Pollock v. Thompson

550 P.3d 888

2024-NMCA-045

Lynn POLLOCK, AS TRUSTEE OF the LEWIS G. AND LYNN J. POLLOCK REVOCABLE TRUST, DATED DECEMBER 3, 2001, as amended, Plaintiff-Appellant/Cross-Appellee,

v.Paul THOMPSON and Paul Thompson & Associates, Inc., Defendants-Appellees/Cross-Appellants.

No. A-1-CA-40031

Court of Appeals of New Mexico.

Filing Date: March 25, 2024

APPEAL FROM THE DISTRICT COURT OF SANTA FE COUNTY, Bryan Biedscheid and David K. Thomson, District Court Judges

Herdman MacGillivray Fullerton Cameron, Pumarejo Honeycutt, PC, Frank T. Herdman, David J. Pumarejo, Santa Fe, NM, for Appellant

Fuqua Law & Policy, P.C., Scott Fuqua, Santa Fe, NM, for Appellees

OPINION

BUSTAMANTE, Judge, retired, sitting by designation.

{1} The issues in this case involve the meaning and effect of two one-page, handwritten documents—a promissory note for money lent (the Note), and a profit sharing agreement (the Agreement)—hastily negotiated, drafted and signed by the parties in April 2007. After a bench trial, the district court ruled, in part, that the Note and the Agreement comprised one contract enforceable against Defendants Paul Thompson and Paul Thompson & Associates, Inc. (collectively, Defendants), but that the Agreement terminated when the Note was paid in full. Plaintiff Lewis Pollock appeals from this judgment. Thompson and Paul Thompson & Associates, Inc. (the Company) defend the district court’s ruling in response to Pollock’s arguments, but cross-appeal, arguing that the district court erred in concluding that there was a meeting of the minds or sufficient consideration to support imposing any obligations on them under the Agreement. In addition, Defendants appeal from the district court’s summary judgment dismissing their counterclaim for malicious abuse of process against Pollock. We affirm, though on different grounds than the district court’s rationale.

Factual and Procedural Background

{2} Drawn from the district court’s order, we provide a short summary of the undisputed events leading up to and culminating in the creation of the Note and the Agreement. Pollock and Thompson first met at the Eldorado Hotel in Santa Fe where Thompson worked as a parking valet. Pollock and Thompson remained acquaintances and became casual but not social friends. Thompson also ran a business driving people—including Pollock and his family—to and from the airport in Albuquerque in their cars.

{3} On April 19, 2007, Thompson telephoned Pollock asking to meet with him to discuss a business matter. The following morning Thompson and Pollock met at Pollock’s home. Thompson explained that he needed money quickly to buy a certain 1998 740 iL BMW (the BMW), so he could start a limousine/auto for hire business. Thompson asked Pollock for a loan in the amount of $9,000 so he could buy the BMW. Thompson asserted that the BMW was worth $11,000 and that he needed to act quickly before it was sold to someone else. Pollock responded that he did not make loans to anyone and suggested that Thompson look elsewhere. Thompson replied that Pollock was his "only hope to get the money," and suggested that he would be willing to share the profits from the limousine/auto for hire business on a 50/50 basis.

{4} After further discussion, Thompson and Pollock agreed to an arrangement then acceptable to both of them with regard to the repayment terms of the Note and the percentage level of profit sharing under the Agreement. Pollock—a Harvard-educated lawyer—drafted the handwritten Note and Agreement that morning. Thompson and Pollock signed the Note and the Agreement immediately, and Pollock gave Thompson a $9,000 check for purchase of the BMW.¹ Thompson paid the Note in full in early October 2007.

{5} Pollock filed his first complaint in November 2015 alleging that Defendants had breached their duty under the Agreement to share profits. Following a period of discovery and motion practice, Pollock filed a first amended complaint broadening his theories of recovery to include breach of the covenant of good faith and fair dealing, unjust enrichment, and to request an accounting as well as punitive damages. Two weeks later—following the depositions of Pollock and Thompson—Pollock submitted an unopposed motion to file a second amended complaint deleting the counts requesting damages and limiting the case to a declaratory judgment action addressing the "validity, enforceability and interpretation of the Agreement," which was granted. Thompson’s answer to Pollock’s second amended complaint included a counterclaim for malicious abuse of process.

{6} The district court held a bench trial limited to the issues raised in the second amended complaint. The only witnesses at the trial were Pollock and Thompson. Following the trial, the district court entered a detailed twenty-one page order. Following additional motion practice and two failed attempts to perfect an appeal to this Court, the parties agreed to a stipulated final order that summarized the district court’s order as follows:

[The district court] entered that certain [o]rder on April 16, 2018 ("Order") after a one-day bench trial. The Order held that [Pollock] was entitled to a share of profits, for the subject BMW only, from the date the original parties to this action entered into an agreement, April 20, 2007, through the date [the district court] determined such agreement was terminated, October 3, 2007. [The district court] determined that … Plaintiff[’s] share of the profits included information related to the sale of [the] BMW, including how, where and to whom the BMW was sold.

{7} The stipulated order also noted the parties’ agreement that "no damages are to be awarded to Plaintiff based on the accounting provided by Defendants" unless the district court’s order "is reversed on appeal in whole or in part."

DISCUSSION

Pollock’s Appeal

{8} On first review, the Note and the Agreement seem straightforward. But that surface simplicity does not bear up under closer examination. The two documents present a surprisingly slippery scenario for interpretation and construction that the parties have litigated thoroughly here and in the district court. The parties disagree, for example, as to whether the two documents comprise one "agreement," or whether they should be treated as two separate contracts. They disagree as to whether the contract was solely for a loan. They disagree as to whether documents are ambiguous or not. They disagree as to whether the profit sharing aspect of the Agreement covered only profits from use of the BMW, or instead extends to all businesses Thompson has developed over the seventeen years since it was signed. Assuming that the Agreement can be interpreted to encompass all of Thompson’s businesses, they argue about whether there was sufficient consideration to support a contract of that magnitude. They disagree whether there was a "meeting of the minds" sufficient to support the creation of a contract—in particular the expanded scope Pollock argues for.

{9} The district court’s order wrestled with these arguments with varying degrees of success. Interesting as these issues might be, we do not need to address them all. The district court concluded that the parties’ arrangement—whatever its content and parameters might be—was terminated when the Note was paid in full on October 3, 2007. Affirming the district court on this point would as a practical matter resolve all of the issues regarding the scope of the Agreement. It is necessary, however, to decide whether any enforceable contract was created between the parties. The following analysis addresses the contract formation issues first and then turns to assess the district court’s ruling that payment of the Note ended the parties’ contract entirely.

I. The Parties Entered Into an Enforceable Contractual Arrangement

{10} The parties’ arguments on the issue of whether a contract was formed are at extremes. Pollock maintains that Thompson agreed to share with him—and his daughter after Pollock’s death—35 percent of "all profits" from "the limousine/auto for hire business" for as long as Thompson maintained the business. Pollock also argues that he is owed 35 percent of all profits represented in the proceeds of any sale or liquidation of the business. Thompson’s position on appeal is more nuanced. In his answer to Pollock’s appeal, he argues that the district court’s decision that the contract was limited to profits from use of the BMW should be affirmed. In his cross-appeal briefing, however, he argues that there was no contract formed at all.

{11} It is unclear how the district court resolved the issue.² The district court’s order found as a matter of fact that "[t]here were not materially different understandings of the parties concerning the obligation … Thompson would bear to [Pollock] under the Agreement." But the order does not explain what undergirds this finding. The district court also found as a matter of fact that the Note and the Agreement "constitute the full and complete extent of any contractual relationships" between Pollock and Defendants. The district court thus rejected Pollock’s assertions and requested findings—supported by testimony at trial—that the parties also entered into verbal side agreements that were not reflected in the documents Pollock drafted. We note that this finding can also function as a conclusion of law. Reading it as a conclusion of law helps explain the district court’s decision to try and treat the Agreement as unambiguous. Jaramillo v. Gonzales, 2002-NMCA-072, ¶ 31, 132 N.M. 459, 50 P.3d 554 ("We construe findings to uphold, rather than defeat, a judgment.").

{12} The district court also concluded as a matter of law that "[t]he Agreement does not entitle [Pollock] to a 35[ percent] share of every business venture pursued by the Company," but rather that the share-of-profits language of the Agreement was limited to profits generated from the use of the BMW. Again, it is unclear what factual background the...