Jacob v. Spurlin

1999 NMCA 049, 978 P.2d 334, 127 N.M. 127
CourtNew Mexico Court of Appeals
DecidedFebruary 9, 1999
Docket19501
StatusPublished
Cited by15 cases

This text of 1999 NMCA 049 (Jacob v. Spurlin) is published on Counsel Stack Legal Research, covering New Mexico Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Jacob v. Spurlin, 1999 NMCA 049, 978 P.2d 334, 127 N.M. 127 (N.M. Ct. App. 1999).

Opinion

OPINION

PICKARD, Chief Judge.

{1} Defendant appeals from a judgment in favor of Plaintiff, holding that Defendant was liable to Plaintiff for payments due on a lease and a promissory note. Defendant claims that his liability was either assigned to a corporation and thus could not be attributed to him or else discharged in bankruptcy. We disagree and affirm.

FACTS

{2} Plaintiff owned commercial property. In 1989, Plaintiff leased the property to Defendant, who was doing business as a video rental store called Video One, for a term of years. The lease provided that Defendant could assign it without Plaintiffs consent. In February 1990, the parties executed an addendum to the lease, changing to some extent the precise location of the premises, increasing the rent, and extending the term of the lease to ten years from the date of occupancy of a new building the parties contemplated. Shortly after the execution of the original lease, Defendant, together with his wife and son, incorporated S & S Investments, Inc. (hereinafter “S & S Investments”). In March 1990, Defendant assigned all his right, title, and interest in the lease to S & S Investments.

{3} Notwithstanding the assignment, in August of 1990, Defendant personally signed a promissory note in favor of Plaintiff for $15,000, which represented costs of remodeling the building. The note did not contain a schedule of payments. On December 5, 1990, the parties again personally executed a second addendum to the lease, so that the rent was increased by an amount intended to amortize the $15,000 note over the remainder of the ten-year term of the lease. At this time, Defendant was no longer operating the video store as Video One, but instead as Showtime Video. The addendum provided: “NOTE TO BE NULL AND VOID. ¶4. IN EVENT OF SALE OF SHOWTIME VIDEO THE BALANCE OF UNAMORTIZED NOTE TO BE PAID TO LESSOR AND MO. RENTAL WILL REVERT” to the amount it was prior to the addendum.

{4} On December 12, 1990, Defendant filed a petition under the federal bankruptcy act, and in February 1992, he was discharged. Defendant never told Plaintiff about his. assignment of the lease to S & S Investments. Defendant did not schedule either the promissory note or the lease as assets or debts of his estate in the bankruptcy matter. Defendant did not tell Plaintiff that he had filed for bankruptcy or been discharged. From Plaintiffs perspective, the parties continued them relationship as lessor and lessee with Defendant operating the video store as Showtime Video. From Defendant’s perspective, S & S Investments operated Showtime Video during this time. In any event, Defendant signed checks for the rent on the premises until he began getting behind in the rent in 1994. Although his last rent payment was in February of 1995, he did not vacate the premises until the end of August 1995. Plaintiff obtained a new tenant effective October 1,1995.

{5} Plaintiff filed this lawsuit in November of 1995, seeking rental payments from the time Defendant stopped paying rent until Plaintiff found a new tenant, as well as the remaining balance under the note and lease addendum and various miscellaneous charges, such as insurance and taxes. Defendant moved to dismiss for lack of jurisdiction on the ground that he had been discharged of these obligations in the bankruptcy proceedings. Defendant also sought the protection of the bankruptcy court by filing an adversary complaint against Plaintiff in the bankruptcy matter. That case was concluded by a judgment, entered in September 1996 by the bankruptcy judge, which stated:

1. That any pre-petition liability, debt or obligation of [Defendant] was discharged in the [Defendant’s] Chapter 7 case.
2. That [Defendant has] not executed any document reaffirming any discharged pre-petition indebtedness.
3. That [Plaintiffs] claims are post-petition claims regarding a promissory note and lease.
4. That the issues involving the alleged post-petition indebtedness should be tried in [the case in the Twelfth Judicial District Court].

{6} Following the trial in this case, the trial court, in its written decision, ruled that the assignment was ineffective to relieve Defendant of any of his alleged obligations under the lease and note. The trial court also ruled that bankruptcy was an essentially equitable matter. Thus, it ruled that Defendant’s conduct in not scheduling the lease and note and conducting business as usual with Plaintiff during the two years after discharge waived Defendant’s ability to rely on the bankruptcy discharge. It also ruled that the same conduct estopped Defendant from asserting that Plaintiff cannot recover for a post-bankruptcy breach of the lease. During oral arguments at the conclusion of the case and during Defendant’s motion for rehearing, the trial court also expressed the opinion that Defendant (or his assignee) could not remain in possession of the leased premises at the same time he was contending that he had no obligation to pay rent. We consider it noteworthy that, insofar as the assignment is concerned, Defendant himself requested the trial court to conclude that “[{Irrespective of the assignment to S & S Investments, Inc., [Defendant] remained individually liable for the performance of his obligations under the lease agreement up to the time of filing his Bankruptcy Petition.” Insofar as the effect of the bankruptcy proceedings are concerned, the trial court found, in findings that are not properly challenged, that the “judgment entered by [the bankruptcy court] returns the issues in this action to this Court” and the “judgment entered by [the bankruptcy court] states that the issue on these charges [sic] are post-petition obligations.”

DISCUSSION

Standard of Review

{7} When the appellate court is asked to review the trial court’s findings of historical facts, the appellate court uses the substantial evidence standard of review, but when it is asked to review the trial court’s application of the law to undisputed or unchallenged historical facts, the appellate court uses a de novo standard of review. See In re Forfeiture of ($28,000.00), 1998-NMCA-029, ¶ 10, 124 N.M. 661, 954 P.2d 93; Quantum Corp. v. State, Taxation & Revenue Dep't, 1998-NMCA-050, ¶ 8, 125 N.M. 49, 956 P.2d 848. Our decision in this case solely reviews the trial court’s application of the law to historical facts that are either undisputed or not properly challenged. Therefore, our standard of review is de novo.

{8} In Defendant’s summary of proceedings, he points out that the trial court adopted conflicting findings of fact by adopting verbatim many of both parties’ requested finding of fact, and he states that the adoption of Plaintiffs requested findings in this regard is not supported by the evidence. The alleged conflict is that Plaintiffs requests suggested that Defendant operated Showtime Video individually after the date of the assignment of the lease whereas Defendant’s requests suggested that S & S Investments operated Showtime Video. We need not resolve the dispute for purposes of this opinion.

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Cite This Page — Counsel Stack

Bluebook (online)
1999 NMCA 049, 978 P.2d 334, 127 N.M. 127, Counsel Stack Legal Research, https://law.counselstack.com/opinion/jacob-v-spurlin-nmctapp-1999.