Kreischer v. Armijo

884 P.2d 827, 118 N.M. 671
CourtNew Mexico Court of Appeals
DecidedAugust 26, 1994
Docket15566
StatusPublished
Cited by28 cases

This text of 884 P.2d 827 (Kreischer v. Armijo) 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
Kreischer v. Armijo, 884 P.2d 827, 118 N.M. 671 (N.M. Ct. App. 1994).

Opinion

OPINION

APODACA, Judge.

Plaintiff appeals the trial court’s dismissal of his complaint against Defendant. The complaint was dismissed in a summary judgment proceeding on the basis that Defendant was not the real party in interest. Based on the allegations raised in the complaint, we hold that the real party in interest was not Defendant individually, but Armijo Construction, Inc., a New Mexico Corporation, (the Corporation) owned by Defendant. Because Plaintiff failed to substitute the Corporation as a defendant, we affirm the trial court’s order granting summary judgment. We deem it unnecessary to address Plaintiff’s other issues.

FACTS

Plaintiff and his wife contracted with the Corporation to have an addition built to Plaintiffs home. Plaintiff dealt with Defendant, who was acting as agent for the Corporation, which Defendant solely owned and of which he was president. Defendant possessed a contractor’s license in his own name only; the Corporation itself did not possess such a license.

Because the construction was never completed, Plaintiff and his wife sued Defendant and two other defendants for unfair trade practices, gross negligence, and fraudulent misrepresentation. Plaintiff did not sue the Corporation, either in contract or in tort. Both parties filed motions for summary judgment. Following a hearing on the motions, the trial court denied Plaintiffs motion but granted Defendant’s motion, thus dismissing all claims against Defendant with prejudice. Plaintiffs wife did not join in the appeal. Plaintiff has not appealed the earlier dismissal of the other two defendants from the lawsuit. Additional facts will be discussed as relevant to our discussion.

DISCUSSION

The trial court and the parties framed the dispositive issue as whether Defendant or the Corporation was the real party in interest. Plaintiff’s second amended complaint alleged that Defendant had committed unfair trade practices, gross negligence, and fraudulent misrepresentation. Defendant, in his motion for summary judgment, contended that he was not the real party in interest because Plaintiff’s contract was formed with the Corporation. Defendant thus argued in the trial court that, as an agent for the Corporation, he was not personally liable under the contract. He makes the same argument on appeal.

We recognize that an agent may be held individually liable for his own tortious acts, whether or not he was acting for a disclosed principal. See Restatement (Second) of Agency § 348 (1958) (agent can be sued in tort for fraud and misrepresentation); Restatement (Second) of Agency § 350 (1958) (agent subject to liability for negligence). Thus, the initial inquiry is whether Plaintiffs causes of action sounded in contract or in tort. The distinction between tort and contract liability is often a difficult distinction. See W. Page Keeton et al., Prosser and Keeton on the Law of Torts § 92, at 655 (5th ed. 1984). Nonetheless, we are satisfied from our review of Plaintiffs second amended complaint that, although his causes of action are couched in tort language, the gravamen of the complaint was essentially the failure of Defendant to complete the construction work in accordance with the contract. See id. at 621-22 (courts must often decide on the facts pleaded the “gist” or “gravamen” of a cause of action).

Courts have long followed the rule that ‘“[t]he difference between a tort and contract action is that a breach of contract is a failure of performance of a duty arising or imposed by agreement; whereas, a tort is a violation of a duty imposed by law.’ ” Tamarac Dev. Co. v. Delamater, Freund & Assoc., P.A, 234 Kan. 618, 675 P.2d 361, 363 (1984) (citation omitted); see also Prosser at 656-58 (suggesting that distinctions between tort and contract cases frequently follow seven generalizations). In this case, the essence of Plaintiffs claim of gross negligence was that construction work was performed in a grossly willful, wanton, and negligent manner that rendered the house unsafe and unusable. The obligation to properly construct the house, however, was created by the contract and was not an obligation imposed by law. The mere titling of the cause of action as one for gross negligence did not change its nature. See New Mea Constr. Corp. v. Harper, 203 N.J.Super. 486, 497 A.2d 534, 539 (App.Div.1985) (homeowner’s complaint of negligent supervision against corporate builder’s principal sounded in contract rather than tort). The court did not err in dismissing this claim.

For the same reason, Plaintiffs claims of fraudulent misrepresentation were properly denied. In each claim, Plaintiff alleged that he paid defendant certain sums of money to be used on the construction project. Defendant allegedly failed in this regard. Again, the obligation to use the money on the construction of the house was a duty imposed by the contract and not by law.

Plaintiffs Count I of the amended complaint can be viewed in a slightly different light. The allegations in this count came very close to alleging a valid non-contractual cause of action against Defendant, as an agent of the Corporation, based on the Unfair Practices Act, NMSA 1978, §§ 57-12-1 to -21 (Repl.Pamp.1987) (the UPA). The language contained in this count alleged certain facts that, if proven, could support a cause of action for unfair and deceptive trade practice against Defendant, not the Corporation.

We therefore recognize that these allegations might support a claim that is separately actionable against Defendant. Although there is very little precedent under the UPA, Texas has enacted an act similar in language to our own, the Deceptive Trade Practices Act, Texas Bus. & Com.Code Ann. §§ 17.41 et seq. (Vernon Supp.1986). Several reported cases have been decided under Texas’ act. For example, Great Am. Homebuilders, Inc. v. Gerhart, 708 S.W.2d 8, 10-11 (Tex.Ct.App. 1986), involved a suit under the Texas act against a corporation for failure to perform in the building of a home, and against the principal of the corporation, individually, for specific misrepresentations made in that context. These facts are very similar to the facts in this appeal. Smith v. Baldwin, 611 S.W.2d 611, 614 (Tex.1980), is another case involving a contract to build a house where separate allegations were maintained under Texas’ act based upon specific representations of individuals. A similar case is Light v. Wilson, 663 S.W.2d 813, 815 (Tex.1983), in which the concurring opinion emphasized the separate liability of an agent for a statutory tort under the act. These actions existed independently of the contract and the action on the contract between the parties. Id.; see also ALT Corp. v. Small Business Admin., 801 F.2d 1451, 1462-63 (5th Cir.1986) (simple actions for breach of contract not cognizable under Deceptive Trade Practices Act; allegations of a tortious nature are required).

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Bluebook (online)
884 P.2d 827, 118 N.M. 671, Counsel Stack Legal Research, https://law.counselstack.com/opinion/kreischer-v-armijo-nmctapp-1994.