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 case arose from a construction contract between the plaintiff, a contractor, and the defendants, landowners, for the construction of a restaurant. After the contractor determined the project would be unprofitable, it demanded an additional $75,000, which the landowners refused. The contractor then ceased work and filed suit to rescind the contract, while the landowners counterclaimed for breach of contract (paras 2-3).
Procedural History
- District Court of Bernalillo County: Granted partial summary judgment in favor of the defendants on the issue of the contractor's liability for breach of contract. However, the issue of liability was still submitted to the jury, which awarded damages to both parties. The court later set aside the contractor's award but denied the defendants' motion for additur or a new trial (para 3).
Parties' Submissions
- Defendants (Appellants): Argued that the trial court erred by submitting the issue of liability to the jury despite granting summary judgment on that issue, by failing to direct a verdict on liability, and by not instructing the jury on liquidated damages. They also contended that the damages awarded were inadequate and that the court erred in refusing to submit punitive damages to the jury and in admitting improper impeachment evidence (paras 3-4, 5, 11, 15, 18, 22).
- Plaintiff (Appellee): Asserted that the contract was ambiguous, that the jury's damages award was appropriate, and that the defendants were not entitled to liquidated or punitive damages. The plaintiff also defended the admissibility of the impeachment evidence (paras 6-7, 15-17, 18-20, 27-30).
Legal Issues
- Whether the trial court erred in submitting the issue of liability to the jury after granting summary judgment on that issue (paras 4, 11-14).
- Whether the contract was ambiguous regarding the contractor's obligations (paras 5-10).
- Whether the defendants were entitled to liquidated damages for delay after the contractor abandoned the project (paras 22-31).
- Whether the defendants were entitled to punitive damages (paras 15-17).
- Whether the trial court erred in admitting improper impeachment evidence (paras 18-21).
- Whether the damages awarded were inadequate (paras 3, 27-33).
Disposition
- The Supreme Court of New Mexico reversed the trial court's judgment on damages and remanded the case for a new trial on the issue of damages (para 33).
Reasons
Per Montgomery J. (Baca and Franchini JJ. concurring):
Liability Submission to Jury: The trial court erred in submitting the issue of liability to the jury after granting summary judgment on that issue. The contract was unambiguous, and the contractor's liability for breach was established as a matter of law. Submitting the issue to the jury created confusion and was improper (paras 4, 11-14).
Contract Ambiguity: The court found that the contract was not ambiguous. The contractor's obligations under the contract were clear, and the trial court should have directed a verdict on liability in favor of the defendants (paras 5-10).
Liquidated Damages: The court held that the liquidated damages clause applied even when the contractor abandoned the project. The jury should have been instructed to calculate delay-related damages based on the liquidated damages provision, but only for the period of delay reasonably attributable to the contractor's breach (paras 22-31).
Punitive Damages: The court upheld the trial court's refusal to submit the issue of punitive damages to the jury, as there was no evidence of malicious, fraudulent, or oppressive conduct by the contractor (paras 15-17).
Impeachment Evidence: The court found that the trial court erred in admitting improper impeachment evidence regarding the defendant's reputation for truthfulness without a proper foundation. The testimony should have been limited to the witness's personal opinion (paras 18-21).
Damages Award: The court concluded that the jury's damages award was inadequate and likely influenced by the errors in the jury instructions. A new trial on damages was necessary to properly assess both delay-related and non-delay-related damages (paras 27-33).