Court Opinion

ID: 3213231
Source: CourtListenerOpinion
Date Created: 2016-06-15 13:06:13.869493+00
Date Added: 2024-06-11T13:00:42.691377
License: Public Domain

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 1        IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO

 2 NEW MEXICO STATE INVESTMENT COUNCIL,

 3          Plaintiff-Appellee,

 4 and

 5 STATE OF NEW MEXICO ex rel. FRANK
 6 FOY, SUZANNE FOY, and JOHN CASEY,

 7          Plaintiffs-Intervenors-Appellants,

 8 v.                                                                            NO. 34,570

 9 GARY BLAND, et al.,

10          Defendants,

11 and

12 ALFRED JACKSON,

13          Defendant-Appellee.

14 APPEAL FROM THE DISTRICT COURT OF SANTA FE COUNTY
15 Sarah M. Singleton, District Judge

16 New Mexico State Investment Council
17 Bruce A. Brown, Special Assistant Attorney General
18 Santa Fe, NM
 1 Day Pitney LLP
 2 Kenneth W. Ritt, Special Assistant Attorney General
 3 Stamford, CT

 4 for Appellee

 5 Victor R. Marshall & Associates, P.C.
 6 Victor R. Marshall
 7 Albuquerque, NM

 8 for Intervenors-Appellants

 9   Bracewell & Giuliani, LLP
10   Philip J. Bezanson
11   Floren J. Taylor
12   New York, NY

13   Brownstein Hyatt Farber Schreck, LLP
14   Eric R. Burris
15   Nury H. Yoo
16   Albuquerque, NM

17 for Defendant-Appellee

18                            MEMORANDUM OPINION

19 BUSTAMANTE, Judge.

20   {1}   This is a companion case to three consolidated appeals decided on April 28,

21 2016, which, for ease of reference, we refer to as NMSIC I.1 The background of

        1
18        New Mexico State Investment Council, as Trustee, Administrator, and
19 Custodian of the Land Grant Permanent Fund, and the Severance Tax Permanent
20 Fund and State of New Mexico ex rel. Frank Foy, Suzanne Foy, and John Casey v.
                                            2
 1 Appellants’ qui tam suits,2 NMSIC’s litigation strategy, the procedural history

 2 underlying earlier settlements, and the basic law related to qui tam suits under the

 3 Fraud Against Taxpayers Act (FATA), NMSA 1978, §§ 44-9-1 to -14 (2007, as

 4 amended through 2015), will not be detailed here, as they are addressed in detail in

 5 the companion cases referred to above. In addition, the majority of Appellants’

 6 arguments on appeal in this case are identical to those asserted in the companion

 7 cases. For resolution of those issues, we refer to our earlier opinion. For purposes of

 8 the present matter, we will set out only the facts unique to the settlement with

 9 Defendant Jackson and address only issues not already resolved.

10 BACKGROUND

18   Daniel Weinstein, Vicky L. Schiff, William Howell, and Marvin Rosen and Gary
19   Bland, et al. (consolidated with) New Mexico State Investment Council, as Trustee,
20   Administrator, and Custodian of the Land Grant Permanent Fund, and the Severance
21   Tax Permanent Fund and State of New Mexico ex rel. Frank Foy, Suzanne Foy, and
22   John Casey v. Saul Meyer and Renaissance Private Equity Partners, LP, d/b/a Aldus
13   Equity Partners, LP, and Gary Bland, et al. (consolidated with) New Mexico State
14   Investment Council, as Trustee, Administrator, and Custodian of the Land Grant
15   Permanent Fund, and the Severance Tax Permanent Fund and State of New Mexico
16   ex rel. Frank Foy, Suzanne Foy, and John Casey v. Elliot Broidy and Gary Bland, et
17   al., 2016-NMCA-__, __ P.3d __ (Nos. 33,787, 34,042 & 34,077, Apr. 28, 2016)
18   (NMSIC I). (The March 24, 2016, opinion was withdrawn on motion for rehearing)
        2
19        State ex rel. Frank C. Foy v. Vanderbilt Capital Advisors, LLC, No. D-101-
20 CV-2008-1895 (Vanderbilt); State ex rel Frank C. Foy v. Austin Capital Mgmt. Ltd.,
21 No. D-101-CV-2009-1189 (Austin).

                                              3
 1   {2}   Seeking to recover for investments made under a “pay-to-play” scheme,

 2 NMSIC initiated the present suit in 2011 asserting breach of fiduciary duty, aiding and

 3 abetting breach of fiduciary duty, breach of contract, and unjust enrichment against

 4 seventeen defendants, including Defendant Alfred Jackson (Jackson). Because the

 5 present suit was deemed an “alternate remedy” under Section 44-9-6(H) of FATA,

 6 Appellants were permitted to intervene and held the same rights with respect to this

 7 action as they held in the qui tam actions in which they were the plaintiffs. See § 44-9-

 8 6(C); NMSIC I, 2016-NMCA-__, ¶ 14. Pursuant to its litigation strategy, NMSIC

 9 developed a Recovery Litigation Settlement Policy (Settlement Policy) and began

10 settling with individual defendants. Appellants objected to many of the settlements.

11 This history is discussed in greater detail in the companion opinion. NMSIC I, 2016-

12 NMCA-__, ¶¶ 7-16.

13   {3}   Consistent with the Settlement Policy, NMSIC entered into a settlement

14 agreement with Jackson in November 2014. The settlement required Jackson to pay

15 $250,000, cooperate fully in NMSIC’s investigation into pay-to-play schemes, and

16 testify upon request. The settlement releases Jackson from any claim “arising out of

17 or relating to the investments by NMSIC,” including Appellants’ FATA claims.

18   {4}   Meanwhile, the district court issued a Settlement Process Order defining the

                                               4
 1 procedures for briefing and other issues related to Appellants’ objections to the

 2 settlements. Appellants were required to file “a memorandum that sets forth the basis

 3 for their position that the proposed settlements . . . are not fair, adequate[,] and

 4 reasonable under all [of] the circumstances and identifies the evidence upon which

 5 they will rely at the hearing.” The order noted that Appellants must overcome a

 6 presumption that the settlements are fair, adequate, and reasonable. It also set out

 7 factors under which the fairness and adequacy of the settlements would be assessed.

 8 See id. ¶ 20.

 9   {5}   In November 2014, NMSIC moved the district court to approve the settlement

10 and dismiss Jackson. NMSIC also filed an affidavit by Jackson detailing his

11 involvement with NMSIC investments. Appellants objected to the settlement, raising

12 many of the arguments they raise on appeal. They also argued that NMSIC had failed

13 to provide any admissible evidence in support of the settlement. NMSIC replied and

14 submitted additional affidavits and documents in support of the settlement. After a

15 hearing, the district court granted the motion and dismissed Jackson. In its findings

16 of fact, the district court found that although Appellants “were provided [the]

17 opportunity to both cross-examine Jackson and identify evidence in opposition to the

18 [m]otion,” they did not do so. The district court further found that the evidence

                                             5
 1 submitted by NMSIC “was sufficient and material to the evaluation of the

 2 reasonableness of the settlement” and that the settlement was “fair, adequate[,] and

 3 reasonable under the circumstances.” Appellants appealed.

 4 DISCUSSION

 5   {6}   On appeal, Appellants make the same arguments as in the previous consolidated

 6 appeals of settlements. Nothing about the facts related to settlement with Jackson

 7 alters our analysis of those contentions. Hence, our discussion in NMSIC I is

 8 dispositive of those issues.3

 9   {7}   The sole unique argument related to the present appeal hinges on our Supreme

10 Court’s opinion in State ex rel. Foy v. Austin Capital Mgmt., Ltd. (Austin II), 2015-

11 NMSC-025, 355 P.3d 1, in which the Court concluded that the treble damages

12 available under FATA “are predominantly compensatory [and] do not violate the ex

13 post facto clause[s] and may be awarded for conduct occurring prior to the effective

14 date of FATA.” Id. ¶ 44. Pursuant to its power of superintending control, the Supreme

15 Court also consolidated Appellants’ two qui tam suits, Vanderbilt and Austin, and

16 stated that it would appoint a pro-tem judge to oversee the consolidated action. Austin

           3
16           Appellants argue before this Court that Day Pitney “has disqualifying conflicts
17 of interest.” We decline to address this issue because it was never considered in the
18 first instance by the district court. Accordingly, Appellants’ motions to supplement
19 the record on appeal related to this argument are denied.
                                               6
 1 II, 2015-NMSC-025, ¶ 23. It specifically stated that the pro-tem judge may, in his or

 2 her discretion, consolidate additional cases identified by Appellants. Id. The Supreme

 3 Court’s decision was filed on June 25, 2015, approximately two months before

 4 Appellants’ brief in chief was filed in the present matter but after Appellants appealed

 5 the Jackson settlement.

 6   {8}   Appellants argue that the Supreme Court’s decision “assigns the ultimate

 7 discretion over [Appellants’ qui tam actions] and this case to the judge pro[-]tem, not

 8 [the district court that approved the Jackson settlement].” Consequently, they argue,

 9 the district court’s approval of the Jackson settlement “usurps the discretion which the

10 Supreme Court vested in the judge pro[-]tem, who has been given the authority to

11 consolidate and vacate any prior decisions in this case.” At minimum, Appellants

12 dramatically overstate the Supreme Court’s order. There is no evidence in the record

13 that the appointed judge pro-tem has determined that the present matter should be

14 consolidated with Vanderbilt and Austin. More importantly, even if this case was

15 consolidated with Vanderbilt and Austin, nothing about the Supreme Court’s order

16 indicates that it intended the judge pro-tem to have the authority to vacate rulings

17 already entered by another district court in a different case, especially when those

18 rulings are pending appeal with this Court. To interpret the Supreme Court’s mandate

                                              7
 1 as Appellants urge would be to undermine the finality of district court rulings and the

 2 appeals process. Moreover, it would work a substantial injustice on the defendants

 3 whose settlements have been approved by both the district court and this Court. This

 4 argument is without merit.

 5 CONCLUSION

 6   {9}    For the foregoing reasons, the district court’s approval of the settlement with

 7 Jackson is affirmed.

 8   {10}   IT IS SO ORDERED.

 9                                          _________________________________
10                                          MICHAEL D. BUSTAMANTE, Judge

11 WE CONCUR:

12
13 ___________________________________
14 MICHAEL E. VIGIL, Chief Judge

15 ___________________________________
16 M. MONICA ZAMORA, Judge

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