255 P.3d 324
N.M. Ct. App.2011Background
- CNMEC disconnected Sunnyland's electricity over disputed Agstar-related debts and guarantor issues.
- Sunnyland purchased a tomato greenhouse operation in June 2003 and opened four accounts in its name, paying deposits and Agstar debts.
- Defendant's billing and disconnect notices were inconsistent and confusing, including misstatements about Agstar's past due amounts.
- On September 9, 2003, a fire destroyed most facilities; water access to fight the fire was impeded by the power outage.
- The district court awarded about $21.35 million in contract damages, $100,000 in punitive damages, with 80% fault to Sunnyland and 20% to CNMEC.
- The court's rulings on consequential damages, punitive damages, and future lost profits were reviewed on appeal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether consequential damages in contract are recoverable | Sunnyland argues Hadley/Globe Refining-based rule allows contractual consequential damages. | CNMEC contends recoverable contract damages require contemplation of special circumstances and explicit/tacit agreement. | Contractual consequential damages reversed; not recoverable under New Mexico rule. |
| Whether punitive damages can be sustained for post-breach conduct | Sunnyland contends punitive damages justified by willful, malicious post-fire conduct and contract breach. | CNMEC argues punitive damages require proper predicate conduct tied to a contract breach and corporate culpability. | Punitive damages reversed; no proper basis under the contract theories presented. |
| Whether the lost profits on the negligence claim were proven with reasonable certainty | Sunnyland asserts future production levels were reasonably certain and damages were justifiable. | CNMEC argues Bauerle's production estimate lacked reasonable certainty and was unsupported by comparable data. | Lost profits on negligence claim not sustained; reasonable certainty not shown; remanded for reevaluation using reliable 53.4 kg/m2 figure. |
| Whether the set-off from insurer subrogation and prejudgment/post-judgment interests were proper | Sunnyland argues set-off and interest rules should not diminish the full recovery. | CNMEC maintains set-off is appropriate and interest decisions depend on the nature of the conduct. | Set-off upheld; prejudgment and post-judgment interest affirmed or remanded consistent with holdings. |
Key Cases Cited
- Camino Real Mobile Home Park Partnership v. Wolfe, 119 N.M. 436 (1995) (Hadley/Globe Refining approach to consequential damages; special circumstances must be contemplated)
- Wall v. Pate, 104 N.M. 1 (1986) (foreseeability/contemplation understood via Hadley; special damages tied to contemplation)
- E & B Specialties Co. v. Phillips, 86 N.M. 331 (1974) (Hadley-based rule; special circumstances must be known to both parties)
- Globe Refining Co. v. Landa Cotton Oil Co., 190 U.S. 540 (1903) (contract damages limited to damages contemplated by the contract; tacit agreement concept)
- Hadley v. Baxendale, 156 Eng. Rep. 145 (1854) (leading rule for consequential damages in contract)
- Kennford Co. v. County of Erie, 537 N.E.2d 176 (N.Y. 1989) (restrictive contemplation test for extraordinary damages in contract)
- Jones v. Lee, 1998-NMCA-008 (N.M. Ct. App. 1998) (integration of Hadley/Globe Refining framework in NM consequential damages)