Court Opinion

ID: 9597156
Source: CourtListenerOpinion
Date Created: 2023-08-22 00:56:01.779402+00
Date Added: 2024-06-11T09:57:43.907373
License: Public Domain

STOWERS, Justice, concurring in part, dissenting in part. I concur in Parts I through V of this opinion. I write separately, however, in order to make very clear that the trial court’s interjection of comparative negligence principles into the counterclaim for fraudulent misrepresentation was erroneous. I disagree with the majority’s application of equitable principles to the plaintiffs’ claim for prejudgment interest, and with its disposition of that issue. Accordingly, I dissent from Part VI of the majority opinion. Assessment of Damages for Fraudulent Misrepresentation. In this case, the Ledbetters fraudulently misrepresented to the Webbs the condition of the ice cream machines. Relying on these representations, the Webbs purchased the machines and began to use them in the business. The trial court awarded the Webbs the difference between the value of the machines as represented and their actual value. The trial court awarded the Webbs additional consequential damages for the proven lost revenues caused by the malfunctioning machinery. The trial court, however, also found that some of the business losses were caused by the Webbs’ negligence in maintaining the machines, that is, by their failure to exercise due care subsequent to the Ledbetters’ tortious acts of misrepresentation. It is fundamental law that “[u]nder the doctrine of avoidable consequences a person injured by the tort of another is not entitled to damages which he could have avoided by the use of due care after the commission of the tort.” Rutledge v. Johnson, 81 N.M. 217, 220, 465 P.2d 274, 277 (1970). Damages caused by the injured party’s negligent acts cannot be recovered. See NMSA 1978, UJI Civ. 18.11, 18.20 (Repl.Pamp. 1980). Mitigation of damages raises questions of causation, not of comparative fault; therefore, the trial court acted improperly in stating its analysis in terms of comparative fault. Finally, it should be noted that the principle of avoidable consequences or mitigation of damages is applicable to torts both negligent and intentional. The Court today does not reach the question of whether the comparative negligence system we adopted in Scott v. Rizzo, 96 N.M. 682, 634 P.2d 1234 (1981) governs the assessment of damages in actions for fraudulent misrepresentation or other intentional torts. Denial of Prejudgment Interest. The Ledbetters requested the trial court to award them the balance due on the promissory note plus 13% interest, as provided in the note and in the purchase agreement. The trial court apparently was satisfied that a contract existed between the parties, for it found that the Webbs had breached the contract and owed the balance due on the note. Although it made no findings regarding the interest clause of the note, which the parties did not contest, the trial court denied the Ledbetters prejudgment interest. I believe that the trial court’s treatment of interest was erroneous, and that the majority’s affirmance of the trial court’s decision on equitable grounds misinterprets the law of prejudgment interest in New Mexico. The first case cited by the majority, Shaeffer v. Kelton, 95 N.M. 182, 619 P.2d 1226. (1980), followed the rule of the Restatement of Contracts § 337 (1932), which applies to claims for prejudgment interest at the statutory rate in contract cases “[i]f the parties have not by contract determined otherwise ...” Id., 95 N.M. at 187, 619 P.2d at 1231. Obviously the case before us falls outside that rule. Nor is Newcum v. Lawson, 100 N.M. 512, 672 P.2d 1143 (Ct.App.1983), directly on point, as the majority state. The New-cum trial court found for the purchasers on their fraudulent misrepresentation claims, and against the sellers on their promissory note claims. Having refused to enforce the promissory note, the court was guided in its treatment of prejudgment interest by the Restatement of Contracts § 337. Id. at 514, 672 P.2d at 1145. Here, unlike Newcum, the trial court upheld the promissory note agreement between the Ledbetters and the Webbs. Where a contract provides for interest payments, as does this one, prejudgment interest is recoverable in a suit upon the contract as a matter of right, as an element of compensatory damages. Allsop Lumber Co. v. Continental Casualty Co., 73 N.M. 64, 79, 385 P.2d 625, 635 (1963); see also American Institute of Marketing Systems, Inc. v. Keith, 82 N.M. 699, 703, 487 P.2d 127, 131 (1971); State Trust and Savings Bank v. Hermosa Land and Cattle Co., 30 N.M. 566, 594-96, 240 P. 469, 480-82 (1925). While the Restatement rule allows awards of prejudgment interest to rest upon equitable considerations in certain situations where the parties have not determined their interest liabilities, it is not the province of the courts to alter or amend the unambiguous terms of a lawful contract. Smith v. Price’s Creameries, Division of Creamland Dairies, Inc., 98 N.M. 541, 545, 650 P.2d 825, 829 (1982). For the foregoing reasons, I dissent from the majority’s disposition of the prejudgment interest issue, and I concur in the remainder of its opinion.