AI Generated Opinion Summaries

This summary was computer-generated without any editorial revision. It is not official, has not been checked for accuracy, and is NOT citable.

Facts

A general contractor entered into a contract with a school district to construct a high school. A change order was executed simultaneously with the contract, deducting the cost of paving certain parking areas. Both parties mistakenly deducted the paving cost twice, resulting in a $93,840 loss to the contractor, of which $20,000 was later reimbursed. The contractor sought equitable relief through contract reformation to recover the remaining amount (paras 3-4).

Procedural History

• District Court, January 12, 1994: The contractor's complaint was dismissed for failure to state a claim, as the court found that reforming the contract would violate the New Mexico Procurement Code and that the contractor's failure to review the contract barred reformation (paras 1, 4).

Parties' Submissions

• Plaintiffs-Appellants (Contractor): Argued that the double deduction was a mutual mistake and sought contract reformation to recover the loss. They contended that the New Mexico Procurement Code does not preclude contract reformation for mutual mistakes discovered after contract formation (paras 3, 6).
• Defendants-Appellees (School District): Asserted that reforming the contract would violate the New Mexico Procurement Code, which prohibits bid modifications after bid opening. They also argued that the contractor's claim was barred by governmental immunity and the contractor's failure to review the contract (paras 4, 6).

Legal Issues

• Does the New Mexico Procurement Code prohibit contract reformation based on mutual mistake discovered after contract formation?
• Is mutual mistake a valid ground for contract reformation in this case?
• Does the contractor's failure to review the contract bar its claim for reformation?

Disposition

• The Supreme Court of New Mexico reversed the district court's dismissal of the contractor's complaint and remanded the case for further proceedings (para 11).

Reasons

Per Frost J. (Ransom C.J. and Montgomery J. concurring):

• The court distinguished between bids and contracts under the New Mexico Procurement Code. While Section 13-1-106 prohibits bid modifications after bid opening, it does not address contract reformation or modification based on mutual mistake after contract formation (paras 5-6).
• Mutual mistake is a recognized ground for contract reformation in New Mexico. The Restatement (Second) of Contracts § 155 supports reformation when a mutual mistake causes a written agreement to fail to reflect the parties' actual agreement (para 7).
• The contractor's failure to review the contract does not bar reformation unless it amounts to bad faith or a failure to act in accordance with reasonable standards of fair dealing, which was not alleged here (para 8).
• The district court erred in relying on Gardner-Zemke Co. v. State, as that case did not involve mutual mistake but rather a failure to read the contract (para 9).
• The court expressed no opinion on the merits of the contractor's claim, leaving factual evaluation to the district court (para 10).