Warner v. Calvert

2011 NMCA 028, 258 P.3d 1125, 150 N.M. 333
CourtNew Mexico Court of Appeals
DecidedFebruary 9, 2011
Docket29,674
StatusPublished
Cited by3 cases

This text of 2011 NMCA 028 (Warner v. Calvert) 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
Warner v. Calvert, 2011 NMCA 028, 258 P.3d 1125, 150 N.M. 333 (N.M. Ct. App. 2011).

Opinion

OPINION

GARCIA, Judge.

{1} In this interlocutory appeal, Horace Calvert and Jody Calvert, a.k.a. Jody Lusk, North American Pizza Solutions, Inc. (NAPS) and Albuquerque Pizza Solutions, L.L.C. (APS) (hereinafter referred to as Appellants) appeal the district court’s order appointing Judith Wagner as an expert witness pursuant to Rule 11-706 NMRA and determining that the valuation report prepared by-Ms. Wagner in 2009 (2009 Valuation Report) may be admitted at trial. Appellants raise two issues on appeal: (1) Ms. Wagner may not serve as a Rule 11-706 expert witness because she was a nonparty participant in the mediation; and (2) Ms. Wagner’s 2009 Valuation Report is a mediation communication that is confidential and inadmissible as evidence at trial. This appeal presents issues of first impression under the Mediation Procedures Act (the MPA or the Act), NMSA 1978, Sections 44-7B-1 to -6 (2007), which became effective on July 1, 2007. We affirm the district court ruling regarding the appointment of Ms. Wagner as a Rule 11-706 expert witness, but we reverse regarding the admissibility of Ms. Wagner’s 2009 Valuation Report.

BACKGROUND

{2} Although this case has an extensive history, we limit our recitation of the factual and procedural history to those details pertinent to the issues on interlocutory appeal. In the underlying lawsuit, Appellee John Warner (Warner) and Crosselaimant-Appellee Nina True (True) each claim entitlement to money damages as well as stock in Defendant corporations, NAPS and APS. Warner and True each allegedly loaned Crossdefendant-Appellee John Phillips (Phillips) funds for purposes of building and operating a new APS franchise. Both loans were allegedly secured with interest in Phillips’ stock in NAPS, and concomitantly, his membership interest in APS. Additionally, Phillips allegedly executed assignments separately transferring his equity interest in NAPS to both Warner and True.

{3} On September 18, 2008, the district court referred this case to a settlement conference and appointed a settlement facilitator. During the first settlement conference on February 22, 2008, the facilitator’s outcome report indicates that “[t]he parties reached an agreement to obtain some additional information, necessary to settlement evaluation, before reconvening” for a second settlement conference. At that conference, the parties also entered a written agreement to hire an expert to perform a valuation of NAPS, which was signed by all parties. The agreement recognized that True and Warner were “unable to fully evaluate [Defendants’] settlement offer without a valuation of the business and a valuation of the stock owned by John Phillips.” As a result, the parties agreed to retain Ms. Wagner to perform a valuation of NAPS and further agreed that the cost of the valuation would be split equally between the parties. Once the valuation was completed, the parties agreed to determine if a settlement could be reached based on the initial settlement offer, and if not, the parties agreed to participate in a second settlement conference.

{4} On March 28, 2008, Ms. Wagner drafted a letter of engagement regarding the terms of the business valuation, which each of the parties ultimately signed. The letter stated that the “purpose of the valuation is to provide information relating to the value of NAPS and Mr. Phillips’ disputed value therein for purposes of mediation.” The letter clarified that Ms. Wagner was not acting as an arbitrator in the dispute and that any agreement as to the value ultimately agreed upon between the parties would be their own. The parties retained Ms. Wagner to create the 2009 Valuation Report “for purposes of mediation” and agreed that distribution of the report would be restricted to mediation purposes and internal use by the parties’ tax and legal advisors. Finally, the letter contemplated that additional fees would apply if Ms. Wagner was requested to testify. The letter clarified that the original fee estimate included drafting the 2009 Valuation Report, but it did not include “any services that may be required to defend [the] valuation report in litigation, including conferences, depositions, court appearances and testimony.”

{5} A second settlement conference was originally scheduled for October 6, 2008, but it was rescheduled for January 14, 2009, in order to allow time for the 2009 Valuation Report to be completed prior to the mediation. The report was completed on January 8, 2009. The report’s preface indicates that “[t]he purpose of the valuation is to provide information relating to the value of NAPS and Mr. Phillips’ disputed value therein for purposes of mediation.” The report further indicated that the calculation was “prepared for mediation purposes only and should not be provided to third parties without the express written consent of Wagner Valuation & Financial Forensics, LLC.” Finally, the report reiterated that the “calculation was performed solely to assist [the parties] in mediation” and that the resulting estimate of value “should not be used for any other purpose” without the express written consent of Wagner. The second settlement conference did not result in settlement, and this case was subsequently scheduled for trial.

{6} On March 2, 2009, Warner filed a motion to appoint Ms. Wagner as an expert witness pursuant to Rule 11-706. After a hearing on the matter, the district court entered an order on May 18, 2009, appointing Ms. Wagner as the district court’s Rule 11-706 expert witness. The district court ordered that the cost of Ms. Wagner’s services would be split equally between the parties, pending the district court’s review. Additionally, the court ruled that Ms. Wagner’s 2009 Valuation Report “may be admitted at trial to show liability of any and all claims in this lawsuit and to determine the amount of liability and/or punitive damages if any,” subject to possible limitations on its use based on further motion by the parties.

{7} Appellants requested an interlocutory appeal of the district court’s order appointing Ms. Wagner as a Rule 11-706 expert witness, and the district court entered an order certifying the issue for interlocutory appeal to this Court. The district court reasoned that the issue “involves a controlling question of law as to which there is substantial ground for difference of opinion and that an immediate appeal from the order or decision may materially advance the ultimate termination of the litigation.” The district court also entered findings that Ms. Wagner “was retained by the parties to perform a valuation of [NAPS] for purposes of mediation,” that the court appointed Ms. Wagner as a Rule 11-706 expert witness, and that Appellants requested an interlocutory appeal based upon Ms. Wagner’s “role in the mediation and her agreement to prepare a valuation for purposes of mediation between the parties.”

DISCUSSION

{8} This appeal requires an interpretation of the newly enacted MPA. Only one published New Mexico case has cited to the MPA, but the Act did not control the outcome of that case. See Carlsbad Hotel Assocs., L.L.C. v. Patterson-UTI Drilling Co., 2009-NMCA-005, ¶ 31, 145 N.M. 385,199 P.3d 288 (noting that the MPA was enacted after the settlement conference had already occurred and that it did not control the outcome of the case).

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Cite This Page — Counsel Stack

Bluebook (online)
2011 NMCA 028, 258 P.3d 1125, 150 N.M. 333, Counsel Stack Legal Research, https://law.counselstack.com/opinion/warner-v-calvert-nmctapp-2011.