Turner v. First New Mexico Bank, 352 P.3d 661

Background

James and Tracy Turner sued First New Mexico Bank alleging (1) breach of duty of good faith under UCC §55-1-304, (2) failure to report a repaid loan to credit agencies (causing credit harm), and (3) entitlement to punitive damages for malicious/reckless conduct.
The Turners filed an initial complaint (First Complaint) in Oct 2010; the district court granted the bank’s Rule 1-012(B)(6) motion and dismissed every count "without prejudice." No appeal was taken.
The Turners filed a second, substantially identical complaint (Second Complaint) in Sept 2012; it added only minor wording to Count II about business relationships/commercial credit.
The bank moved to dismiss the Second Complaint on claim- and issue-preclusion grounds and for failure to state a claim; the new district judge dismissed the Second Complaint with prejudice.
On appeal, the Court of Appeals reviewed whether the prior dismissal (without prejudice) was a final judgment on the merits and therefore barred the second suit by res judicata (claim preclusion). The court affirmed dismissal on res judicata grounds.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the dismissal of the First Complaint "without prejudice" is a final judgment for res judicata purposes	The "without prejudice" label preserved the Turners’ right to file a new suit; res judicata should not apply	The dismissal fully disposed of the case and was a final judgment barring relitigation	The dismissal was final under New Mexico precedent and thus qualifies as a final judgment
Whether dismissal for failure to state a claim under Rule 1-012(B)(6) is a judgment on the merits	The Turners argued they could replead; the label and right to amend preclude preclusion	The Rule 1-012(B)(6) dismissal was fully litigated (briefing + hearing) and decides the merits	The court held the Rule 1-012(B)(6) dismissal was a judgment on the merits and thus preclusive
Whether the parties and causes of action in both suits are the same	The Turners contended minor wording changes in Count II avoided preclusion	The Bank argued parties are identical and causes are the same (minor wording irrelevant)	The court found parties and causes identical; claim-preclusion elements satisfied
Whether Count II in the Second Complaint avoided preemption under the Fair Credit Reporting Act by adding business/commercial-credit language	The Turners claimed the added language converted the claim beyond personal/consumer context	The Bank argued the loan remained personal and the claim remained preempted by FCRA	The court held the minor rewording did not change the character of the loan; Count II remained preempted and precluded

Key Cases Cited

Federated Dep’t Stores, Inc. v. Moitie, 452 U.S. 394 (federal dismissal for failure to state a claim is a judgment on the merits)
AVX Corp. v. Cabot Corp., 424 F.3d 28 (dismissal for failure to state a claim ordinarily treated as on the merits)
Sunwest Bank of Albuquerque v. Nelson, 125 N.M. 170 (N.M. 1998) (an order dismissing without prejudice can be final as to the court that entered it)
Vill. of Los Ranchos de Albuquerque v. Shiveley, 110 N.M. 15 (N.M. Ct. App. 1989) (dismissal without prejudice may be a final judgment when it terminates the suit and disposes of the proceedings)
Bralley v. City of Albuquerque, 102 N.M. 715 (N.M. Ct. App. 1985) (words "without prejudice" generally indicate no resolution on merits but dismissal can be final if it fully terminates the case)
Deflon v. Sawyers, 139 N.M. 637 (N.M. 2006) (claim preclusion bars relitigation when there is a final judgment on the merits)
Rosette, Inc. v. United States Dep’t of the Interior, 142 N.M. 717 (N.M. Ct. App. 2007) (discussion of preclusion principles)
Jojola v. Fresenius Med. Clinic, 149 N.M. 51 (N.M. Ct. App. 2010) (appellate court will assume no authority exists where appellant cites none)