352 P.3d 687
N.M. Ct. App.2015Background
- William and Marci Kipnis and Michael and Rebecca Jusbasche formed an LLC to develop a Taos hotel into condominiums; defendants contributed cash and held a 51% interest.
- Plaintiffs allege that at an early meeting William asked if there was anything in Defendants’ personal histories they should know; Defendants answered no.
- Plaintiffs later discovered that Michael Jusbasche had pled nolo contendere in 1984 to theft of trade secrets and say Defendants’ failure to disclose that plea constituted fraud, constructive fraud, intentional misrepresentation, and conversion.
- Defendants moved for summary judgment partly arguing New Mexico Rule 11-410(A)(2) barred evidence of the nolo plea and related judgment; Plaintiffs argued the plea and judgment are admissible when not offered to prove guilt.
- The district court initially denied exclusion but later sua sponte reversed and granted summary judgment based on Rule 11-410(A)(2); Plaintiffs appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Rule 11-410(A)(2) bars admission of Jusbasche’s nolo plea and resulting judgment | Rule 11-410 bars only using the plea to prove guilt; the plea/judgment are admissible to show what Defendants failed to disclose | Rule 11-410(A)(2) prohibits admission of the nolo plea and related judgment in any proceeding | Rule 11-410(A)(2) does not bar plea or resulting judgment when offered for purposes other than proving guilt (reversed district court grant of summary judgment on this basis) |
| Whether Defendants had a duty to disclose the prior plea | The question of duty is factual and should go to a jury; Plaintiffs relied on the specific inquiry at the meeting | Defendants say no duty existed; the question was too vague and could not reasonably encompass a 19‑year‑old plea | Existence of a duty to disclose depends on disputed facts (actual knowledge and materiality); denial of summary judgment on this issue affirmed |
Key Cases Cited
- Olsen v. Correiro, 189 F.3d 52 (1st Cir.) (nolo plea itself barred by Rule 410 but convictions/sentences resulting from such pleas may be admissible when not offered to prove guilt)
- United States v. Adedoyin, 369 F.3d 337 (3d Cir.) (distinguishes plea from resulting conviction; conviction admissible to prove the fact of conviction when relevant, not to prove guilt)
- United States v. Nguyen, 465 F.3d 1128 (9th Cir.) (interprets Rule 410 to exclude plea and conviction as proof of guilt but recognizes other admissible uses are limited by purpose)
- State v. Trujillo, 93 N.M. 724 (N.M.) (interpreted Rule 11-410 broadly to exclude plea discussions, but did not address admission of pleas/judgments when offered for non-guilt purposes)