329 P.3d 701
N.M. Ct. App.2014Background
- Luz Corona extended a revolving line of credit to Coronas Concrete Company, Inc. and guarantors signed promissory note, loan, and security agreements; repayment due by September 30, 2000.
- Land Loan: Luz provided about $70,000 for land; terms not written; loan intended to be repaid within a year; not within the written agreement.
- CD Loan: $42,000 certificate of deposit used to cover an unpaid line of credit; terms not written; separate from the revolving line.
- Between 1999 and 2000 loans were repaid; from 2008 to 2010 payments totaling $63,000 were made, including a $20,000 payment, with checks not necessarily labeled to a specific loan but marked as ‘payment on loan.’
- November 2008 to February 2010, Appellants’ payments and later settlement negotiations suggest a potential revival of debts; district court found a verbal settlement in 2009 for $100,000 payable in $5,000 installments.
- Luz filed suit in 2010 alleging contract and promissory note claims; district court held that partial payments revived the debts under NMSA 37-1-16, with some guaranties enforceable and others not.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Which debts were revived by partial payments | Luz contends all debts were revived by the 2008–2010 payments. | Appellants argue revival was limited or not established for certain loans and guaranties. | Some debts and guaranties were revived; not all guaranties (Wives’ guaranties) were revived. |
| Who is liable for revived debts | Luz may pursue all revived debts against guarantors, including Daniel, Samuel, and Jose Luis. | Arguments about entity vs. individual borrowers and agency limit who is liable. | Brothers as guarantors liable for revived debts; Wives’ guaranties not enforceable; Land Loan liability found against the Brothers only. |
| Amount and scope of liability after modification | Guaranties cover more than the original $70,000 cap due to modifications; liability not limited to $70,000. | Modifications may limit liability to the settlement amount or to original terms. | Liability not limited to $70,000 and not limited to the settlement amount; modification supported, guaranties remain enforceable. |
| Effect of the Land Loan on liability | Land Loan is subject to the Agreement; guaranties extend to it. | Land Loan is separate from the Agreement and not subject to its terms. | Land Loan not subject to the Agreement; Wives not liable on Land Loan; attorney-fee award tied to Land Loan reversed. |
| Agency and attribution of payments | Daniel acted as the Brothers’ agent; payments were made by Daniel and ratified by others. | Evidentiary support for agency as to Wives is lacking; liability for Land Loan contested. | Daniel acted as agent for the Brothers; guaranties revived as to Brothers; no evidence Wives acted as agents. |
Key Cases Cited
- Joslin v. Gregory, 80 P.3d 464 (2003-NMCA-133) (partial payment can revive a debt; factual inquiry)
- Ponder v. State Farm Mut. Auto. Ins. Co., 12 P.3d 960 (2000-NMSC-033) (statute revival standards; substantial evidence review)
- Enriquez v. Cochran, 967 P.2d 1136 (1998-NMCA-157) (absent clear evidentiary basis, court assesses credibility and agency findings)
- Mascarenas v. Jaramillo, 806 P.2d 59 (1991-NMSC-014) (standard for reviewing factual findings; substantial evidence)
- Sunwest Bank of Clovis, N.A. v. Garrett, 113 N.M. 112, 823 P.2d 912 (1992-NMSC-002) (guaranty strict construction; guarantors favored)
- Paz v. Tijerina, 165 P.3d 1167 (2007-NMCA-109) (American rule on attorney fees; when to award)
- Levenson v. Haynes, 934 P.2d 300 (1997-NMCA-020) (modification of contract and guaranty consequences)
- Pac. Nat’l Agric. Credit Corp. v. Hagerman, 39 N.M. 549 (1935-NMSC-088) (consent required for guarantor to be bound by modification)