, 119 N.M. 290
CourtNew Mexico Supreme Court
DecidedJanuary 25, 1995
Docket21320
StatusPublished
Cited by30 cases

This text of 889 P.2d 1212 (Diversified Development & Investment, Inc. v. Heil) is published on Counsel Stack Legal Research, covering New Mexico Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Diversified Development & Investment, Inc. v. Heil, 889 P.2d 1212, 119 N.M. 290 (N.M. 1995).

Opinion

OPINION

RANSOM, Justice.

Diversified Development & Investment, Inc., sued the estate of Anne Pickard and its personal representatives, Helga Heil and Dorothy Holmberg, (collectively, “the Estate") for breach of contract, misrepresentation, and prima facie tort in connection with a contractual option to purchase real estate. After the Estate filed a third-party claim for indemnification and legal malpractice against its attorney, Patrick Hurley, Diversified Development filed a claim against Hurley for breach of contract, misrepresentation, and prima facie tort, and asked for punitive damages. Before ruling on a motion filed by Diversified Development to compel discovery, the district court granted summary judgments in favor of the Estate and Hurley.

Diversified Development appeals pursuant to SCRA 1986, 12-102(A)(1) (Repl. Pamp.1992) (count sounding in contract). We find that the court erred in granting summary judgment before ruling on the motion to compel discovery. We therefore reverse the judgment in favor of the Estate on Diversified Development’s claim that Hurley had actual authority to grant an extension of the purchase option. Further, we hold that the trial court should compel discovery of certain communications between the Estate and Hurley. Finally, we find that Diversified Development raised a genuine issue as to Hurley’s actual or apparent authority to communicate whether the Estate agreed to an extension of the option deadline. We therefore hold that, on remand, Diversified Development may pursue its theory that Hurley’s statements thus could bind the Estate.

Facts. In March 1990 Diversified Development executed an agreement with New Jersey residents Heil and Holmberg in which Diversified Development was given a six-month option to purchase approximately sixteen acres of unimproved Albuquerque real estate for $575,000. The agreement empowered Diversified Development to extend the purchase option for an additional six months upon written notification to the Estate. Diversified Development exercised this right to an extension in a letter delivered to Hurley from Diversified Development’s attorney, Ray Baehr. This extension gave Diversified Development until March 31, 1991, to exercise the purchase option.

In February 1991 Diversified Development asked Lee Welsh, a real estate agent for the Estate, to determine whether the Estate would consider modifications to the agreement’s financing terms. Diversified Development’s president, Chester Hearn, testified that Welsh assured him he had talked to Heil and Holmberg and that they were receptive to “some modifications of the financing arrangements.” Diversified Development emphasized to Welsh that it wished to retain the right to exercise the original purchase option if financing modifications could not be worked out.

In a letter sent to Welsh, Heil, Hurley, and Baehr dated March 22, 1991, Diversified Development put its financing modification request in writing. In this letter Hearn reaffirmed Diversified Development’s intent to purchase the parcel of land and requested a ninety-day extension of the existing option pending execution of the modified agreement. Baehr testified that during the week of March 25 he telephoned Hurley to inquire about the status of the March 22 extension request and to set up a meeting before the March 31 option deadline to discuss whether the Estate would accept the alternative financing proposal. He testified that Hurley was not able to meet with him but assured him that “a few days one way or another [will] not make any difference” and “these ladies are not going to hold [Diversified Development] to the [option deadline.]”

Hurley conceded only that on March 29 he told Baehr he had talked to Heil and that the Estate “probably [would] agree to an extension — possibly more.” He stated that Heil told him it would be after the March 31 deadline before she could say whether the Estate was amenable to accepting an alteration of the option. Heil insisted that Hurley had no authority to tell Baehr that the Estate “probably [would] agree to an extension” but acknowledged that Hurley did have authority to discuss an extension.

Baehr and Hurley agreed to meet on April 4. At this meeting Diversified Development and Baehr discussed the March 22 financing proposal with Hurley and Welsh and inquired whether the option would have to be exercised as written. Hearn testified that at the conclusion of the meeting he asked for a written extension but Hurley insisted that one was not necessary because Diversified Development would get an answer on the financing proposal in a few days. Hearn also stated that Hurley assured Diversified Development it could exercise the original purchase option if the Estate did not agree to financing modifications.

Between April 4 and April 25 Hurley had several conversations with Heil about the proposed modifications. Hurley did not know that the Estate would not extend the option, however, until either April 25 or May 2. On May 1 Heil and Holmberg faxed a letter directly to Baehr rejecting the proposed financing modifications and stating that the Estate was “reviewing [its] options” and would attempt to obtain a better price for the land. On May 8 Welsh told Hearn that the Estate considered the purchase option to have expired.

On May 9 Diversified Development deposited earnest money in the amount called for by the option agreement into escrow and notified Hurley, Welsh, and Heil that it was exercising the original purchase option. On May 11 the Estate instructed the escrow agent to return the earnest money to Diversified Development and to record a termination statement. Approximately three months later the Estate accepted a purchase offer for $800,000 from another buyer.

Proceedings. On February 25, 1993, following minimal pretrial discovery, Diversified Development filed a motion to compel production of memos written by Hurley detailing his conversations with Heil about the March 22 extension request. Hurley refused to produce these memos, claiming attorney-client privilege. The motion to compel also sought production of withheld portions of Heil’s telephone diary detailing conversations with Welsh and Hurley. Hurley joined in Diversified Development’s motion, arguing that Heil had waived the attorney-client privilege by bringing an action against him and by offering evidence of some of the communications. The court held a motion hearing on March 11 but did not rule.

The Estate and Hurley filed motions for summary judgment on February 15 and 19 respectively. On March 26 and 29 those motions were heard and on April 6 the court issued a letter decision ruling in favor of the Estate and Hurley. .The court stated that it assumed Diversified Development’s motion to compel discovery to be moot as a result of its ruling. The trial court found it undisputed that Hurley lacked actual or apparent authority either to make final decisions for the Estate or to grant an extension. Based on this finding, the court determined that there was no support for the contract claim. The court also determined that “Hurley made no misrepresentations for which his principals could be held liable.” Finally, the court found as a matter of law that the facts of the case did not support the prima facie tort claim.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Energy Pol'y Advoc. v. Balderas
560 P.3d 37 (New Mexico Court of Appeals, 2024)
Meyer v. Regents of the Univ. of N.M.
New Mexico Court of Appeals, 2024
Gillies v. Odelia Healthcare
New Mexico Court of Appeals, 2023
Citizens for Fair Rates & the Env't v. NMPRC
New Mexico Supreme Court, 2022
Rogers v. Bd. of Comm'rs of Torrance Cty.
2020 NMCA 002 (New Mexico Court of Appeals, 2019)
President & Fellows of Harvard College v. Elmore
222 F. Supp. 3d 1050 (D. New Mexico, 2016)
McNallen v. McNallen
New Mexico Court of Appeals, 2012
Stanton v. Lovelace Health
New Mexico Court of Appeals, 2012
Barron v. Evangelical Lutheran Good Samaritan Society
2011 NMCA 94 (New Mexico Court of Appeals, 2011)
Arnold v. Delgadillo
New Mexico Court of Appeals, 2010
Mendez v. Hovensa, L.L.C.
49 V.I. 849 (Virgin Islands, 2008)
Valley Bank of Commerce v. Hilburn
2005 NMCA 004 (New Mexico Court of Appeals, 2004)
Bierner v. City of Truth or Consequences
2004 NMCA 093 (New Mexico Court of Appeals, 2004)
Sphere Drake Insurance v. All American Life Insurance
300 F. Supp. 2d 606 (N.D. Illinois, 2003)
Azar v. Prudential Insurance Co. of America
2003 NMCA 062 (New Mexico Court of Appeals, 2003)
Chase Manhattan Mortgage Corp. v. Caraway
2003 NMCA 020 (New Mexico Court of Appeals, 2002)

Cite This Page — Counsel Stack

Bluebook (online)
889 P.2d 1212, 119 N.M. 290, Counsel Stack Legal Research, https://law.counselstack.com/opinion/diversified-development-investment-inc-v-heil-nm-1995.