Court Opinion

ID: 892720
Source: CourtListenerOpinion
Date Created: 2013-06-05 18:41:47.022501+00
Date Added: 2024-06-11T15:34:28.683035
License: Public Domain

1   This memorandum opinion was not selected for publication in the New Mexico Reports. Please
 2   see Rule 12-405 NMRA for restrictions on the citation of unpublished memorandum opinions.
 3   Please also note that this electronic memorandum opinion may contain computer-generated
 4   errors or other deviations from the official paper version filed by the Court of Appeals and does
 5   not include the filing date.
 6   IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO

 7 RUBY RIVERA,

 8          Plaintiff-Appellant,

 9 v.                                                                                    NO. 30,519

10 ZIA PARK, LLC, a Delaware Limited Liability Company,

11          Defendant-Appellee.

12 APPEAL FROM THE DISTRICT COURT OF LEA COUNTY
13 Don Maddox, District Judge

14 Templeman & Crutchfield, PA
15 Barry C. Crutchfield
16 Lovington, NM

17 for Appellant

18 Hinkle, Hensley, Shanor & Martin, L.L.P.
19 Jennifer M. Heim
20 Roswell, NM

21 Richard E. Olson
22 Roswell, NM

23 for Appellee

24                                 MEMORANDUM OPINION
 1 CASTILLO, Judge.

 2        Plaintiff appeals an order granting summary judgment to Defendant. We

 3 proposed to affirm in a notice of proposed summary disposition, and Plaintiff has filed

 4 a timely memorandum in opposition.             Remaining unpersuaded by Plaintiff’s

 5 memorandum, we affirm.

 6        “Summary judgment is proper if there are no genuine issues of material fact and

 7 the movant is entitled to judgment as a matter of law.” Roth v. Thompson, 113 N.M.
8 331, 334, 825 P.2d 1241, 1244 (1992). The court must resolve all reasonable

 9 inferences in favor of the nonmovant and must view the pleadings, affidavits,

10 depositions, answers to interrogatories and admissions in a light most favorable to a

11 trial on the merits. See Carrillo v. Rostro, 114 N.M. 607, 615, 845 P.2d 130, 138

12 (1992). Although all reasonable inferences are resolved in favor of the nonmovant,

13 once the movant makes a prima facie showing that it is entitled to summary judgment,

14 “the burden shifts to the party opposing the motion to demonstrate the existence of

15 specific evidentiary facts which would require trial on the merits.” Roth, 113 N.M.
16 at 334-35, 825 P.2d at 1244-45. The party opposing summary judgment “cannot rely

17 on the allegations contained in its complaint or upon the argument or contention of

18 counsel to defeat it. Rather, the opponent must come forward and establish with

19 admissible evidence that a genuine issue of fact exists.” Ciup v. Chevron U.S.A., Inc.,

                                              2
 1 1996-NMSC-062, ¶ 7, 122 N.M. 537, 928 P.2d 263 (citation omitted).

 2        Plaintiff contends that the district court erred in granting summary judgment to

 3 Defendant because the sales contract between Defendant and Zia Partners, LLC

 4 (Partners) contains an indemnification clause requiring Partners to indemnify

 5 Defendant if Defendant was found liable for acts of Partners that occurred prior to the

 6 asset sale. [MIO 1-2] She claims that Partners’ agreement to indemnify Defendant

 7 for claims that might be asserted by a third party should be construed as meaning that

 8 Defendant was the operator of a continuing business and functioned as Partners’ agent

 9 for claims such as Plaintiff’s. [MIO 2; RP 143-146 §§ 10.2-10.9, 192-195] We are

10 unpersuaded.

11        As observed in our notice of proposed summary disposition, the sales contract

12 between Defendant and Partners establishes that Defendant rejected any assumption

13 of liability for matters occurring prior to the closing date of the sale. [RP 77, 95 §§

14 1.3(I) and (k)] Therefore, Defendant is not liable for the debts and liability of

15 Partners. See Garcia v. Coe Mfg. Co., 1997-NMSC-013, ¶ 11, 123 N.M. 34, 933 P.2d
16 243 (recognizing the general rule that, absent a contractual provision to the contrary,

17 a corporation which purchases the assets of another corporation will not be liable for

18 the obligations and debts of the seller corporation). Given this language clearly

19 rejecting assumption of liability, we fail to see how an indemnification agreement

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 1 between Defendant and Partners is sufficient to warrant a finding that Defendant

 2 should be liable on third party claims. The agreement only specifies that, in the event

 3 Defendant incurs certain costs and expenses, it can look to Partners for defense and

 4 reimbursement; it does not provide that Defendant is assuming any liability to

 5 compensate a third party such as Plaintiff who is asserting a claim.

 6        In Garcia, our Supreme Court recognized four traditional exceptions to the

 7 general rule that a corporation purchasing the assets of another is not liable for the

 8 debts of the selling corporation: “‘(1) where there is an agreement to assume those

 9 obligations; (2) where the transfer results in a consolidation or merger; (3) where there

10 is a continuation of the transferor corporation; or (4) where the transfer is for the

11 purpose of fraudulently avoiding liability.’” Id. ¶ 12 (quoting Southwest Distrib. Co.

12 v. Olympia Brewing Co., 90 N.M. 502, 505, 565 P.2d 1019, 1022 (1977)). Plaintiff

13 has failed to make a showing that any of the traditional exceptions applies.

14        As previously discussed, there is no agreement by Defendant to assume these

15 obligations. To the contrary, the sales contract clearly states that Defendant is not

16 assuming the pre-existing debts and obligations of Partners, [RP 95 §§ 1.3(I) and (k)]

17 and the provisions regarding Partners’ indemnification of Defendant in no way

18 suggest that Defendant agreed to assume Partners’ obligations. Furthermore, Plaintiff

19 has failed to cite to any authority supporting her contention that an indemnification

                                               4
 1 agreement entitles a third party such as herself to sue the indemnified party for claims

 2 it has against the indemnifying party. Cf. In re Adoption of Doe, 100 N.M. 764, 765,

 3 676 P.2d 1329, 1330 (1984) (stating that where a party cites no authority to support

 4 an argument, we may assume no such authority exists).

 5        Despite the lack of any agreement, Plaintiff claims that the reasoning expressed

 6 by our Supreme Court in Garcia under “the continuation of enterprise exception”

 7 warrants imposing liability on Defendant for Plaintiff’s injuries. [MIO 3-4] She

 8 claims that public policy should allow suit against Defendant because otherwise

 9 Plaintiff is barred from recovery given that the limitations period had expired so she

10 could not bring suit against Partners. [MIO 3-4] We disagree.

11        As discussed in our previous notice, New Mexico has not yet recognized the

12 continuation of enterprise exception. See Garcia, 1997-NMSC-013, ¶¶ 15-23 (noting

13 that the continuation of enterprise and product-line exceptions have been rejected by

14 many courts that have considered them but then holding that the product-line

15 exception would be recognized as consistent with the Court’s previous analysis of

16 cases involving “liability for injuries caused by product design defects”). Plaintiff has

17 failed to rebut the observation in our notice that we know of no cases in New Mexico

18 where the continuation of enterprise exception has been adopted and applied.

19        Even if the continuation of enterprise exception might apply in some cases, we

                                               5
 1 continue to be of the opinion that this exception would not allow Plaintiff to pursue

 2 her claims against Defendant in this case. The exception, if it applies at all, only

 3 applies in cases of product liability. See id. ¶ 14 (recognizing that the factors at issue

 4 require consideration of whether the successor “utilizes the same production . . .

 5 personnel, [and] the same methods of production” (emphasis added)). Plaintiff has

 6 failed to make any showing that the public policy considerations relevant in a case

 7 involving product liability are similar to the considerations presented in Plaintiff’s

 8 negligence case against Partners. [MIO 4; RP 192-195] Cf. id. ¶ 15 (recognizing that

 9 the decision of whether public policy considerations should prevail to allow the

10 plaintiff to proceed against a successor corporation requires assessment of “the

11 competing policies which underlie rules of contract and tort liability consistent with

12 [our previous] products liability analysis”).

13        Moreover, the public policy considerations identified in Garcia do not warrant

14 protection of Plaintiff in this case because her recovery from Partners is not precluded

15 because Partners “has dissolved, is defunct, or is otherwise unavailable to respond in

16 damages” but only because she failed to name Partners as a party within the

17 limitations period. Id. As discussed in our previous notice, we are unaware of any

18 case law that would allow Plaintiff to proceed against Defendant merely because her

19 claims against the proper party are barred by the expiration of the limitations period.

                                               6
 1 See ITT Educ. Servs., Inc., v. Taxation & Revenue Dep’t, 1998-NMCA-078, ¶ 10, 125

 2 N.M. 244, 959 P.2d 969 (holding that, on review, we will not consider a proposition

 3 unsupported by citation to authority).

 4       Finally, Plaintiff again claims that she was unaware of the nature of the sale of

 5 assets between Defendant and Partners. [MIO 2] However, she has failed to inform

 6 us of any case law holding that her ignorance of the assets purchase details should

 7 result in a finding that Defendant must answer for Plaintiff’s injury. Therefore, we

 8 remain of the opinion that Plaintiff’s ignorance does not warrant a reversal of the

 9 order granting summary judgment to Defendant.

10 CONCLUSION

11       For the foregoing reasons as well as those set forth in our notice of proposed

12 disposition, we affirm the district court’s order granting summary judgment to

13 Defendant.

14       IT IS SO ORDERED.

15                                          ___________________________________
16                                          CELIA FOY CASTILLO, Judge
17 WE CONCUR:

18 __________________________________
19 RODERICK T. KENNEDY, Judge

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1 __________________________________
2 LINDA M. VANZI, Judge

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