BIPIN BHAKTA v. BLUE HORIZON HOSPITALITY, LLC, ANANDKUMAR BHAKTA, VAISHALI BHAKTA, NISHA BHAKTA, SMRUTI BHAKTA, PRAVINCHANDRA LAL, VEENABEN LAL, and CHANDRAVADAN JAI DESAI
No. A-1-CA-41795
THE COURT OF APPEALS OF THE STATE OF NEW MEXICO
HENDERSON, Judge.
APPEAL FROM THE DISTRICT COURT OF EDDY COUNTY, Anne Marie C. Lewis, District Court Judge
Martin Law Firm
Kenneth D. Dugan
Carlsbad, NM
for Appellee
Stalter Law LLC
Kenneth H. Stalter
Albuquerque, NM
Marrs Griebel Law, Ltd.
Patrick J. Griebel
Jeremy T. Theoret
Albuquerque, NM
for Appellants
MEMORANDUM OPINION
{1} Defendants Anandkumar Bhakta, Nisha Bhakta, Pravinchandra Lal, Veenaben Lal, and Chandravadan Jai Desai appeal from the district court‘s enforcement order, following a grant of summary judgment that ordered rescission of a “corporate divorce” agreement and restoration of Plaintiff Bipin Bhakta‘s 17.5 percent membership interest in Blue Horizon Hospitality, LLC (Blue Horizon).1 After Plaintiff‘s failed attempts to enforce the judgment, the district court entered the enforcement order deeming Plaintiff‘s membership interest a “current interest” with “an effective date for valuation purposes of August 17, 2023,” but denying Plaintiff his requested attorney fees. Now on appeal, Defendants claim that the district court erred in arbitrarily determining the effective date for valuation purposes when Plaintiff should have been restored to his membership interest as of November 15, 2021—the date the settlement agreement was executed. Although Plaintiff argues the district court erred in denying his attorney fees request related to the enforcement action; Plaintiff did not file a cross-appeal challenging that ruling and therefore cannot seek affirmative relief from that ruling. See
BACKGROUND
{2} This case arises from a dispute between members of Blue Horizon, following the construction of a hotel in Carlsbad, New Mexico. Following the dispute, Plaintiff executed a corporate divorce settlement agreement with the other members of Blue Horizon in November 2021. The settlement agreement was conditioned on the bank releasing Plaintiff from a personally guaranteed loan, which was used to finance construction of the company‘s hotel. After the bank refused to release Plaintiff from the loan, Plaintiff sued Blue Horizon and its other members, seeking rescission of the settlement agreement and a declaration that “Plaintiff is restored to a 17.5 [percent] membership interest owner in Blue Horizon; . . . as a co-managing member of Blue Horizon;” and “[s]uch other terms and provisions as the [district c]ourt deems proper to return the status quo.”
{3} In May 2023, Plaintiff filed a motion for summary judgment arguing he was entitled to rescission of the settlement agreement and restoration of the same rights and privileges demanded in his complaint. The district court held a hearing on Plaintiff‘s motion on August 1, 2023, determining that summary judgment was appropriate as there were no issues of material fact in dispute. Before entering final judgment on August 17, 2023, the district court held another hearing to allow parties a final argument as to its proposed findings and conclusions. At this hearing, Defendants argued that they were concerned with Plaintiff‘s proposed order because Defendants did not want it to appear the district court was finding that Plaintiff had a current 17.5 percent membership interest, which could “collaterally affect” changes to the company‘s
{4} On December 14, 2023, after Plaintiff‘s attempts to have his membership interest and rights restored pursuant to final judgment order were unsuccessful, Plaintiff filed an amended motion to enforce the judgment. At the associated hearing, Defendants’ counsel again raised concerns with the district court‘s order reinstating Plaintiff to his 17.5 percent membership interest, pointing to the same concerns about the collateral effect of restoring Plaintiff‘s membership interest on the other members’ ownership interests that Defendants had raised at the August hearing. Following the hearing, the district court granted Plaintiff‘s motion to enforce in part and denied it in part, and included the following orders:
2. Notwithstanding any events that occurred between November 15, 2021 and August 17, 2023, events on which the [district c]ourt has not entertained nor received evidence, the [district c]ourt nevertheless hereby orders that pursuant to paragraph 14(c) of this [district c]ourt‘s [f]inal [j]udgment, [Plaintiff] is restored to a 17.5 [percent] membership interest in Blue Horizon . . . , with an effective date for valuation purposes of August 17, 2023. [Plaintiff]‘s membership interest of 17.5 [percent] is deemed a “current interest” as of August 17, 2023.
. . . .
4. The parties shall bear their own costs and attorney[] fees incurred in this [m]otion proceeding. Plaintiff‘s requests to the contrary, either under the [s]ettlement [a]greement or as a sanction, are hereby denied.
It is from this order that Defendants now appeal.
DISCUSSION
{6} On appeal, Defendants argue that the district court erred “by arbitrarily selecting August 17, 2023” as the “effective date for valuation purposes” instead of restoring the parties to their “precontractual positions,” which “were their respective [membership] interests when they executed the settlement agreement—November 15, 2021.” In doing so, Defendants argue, “the district court effectively nullified nearly two years of potential corporate events . . . violat[ing] fundamental principles of rescission, which require careful accounting to ensure that the underlying transaction is properly unwound and all parties are restored as nearly as possible to” their precontractual positions. Defendants contend that this issue was preserved “through their January 5, 2024, written opposition to Plaintiff‘s motion to enforce and through oral argument at the hearing.” Plaintiff‘s claim that Defendants’ appeal—purporting to be an appeal of the district court‘s order on Plaintiff‘s amended motion to enforce judgment—is actually an untimely and “forbidden collateral attack” on the district court‘s underlying final judgment.
{7} Pursuant to
{8} In this case, while the district court did not specify the date which Defendants were to use for valuing Plaintiff‘s membership interest, it did specifically conclude in its final judgment on August 17, 2023, that “Plaintiff is restored to his 17.5 [percent] membership interest in Blue Horizon.” Further, the district court ordered “Defendants shall execute such documents and undertake such actions as necessary to return [Plaintiff] his 17.5 [percent] membership interest in Blue Horizon.” Defendants did not appeal the final judgment, which is now binding on appeal. See
{9} Defendants contend that the district court‘s enforcement order “impose[d] an arbitrary effective date on the parties’ membership interests,” which “overrode nearly two years of corporate dealings, about which the district court had heard no evidence and made no findings.” We are unpersuaded by Defendants’ argument that the issue is properly before this Court since, as we explain, the district court‘s enforcement order does not modify or change any provision as to Plaintiff‘s membership interest in a manner contrary to the final judgment order. See Hall, 1992-NMCA-097, ¶ 38. Rather, the district court‘s enforcement order seeks to cause the provisions of the final judgment to be executed by reiterating its final judgment, see id. ¶ 41, finding that “Plaintiff is to be restored to a 17.5 [percent] membership interest in Blue Horizon.”
{10} First, Plaintiff sought the return of his 17.5 percent membership interest as pled in his complaint. The district court‘s final judgment, entered August 17, 2023, found that “Plaintiff is restored” to his 17.5 percent membership interest—restoring Plaintiff his membership interest in the present tense. The district court‘s later ruling in the enforcement order, similarly maintained that Plaintiff is owed a 17.5 percent “current [membership] interest” effective as of August 17, 2023. The district court‘s enforcement order merely seeks execution of the underlying final judgment order—ensuring that Plaintiff‘s 17.5 percent membership interest is restored as of the date the district court entered its final judgment order.
{11} Second, Defendants argument that the district court assigned an arbitrary effective date for valuing Plaintiff‘s membership interest essentially asks this Court to ignore the district court‘s final determination, now unappealable, and return him something less based on corporate dealings that occurred in the two years subsequent to execution of the settlement agreement—dealings, which Plaintiff had no say in or control over. However, as the district court had previously determined that “Plaintiff is restored” at the time it issued the final judgment, the enforcement order simply reiterated that the effective date for restoration of Plaintiff‘s membership interest was the date the district court issued its final judgment—August 17, 2023. The district court‘s enforcement order enforces the terms of the final judgment and guarantees that Plaintiff‘s membership interest is restored in a timely fashion, as of the date of the final judgment order, by preventing Defendants from attempting to dilute Plaintiff‘s membership interest or delaying its restoration further. See Prudential Ins. Co. of Am. v. Anaya, 1967-NMSC-132, ¶ 34, 78 N.M. 101, 428 P.2d 640 (“The restoration of the status quo means the return, or offer to return, of that which has been received.“). Thus, we are unpersuaded by Defendants’ argument that the issue is properly before this
{12} Furthermore, at the hearing on the district court‘s proposed final judgment order, Defendants raised the very argument now asserted under the guise of an appeal from the enforcement order. Defendants raised concern with the proposed order prepared by Plaintiff, challenging the proposed findings because they “don‘t want it to be referred to as the [district] court made a finding that [Plaintiff] had a 17.5 percent membership interest beforehand” and Defendants “don‘t want this order to collaterally affect anything that has happened to the company since” the settlement agreement was executed. The district court immediately clarified that “[Plaintiff] had 17.5 percent in the actual settlement agreement, so he‘s restored back to the status quo, he‘s restored back to what he originally had as if this never existed“—a clarification which Defendants agreed with at that time. See Jeantete v. Jeantete, 1990-NMCA-138, ¶ 11, 111 N.M. 417, 806 P.2d 66 (“On appeal, the reviewing court may consider the [district] court‘s verbal comments in order to clarify or discern the basis for the order or action of the court below.“). Yet, despite their not having then timely appealed an argument they were aware of and preserved, Defendants assert that their present challenge is to the district court‘s enforcement order.
{13} Under Defendants’ view, an aggrieved party could ignore an adverse district court order, decline to timely appeal from it, and hope that the prevailing party did not seek to enforce the order. Then, if the prevailing party does seek enforcement, the aggrieved party could have a second bite at the apple and assert the error that it previously perceived. But
{15} Next, Plaintiff contends that the district court erred in denying his attorney fees claim related to the enforcement proceedings. Defendants argue that rescission of the settlement agreement precludes the awarding of attorney fees and that Plaintiff has not properly cross-appealed such that we should decline to review this issue anyway. We agree that this issue was not properly cross-appealed and explain.
{16} As discussed above, Defendants raised a single issue challenging the district court‘s enforcement action on appeal. Plaintiff never filed a cross-appeal in accordance with
CONCLUSION
{17} Based on the foregoing, we affirm.
{18} IT IS SO ORDERED.
SHAMMARA H. HENDERSON, Judge
WE CONCUR:
JACQUELINE R. MEDINA, Chief Judge
J. MILES HANISEE, Judge