Dooley v. Quiet Title Co., LLC

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1 IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO
2 CORNELIUS DOOLEY M.D. AND
3 SUSAN HOFFMAN-DOOLEY,
4 Plaintiffs-Appellees,
5 v. NO. 31, 073 Consolidated with 31,072
6 QUIET TITLE COMPANY, LLC,
7 A New Mexico Limited Liability Company,
8 and J. MICHAEL HYATT,
9 Individually and as a member of
10 QUIET TITLE COMPANY, LLC,
11 Defendants-Appellants.
12 APPEAL FROM THE DISTRICT COURT OF SANTA FE COUNTY
13 Sarah M. Singleton, District Judge
14 The Simons Firm LLP
15 Thomas A. Simons IV
16 Daniel H. Friedman
17 Kelcey Nichols
18 Santa Fe, NM
19 for Appellees
20 Lorenz Law
21 Alice Tomlinson Lorenz
22 Albuquerque, NM
23 Sommer Udall Sutin Hardwick & Hyatt, PA
1 Jack N. Hardwick
2 Kurt A. Sommer
3 Santa Fe, NM
4 for Appellants
5 MEMORANDUM OPINION
6 ZAMORA, Judge.
7 {1} Quiet Title Co., LLC and J. Michael Hyatt (Defendants) appeal from a jury
8 verdict awarding HDQ, LLC money damages after Defendants failed to close on
9 HDQ’s contract for the purchase of three condominium units and instead closed the
10 purchase with Maxmedical. Defendants challenge the jury instructions, HDQ’s
11 intentional interference with contract claim, admission of expert testimony, and the
12 amount of the awards for compensatory damages and punitive damages. We affirm.
13 BACKGROUND
14 {2} The original plaintiffs in this suit were HDQ, LLC and its three physician
15 members, Doctors Hoverson, Dooley and Quinn. The cause of action has since been
16 assigned to Dr. and Mrs. Dooley. We refer to all of the above collectively as Plaintiffs
17 for simplicity and consistency throughout the Opinion. The parties are familiar with
18 the facts of the case, but we briefly identify the parties and recount a time line of
19 events to assist in our analysis below.
2
1 {3} HDQ’s members included Doctors Hoverson, Dooley and Quinn. Quiet Title,
2 the title company and closing agent, consists of co-defendant Michael Hyatt as
3 Manager, its sole member was Trestle Ranch Corporation, and Hyatt is owner of
4 Trestle Ranch Corporation. Maxmedical is owned by Poohbah Corporation, and
5 Poohbah is owned by Hyatt. Selene T. Sinclair was the Trustee of the Selene T.
6 Sinclair Separate Property Trust.
7 {4} On May 21, 2009, the Selene Sinclair Trust (Seller) contracted with
8 Maxmedical to sell three medical office condominium units for $500,000, with a
9 closing date of June 15, 2009, a Monday. The broker for that deal was Leon Mellow,
10 who was to evenly split a six percent commission with Seller’s real estate agent. The
11 Doctors’ Park Condominium Owners’ Association (DPCOA) reserved a right of first
12 refusal that permitted it to purchase the units on the same terms and conditions of the
13 Maxmedical contract if that right was exercised by June 12, 2009, a Friday. The
14 DPCOA assigned its right to Dr. Hoverson on June 9, and the next day, Dr. Hoverson,
15 as a managing member of HDQ, signed a purchase contract with Seller. Plaintiffs’
16 contract called for the same purchase price and closing date, but rather than allowing
17 for a split commission listed in the Maxmedical contract, Plaintiffs’ contract provided
18 a 5.5 percent commission going solely to Seller’s real estate agent.
3
1 {5} On June 10, 2009, Defendants worked with Seller to prepare closing documents
2 for the sale to Plaintiffs. Because Seller was leaving town that week and would be
3 unreachable until several days after the closing date, Defendants had Seller sign
4 closing documents for the Maxmedical purchase as well, to serve as a backup in case
5 the sale to Plaintiffs could not be executed. The June 15 closing date was considered
6 crucial because Seller was facing imminent foreclosure on the property. As of June
7 12, 2009, Defendant Hyatt did not think that HDQ had exercised the right of first
8 refusal correctly. When Defendants reviewed Plaintiffs’ contract on June 15,
9 Defendants concluded that the non-matching commissions in the two sale contracts
10 resulted in a defective execution of the right of first refusal because the agreement was
11 not on the same terms and conditions as the Maxmedical contract. Defendants also
12 cited flaws in the lending bank’s security requirements and in Plaintiffs’ attempt to
13 satisfy requirements of the title binder. At no time between June 12 and June 15 did
14 Defendants alert Plaintiffs of any shortcomings. Instead, on June 15, Defendants
15 rejected Plaintiffs’ closing bid and closed on the deal between Seller and Maxmedical,
16 informing Plaintiffs of the sale after it was complete. Plaintiffs alleged that
17 Defendants’ actions violated a fiduciary duty, as closing agent, to disclose the
18 information that impeded Plaintiffs’ sale in favor of a closing overseen by one of Mr.
4
1 Hyatt’s business entity associations (Quiet Title) for a sale to another of Mr. Hyatt’s
2 business entity associations (Maxmedical).
3 {6} Plaintiffs filed this action against Defendants, Maxmedical, and Seller, alleging
4 breach of fiduciary duty, negligence, fraud, intentional interference with contract,
5 breach of contract, and a violation of the New Mexico Unfair Practices Act. Seller was
6 later dropped as a party, and the jury found in favor of Maxmedical on all counts
7 against it. Against Defendants, the district court allowed three claims to go to the
8 jury: (1) negligent failure to disclose problems with Plaintiffs’ attempt to exercise its
9 right of first refusal; (2) breach of fiduciary duty for Defendants’ failure to disclose
10 those problems; and (3) intentional interference with contract. The jury found in favor
11 of Plaintiffs and awarded $335,107 in compensatory damages and $1.5 million in
12 punitive damages. Defendants filed this appeal.
13 DISCUSSION
14 {7} Defendants raise four main issues, arguing that: (1) the jury instructions failed
15 to explain that Plaintiffs’ improperly executed right of first refusal was not an
16 enforceable contract, as a matter of law, and consequently, Plaintiffs could not meet
17 their burden of proof on causation; (2) expert testimony should not have been
18 admitted; (3) evidence was insufficient to allow the jury to determine damages for lost
5
1 rental income; and (4) the punitive damages award was improper. We take those
2 arguments in turn.1
3 I. Execution of the Right of First Refusal
4 {8} Defendants first argue that they were denied jury instructions that would have
5 informed the jury that Plaintiffs’ contract was marred by terms that were materially
6 different than the original Maxmedical sales contract. To properly exercise a right of
7 first refusal, the DPCOA agreement required Plaintiffs to purchase the property
8 according to the same material terms and conditions as the original contract. Because
9 the court concluded that the failure to provide a commission for Mr. Mellow
10 constituted a material difference, Defendants contend that Plaintiffs’ failure to
11 properly execute the right of first refusal meant there was no enforceable contract to
12 purchase the property. Therefore, Defendants argue, Plaintiffs’ claim fails as a matter
13 of law because there was no valid contract with which to interfere. Finally,
14 Defendants contend that Seller’s unavailability after June 10, 2009 meant that, even
15 if informed of any defects in the contract, Plaintiffs could not have cured those defects
16 and thus cannot now prove a causative link between Defendants’ actions and any
17 resulting harm. We address those arguments in order.
1
18 Defendants have elected not to pursue their appeal, in consolidated cause
19 number 31,072, from the district court’s denial of costs pursuant to their Statement
20 filed on March 25, 2013. Only the issues from No. 31,073 remain.
6
1 A. Jury Instructions on HDQ’s Proper Exercise of Right of First Refusal
2 {9} Defendants argue that the district court improperly rejected their request for
3 jury instructions that would have told the jury that (1) a real estate broker is entitled
4 to a commission even if the property is sold to a subsequent buyer exercising a right
5 of first refusal and (2) Plaintiffs’ failure to include a contractual provision granting a
6 commission to Seller’s original broker meant that their contract was not on the same
7 material terms and conditions as the original sales contract. Defendants contend that
8 the denial of the instructions prevented them from presenting their theory of the case
9 to the jury.
10 {10} “The propriety of jury instructions given or denied is a mixed question of law
11 and fact, and we review factual questions under a substantial evidence standard and
12 we review the application of law to the facts de novo.” State v. Soutar,
13 2012-NMCA-024, ¶ 21, 272 P.3d 154 (alterations, internal quotation marks, and
14 citation omitted). We consider “whether a reasonable juror would have been confused
15 or misdirected by the jury instruction.” State v. Cunningham, 2000-NMSC-009, ¶ 14,
16 128 N.M. 711, 998 P.2d 176 (internal quotation marks and citation omitted).
17 {11} Defendants requested the following instruction: “The [c]ourt has determined
18 that [Plaintiffs] did not effectively exercise the right of first refusal because the
19 [Plaintiffs’] [c]ontract was not on the same material terms and conditions as the
7
1 Maxmedical [c]ontract as a matter of law.” The district court submitted the following
2 instructions to the jury:
3 In order for a holder of a right of first refusal to validly exercise
4 a right of first refusal, the holder must agree to buy the property on the
5 same material terms and conditions set forth in the first contract between
6 the seller of the property and the original buyer. . . .
7 The [c]ourt has determined that the failure of the [Plaintiffs’]
8 [c]ontract to provide for the payment of a commission to Leon Mellow’s
9 company was a material difference between the [Plaintiffs’] [c]ontract
10 and the Maxmedical [c]ontract as a matter of law. This determination
11 may be considered by you in determining whether the actions of
12 [D]efendants were justified and whether punitive damages should be
13 awarded.
14 {12} “A party is entitled to have the jury instructed upon all correct legal theories of
15 his case which are pleaded and supported by evidence, and a failure by the trial court
16 to so instruct constitutes reversible error.” McNeill v. Burlington Res. Oil & Gas Co.,
17 2008-NMSC-022, ¶ 21, 143 N.M. 740, 182 P.3d 121 (internal quotation marks and
18 citation omitted); see also State v. Brown, 1996-NMSC-073, ¶ 34, 122 N.M. 724, 931
19 P.2d 69 (“When evidence at trial supports the giving of an instruction on a defendant’s
20 theory of the case, failure to so instruct is reversible error.”). However, our courts
21 have long held that it is not error to submit to the jury an alternative instruction that
22 “essentially states the same rule” as the instruction offered by a party. Apodaca v.
23 Miller, 79 N.M. 160, 165-66, 441 P.2d 200, 205-06 (1968) (stating that “refusal to
8
1 give a requested instruction in the form tendered is not error where another correct
2 instruction on the same rule of law is in fact given”).
3 {13} The jury instructions submitted by the district court conveyed the same concept
4 as did Defendants’ requested instruction: in order to properly exercise the right of
5 first refusal, Plaintiffs’ contract was required to be on the same material terms and
6 conditions of the Maxmedical contract; and the provision for Mr. Mellow’s
7 commission constituted a material term. “A jury instruction is proper, and nothing
8 more is required, if it fairly and accurately presents the law.” Heath v. La Mariana
9 Apartments, 2007-NMCA-003, ¶ 22, 141 N.M. 131, 151 P.3d 903 (internal quotation
10 marks and citation omitted); see also Folz v. State, 110 N.M. 457, 467-68, 797 P.2d
11 246, 256-57 (1990) (expecting instructions “to provide adequate guidance to the jury
12 on the task that lay before it” and stating that “[i]nstructions will be held adequate if
13 they fairly represent the law applicable to the issue in question”). Here, the court
14 rejected Defendants’ proposed instructions but submitted two instructions that were
15 worded differently but that effectively addressed the issue raised. We see no evidence
16 that the submitted instructions created confusion for the jury; instead the district
17 court’s action properly guided the jury in its task at hand.
18 B. Whether the Contract Was Enforceable and Plaintiffs Had a Viable Claim
9
1 {14} Defendants argue that because Plaintiffs’ contract failed to match the terms and
2 conditions of the Maxmedical contract, the exercise of the right of first refusal was
3 defective and Plaintiffs had no enforceable contract—and thus no interference claim.
4 Defendants contend that the district court allowed “an untenable claim” to go to the
5 jury.
6 {15} Defendants cite out-of-state authority for the proposition that a claim of
7 interference with contract will not lie when the contract at issue is unenforceable. New
8 Mexico case law teaches otherwise. See Wolf v. Perry, 65 N.M. 457, 461, 339 P.2d
9 679, 681 (1959), stating:
10 The general rule is that one who, without justification or privilege to do
11 so, induces a third person not to perform a contract with another, is liable
12 to the other for the harm caused thereby. The prevailing doctrine is that
13 liability for inducing a breach of contract attaches even if the contract,
14 though valid, is unenforceable.
15 (Citation omitted).
16 {16} In Kelly v. St. Vincent Hospital, 102 N.M. 201, 207, 692 P.2d 1350, 1356 (Ct.
17 App. 1984), this Court noted that the tort could be accomplished by either of two
18 methods: improper motive solely to harm the plaintiff or improper means. If proven,
19 either basis standing alone will support liability. Id. In our most recent case of Zarr
20 v. Washington Tru Solutions, LLC, 2009-NMCA-050, 146 N.M. 274, 208 P.3d 919,
21 we set out the correct standard for a finding of improper means.
10
1 What may qualify as ‘improper means’ depends to some degree on
2 context and can include, but is not limited to predatory behavior,
3 violence, threats or intimidation, deceit or misrepresentation, bribery,
4 economic pressure, unfounded litigation, defamation, unlawful conduct,
5 and perhaps violation of business ethics and customs.
6 Id. ¶ 11. We see no reason to diverge from that reasoning, and we conclude that
7 Plaintiffs’ contract with Seller provided a valid basis for a claim of intentional
8 interference with contract.
9 C. Seller’s Unavailability and Connection to Proof of Causation
10 {17} Defendants further contend that the material difference between the
11 contracts—the omission of a commission for the original broker, Mr. Mellow—could
12 not have been resolved before the June 12 expiration date of the exercise of right of
13 first refusal or the June 15 closing date because the Seller was out of town and
14 incommunicado until at least June 17. Thus, Defendants argue, Plaintiffs introduced
15 no evidence to show that any failure by Defendants to inform them of the discrepancy
16 caused their damages. Plaintiffs counter by pointing out that simple notice, not a
17 contract, was all that was needed to properly exercise the right of first refusal, and that
18 any discrepancies between contracts could have been resolved by the June 15 closing
19 if Plaintiffs had been informed of the problems.
11
1 {18} Plaintiffs note that nothing in their contract with Seller prohibited the payment
2 of a commission to Mr. Mellow. While the contract provided a commission only for
3 Seller’s real estate agent and stated that no other broker had a claim for a commission,
4 the contract also included an indemnification provision to correct any
5 misrepresentations. At trial, Plaintiffs brought forth testimony from Dr. Hoverson that
6 “[i]f I’d have known about Mr. Mellow, maybe we could have tried to come to some
7 accommodation, but I didn’t know about him.” And Mr. Hyatt acknowledged that
8 Plaintiffs likely had the ability to provide sufficient personal funds to finance the
9 entire transaction, including Mr. Mellow’s additional commission, if necessary.
10 Evidence thus was presented that Seller’s presence was not necessarily required to
11 have resolved any discrepancies over the payment of a commission.
12 {19} Regardless of whether Plaintiffs could have cured any defects before closing
13 without the availability of Seller, the key issue at trial was the undisputed fact that
14 Defendants never informed Plaintiffs about the discrepancy in commissions or any
15 other problems with the closing of Plaintiffs’ contract. Seller’s unavailability during
16 the final days leading up to the closing date of June 15 did not constitute a per se bar
17 to Plaintiffs proving a causative link between Defendants’ actions and Plaintiffs’
18 damages.
19 II. Admissibility of Expert Testimony
12
1 {20} Defendants next assert that the testimony of Plaintiffs’ expert, Leonard
2 Espinosa (Expert), was improper and inadmissible because it misled the jury about the
3 elements of duty and breach, in particular the duties required of a title agency during
4 the closing process. Defendants contend that Expert made incorrect assumptions
5 about what Defendants knew the week before the closing date and also impermissibly
6 offered his own conclusions of law.
7 {21} We review a district court’s admission of expert testimony for an abuse of
8 discretion. State v. Torrez, 2009-NMSC-029, ¶ 9, 146 N.M. 331, 210 P.3d 228. “An
9 abuse of discretion occurs when a ruling is clearly contrary to the logical conclusions
10 demanded by the facts and circumstances of the case.” Sims v. Sims, 1996-NMSC-
11 078, ¶ 65, 122 N.M. 618, 930 P.2d 153. When reasons both supporting and detracting
12 from a decision exist, there is no abuse of discretion. Talley v. Talley, 115 N.M. 89,
13 92, 847 P.2d 323, 326 (Ct. App. 1993).
14 {22} We look to the admissibility of Expert’s testimony. We note that Expert’s
15 recitation of the duties of a title company and escrow agent were actually endorsed by
16 Mr. Hyatt, who testified during this exchange:
17 Q: You heard [Expert’s] testimony about the responsibilities a title
18 company like Quiet Title owes to a buyer and a seller in a one-buyer,
19 one-seller situation. Do you have any disagreement with anything he
20 said about that?
21 A: I do not.
13
1 And during this exchange:
2 Q: [W]e heard a lot of testimony from [Expert] about what a title
3 company does. Do you disagree with [Expert’s] description about what
4 a title company does?
5 A: No, it was very good. That portion of his testimony, I thought made
6 a lot of sense and was clear.
7 We see no basis for the argument that Expert misled the jury on the duties of a title
8 company and escrow agent.
9 {23} We also find unconvincing Defendants’ contention that Expert’s opinions
10 should have been barred because the opinions were based on the assumption that
11 Defendants knew of the key flaw in Plaintiffs’ contract as early as June 11, before the
12 deadlines for both the exercise of the right of first refusal and the closing. Expert’s
13 testimony was elicited by Defendants during cross-examination when responding to
14 a hypothetical from Defendants’ counsel. Defendants sought neither to object to the
15 testimony nor strike it and thus failed to preserve the argument on appeal. See
16 Woolwine v. Furr’s, Inc., 106 N.M. 492, 496, 745 P.2d 717, 721 (Ct. App. 1987) (“To
17 preserve an issue for review on appeal, it must appear that appellant fairly invoked a
18 ruling of the trial court on the same grounds argued in the appellate court.”).
19 {24} As to Expert’s testimony stating that Defendants’ failure to close Plaintiffs’
20 contract was “egregiously” wrongful or that the standard of care for escrow agents
21 was “very high,” such testimony was rebuttable through cross-examination or through
14
1 Defendants’ own witnesses. And our analysis above in Section I refutes Defendants’
2 contention that Expert committed an error of law by not understanding that the
3 omission of Mr. Mellow’s commission rendered Plaintiffs’ attempted exercise of the
4 right of first refusal defective.
5 {25} We conclude that the district court did not abuse its discretion when it admitted
6 Expert’s testimony.
7 III. Whether Evidence Was Sufficient on Lost Rental Income to Support the
8 Award of Compensatory Damages
9 {26} Defendants also argue that the evidence was incomplete and insufficient to
10 allow the jury to make a reasonable calculation as to Plaintiffs’ lost rental income,
11 which Defendants characterize as speculative. The district court considered the
12 question a matter not of admissibility but of credibility, suitable for a jury
13 determination. The district court ruled that “[l]oss of rental income being too
14 speculative . . . goes to weight [of the evidence]. There’s not a requirement that it be
15 so certain that this type of evidence would not be sufficient to send it to the [j]ury.”
16 {27} As a threshold matter, we note that the jury issued a general verdict and
17 awarded compensatory damages in a lump sum without itemizing the damages by
18 category. “A general verdict may be affirmed under any theory supported by evidence
19 unless an erroneous jury instruction was given.” Bustos v. Hyundai Motor Co.,
15
1 2010-NMCA-090, ¶ 48, 149 N.M. 1, 243 P.3d 440. The jury was given the following
2 instruction:
3 In determining damages, you may award the following damages
4 to [Plaintiffs]:
5 1. The difference between the sale price of the Condominium
6 Units in this case to [Plaintiffs] and the market value of those units as of
7 June 15, 2009.
8 2. The loss of net rental income from the rental of the units from
9 June 15, 2009 to the date of trial.
10 3. The rent [Plaintiffs] paid to Dr. Hoverson by [Plaintiffs] to rent
11 Unit 12 pending the disposition of the property at issue in this litigation.
12 Plaintiffs had requested $685,107 in damages—$600,000 being the difference
13 between the sale price and the market value of the property, $70,607 in lost rental
14 income, and $14,500 in placeholder rent paid to Dr. Hoverson for one of his
15 condominium units. The jury awarded $335,107 in compensatory damages—less than
16 half of what was requested—without breaking down the damages according to the
17 three categories of damages allowed. No special interrogatories were submitted to the
18 jury requiring jurors to itemize the damages according to the difference between sale
19 price and market value, lost future rental income, or placeholder rent paid to Dr.
20 Hoverson. Therefore, there is no way to know whether the jury even awarded
21 damages to Plaintiffs based on lost rental income. See Littell v. Allstate Ins. Co.,
22 2008-NMCA-012, ¶ 55, 143 N.M. 506, 177 P.3d 1080 (noting the multiple sources
16
1 of potential damages that formed the basis of a general verdict and stating that “[the
2 defendant] may be wrong about the amount the jury attributed to [the p]laintiff’s
3 economic damages”).
4 {28} To warrant reversal, an error must be prejudicial. State v. Ranne, 80 N.M. 188,
5 189, 453 P.2d 209, 210 (Ct. App. 1969). Here, Defendants cannot show that they
6 have been prejudiced by the compensatory damages award on the issue of lost rental
7 income. Cf. First Nat’l Bank in Albuquerque v. Sanchez, 112 N.M. 317, 322, 815
8 P.2d 613, 618 (1991) (stating that “when a jury returns a general verdict in a case
9 submitted on alternate theories of liability, an appellate court has no way of knowing
10 whether the jury relied upon the invalid basis in making its decision” and questioning
11 “whether there was prejudice . . . that would justify reversal” on the issue).
12 {29} However, even if Defendants could show prejudice, we would uphold the
13 damages award if it were supported by substantial evidence. See Littell,
14 2008-NMCA-012, ¶ 54 (stating that “[the defendant’s] argument is partly that there
15 was insufficient evidence supporting the damages award, and to that extent we employ
16 the substantial evidence standard of review”). “Once damage is established, appellate
17 courts will be reluctant to reverse an award on the ground that the amount is too
18 speculative.” Naranjo v. Paull, 111 N.M. 165, 172, 803 P.2d 254, 261 (Ct. App.
19 1990).
17
1 {30} In the case before us, testimony from Dr. Hoverson put forth evidence that
2 Plaintiffs planned to lease the three purchased condominium units to their own
3 endoscopy center, which was forty-nine percent owned by the doctors and fifty-one
4 percent owned by AmSurg, a national company that operates endoscopy centers. Dr.
5 Hoverson testified that an architect for AmSurg prepared preliminary drawings for the
6 space in question, a contractor had toured the site to prepare cost estimates for
7 renovation, and Plaintiffs had worked with AmSurg in building two such endoscopy
8 centers in the past. He explained the calculations involved in arriving at the market
9 rate and monthly rent payments that would have resulted from the purchase of the
10 units. Dr. Hoverson concluded:
11 So we have a good track record with [AmSurg]. And I think that we
12 know pretty much how they do things. So I think [the expectation of
13 rental income is] more than pure speculation; I think it’s based on past
14 experience, and I think that has a pretty good predictive value going
15 forward.
16
17 Dr. Hoverson testified that AmSurg’s goal is “to keep us happy.” He testified that
18 AmSurg was willing to negotiate a move to the new location and was willing to pay
19 for the cost of renovation and make rent payments, at market rates, during
20 construction.
18
1 {31} The district court ruled that Defendants’ objections to that testimony went to
2 the weight of the evidence, not its admissibility. We agree. The testimony was
3 subject to cross-examination.
4 {32} When reviewing a damages award, “there must be some evidence which
5 directly gives the jury a means by which to measure damages[.]” Curtis v.
6 Schwartzman Packing Co., 61 N.M. 305, 312, 299 P.2d 776, 781 (1956). And while
7 certainty as to the cause of damages is required, uncertainty as to the exact amount is
8 permissible. Jackson v. Goad, 73 N.M. 19, 23, 385 P.2d 279, 281-82 (1963) (“Proof
9 of the cause of the damages being thus certain, mere uncertainty as to the actual
10 amount will not preclude recovery.”). We accept damage estimates if they are capable
11 of “reasonable ascertainment.” Rudolph v. Guy, 61 N.M. 284, 286, 299 P.2d 462, 463
12 (1956) (“Uncertainty as to the amount of damages does not preclude recovery.”).
13 {33} When courts find a calculation of damages too remote or speculative, evidence
14 is lacking. In Price v. Van Lint, 46 N.M. 58, 69-70, 120 P.2d 611, 618 (1941), our
15 Supreme Court rejected a request for lost profits because of a lack of testimony and
16 because the business in question was new and unproven. Nevertheless, the Court did
17 allow damages for loss of rental income. Id. In Mascarenas v. Jaramillo, 111 N.M.
18 410, 415, 806 P.2d 59, 64 (1991), a request for damages based on lost rental income
19 was rejected because no prospective tenants testified or were identified, and the owner
19
1 of the property presented no evidence of the market rate for the rental property in
2 question. By contrast, in the case before us, Plaintiffs presented evidence of a
3 prospective tenant, as well as architecture and business preparations for the potential
4 lease arrangements, and the going rate for such a leased space. We conclude that
5 substantial evidence existed for the jury to award damages to Plaintiffs for lost rental
6 income.
7 IV. Punitive Damages Award
8 {34} Defendants first argue that the punitive damages award was the result of
9 passion, prejudice, improper considerations, and mistake on the part of the jury. They
10 also contend that the size of the punitive damages award is constitutionally improper.
11 [BIC 43-44] We take those arguments in order.
12 A. Whether the Punitive Damages Award Was the Result of Jury Passion,
13 Prejudice, Improper Considerations, or Mistake
14 {35} “Punitive damages punish the wrongdoer and serve as a deterrent; the award
15 does not measure a loss suffered by the plaintiff.” Madrid v. Marquez,
16 2001-NMCA-087, ¶ 4, 131 N.M. 132, 33 P.3d 683. We examine the findings
17 underlying a jury’s award of punitive damages to determine whether the findings are
18 supported by substantial evidence. Pub. Serv. Co. of N.M. v. Diamond D Constr. Co.,
20
1 2001-NMCA-082, ¶ 36, 131 N.M. 100, 33 P.3d 651. “Substantial evidence is such
2 relevant evidence as a reasonable mind might accept as adequate to support a
3 conclusion.” Id. “We resolve all disputed facts in favor of the jury’s findings and
4 indulge all reasonable inference[s] in favor of the verdict, while disregarding all
5 inferences to the contrary.” Helena Chem. Co. v. Uribe, 2013-NMCA-017, ¶ 35, 293
6 P.3d 888, rev’d on other grounds by 2012-NMSC-021, 281 P.3d 237.
7 {36} In the case before us, the jury was permitted to award punitive damages if it
8 found that Defendants’ actions were “malicious, willful, reckless, wanton[,] or in bad
9 faith.” The jury awarded $1.5 million in punitive damages. “The proper approach is
10 to examine [the p]laintiff’s evidence related to damages and determine whether that
11 evidence could justify the amount of the verdict, or determine whether the verdict
12 amount was grossly out of proportion to the evidence[.]” Sandoval v. Baker Hughes
13 Oilfield Operations, Inc., 2009-NMCA-095, ¶ 22, 146 N.M. 853, 215 P.3d 791. We
14 then “determine whether the disproportionality shocks our conscience.” Id. “We will
15 not reweigh the evidence and substitute our judgment for that of the jury.” Littell,
16 2008-NMCA-012, ¶ 58.
17 {37} Defendants make several arguments that we have already disposed of above.
18 They argue that Expert made misstatements about duty and criticized Defendants’
19 handling of Plaintiffs’ contract, thus giving the jury the mistaken impression that
21
1 Defendants deserved to be punished. Defendants also repeat the contention that they
2 “were right about the defectiveness of [Plaintiffs’] attempted exercise” of the right of
3 first refusal. Both of those arguments are misplaced.
4 {38} As evidence that the jury was inflamed by passion, prejudice, or
5 misunderstanding, Defendants also contend that the transaction itself was complex,
6 that Defendants have a good reputation in the community, and that there was no
7 evidence of continued or repeated misconduct. While those factors may weigh in
8 Defendants’ favor, other evidence of wrongdoing and self-dealing was presented, such
9 as Defendant Hyatt’s interest in Maxmedical, which was in a position to purchase the
10 condominium units if HDQ did not properly exercise the right of first refusal;
11 Defendant Hyatt’s interest in Quiet Title, the title company and closing agent that
12 would make the determination of whether or not the right of first refusal had been
13 properly exercised; and Defendant Hyatt’s extensive conversation with an attorney
14 about the requirements of the right of first refusal, and we refuse to reweigh the
15 evidence on appeal. See Gonzales v. Lopez, 2002-NMCA-086, ¶ 26, 132 N.M. 558,
16 52 P.3d 418. Indulging all inferences in favor of the jury’s verdict, we cannot say that
17 the award of punitive damages was unrelated to the injury suffered by Plaintiffs. See
18 Green Tree Acceptance, Inc. v. Layton, 108 N.M. 171, 174, 769 P.2d 84, 87 (1989)
19 (“Punitive damages do not have to be in reasonable proportion to the actual damages,
22
1 but they must not be so unrelated to the injury as to plainly manifest passion and
2 prejudice rather than reason and justice.”). Nor does the punitive damages award
3 shock the conscience of the court.
4 {39} We conclude that Defendants have failed to show that the jury verdict was a
5 result of passion, prejudice, improper considerations, or mistake.
6 B. Whether the Punitive Damages Award Was Constitutional
7 {40} When reviewing the constitutionality of an award of punitive damages, we
8 apply de novo review, making an independent assessment of the record in order to
9 determine whether the jury’s award of punitive damages is comparatively reasonable.
10 Aken v. Plains Elec. Generation & Transmission Coop., Inc., 2002-NMSC-021, ¶ 19,
11 132 N.M. 401, 49 P.3d 662. When reviewing an award of punitive damages for
12 reasonableness, we are guided by three criteria: “(1) the reprehensibility of the
13 defendant’s conduct, or the enormity and nature of the wrong; (2) the relationship
14 between the harm suffered and the punitive damages award; and (3) the difference
15 between the punitive damages award and the civil and criminal penalties authorized
16 or imposed in comparable cases.” Chavarria v. Fleetwood Retail Corp.,
17 2006-NMSC-046, ¶ 36, 140 N.M. 478, 143 P.3d 717. The third factor has been
18 marginalized as “ineffective and very difficult to employ.” Aken, 2002-NMSC-021,
19 ¶ 25. We analyze the first two criteria.
23
1 {41} As to the first factor, “the degree of reprehensibility of a defendant’s conduct
2 is the most important indicium of the reasonableness of a punitive damages award.”
3 Jolley v. Energen Res. Corp., 2008-NMCA-164, ¶ 32, 145 N.M. 350, 198 P.3d 3764 (alterations in original) (internal quotation marks and citation omitted). In evaluating
5 the degree of reprehensibility, we examine whether:
6 the harm caused was physical as opposed to economic; the tortious
7 conduct evinced an indifference to or a reckless disregard of the health
8 or safety of others; the target of the conduct had financial vulnerability;
9 the conduct involved repeated actions or was an isolated incident; and
10 the harm was the result of intentional malice, trickery, or deceit, or mere
11 accident.
12 Id. “The inquiry is concerned with the social odium which should be attached to the
13 defendant’s conduct. The applicability of the factors is obviously fact and case
14 dependent.” Grassie v. Roswell Hosp. Corp., 2011-NMCA-024, ¶ 50, 150 N.M. 283,
15 258 P.3d 1075.
16 {42} We have previously found a punitive damages award appropriate when the
17 defendant acted with “intentional malice” in depriving another realtor of its
18 commission. Bogle v. Summit Inv. Co., 2005-NMCA-024, ¶ 34, 137 N.M. 80, 107
19 P.3d 520. In the case before us, evidence presented was related to Defendants’ failure
20 to be forthright in the form of self-dealing while holding a fiduciary duty to Plaintiffs;
21 the jury could have found that behavior to be reprehensible. In addition, punitive
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1 damages here would also serve the purposes of both punishing the conduct at issue
2 and deterring similar future wrongdoing. Id.3 {43} The second factor considers the Plaintiffs’ injury and assesses the relationship
4 between the harm suffered and the size of the punitive damages, often translated into
5 a general ratio without drawing a firm mathematical line. See Aken, 2002-NMSC-021,
6 ¶ 23; Allsup’s Convenience Stores, Inc. v. N. River Ins. Co., 1999-NMSC-006, ¶ 49,
7 127 N.M. 1, 976 P.2d 1. A ratio of up to 10-to-1 between punitive damages and
8 compensatory damages has been considered acceptable under New Mexico case law.
9 Aken, 2002-NMSC-021, ¶ 24. In Allsup’s, our Supreme Court allowed to stand
10 punitive damages that represented a 7.4-to-1 ratio over compensatory damages,
11 “which easily bears constitutional scrutiny[.]” 1999-NMSC-006, ¶ 49. In the case
12 before us, the ratio between punitive damages and compensatory damages is
13 approximately 4.5-to-1, which falls within an acceptable range under constitutional
14 analysis.
15 {44} We conclude that the punitive damages award in this case was not
16 impermissibly onerous or otherwise constitutionally unsound.
17 CONCLUSION
18 {45} For the foregoing reasons, we affirm the ruling of the district court.
19 {46} IT IS SO ORDERED.
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1 __________________________________
2 M. MONICA ZAMORA, Judge
3 WE CONCUR:
4 __________________________________
5 MICHAEL D. BUSTAMANTE, Judge
6 __________________________________
7 CYNTHIA A. FRY, Judge
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