Scarborough v. Angel Fire Resort
A-1-CA-34718
| N.M. Ct. App. | Sep 6, 2017Background
- Plaintiff owns Monte Verde Subdivision Lots 2, 3, and 4; dispute concerns obligation to pay annual assessment fees for Resort amenities established by a bankruptcy reorganization plan and recorded Supplemental Declaration.
- In 1993 several entities tied to Angel Fire Resort filed Chapter 11; a Property Owners’ Committee (POC) succeeded in obtaining a negative easement reflected in a 1995 Plan and Supplemental Declaration that created covenants requiring annual assessments for homesites listed in Exhibit A.
- Exhibit A expressly lists "Monte Verde 'V' Subdivision Unit 1" and many entries show "No Restrictive Covenants Filed." The Supplemental Declaration defines "homesite" as any legally constituted lot within listed subdivisions.
- Plaintiff bought Lot 3 in 1967 (before the bankruptcy) and Lots 2 and 4 after the Plan was confirmed; Lots 2 and 4 deeds include language subjecting them to easements/restrictions of record and owners received notice during the bankruptcy.
- District court granted summary judgment to Plaintiff as to all three lots, finding Monte Verde Subdivision not part of the Resort; this appeal challenges those rulings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Lots 2, 3, 4 are bound by the bankruptcy Plan/Supplemental Declaration | Scarborough: he and some predecessors were not creditors or property owners in the bankruptcy and thus not bound; Lot 3 had no covenants recorded when bought | Resort: Plan and Supplemental Declaration created covenants running with the land affecting listed subdivisions (including Monte Verde V) and bind owners | Lots 2 & 4: bound by Plan/Declaration (summary judgment for Resort should have been granted). Lot 3: genuine issues of material fact remain; summary judgment improper. |
| Whether implied covenants or negative easements arose for Lot 3 pre- or post-bankruptcy | Scarborough: no recorded covenants; any option to pay for use lacked consideration and did not create binding restriction | Resort: billing, POC disclosure, and Plan/Declaration support existence of implied reciprocal covenants/easements | Court: factual dispute exists about origins and application of implied covenants/easements to Lot 3; remand for further factfinding. |
| Effect of purchaser timing (pre- vs post-confirmation) on binding nature of Plan | Scarborough: lots alienated before bankruptcy cannot have post hoc covenants imposed | Resort: confirmed Plan binds creditors/property owners and those given notice; post-confirmation purchasers who received notice are bound | Court: post-confirmation purchasers (Lots 2 & 4) who had notice and deeds subject to restrictions are bound; pre-confirmation Lot 3 requires further fact development. |
| Preclusion / jurisdictional defenses (didnt decide below) | Scarborough: bankruptcy court lacked jurisdiction / issues may be forfeited | Resort: claims barred by res judicata/issue preclusion from bankruptcy | Court: declined to decide on appeal—remanded for district court to address waiver, jurisdiction, and preclusion issues. |
Key Cases Cited
- Home & Land Owners, Inc. v. Angel Fire Resort Operations, L.L.C., 69 P.3d 243 (N.M. Ct. App. 2003) (addresses binding effect of bankruptcy plan and recorded supplemental declaration on property owners)
- Angel Fire Resort Operations, L.L.C. v. Corda, 116 P.3d 841 (N.M. Ct. App. 2005) (related precedent interpreting Resort’s post-bankruptcy property rights)
- Riblet Tramway Co. v. Monte Verde Corp., 453 F.2d 313 (10th Cir. 1972) (historical context on early development and corporate relationships at Angel Fire)
- Agua Fria Save the Open Space Ass’n v. Rowe, 255 P.3d 390 (N.M. Ct. App. 2011) (restrictive covenants analyzed under contract principles)
- Sharts v. Walters, 759 P.2d 201 (N.M. Ct. App. 1988) (reciprocal restrictions may be inferred from surrounding circumstances)