Kipnis v. Jusbasche, 2015 NMCA 071

William and Marci Kipnis (Plaintiffs) and Michael and Rebecca Jusbasche (Defendants) formed an LLC to redevelop a Taos hotel into condominiums; defendants provided most financing and obtained majority interest.
In 2003–2005 the project failed financially; disputes followed and the business dissolved with defendants taking title to unsold units.
Plaintiffs allege Defendants committed fraud, constructive fraud, intentional misrepresentation, and conversion by failing to disclose that Michael Jusbasche pled nolo contendere in 1984 to theft of trade secrets when asked in a 2003 meeting whether there was anything in Defendants’ personal histories to know.
Defendants moved for summary judgment arguing (1) they had no duty to disclose the old nolo plea and (2) New Mexico Rule 11-410(A)(2) barred admission of the plea and related judgment.
The district court initially denied summary judgment, then reconsidered and granted dismissal based on Rule 11-410; the Court of Appeals reviewed de novo.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Admissibility under Rule 11-410(A)(2) — may the nolo plea or resulting judgment be admitted in a civil fraud suit?	The fact of the nolo plea and resulting judgment is admissible to show what Defendants failed to disclose; plaintiffs are not offering it to prove guilt.	Rule 11-410(A)(2) prohibits admission of a nolo plea and related evidence and therefore bars plaintiffs from proving a necessary element.	Rule 11-410(A)(2) does not bar admission of a nolo contendere plea or resultant judgment when offered for purposes other than proving the pleader’s guilt (e.g., to show what defendants failed to disclose). Reversed as to Rule 11-410 dismissal.
Duty to disclose — whether defendants had a legal duty to disclose the plea in pre‑transaction communications	The question whether defendants breached a duty to disclose is factual (what the question meant, what defendants understood, materiality) and should go to a jury.	The question posed by Kipnis was too vague and defendants could not have known the plea was material; thus no duty and summary judgment is appropriate.	There are disputed facts about materiality and what defendants understood; summary judgment on duty to disclose was improper and the issue must be submitted to the factfinder.

Olsen v. Correiro, 189 F.3d 52 (1st Cir. 1999) (nolo plea itself is barred by Rule 410 but convictions or sentences resulting from such pleas may be admissible when not offered to prove guilt)
United States v. Adedoyin, 369 F.3d 337 (3d Cir. 2004) (conviction based on a nolo plea admissible to prove existence of a conviction where not used to show actual guilt)
United States v. Nguyen, 465 F.3d 1128 (9th Cir. 2006) (read Rule 410 to exclude pleas and convictions as proof of guilt but recognized admissibility for non‑guilt purposes in some contexts)
State v. Trujillo, 93 N.M. 724 (N.M. 1980) (interpreting Rule 11‑410 broadly to exclude plea discussions, but distinguished by the Court of Appeals for present facts)