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 Plaintiff, a New Mexico-based custom shutter manufacturer, entered into agreements with the Defendant, a national retailer, to supply and install shutters in certain markets. The Plaintiff expanded its operations based on the Defendant's representations of future nationwide marketing and sales opportunities. However, the Defendant failed to market the Plaintiff's products as promised and eventually terminated the business relationship, causing financial harm to the Plaintiff (paras 2-7).

Procedural History

• District Court, Santa Fe County: Found the Defendant liable for breach of contract, fraud, and violations of the New Mexico Unfair Practices Act (UPA) and Texas Deceptive Trade Practices Act (DTPA). Awarded the Plaintiff $11,999,053 in damages, including treble damages and punitive damages, and $3,045,338.58 in attorney fees and costs (paras 7-8).

Parties' Submissions

• Defendant: Argued that the Plaintiff lacked standing under the Texas DTPA and New Mexico UPA, challenged the evidentiary rulings admitting testimony about another supplier's experience, and contested the damages awarded, including the calculation of lost profits and punitive damages (paras 10-11, 19-20, 37-38).
• Plaintiff: Asserted that the Defendant's actions constituted fraud, breach of contract, and violations of consumer protection laws. Argued that the damages awarded were appropriate and supported by the evidence (paras 7-8, 19-20, 43).

Legal Issues

• Did the Plaintiff have standing to bring claims under the Texas DTPA and New Mexico UPA?
• Was the admission of evidence regarding another supplier's experience with the Defendant proper?
• Was the calculation of damages, including lost profits and punitive damages, appropriate?
• Did the Defendant provide reasonable notice of termination under the Uniform Commercial Code (UCC)?

Disposition

• The Court of Appeals reversed the district court's judgment and remanded the case for further proceedings (para 47).

Reasons

Per Alarid J. (Sutin and Kennedy JJ. concurring):

Standing under the Texas DTPA and New Mexico UPA:
The Plaintiff lacked standing under both statutes. Under the Texas DTPA, the Plaintiff was not a "consumer" because its relationship with the Defendant was as a seller of goods and services, not a purchaser (paras 10-12). Similarly, under the New Mexico UPA, the Plaintiff was not a buyer of goods or services, and the Defendant's marketing activities were incidental to the transaction (paras 13-18).

Evidentiary Rulings:
The district court erred in admitting testimony about another supplier's experience with the Defendant. This evidence improperly suggested a pattern of misconduct by the Defendant, violating Rule 11-404(B) NMRA, which prohibits the use of character evidence to show action in conformity (paras 19-31). The error was not harmless, as it likely influenced the district court's findings on fraud and punitive damages (paras 30-32).

Damages:
The district court's calculation of lost profits over a five-year period was inconsistent with the UCC. The agreement between the parties was of indefinite duration and terminable at will with reasonable notice. The Plaintiff was not entitled to damages for profits beyond the termination date but could seek damages for inadequate notice of termination (paras 37-44).

Remand Instructions:
The Court directed the district court to reconsider the Plaintiff's claims for fraud and breach of contract, excluding the improper evidence, and to recalculate damages consistent with the UCC's provisions on termination and notice (paras 32, 44-45).

Attorney Fees and Cross-Appeal:
The award of attorney fees was vacated due to the Plaintiff's lack of standing under the DTPA and UPA. The Plaintiff's cross-appeal on the amount of damages under the DTPA was rendered moot (para 46).