Opinion ID: 1154750
Heading Depth: 4
Heading Rank: 1

Heading: Representations about Future Profits.

Text: The record contains additional statements by Wells, in a November 1956 letter, that can be properly characterized as expressions of opinion and speculation about the mining operation and its relationship to royalties for the plaintiffs. On November 15, 1960, McGreevy expressed in a letter his concerns about the accounting techniques, the relationship between National and Central Farmers, and the lack of profits in 1960. This letter demonstrates an awareness of additional grounds upon which the plaintiffs based their fraud claim. Again in 1963, at a royalty holders' meeting, it was acknowledged that another deficit from the Lea County mine was possible, but that no immediate action should be taken on a lawsuit at this time presumably based upon the plaintiffs' hope that royalties would begin to flow in 1964. Another of the defendants' letters, dated February 1966, candidly expressed the facts that production at the Lea County mine was low, that [f]urther expansion does not seem likely, and that the level of mineralization from the Lea County mine was unusually low. A discussion of accounting procedures relating to the Lea County mine was also included in the letter to McGreevy. In 1967, the plaintiffs were aware that it was doubtful that there would be any profit to [the royalty interest holders] for the next two years and perhaps even a slight loss. In that letter, the issue of the defendants' discretion to operate the mine was raised again. After approximately $78,000 was paid in royalties during the mid-1960s, National went into a net loss position that steadily grew during the late 1960s and early 1970s. Most significantly, the plaintiffs had knowledge of the accumulating losses from the annual financial statements that they received from National. The plaintiffs were notified that the July 1968 shutdown of the Lea County mine was a result of market condition. In 1968, when National closed the mine, the plaintiffs obviously were aware of the impossibility of realizing a profit from a closed mine. In January 1973, Rothwell, an official of National, wrote McGreevy predicting bad times for the American potash industry due to intense price competition from Canada, and reminded him that National may never reopen the mine. Rothwell's letter of January 29, 1973, tells McGreevy that the Canadian potash producers were expected to bring down the price of potash to a point where National would not be able to compete. Rothwell said nothing that any reasonable person could read as guaranteeing future net profits, thus lulling the plaintiffs into repose. He certainly said nothing that would give a reasonable person the impression that any future net profit would be large enough or consistent enough to wipe out the then existing accumulated loss. In an August 1974 letter to McGreevy, Wells worded his comments on reopening the mine in conditional terms and stated that the mine might not reopen. The letter cannot be read as giving a guarantee of sustained, significant profit. Rather, it was more akin to an opinion than to fact, which the plaintiffs confirm by continually referring to the alleged actionable statements by the defendants as puffing. Fraud cannot be predicated upon the expression of an opinion. See Agnew v. Landers, 59 N.M. 54, 66, 278 P.2d 970, 977 (1954).