This memorandum opinion was not selected for publication in the New Mexico Appellate Reports. Please see Rule 12-405 NMRA for restrictions on the citation of unpublished memorandum opinions. Please also note that this electronic memorandum opinion may contain computer-generated errors or other deviations from the official paper version filed by the Court of Appeals and does not include the filing date.
1 IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO
2 ROLAND LUCERO and R & L 3 STRAIGHTLINE TILE, LLC a/k/a 4 R & L STRAIGHTLINE TILE,
5 Plaintiffs-Appellants,
6 v. NO. 32,901
7 RICHARD SUTTEN,
8 Defendant-Appellee.
9 APPEAL FROM THE DISTRICT COURT OF BERNALILLO COUNTY 10 Alan M. Malott, District Judge
11 Law Offices of Daymon B. Ely 12 Daymon B. Ely 13 Albuquerque, NM
14 William Gilstrap 15 Albuquerque, NM
16 for Appellants
17 Tucker Law Firm, P.C. 18 Steven L. Tucker 19 Santa Fe, NM
20 for Appellee 1 MEMORANDUM OPINION
2 VANZI, Judge.
3 {1} Roland Lucero and his company, R & L Straightline Tile, (collectively,
4 Plaintiff) appeal from a judgment entered in favor of Defendant Richard Sutten
5 following a bench trial on the issue of legal malpractice. The district court found that
6 Defendant negligently failed to apprise Plaintiff of the dangers of providing an
7 unsecured $300,000 loan to a Las Vegas development company. However, the district
8 court applied the doctrine of independent intervening cause, a defense that had not
9 been previously raised in Defendant’s proposed findings prior to trial, and concluded
10 that the real estate market collapse of the mid-to-late 2000s severed the connection
11 between Defendant’s professional negligence and Plaintiff’s damages claimed
12 therefrom. On appeal, Plaintiff argues that the district court erred in applying the
13 doctrine of independent intervening cause to these facts. We agree. We reverse and
14 remand for consideration of damages in light of this Opinion.
15 BACKGROUND
16 {2} The district court’s following findings of fact in this case are not challenged on
17 appeal. Plaintiff was able to amass substantial savings in the course of his business in
2 1 the tile industry. In February 2008, Plaintiff was approached by Mark Brady, an old
2 friend, about loaning $300,000 to a developer for a mixed-use real estate development
3 project in Las Vegas, Nevada. By the terms of the proposed “bridge loan,” Plaintiff
4 was to receive a $360,000 payment one month after making the loan. Brady, who was
5 also the friend of an officer of the development company, stood to receive a “finder’s
6 fee” of up to $30,000 for assisting in the transaction. These terms were contained in
7 a document entitled “Secured Promissory Note,” which was forwarded to Brady by
8 the developer.
9 {3} Brady suggested to Plaintiff that Defendant, a licensed attorney, review the
10 document on Plaintiff’s behalf. Defendant reviewed and made minor changes to the
11 document without notifying Plaintiff that the purported “Secured Promissory Note”
12 (the Note) did not, in fact, create any security interest. Nor did Defendant apprise
13 Plaintiff of any of the inherent risks involved in engaging in such a transaction.
14 Instead, Defendant returned the Note with his edits to Brady but did not communicate
15 directly with Plaintiff. Shortly after making the loan, the real estate market in Las
16 Vegas, Nevada, suffered a “cataclysmic decline,” and the Las Vegas developer filed
17 for bankruptcy. Plaintiff was never repaid any portion of the loan he had made
18 because the senior lienholder’s interests exceeded the value of the secured property
19 after the market collapse.
3 1 {4} Plaintiff sued Defendant for professional malpractice, and the district court held
2 a bench trial on the merits. The district court found that the parties had entered into
3 an attorney-client relationship and that Defendant’s actions fell below the standard of
4 care and were negligent because he failed to adequately review the Note or advise
5 Plaintiff about the nature and dangers of the proposed transaction. Nevertheless, the
6 district court found that the decline in the Las Vegas real estate market operated as an
7 independent intervening cause, severing the connection between Defendant’s
8 professional negligence and Plaintiff’s losses. This appeal followed.
9 DISCUSSION
10 Standard of Review
11 {5} At the outset, the parties disagree about the standard of review we should apply
12 in this case. Plaintiff contends that this matter should be reviewed de novo, while
13 Defendant argues that Plaintiff “gets off on the wrong foot with the standard of
14 review” and that we should instead determine whether the factual issues are supported
15 by substantial evidence. We agree with Plaintiff. While the determination of whether
16 something is an independent intervening cause is a question of fact, Govich v. North
17 American Systems, Inc., 1991-NMSC-061, ¶ 24, 112 N.M. 226, 814 P.2d 94, this
18 appeal, involving undisputed facts, presents a question of law: whether the doctrine
19 of independent intervening cause should have even been considered by the fact finder
20 in the first place. We have previously reviewed this issue de novo in cases tried by
4 1 juries, see, e.g., Chamberland v. Roswell Osteopathic Clinic, Inc., 2001-NMCA-045,
2 ¶ 11, 130 N.M. 532, 27 P.3d 1019, and we see no reason to afford a more deferential
3 review when the fact finding is conducted by a judge. Johnson v. Yates Petroleum
4 Corp., 1999-NMCA-066, ¶ 3, 127 N.M. 355, 981 P.2d 288 (stating that when the
5 relevant facts are undisputed, the legal interpretation of those facts is reviewed de
6 novo on appeal). We therefore review the district court’s decision to apply the
7 doctrine of independent intervening cause de novo.
8 The Doctrine of Independent Intervening Cause Should Not Have Been 9 Considered by the Fact Finder
10 {6} Plaintiff makes two arguments on appeal: (1) that the district court incorrectly
11 applied the doctrine of independent intervening cause and (2) that the district court’s
12 decision creates immunity for a person or entities whose negligence caused harm.
13 Because our reversal is based on the issue of the independent intervening cause, we
14 need not reach Plaintiff’s second argument. Before turning to our analysis, however,
15 we note again one curious aspect of the district court’s decision. Our review of the
16 record indicates that Defendant did not raise the doctrine of independent intervening
17 cause in his pre-trial findings and conclusions or during the trial, including during
18 closing argument. It was only after the district court raised the doctrine sua sponte in
19 his letter decision that Defendant added to his post-trial findings and conclusions that
20 the “market collapse was an independent intervening force” that severed the
5 1 connection between Defendant’s negligence and Plaintiff’s losses. Accordingly, the
2 doctrine, which then became part of the district court’s findings and conclusions, was
3 never properly raised by Defendant or argued by the parties below. See Chamberland,
4 2001-NMCA-045, ¶ 25 (noting that it was the defendant’s duty to request an
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This memorandum opinion was not selected for publication in the New Mexico Appellate Reports. Please see Rule 12-405 NMRA for restrictions on the citation of unpublished memorandum opinions. Please also note that this electronic memorandum opinion may contain computer-generated errors or other deviations from the official paper version filed by the Court of Appeals and does not include the filing date.
1 IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO
2 ROLAND LUCERO and R & L 3 STRAIGHTLINE TILE, LLC a/k/a 4 R & L STRAIGHTLINE TILE,
5 Plaintiffs-Appellants,
6 v. NO. 32,901
7 RICHARD SUTTEN,
8 Defendant-Appellee.
9 APPEAL FROM THE DISTRICT COURT OF BERNALILLO COUNTY 10 Alan M. Malott, District Judge
11 Law Offices of Daymon B. Ely 12 Daymon B. Ely 13 Albuquerque, NM
14 William Gilstrap 15 Albuquerque, NM
16 for Appellants
17 Tucker Law Firm, P.C. 18 Steven L. Tucker 19 Santa Fe, NM
20 for Appellee 1 MEMORANDUM OPINION
2 VANZI, Judge.
3 {1} Roland Lucero and his company, R & L Straightline Tile, (collectively,
4 Plaintiff) appeal from a judgment entered in favor of Defendant Richard Sutten
5 following a bench trial on the issue of legal malpractice. The district court found that
6 Defendant negligently failed to apprise Plaintiff of the dangers of providing an
7 unsecured $300,000 loan to a Las Vegas development company. However, the district
8 court applied the doctrine of independent intervening cause, a defense that had not
9 been previously raised in Defendant’s proposed findings prior to trial, and concluded
10 that the real estate market collapse of the mid-to-late 2000s severed the connection
11 between Defendant’s professional negligence and Plaintiff’s damages claimed
12 therefrom. On appeal, Plaintiff argues that the district court erred in applying the
13 doctrine of independent intervening cause to these facts. We agree. We reverse and
14 remand for consideration of damages in light of this Opinion.
15 BACKGROUND
16 {2} The district court’s following findings of fact in this case are not challenged on
17 appeal. Plaintiff was able to amass substantial savings in the course of his business in
2 1 the tile industry. In February 2008, Plaintiff was approached by Mark Brady, an old
2 friend, about loaning $300,000 to a developer for a mixed-use real estate development
3 project in Las Vegas, Nevada. By the terms of the proposed “bridge loan,” Plaintiff
4 was to receive a $360,000 payment one month after making the loan. Brady, who was
5 also the friend of an officer of the development company, stood to receive a “finder’s
6 fee” of up to $30,000 for assisting in the transaction. These terms were contained in
7 a document entitled “Secured Promissory Note,” which was forwarded to Brady by
8 the developer.
9 {3} Brady suggested to Plaintiff that Defendant, a licensed attorney, review the
10 document on Plaintiff’s behalf. Defendant reviewed and made minor changes to the
11 document without notifying Plaintiff that the purported “Secured Promissory Note”
12 (the Note) did not, in fact, create any security interest. Nor did Defendant apprise
13 Plaintiff of any of the inherent risks involved in engaging in such a transaction.
14 Instead, Defendant returned the Note with his edits to Brady but did not communicate
15 directly with Plaintiff. Shortly after making the loan, the real estate market in Las
16 Vegas, Nevada, suffered a “cataclysmic decline,” and the Las Vegas developer filed
17 for bankruptcy. Plaintiff was never repaid any portion of the loan he had made
18 because the senior lienholder’s interests exceeded the value of the secured property
19 after the market collapse.
3 1 {4} Plaintiff sued Defendant for professional malpractice, and the district court held
2 a bench trial on the merits. The district court found that the parties had entered into
3 an attorney-client relationship and that Defendant’s actions fell below the standard of
4 care and were negligent because he failed to adequately review the Note or advise
5 Plaintiff about the nature and dangers of the proposed transaction. Nevertheless, the
6 district court found that the decline in the Las Vegas real estate market operated as an
7 independent intervening cause, severing the connection between Defendant’s
8 professional negligence and Plaintiff’s losses. This appeal followed.
9 DISCUSSION
10 Standard of Review
11 {5} At the outset, the parties disagree about the standard of review we should apply
12 in this case. Plaintiff contends that this matter should be reviewed de novo, while
13 Defendant argues that Plaintiff “gets off on the wrong foot with the standard of
14 review” and that we should instead determine whether the factual issues are supported
15 by substantial evidence. We agree with Plaintiff. While the determination of whether
16 something is an independent intervening cause is a question of fact, Govich v. North
17 American Systems, Inc., 1991-NMSC-061, ¶ 24, 112 N.M. 226, 814 P.2d 94, this
18 appeal, involving undisputed facts, presents a question of law: whether the doctrine
19 of independent intervening cause should have even been considered by the fact finder
20 in the first place. We have previously reviewed this issue de novo in cases tried by
4 1 juries, see, e.g., Chamberland v. Roswell Osteopathic Clinic, Inc., 2001-NMCA-045,
2 ¶ 11, 130 N.M. 532, 27 P.3d 1019, and we see no reason to afford a more deferential
3 review when the fact finding is conducted by a judge. Johnson v. Yates Petroleum
4 Corp., 1999-NMCA-066, ¶ 3, 127 N.M. 355, 981 P.2d 288 (stating that when the
5 relevant facts are undisputed, the legal interpretation of those facts is reviewed de
6 novo on appeal). We therefore review the district court’s decision to apply the
7 doctrine of independent intervening cause de novo.
8 The Doctrine of Independent Intervening Cause Should Not Have Been 9 Considered by the Fact Finder
10 {6} Plaintiff makes two arguments on appeal: (1) that the district court incorrectly
11 applied the doctrine of independent intervening cause and (2) that the district court’s
12 decision creates immunity for a person or entities whose negligence caused harm.
13 Because our reversal is based on the issue of the independent intervening cause, we
14 need not reach Plaintiff’s second argument. Before turning to our analysis, however,
15 we note again one curious aspect of the district court’s decision. Our review of the
16 record indicates that Defendant did not raise the doctrine of independent intervening
17 cause in his pre-trial findings and conclusions or during the trial, including during
18 closing argument. It was only after the district court raised the doctrine sua sponte in
19 his letter decision that Defendant added to his post-trial findings and conclusions that
20 the “market collapse was an independent intervening force” that severed the
5 1 connection between Defendant’s negligence and Plaintiff’s losses. Accordingly, the
2 doctrine, which then became part of the district court’s findings and conclusions, was
3 never properly raised by Defendant or argued by the parties below. See Chamberland,
4 2001-NMCA-045, ¶ 25 (noting that it was the defendant’s duty to request an
5 instruction and present the issue of independent intervening cause to the jury).
6 Notwithstanding the lack of a fully developed record on the issue, we proceed to
7 address the district court’s ruling.
8 {7} “The elements of legal malpractice are: (1) the employment of the defendant
9 attorney; (2) the defendant attorney’s neglect of a reasonable duty; and (3) the
10 negligence resulted in and was the proximate cause of loss to the client.” Encinias v.
11 Whitener Law Firm, P.A., 2013-NMSC-045, ¶ 8, 310 P.3d 611 (alteration, internal
12 quotation marks, and citation omitted). At trial, the district court found that the first
13 two elements of representation and negligence were met, but it concluded that the
14 collapse of the real estate market in Las Vegas, Nevada, constituted an independent
15 intervening cause, severing Defendant’s negligence from Plaintiff’s losses. As a result,
16 the sole issue before this Court is the third element, proximate cause. See Torres v. El
17 Paso Elec. Co., 1999-NMSC-029, ¶ 17, 127 N.M. 729, 987 P.2d 386 (“A finding of
18 an independent intervening cause represents a finding against the plaintiff on
19 proximate cause[.]”), overruled on other grounds by Herrera v. Quality Pontiac,
20 2013-NMSC-018, 134 N.M. 43, 73 P.3d 181.
6 1 {8} “An independent intervening cause is a cause which interrupts the natural
2 sequence of events, turns aside their cause, prevents the natural and probable results
3 of the original act or omission, and produces a different result, that could not have
4 been reasonably foreseen.” Id. ¶ 12 (internal quotation marks and citation omitted).
5 In Torres, our Supreme Court recognized that the doctrine is incompatible with our
6 system of comparative negligence and potentially in conflict with our use of several
7 liability. See id. ¶¶ 18-19. Thus, our appellate courts have “virtually eliminated” the
8 doctrine’s application in cases involving only negligent, as opposed to intentional,
9 conduct. Silva v. Lovelace Health Sys., Inc., 2014-NMCA-086, ¶ 14, 331 P.3d 958,
10 cert. granted, 2014-NMCERT-008, ___ P.3d ___ (No. 34,784, Aug. 1, 2014). While
11 the defense may still be available in limited cases, for example where the alleged
12 intervening cause is a “force of nature”—the sort of event that “cannot be prevented
13 by human care, skill or foresight”—Chamberland, 2001-NMCA-045, ¶ 24 (internal
14 quotation marks and citation omitted), for the reasons discussed below, we find it
15 unnecessary to decide whether “market decline” constitutes a force of nature in this
16 case.
17 {9} When the intervening cause does not involve intentional conduct, New Mexico
18 follows the rule that “any harm which is in itself foreseeable, as to which the actor has
19 created or increased the recognizable risk, is always proximate, no matter how it is
20 brought about.” Andrews v. Saylor, 2003-NMCA-132, ¶ 22, 134 N.M. 545, 80 P.3d
7 1 482 (alteration, internal quotation marks, and citation omitted). Thus, the doctrine is
2 inapplicable in New Mexico in cases where a non-intentional intervening force causes
3 the same harm as that risked by the actor’s conduct. See Collins ex rel. Collins v.
4 Perrine, 1989-NMCA-046, ¶ 19, 108 N.M. 714, 778 P.2d 912 (“An independent
5 intervening cause is a cause that interrupts the natural sequence of events and
6 produces a different result that could not be reasonably foreseen.”). The principle cited
7 in Andrews, Torres, and Collins is adopted from the Restatement (Second) of Torts,
8 which applies equally to forces of nature:
9 If the actor’s conduct has created or increased the risk that a particular 10 harm to the plaintiff will occur, . . . it is immaterial to the actor’s liability 11 that the harm is brought about in a manner which no one in his position 12 could possibly have been expected to foresee or anticipate. This is true 13 not only where the result is produced by the direct operation of the 14 actor’s conduct upon conditions or circumstances existing at the time, 15 but also where it is brought about through the intervention of other 16 forces which the actor could not have expected, whether they be forces 17 of nature, or the actions of animals, or those of third persons which are 18 not intentionally tortious or criminal.
19 Section 442B cmt. b (1965) (emphasis added).
20 {10} Our application of Restatement (Second) of Torts Section 442B to an allegedly
21 intervening force in the legal malpractice context of Collins is instructive. In Collins,
22 the defendant-attorney negligently settled a complex medical malpractice case without
23 performing a minimum level of discovery. 1989-NMCA-046, ¶ 13. After settling with
24 the original defendants, the plaintiffs sued Indian Health Services (IHS) in federal
8 1 court and obtained a much larger judgment, with damages apportioned between IHS
2 and the original defendants. Id. ¶ 8. Despite the previous settlement with the original
3 defendants, the plaintiffs’ attorney planned on collecting all damages from IHS
4 through principles of joint and several liability. Id. ¶ 16. However, while the second
5 suit was pending, New Mexico abolished the concept of joint and several liability. Id.
6 ¶ 17. Thus, as a result of the attorney’s negligence in settling the original case,
7 together with the change in state tort law, the plaintiffs were unable to collect a
8 substantial portion of the damages awarded in the federal judgment. Id. ¶ 8.
9 {11} At trial for legal malpractice and on appeal, the defendant-attorney in Collins
10 argued that the unforeseeable change in the law acted as an independent intervening
11 cause. Id. ¶¶ 16-18. This Court rejected that argument, stating:
12 The Restatement of Torts addresses this point clearly. In Section 442B, 13 the Restatement explains that where the negligent conduct of an actor 14 creates or increases the risk of a particular harm and is a substantial 15 factor in causing that harm, the fact that the harm is brought about 16 through the intervention of another force does not relieve the actor of 17 liability.
18 Collins, 1989-NMCA-046, ¶ 20. Applying Restatement (Second) of Torts Section
19 442B, we reasoned that the attorney’s negligence created a particular risk—the risk
20 that the plaintiffs would not be able to recover damages caused by the original
21 defendants. We therefore held that the “intervention of the change in law,” whether
9 1 foreseeable or not, brought about a foreseeable harm and could not relieve the attorney
2 of liability. Collins, 1989-NMCA-046, ¶¶ 20-21.
3 {12} In light of these authorities, the district court should not have considered the
4 doctrine of independent intervening cause in this case. The district court found that
5 Defendant gave the transaction the attorney “seal of approval,” negligently creating
6 or increasing the risk of the loss of Plaintiff’s investment by failing to warn Plaintiff
7 of the dangers inherent in loaning $300,000 to a Las Vegas developer in an unsecured
8 transaction. In the absence of any allegation that the intervening cause was the result
9 of intentional tortious conduct, the principles articulated in Restatment (Second) of
10 Torts Section 442B and adopted in Collins apply. As discussed above, these principles
11 apply whether or not the market decline is considered a “force of nature.” The district
12 court should not have dismissed this case but, instead, it should have determined
13 whether Defendant’s negligence was the proximate cause of loss of Plaintiff and, if
14 applicable, employed a standard comparative fault analysis.
15 {13} Citing to several out-of-state and federal cases, Defendant asks us to consider
16 whether the collapse of the Las Vegas real estate market was foreseeable. However,
17 Defendant’s characterization of the issue relies on the same contention that we
18 specifically rejected in Collins: that the manner in which the harm occurs is somehow
19 relevant to the analysis. See Collins, 1989-NMCA-046, ¶¶ 17-21. We have made clear
20 that in cases not involving intentional intervening conduct, even when the risk of harm
10 1 is foreseeable, the manner that the foreseeable harm is brought about need not itself
2 be foreseeable. Id. ¶ 21 (“Nor does it matter whether [the attorney] could have
3 foreseen the change in law.”). Accordingly, we find Defendant’s citations to extra-
4 jurisdictional opinions evaluating the foreseeability of the 2008 real estate market
5 collapse inapposite. We conclude that the district court erred in applying the doctrine
6 of independent intervening cause to its factual determination that the parties had
7 entered into an attorney-client relationship and that Plaintiff made the loan in reliance,
8 at least partially, on Defendant’s seal of approval.
9 CONCLUSION
10 {14} We reverse the district court’s decision dismissing Plaintiff’s complaint with
11 prejudice and remand for consideration and apportionment of damages using a
12 comparative fault analysis.
13 {15} IT IS SO ORDERED.
14 __________________________________ 15 LINDA M. VANZI, Judge
16 WE CONCUR:
17 _________________________________
11 1 MICHAEL D. BUSTAMANTE, Judge
2 _________________________________ 3 J. MILES HANISEE, Judge