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 dispute arose between Concerned Residents of Santa Fe North, Inc. (Residents) and Santa Fe Estates, Inc. (Estates) regarding the development of a commercial area on Estates' property. A 1996 settlement agreement, which included a vision statement outlining design and use restrictions, resolved a prior lawsuit and amended the 1995 master plan. In 2003, Thornburg Companies, under contract with Estates, proposed a development plan (Thornburg plan) that Residents claimed violated the settlement agreement and the 1996 master plan (paras 2-3, 11).
Procedural History
- District Court, October 18 and November 3, 2004: The court consolidated and resolved four administrative appeals filed by Residents, affirming the City Planning Commission’s approval of the Thornburg plan (para 4).
- District Court, April 2005: The court dismissed Residents’ claims against the City and Thornburg but denied Estates’ summary judgment motions based on res judicata and contract interpretation (para 5).
- District Court, Final Judgment: After a bench trial, the court held that certain restrictions in the settlement agreement created enforceable contractual rights for Residents and denied Estates’ res judicata defense (paras 6, 12-14).
Parties' Submissions
- Appellant (Estates): Argued that the district court erred in denying its res judicata defense, as the administrative appeals precluded the contract action. Estates also contended that the settlement agreement was unambiguous and did not create enforceable restrictive covenants running with the land (paras 15-16).
- Appellee (Residents): Asserted that the settlement agreement created enforceable contractual rights, including restrictive covenants, and that Estates acquiesced to claim-splitting by failing to object earlier. Residents also cross-appealed, arguing that all design and use restrictions in the vision statement should be enforceable (paras 18, 69-70).
Legal Issues
- Did the district court err in denying Estates’ motion for summary judgment on res judicata grounds?
- Did the settlement agreement create enforceable restrictive covenants running with the land?
- Should all design and use restrictions in the vision statement be enforceable as covenants?
Disposition
- The Court of Appeals affirmed the district court’s decision, rejecting Estates’ res judicata defense and upholding the enforceability of certain restrictive covenants in the settlement agreement (paras 75-76).
Reasons
Per Sutin CJ. (Bustamante and Fry JJ. concurring):
Res Judicata and Acquiescence: The court held that Estates acquiesced to claim-splitting by failing to object to the simultaneous administrative appeals and contract action for over a year. Estates’ general assertion of res judicata in its answer was insufficient to overcome this acquiescence. The court relied on Restatement (Second) of Judgments §26(1)(a), which allows claim-splitting when a defendant consents or acquiesces (paras 18-28, 40-45).
Ambiguity in the Settlement Agreement: The court found the settlement agreement ambiguous, as the vision statement contained both mandatory language (e.g., restrictions on building height and architecture) and references to administrative review. The ambiguity justified the district court’s reliance on extrinsic evidence, including testimony from Residents’ president, to interpret the agreement (paras 46-58).
Restrictive Covenants: The court upheld the district court’s finding that certain specific restrictions in the vision statement (e.g., building height, exclusion of large-scale retail, architectural style) created enforceable contractual rights and covenants running with the land. These covenants were to be recorded by Estates before any transfer of the commercial property (paras 12-14, 59-68).
Residents’ Cross-Appeal: The court rejected Residents’ argument that all design and use restrictions in the vision statement should be enforceable. The district court reasonably distinguished between specific enforceable restrictions and broader conceptual guidelines incorporated into the master plan (paras 69-72).
Rule 12-213(A)(3) Compliance: The court found no prejudice from Estates’ alleged noncompliance with Rule 12-213(A)(3) and determined that the evidence presented was sufficient to address the issues on appeal (paras 73-74).