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 Village of Ruidoso sought to acquire land from the Appellants for a highway right of way. Due to time and financial constraints, the Village proposed a land exchange, transferring "Tract A-A" to the Appellants. The agreement excluded certain restrictive covenants, allowing potential multi-family housing. After the exchange, the Appellants applied for rezoning of Tract A-A to permit condominiums, but the Village denied the request. The Appellants later sold the property at a significantly reduced value due to market changes.
Procedural History
- District Court of Lincoln County: Held that the contract between the Appellants and the Village was void for illegality as it constituted "contract zoning." The court denied damages to the Appellants, finding the contract unenforceable.
Parties' Submissions
- Appellants: Argued that the Village had impliedly promised to rezone Tract A-A as R-2, and the denial of rezoning caused financial losses. They contended the trial court erred in finding the contract illegal and unenforceable and argued that the Village should be estopped from claiming illegality.
- Respondent: Asserted that any agreement to rezone was illegal and unenforceable as it constituted an improper delegation of the Village's legislative authority. They maintained that the Appellants were not entitled to damages or other remedies.
Legal Issues
- Was the alleged agreement to rezone Tract A-A as R-2 illegal and unenforceable?
- Should the Village be estopped from asserting the illegality of the contract?
- Are the Appellants entitled to damages or restitution for their losses?
Disposition
- The Supreme Court of New Mexico affirmed the trial court's decision, holding that the contract was illegal and unenforceable, and denying damages or restitution to the Appellants.
Reasons
Per Montgomery J. (Ransom C.J. and Baca J. concurring):
The Court held that the alleged agreement constituted "contract zoning," which is generally illegal because it bypasses statutory zoning procedures and undermines public participation. The Village's purported promise to rezone Tract A-A was deemed unenforceable as it preempted the legislative process required for zoning changes.
The Court rejected the Appellants' claim for damages, emphasizing that illegal contracts are void ab initio, and no damages can be awarded for their breach. While restitution may be available in some cases involving illegal contracts, the Court found no disproportionate forfeiture in denying restitution here. The Appellants bore responsibility for their losses by failing to secure explicit contractual protections, such as a rezoning deadline, and their reliance on an implied promise to rezone was deemed unreasonable.
The Court also dismissed the Appellants' estoppel argument, finding no reasonable basis for their reliance on the Village's alleged promise. Consequently, the judgment of the trial court was affirmed.