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

The case concerns the sale of a tortilla chip distributorship business. The sellers entered into a contract to sell the business to the buyer for $50,000, with the buyer agreeing to pay in installments. The contract required one of the sellers to remain with the business for five years. However, the seller left the business after 18 months, leading to disputes over contract performance and damages (paras 1-2).

Procedural History

• District Court of Sandoval County: Held that the seller breached the contract but found the breach was not material. The buyer was ordered to pay the remaining balance under the contract and promissory note. Both parties were held responsible for their own attorney fees (paras 1, 10).

Parties' Submissions

• Plaintiffs-Appellees/Cross-Appellants (Sellers): Argued that the buyer breached the contract by failing to pay the remaining installments. They also sought attorney fees (paras 1, 10).
• Defendant-Appellant/Cross-Appellee (Buyer): Contended that the seller's failure to fulfill the five-year obligation constituted a material breach, relieving the buyer of further obligations. The buyer also sought additional damages for lost profits and argued for rescission of the contract (paras 1, 11-12, 25).

Legal Issues

• Was the seller's failure to fulfill the five-year obligation a material breach of the contract?
• Should the buyer be relieved of its obligations under the contract due to the seller's breach?
• Is the buyer entitled to additional damages for lost profits?
• Are either party entitled to attorney fees under the contract?

Disposition

• The trial court's judgment holding the buyer liable for the remaining installment payments was reversed.
• The trial court's refusal to award the buyer additional damages for lost profits was affirmed.
• The case was remanded for a determination of attorney fees for the buyer, including fees for the appeal.
• The sellers' cross-appeal for attorney fees was rejected (paras 28-29).

Reasons

Per Flores J. (Pickard and Armijo JJ. concurring):

• The court found that the seller's failure to fulfill the five-year obligation was a material breach. The contract explicitly stated that the purchase was contingent on this obligation, and the buyer was deprived of a significant benefit it reasonably expected (paras 19, 23).
• The seller's breach was intentional and uncured, as the seller refused to return to the business despite the buyer's objections and warnings (paras 23-24).
• The trial court erred by focusing solely on the lack of direct monetary damages and failing to consider other factors relevant to materiality, such as the breach's impact on the contract's purpose and the seller's unwillingness to cure the breach (paras 16-18, 23).
• The buyer's claim for additional damages for lost profits was rejected due to conflicting evidence, which the trial court resolved against the buyer (para 25).
• The buyer was entitled to attorney fees under the contract, as the seller's material breach constituted a default. The court also awarded attorney fees for the appeal (para 27).