This summary was computer-generated without any editorial revision. It is not official, has not been checked for accuracy, and is NOT citable.
Facts
The Defendants contracted with the Defendant-Appellee, a general contractor, to construct townhouses on their property. The Plaintiff, a subcontractor, installed two shower/tub units that were cracked during installation. The Defendants deemed the units nonconforming and withheld final payment to both the Plaintiff and the general contractor. The Plaintiff filed a mechanic's lien and sought to foreclose on the property, while the Defendants sought indemnification from the general contractor for the nonconforming work.
Procedural History
- District Court of Taos County: Granted summary judgment dismissing the Defendants' cross-claim for indemnification against the general contractor.
Parties' Submissions
- Defendants-Appellants (Pooles): Argued that the general contractor was contractually obligated to indemnify them for the nonconforming work performed by the subcontractor. They also contended that they were denied due process due to inadequate notice and opportunity to respond to the oral motion for summary judgment.
- Defendant-Appellee (Michael Carroll Construction Company): Asserted that the Defendants' offer of judgment in the full amount of the subcontractor's claim precluded any genuine issue of material fact regarding the nonconformity of the work, as it implied the work was acceptable.
Legal Issues
- Did the Defendants receive adequate notice and a reasonable opportunity to respond to the oral motion for summary judgment?
- Does the Defendants' settlement of the subcontractor's claim preclude their right to seek indemnification from the general contractor?
- Was there a genuine issue of material fact regarding the nonconformity of the subcontractor's work?
Disposition
- The Supreme Court of New Mexico reversed the summary judgment and remanded the case for further proceedings.
Reasons
Per Ransom J. (Sosa C.J. and Montgomery J. concurring):
The Court found that the Defendants waived their due process argument by failing to object to the lack of notice and opportunity to respond during the hearing.
The Court held that an indemnitee may settle a third-party claim without forfeiting their right to seek indemnification, provided the settlement does not preclude proving the indemnitor's liability under the indemnification agreement. The Defendants' payment of the subcontractor's claim did not conclusively establish that the work was conforming, as they had other motives for settling, such as clearing the property title and avoiding further attorney fees.
The Court concluded that there were genuine issues of material fact regarding the nonconformity of the subcontractor's work and the resulting damages. The Defendants were entitled to a trial on the merits, and the trial court erred in granting summary judgment.