CREIG BUTLER, Judgmеnt Creditor-Respondent, v. MOTIVA PERFORMANCE ENGINEERING, LLC, Judgment Debtor, and DEALERBANK FINANCIAL SERVICES, LTD, and ARMAGEDDON HIGH PERFORMANCE SOLUTIONS, LLC, Relief Defendants, and WILLIAM S. FERGUSON, Relief Defendant-Petitioner.
NO. S-1-SC-40215
IN THE SUPREME COURT OF THE STATE OF NEW MEXICO
June 30, 2025
Victor S. Lopez, District Judge
ORIGINAL PROCEEDING ON CERTIORARI
Paul J. Kennedy
Jessica M. Hernandez
Elizabeth A. Harrison
Albuquerque, NM
for Petitioner
Modrall, Sperling, Roehl, Harris & Sisk, P.A.
Spencer L. Edelman
Elizabeth A. Martinez
Laura M. Unklesbay
Taryn F. Hanrahan
Albuquerque, NM
for Respondent
BACON, Justice.
{1} Yet once more, we clarify the scope of our courts’ extraordinary contempt power to ensure the Judiciary does not act lawlessly in the course of upholding the law. In this case, we conclude the district court‘s use of remedial contempt procedures to impose punitive contempt sanctions was clearly in error and deprived Petitioner William Ferguson of due process.1 We consider, however, whether the sanctions can be affirmed in the alternative under the district court‘s inherent powers or
I. BACKGROUND
A. Ferguson‘s Conduct
{2} Respondent Creig Butler filed suit against Ferguson‘s company, Motiva Performance Engineering, for Motiva‘s failed attempt to upgrade Butler‘s H3 Hummer. A jury found Motiva liable for breach of contract, fraudulent misrepresentation, and violation of the Unfair Practices Act. The district court entered judgment against Motiva in the amount of $292,000 plus interest, costs, and attorney‘s fees. Ferguson was both a managing member of Motiva and a licensed attorney. He and his law firm, Will Ferguson and Associates, represented Motiva throughout the litigation. Two months after the verdict, Motiva shut down operations.
{3} At the time of the verdict, Motiva owned a 2012 Ferrari FF. A few days after the verdict but before judgment for damages, Ferguson transferred title of the Ferrari from Motiva to another one of his companies called Dealerbank. Following the judgment for damages, the district court issued a Writ of Execution directing the sheriff to seize Motiva‘s assets to enforce the judgment. A sheriff‘s deputy attempted
{4} Butler then filed a Motion for Declaration of Ownership (Ownership Motiоn) asking the district court to determine who owned the Ferrari. He also filed a Verified Application for Writ of Attachment or in the Alternative, for a Preliminary Injunction (PI Application) to prevent Ferguson from potentially draining assets while the Ownership Motion was litigated.
{5} The district court held a hearing on the PI Application, and orally stated it was inclined to “allow an attachment to the Ferrari until we figure out what is going on here.” The court instructed the parties to work together to draft a preliminary injunction and prepare an order reflecting “the TRO[] [and] the attachment.” One day after the injunction hearing, and while corresponding with Butler‘s counsel about the draft order for the court, Ferguson applied for a $120,000 loan from Main Bank, with Dealerbank pledging the Ferrari as collateral. Ferguson signed the loan documents on his own behalf and on behalf of Dealerbank. After closing the loan, Main Bank noted its interest in the Ferrari by obtaining a new certificate of title listing Main Bank as the first lienholder. Subsequently, the district court entered its written Preliminary Injunction and Order on Application for Writ of Attachment. In
{6} Approximately five months later, the district court held a bench trial on the Ownership Motion. Ferguson introduced into evidence an old copy of the Ferrari‘s title that did not reflect the Main Bank lien. After the bench trial, the court entered its findings of fact and order on the Ownership Motion and declared the “title of Dealerbank to the Ferrari should be . . . set aside in favor of Motiva‘s prior and superior title.” The court also ordered Ferguson to file an accounting of settlement funds (accounting) to address an insurance payment from Allstate to Motiva that had never been paid to Motiva. Four days later Motiva declared bankruptcy. Ferguson timely complied with the district court‘s order and filed the accounting, which stated that the insurance proceeds—totaling $40,948—had been deposited into his personal bank account rather than paid to Motiva. However, he failed to disclose—or alternatively backdated—a promissory note wherein he loaned $41,000 to Motiva. Soon after, Butler discovered the Main Bank lien on the Ferrari because it was listed on Motiva‘s bankruptcy filings.
{7} Butler filed a Motion for Order to Show Cause (OTSC), arguing Ferguson should show cause why he should not be held in contempt of court and sanctioned for remedial contempt and referred to the District Attorney for punitive contempt.
B. The Sanctions Order
{8} The district court held a hearing on the OTSC and subsequently issued its “Findings of Fact and Conclusions of Law on Order to Show Cause and Order of [Remedial] Contempt and Sanctions Against Dealerbank, [Ferguson], and The Law Firm” (Sanctions Order). Finding Ferguson had repeatedly disregarded its orders, the court offered a non-exhaustive list of acts in support of that finding. This conduct included changing the Ferrari‘s title from Motiva to Dealerbank immediately after the jury verdict, placing the Main Bank lien on the Ferrari, introducing an old certificate of title for the Ferrari that hid the Main Bank lien, and failing to disclose or potentially backdating the promissory note to hide the transaction. The court held Ferguson in what it called remedial contempt and stated he may purge the contempt by (1) paying Butler to satisfy the $292,000 judgment in full plus interest, costs, and attorney‘s fees and (2) donating $50,000 to Roadrunner Food Bank. The court also noted in a subparagraph of the order that “[t]his [remedial] [c]ontempt and [s]anctions [o]rder is also appropriate under . . .
{9} Within a month after issuance of the Sanctions Order, Ferguson filed a motion to reconsider. In his motion, he argued only that the evidence presented at the hearing did not warrant remedial contempt and sanctions. A day later, and before the district court ruled on his motion to reconsider, Ferguson appealed the Sanctions Order to the Court of Appeals. The district court later denied the motion to reconsider.
C. At the Court of Appeals
{10} Ferguson argued to the Court of Appeals, inter alia, that he was held in punitive contempt without due process. A Court of Appeals panel majority affirmed and concluded “the sanctions were appropriate under Rule 1-011 and the court‘s inherent powers even though [Ferguson] failed to preserve these issues because the preservation exceptions could apply.” Butler v. Ferguson, A-1-CA-39546, mem. op. ¶ 6 (N.M. Ct. App. Nov. 16, 2023) (nonprecedential). In dissent, Judge Duffy explained she did not believe there was a preservation issue because there was no opportunity to object to the Sanctions Order prior to the district court entering its order. Butler, A-1-CA-39546, mem. op. ¶ 23 (Duffy, J., dissenting). Additionally,
II. DISCUSSION
{11} We granted certiorari to review two issues presented by Ferguson.2 First, we consider whether the Court of Appeals erred by holding a motion to reconsider was necessary to preserve issues for appeal from the district court‘s final Sanctions Order. We conclude Ferguson did not need to file a motion to reconsider to preserve
{12} Second, we consider whether the Court of Appeals erred by affirming the Sanctions Order under the district court‘s inherent powers and Rule 11 despite the lack of criminal-level due process safeguards that would have been required for the sanctions to be properly imposed under the court‘s contempt power. In addressing the second issue, we have rephrased the question Ferguson presented to this Court in his petition for writ of certiorari and argued in his briefings. There, he asked, “[w]hether the Court of Appeals erred by holding that a procedurally defective [punitive] contempt order may be affirmed under the less demanding standards for [remedial] contempt?” To ask the question presented by Ferguson is to answer it: No, of course a punitive contempt order issued without honoring necessary due process requirements cannot be affirmed. What we understand Ferguson is actually asking is whether the Sanctions Order that constitutes a violation of due process under the court‘s contempt power necessarily constitutes a violation of due process when imposed on other grounds—specifically, inherent powers or Rule 11.
{13} We conclude the Court of Appeals erred in holding that inherent powers were a valid alternative basis for the Sanctions Order, and reverse in part on that ground.
{14} Our analysis proceeds in four parts. We begin by addressing the preservation issue raised by Ferguson. Next, and as a threshold matter to Ferguson‘s second issue, we explain why the sanctions imposed by the district court made the contempt punitive, and why under our contempt law Ferguson was entitled to criminal-level due process. We then discuss why the district court‘s inherent powers were not a valid alternative basis for the sanctions. Last, we explain why the sanctions were proper under Rule 11 despite the lack of criminal-level due process protections.
A. Ferguson Did Not Have to File a Motion to Reconsider to Preserve Issues for Appeal
{15} Ferguson‘s first issue, whether a motion to reconsider was necеssary to preserve issues for appeal, is readily answered by our preservation rule:
To preserve an issue for review, it must appear that a ruling or decision by the trial court was fairly invoked. If a party has no opportunity to object to a ruling or order at the time it is made, the absence of an objection does not thereafter prejudice the party.
{16} In accordance with the plain language of
{17} That Ferguson filed a motion to reconsider on other grounds does not lead us to conclude he waived issues not presented in that motion. In his briefings, Butler argued, “having taken that opportunity [to move for reconsideration], . . . Ferguson was required to use it.” Butler‘s argument, however, begs the question by failing to offer any reasoning or authority to support this conclusion. Absent such reasoning or authority, we assume none exists, see In re Adoption of Doe, 1984-NMSC-024, ¶ 2, 100 N.M. 764, 676 P.2d 1329 (stating that where a party cites no authority to support an argument we assume none exists), and decline to otherwise hinder
B. Ferguson Was Held in Indirect Punitive Contempt Without Due Process
{18} In the Court of Appeals, Ferguson contended the sanctions imposed made the contempt punitive and he was consequently deprived of due process because he was not afforded criminal-level due process protections. The Court of Appeals declined to address this issue and instead upheld the sanctions on inherent powers and Rule 11 grounds. Butler, A-1-CA-39546, mem. op. ¶¶ 8, 15. In so doing, the Court of Appeals tacitly concluded that even if the sanctions were an improper exercise of the district court‘s contempt power, they were affirmable on other grounds. See id. It is this tacit conclusion Ferguson now challenges here. Accordingly, we first consider whether Ferguson was held in punitive contempt without due process, as that question is potentially dispositive. We conclude he clearly was.
1. Standard of review
{19} “Whether the district court exercised its contempt power consistent with the purposes of [remedial] contempt is a mixed question of fact and law that we review de novo.” State ex rel. CYFD v. Mercer-Smith, 2019-NMSC-005, ¶ 19, 434 P.3d 930.
{20} Under
3. Remedial versus punitive contempt
{21} Contempts of court are classified as punitive or remedial. Marshall, 2023-NMSC-009, ¶ 15. As this Court has made clear, “the [traditional] classifications of contempt charges as ‘civil’ or ‘criminal’ are somewhat paradoxical as these classifications do not relate to the underlying charges in the proceedings or the type
{22} The remedial contempt power serves to “preserve and enforce the rights of private parties to suits and to compel obedience to the orders, writs, mandates, and decrees of the court.” Mercer-Smith, 2019-NMSC-005, ¶ 20 (internal quotation marks and citation omitted). “If a court is exercising its [remedial] contempt power, it may impose compensatory . . . or coercive sanctions.” Id. ¶ 22. “Compensatory sanctions may include damages or attorney‘s fees and are imposed for the purpose of compensating a party for pecuniary losses sustained due to the contempt.” Tran v. Bennett, 2018-NMSC-009, ¶ 36, 411 P.3d 345. “Coercive sanctions may include ‘fines, imprisonment, or other sanctions’ designed ‘to compel the contemnor to comply . . . with an order of the court.‘” Id. ¶ 37 (citation omitted).
{23} “Because [rеmedial] contempt sanctions are not punitive in nature, once the contemnor complies, the sanctions end.” Marshall, 2023-NMSC-009, ¶ 12. “Thus, [a] [remedial] contempt defendant carries the keys of his prison in his own pocket. He can end the sentence and discharge himself of contempt at any moment by doing
{24} As opposed to remedial contempt, the punitive contempt power seeks “to vindicate the authority of the court.” Marshall, 2023-NMSC-009, ¶ 11 (citation omitted). Punitive contempt proceedings “are instituted to punish completed acts of disobedience that have threatened the authority and dignity of the court and are appropriate even after the contemnor is no longer acting contemptuously.” Id. ¶ 13 (citation omitted). Punitive contempt is a “crime in the ordinary sense; it is a violation of the law.” Id. (citation omitted). A punitive contemnor is “therefore entitled to due process protections of the criminal law, the specific nature of which will depend on whether the criminal contempt is categorized as direct or indirect.” Id. (citation omitted).
{25} “‘Direct contempt is contemptuous conduct in the presence of the court.‘” Id. ¶ 14 (emphasis and citation omitted). “[D]irect contempts traditionally have been subject to summary adjudication [in order] to maintain order in the courtroom.” Id. (first alteration in original) (citation omitted). “If feasible, even in summary proceedings for an act of direct contempt occurring in open court, an ‘adequate opportunity to defend or explain one‘s conduct is a minimum requirement before imposition of punishment.‘” Concha, 2011-NMSC-031 ¶ 27 (citation omitted).
{26} Conversely, indirect contempt is contemptuous conduct “‘committed outside the presence of the court.‘” Marshall, 2023-NMSC-009, ¶ 14 (citation omitted). Indirect contempts “must be resolved through . . . traditional due process procedures.” Id. (citation omitted). This means indirect punitive contemnors are “entitled to the full panoply of due process protections afforded to criminal defendants.” Tran, 2018-NMSC-009 ¶ 42. Specifically, indirect-punitive-contempt defendants have the right to appear and defend themselves in person, and by an attorney. See
{27} The contemnor also has the right to a jury trial if the offense is serious. Marshall, 2023-NMSC-009, ¶ 21 (citing Bloom v. Illinois, 391 U.S. 194, 198 (1968) for the proposition that whether a right to trial by jury is implicated depends on whether a contempt offense is classified as petty or serious). Punitive contempt is a petty offense unless the punishment makes it a serious one. See id. ¶ 21 (recognizing “[t]he United States Supreme Court has accepted the view that ‘criminal [or punitive] contempt is a petty offense unless the punishment makes it a serious one‘” (second alteration in original)). If the punishment involves a prison sentence exceeding six months, the contempt offense is serious. See id. ¶ 22 (citing Int‘l Union, United Mine Workers of Am. v. Bagwell, 512 U.S. 821, 826-27 (1994)); cf.
5. Ferguson was held in indirect punitive contempt
{28} In this case, the sanctions imposed by the district court made the contempt punitive. First, the sanctions were not compensatory in nature. The requirement to satisfy the judgment in full was not compensatory because the $292,000 judgment
{29} Second, the sanctions were not coercive. They were not imposed to compel Ferguson to comply with an order of the court.4 The requirements to satisfy the judgment in full and donate $50,000 to Roadrunner Food Bank were punishments per se, not punishments used as tools to gain compliance. True, the district court reasoned the sanctions were partly “to ensure that Ferguson complies with future orders of this [c]ourt,” but this is not the type of coercive punishment contemplated by our contempt jurisprudence. Contemnors may only be coerced into complying with current court orders, not future, yet-to-be-given orders. To permit this type of coercive punishment would effectively erase the remedial-punitive distinction by giving courts the power to cloak punitive sanctions under the mantle of coercion. Further, the district court did not give Ferguson a means to purge or discharge himself of the contempt by doing what he had previously refused to do. While the
{30} The district court‘s Sanctions Order was inconsistent with the purposes of remedial contempt; rather, the sanctions imposed rendered the contempt punitive. Because the punishable conduct occurred outside the presence of the district court, the punitive contempt was indirect. Therefore, Ferguson was entitled to criminal-level due process protections. Because he was not afforded those protections, thе sanctions were an improper exercise of the district court‘s contempt power. Having concluded the sanctions imposed were an improper exercise of the district court‘s punitive-contempt powers, we turn to whether the sanctions were otherwise permissible under another source of authority. First, we look at inherent powers. Then, we consider Rule 11.
C. Inherent Powers Were Not a Valid Alternative Basis for the Sanctions Order
{31} In this case, the district court referenced its inherent powers, but did not explicitly articulate inherent powers as an alternative basis for the sanctions. The
1. Standard of review
{32} We typically review a district court‘s imposition of sanctions under its inherent powers for an abuse of discretion. State ex rel. N.M. State Highway & Transp. Dep‘t v. Baca, 1995-NMSC-033, ¶ 26, 120 N.M. 1, 896 P.2d 1148. However, Ferguson does not argue to this Court that the Court of Appeals erred in concluding the sanctions were not an abuse of discretion under the district court‘s inherent powers. Rather, he only contends that he was necessarily deprived of due process to the extent the sanctions were imposed pursuant to inherent powers because the sanctions under our contempt law were punitive. Accordingly, to
2. Overview of the court‘s inherent powers
{33} “It has long been recognized that a court must be able to command the obedience of litigants and their attorneys if it is to perform its judicial functions.” Id. ¶ 11. “Such powers inhere in judicial authority and exist independent of statute.” Id.; Chambers v. NASCO, Inc., 501 U.S. 32, 43 (1991) (“Courts of justice are universally acknowledged to be vested, by their very creation, with power to impose silence, respect, and decorum, in their presence, and submission to their lawful mandates.” (citing Anderson, 6 Wheat. 204, 19 U.S. at 227)). Under its inherent powers, a court may “fine for contempt, imprison for contumacy, [and] enforce the observance of orders.” Baca, 1995-NMSC-033, ¶ 11 (citation omitted). A court may also invoke its inherent powers to sanction parties and аttorneys to regulate its docket, promote judicial efficiency, and deter frivolous filings. Id. “A court‘s inherent power only
3. Federal jurisprudence requires criminal-level due process protections when punitive sanctions are imposed pursuant to inherent powers
{34} The United States Supreme Court has explained what types of sanctions may be imposed under a federal court‘s inherent powers and what level of process is due under the Fifth Amendment. In Goodyear Tire & Rubber Co. v. Haeger, the Supreme Court explained when a court uses its inherent powers to fashion a sanction, the sanction must be compensatory rather than punitive “when imposed pursuant to civil procedures.” Id. at 107-08. In Goodyear, a district court found Goodyear had engaged in an extensive course of misconduct throughout the litigation process, beginning with discovery fraud. Id. at 105. The district court invoked its inherent authority to sanction Goodyear and awarded $2.7 million to Haeger, which сonstituted the entire sum spent in “legal fees and costs since the moment, early in litigation, when Goodyear made its first dishonest discovery response.” Id. at 105-06. The Ninth Circuit affirmed the award. See Haeger v. Goodyear Tire & Rubber Co., 813 F.3d 1233, 1237, 1254 (9th Cir. 2016). The Supreme Court reversed the Ninth Circuit. Goodyear, 581 U.S. at 115. Writing for the Court, Justice Kagan explained when a federal court exercises its inherent authority to sanction bad-faith conduct by ordering a litigant to pay the other side‘s
{35} Federal jurisprudence prior to Goodyear offers additional support for the conclusion that punitive sanctions imposed pursuant to a court‘s inherent powers
“Whether or not a finding of contempt is involved, unfairness and abuse are possible, especially if courts were to operate without any framework of rules or cap on their power to punish. In either case, the individual bears the risk of substantial punishment by reason of obstructive or disobedient conduct, as well as of vindictive pursuit by an offended judge.”
Hanshaw, 244 F.3d at 1139 (quoting Mackler, 146 F.3d at 130). Following this reasoning, both the Hanshaw and Mackler Courts held the punitive sanctions
4. Ferguson was not afforded due process to the extent the sanctions were imposed pursuant to inherent powers
{36} In accordance with the Fifth Amendment due process standards articulated in Goodyear, we hold punitive sanctions imposed pursuant to a court‘s inherent powers are circumscribed by our contempt law and therefore require criminal-level due process protections. However, we clarify that with sanctions levied through inherent powers that would not fit neatly within the contempt sanctioning scheme, such as outright dismissal of a case, requisite procedures are left to the discretion of the court. See Chambers, 501 U.S. at 44-45 (stating that outright dismissal of a case is a valid, though “severe,” sanction); id. at 46 (stating that because inherent powers extend to a full range of litigation abuse that other sanctioning “mechanisms” do not reach, the inherent power must “continue to exist to fill in the interstices“).
{37} In arriving at this holding, we expand on the reasoning articulated in Hanshaw and Mackler by noting the contempt power is a fundamental and prominent component of a court‘s inherent powers, and much disfavored conduct punishable pursuant to inherent powers will often be punishable by contempt. See Roadway Express, Inc. v. Piper, 447 U.S. 752, 764 (1980) (“The most prominent of these
{38} Accordingly, we hold Ferguson was not afforded due process to the extent the punitive sanctions were imposed pursuant to inherent powers, and consequently the
D. Rule 11 Was a Valid Alternative Basis for the Sanctions Order
{39} Ferguson did not challenge the district court‘s Rule 11 basis for the sanctions before the Court of Appeals. Nonetheless, the Court of Appeals held the sanctions were not an abuse of discretion under Rule 11. Butler, A-1-CA-39546, mem. op. ¶¶ 9-10, 12. In this Court, Ferguson does not argue that the Court of Appeals erred in finding no abuse of discretion under Rule 11. Rather, he claims because he was deprived of due process to the extent the sanctions were imposed under the district court‘s contempt powers, he was necessarily deprived of due process to the extent those same sanctions were imposed under
1. Standard of review
{40} We typically review all aspects of the district court‘s imposition of sanctions under
2. Due process requirements for Rule 11 are not coterminous with those for contempt
{41} Under
{42}
{43} Considering the different natures of contempt and
{44} The United States Supreme Court has pointed out that when evaluating what process is due there comes a point when “the benefit of an additional safeguard to the individual affected by the [government] action[,] and to society in terms of increased assurance that the action is just, may be outweighed by the cost.” Mathews v. Eldridge, 424 U.S. 319, 348 (1976). For contempt, due process protections are balanced against the extraordinary and broad power of the court to punish contumacy and disobedience. The breadth of the contempt power, in addition to the nаture of contumacious acts that have the potential to test the patience of any judge, demand well-delineated due process protections to ensure the power is not abused. See Concha, 2011-NMSC-031, ¶ 29; Bagwell, 512 U.S. at 831.
{45} We conclude due process requirements under
“No set rule can be stated to govern all Rule 11 cases; the standard is necessarily flexible to cover varying situations. The specific dictates of due procеss will be determined by the interaction of several factors. These factors include but are not limited to: the interests of attorneys and parties in having a specific sanction imposed only when justified; the risk of an erroneous imposition of sanctions under the procedures
used and the probable value of additional notice and hearing; and the interests of the court in efficiently monitoring the use of the judicial system and the fiscal and administrative burdens that additional procedural requirements would entail. Providing due process will ensure that Rule 11 will not be applied arbitrarily, that erroneous application of the rule will be minimized, and that creative legal arguments and vigorous advocacy will not be stifled.”
Rivera, 1991-NMSC-030, ¶ 24 (quoting Donaldson, 819 F.2d at 1558). We recognize there may be a rare case where
{46} We note and acknowledge our holding in this case puts due process requirements for sanctions imposed under inherent powers in lockstep with those for contempt but does not bind
3. Rule 11 was a proper basis for the sanctions only with regard to Ferguson‘s willful misstatements in documents filed with the court
{47} The Sanctions Order punished Ferguson under
{48} The scope of conduct listed in the Sanctions Order and discussed by the Court of Appeals, see id., was too broad.
III. CONCLUSION
{50} We affirm the Court of Appeals in part and reverse in part. The Court of Appeals is reversed in part in holding that Ferguson was required to file a motion to reconsider to preserve issues for appeal from a final order when the errors only became apparent on the face of the order. The Court of Appeals is also reversed in part in holding that inherent powers were a valid alternative basis for the Sanctions Order. We affirm the Court of Appeals’ conclusion that
{51} IT IS SO ORDERED.
C. SHANNON BACON, Justice
DAVID K. THOMSON, Chief Justice
MICHAEL E. VIGIL, Justice
JULIE J. VARGAS, Justice
BRIANA H. ZAMORA, Justice