WILLIAM E. KIPNIS AND MARCI KIPNIS, Plaintiffs-Respondents, v. MICHAEL JUSBASCHE AND REBECCA MARK-JUSBASCHE, Defendants-Petitioners.
No. S-1-SC-35249
IN THE SUPREME COURT OF THE STATE OF NEW MEXICO
December 1, 2016
Opinion Number: 2017-NMSC-006
DANIELS, Chief Justice.
The Simons Firm, L.L.P.
Thomas A. Simons, IV
Daniel H. Friedman
Santa Fe, NM
Rodey, Dickason, Sloan, Akin & Robb, P.A.
Edward R. Ricco
Jocelyn C. Drennan
Albuquerque, NM
for Petitioners
John B. Pound, L.L.C.
John Bennett Pound
Santa Fe, NM
for Respondents
OPINION
DANIELS, Chief Justice.
{1}
{2} In this case, we consider whether evidence of a nolo plea is admissible in a civil case for misrepresentation where the plaintiffs sought to introduce a nineteen-year-old nolo plea of one defendant to support an argument that the defendant fraudulently failed to disclose his nolo plea during the
I. BACKGROUND
{3} In 2003, Defendants Michael Jusbasche and Rebecca Mark-Jusbasche formed a limited liability corporation (LLC) with Plaintiffs William and Marci Kipnis for the purpose of replacing the Hotel Edelweiss at the Taos Ski Valley with a modern condominium complex. As their part of the initial capital contribution, Plaintiffs deeded the hotel property and transferred the hotel liquor license to the LLC. Defendants contributed an initial capital infusion of $351,000, made loans of several million dollars to the LLC, and retained a fifty-one percent controlling interest. Although it was initially anticipated that the project would generate a three- to four-million-dollar profit, it became clear after a number of setbacks that the venture would not yield a profit, and Defendants, “having a majority share of the voting powers,” dissolved the LLC in 2010. Simultaneously, the LLC under Defendants’ control transferred several unsold residential units and two commercial units from the condominium development to Defendants for partial loan repayment at dissolution. The lawfulness of those repayment transfers is not before us in this proceeding.
{4} Plaintiffs filed suit for damages against Defendants, alleging fraud, constructive fraud, intentional misrepresentation, and conversion, along with other claims no longer at issue. The thrust of these claims arises from a conversation Plaintiffs claim they had with Defendants prior to forming the LLC. Plaintiffs allege that in 2003 William Kipnis asked Defendants “if there was anything in their personal histories he should know about before going into a business relationship with them,” and Defendants answered negatively. For purposes of summary judgment, Defendants conceded that the court could assume the correctness of Plaintiffs’ version of that discussion.
{5} In their summary judgment materials, Plaintiffs offered evidence that in 1984 Michael Jusbasche pleaded nolo contendere in a Texas court to theft of trade secrets for purportedly stealing a seismic prospect map from his former employer. Michael Jusbasche was placed in a Texas deferred adjudication program, required to pay a fine, and ordered to serve a five-year probationary period. Because he complied with the terms of the deferred adjudication, he was never convicted of any criminal offense. See State v. Burk, 1984-NMCA-043, ¶¶ 6-7, 101 N.M. 263, 680 P.2d 980 (recognizing that under Texas statute, a deferred adjudication is not deemed a conviction); cf. State v. Harris, 2013-NMCA-031, ¶ 6, 297 P.3d 374 (clarifying that successful completion of a conditional discharge pursuant to
{6} Defendants filed a motion for summary judgment arguing in relevant part, as a matter of law, that
Where the plaintiff in a civil suit seeks to prove that he was fraudulently deceived into entering into a business relationship by the defendant, and the deception was in the form of failure to respond honestly to a question which would reasonably elicit disclosure of a plea of no contest to a criminal charge of dishonesty in business, does
Rule 11-410 bar the evidence of the plea?
{8} The Court of Appeals reversed the district court‘s grant of summary judgment, holding that
tell” Plaintiffs. Id. ¶ 27.
{9} We granted Defendants’ Petition for a Writ of Certiorari to consider the proper interpretation and application of
II. DISCUSSION
{10} We review de novo a district court‘s order granting or denying summary judgment. See Potter v. Pierce, 2015-NMSC-002, ¶ 8, 342 P.3d 54. In doing so, this case requires us to interpret a provision of the New Mexico Rules of Evidence, a question of law we also review de novo. Allen v. LeMaster, 2012-NMSC-001, ¶ 11, 267 P.3d 806. “When construing our procedural rules, we use the same rules of construction applicable to the interpretation of statutes.” Id.
{11} We begin by “examin[ing] the plain language of the [rule] as well as the context in which it was promulgated, including the history of the [rule] and the object and purpose . . . .” Moses v. Skandera, 2015-NMSC-036, ¶ 15, 367 P.3d 838 (internal quotation marks and citation omitted). To assist in that process, New Mexico courts have concluded that federal interpretations of the Federal Rules of Evidence are instructive when interpreting identical provisions in our rules of evidence. See State v. Torres, 1998-NMSC-052, ¶ 13, 126 N.M. 477, 971 P.2d 1267 (relying on federal case law interpreting
A. The Language of Rule 11-410(A)(2) Plainly Prohibits Admissibility of a Nolo Plea Against the Pleader in Subsequent Proceedings
{12} Defendants urge that the Court of Appeals erred in holding evidence of Michael Jusbasche‘s nolo plea admissible under
{13} This Court first interpreted
“the plain import of the language of
{14} The Trujillo Court also grounded its decision in the policy underlying
{15} The specific policy behind recognition of the nolo plea further supports excluding the plea itself as substantive evidence in subsequent litigation. In New Mexico, a nolo plea has the same effect as a guilty plea for the purpose of entering a judgment and sentence in the case in which the plea is entered, but unlike a guilty plea it is not an express or implied admission of factual guilt. State v. Baca, 1984-NMCA-056, ¶ 5, 101 N.M. 415, 683 P.2d 970 (holding that a revocation of probation could not be based on a conviction resulting from a nolo plea); see also
{16} Because a nolo plea, unlike a guilty plea, has no probative value and is intended to encourage plea negotiations by avoiding collateral evidentiary consequences resulting from guilty pleas,
See Weissenberger & Duane, supra, § 410.3 at 213 (“[T]he nolo contendere plea is ‘inconclusive’ and has less probative value than a plea of guilty as evidence of the guilt of the one who entered the plea.” (footnote omitted) (citation omitted)). The advantage of the plea “is to avoid potential future repercussions which would be caused by the admission of liability, particularly the repercussions in potential future civil litigation.” Lichon v. Am. Universal Ins. Co., 459 N.W. 2d 288, 293 (Mich. 1990). “Without a guarantee that the plea would not be used against them, the nolo contendere plea would be of no value to the
B. Narrow, Judicially Created Exceptions to Rule 11-410 Are Inapplicable
{17} The Court of Appeals in this case considered the Trujillo Court‘s construction of
{18} The Trujillo Court did not identify any pertinent federal or state cases, observing that similar evidentiary provisions in other jurisdictions were like the New Mexico rule: “of recent vintage and . . . not yet . . . under the judicial microscope.” Trujillo, 1980-NMSC-004, ¶¶ 11-12. In the thirty-six years since Trujillo, many of the state and federal jurisdictions that recognize the nolo plea have had the opportunity to construe similar evidentiary provisions, resulting in case law that considers admitting evidence of a conviction predicated on a nolo plea in certain limited contexts “[d]espite
{19} While there is no universal agreement on the overall scope of judicial exceptions to
{20} In Olsen v. Correiro, for example, a civil rights plaintiff challenged a federal district court‘s decision to admit evidence of his prior conviction and sentence resulting from a nolo
plea. See 189 F.3d 52, 55 (1st Cir. 1999). The plaintiff was initially convicted of first degree murder and sentenced to life imprisonment. Id. Five years later, the conviction was overturned. Id. Rather than face another trial, the plaintiff pleaded nolo contendere to a lesser charge of manslaughter, was convicted, and was sentenced to time served. Id. He brought a civil rights action seeking damages for the period of his “improper incarceration.” Id.
{21} In affirming the district court‘s evidentiary ruling, the First Circuit reasoned that evidence of the conviction and sentence was not offered “to prove that [the plaintiff] actually committed manslaughter, or to suggest that he was actually guilty of a criminal act . . . [but] was primarily offered to counter [the plaintiff‘s] claim for incarceration-based damages by showing that he was incarcerated for something other than the murder conviction.” Id. at 61. The court suggested that had the government offered the conviction and sentence for the purpose of demonstrating the pleader‘s guilt for the crime pleaded to, using the plea “in effect . . . as an admission,” the purposes of
{22} United States v. Adedoyin, 369 F.3d 337 (3d Cir. 2004), which Plaintiffs also cite, is equally instructive. In that case, a foreign national was ordered deported from the United States as a result of his felony conviction based on a nolo plea. See id. at 339. Several years later, he reentered the country using another name, falsely denying in his visa application that he had ever been convicted of a felony. See id. In a prosecution for
{23} The New Mexico Court of Appeals has similarly held that evidence of a conviction resulting from a nolo plea accepted and recorded in open court is admissible to prove that a defendant has a prior conviction for purposes of sentencing enhancement under the habitual offender statute. State v. Marquez, 1986-NMCA-119, ¶¶ 2, 7, 11, 105 N.M. 269, 731 P.2d 965. Relying on Baca, 1984-NMCA-056, the Marquez court distinguished between admission of a nolo plea itself and admission of a conviction based on the plea, not to establish an inference of guilt but to show the fact of conviction where that status is relevant. Id. ¶ 9. Baca had held that a nolo plea cannot “be used as the sole basis to revoke probation,” reasoning that to hold otherwise would undermine “the policy of this [s]tate to promote plea bargaining.” See 1984-NMCA-056, ¶¶ 1, 9. The Marquez Court suggested that if the state in Baca had sought to introduce the conviction based on the plea rather than introducing the plea itself, the Baca Court might have reached a different result. See Marquez, 1986-NMCA-119, ¶ 9; see, e.g., Town of Groton v. United Steelworkers of Am., 757 A.2d 501, 509-11
(Conn. 2000) (holding that a public employer could discharge an employee as a result of a conviction for theft from the employer even though the conviction followed from a nolo plea).
{24} While these authorities certainly support the recognition that a rigid interpretation of the exclusionary stance of
{25} Each of these cases involved a conviction based on a nolo plea rather than a nolo plea in itself. Whether we might recognize a generalized distinction between inadmissibility of the nolo plea and admissibility of the conviction predicated on the plea is not before us in this case. See, e.g., Weissenberger & Duane, supra, § 410.3 at 215 (suggesting that making a distinction between admission of a nolo plea and admission of a conviction resulting therefrom based on the rule‘s literal prohibition against admission of a “nolo contendere plea” without mentioning a “judgment of conviction based on that plea” would “reduce[] the rule to a meaningless nullity” because ”
{26} But we need not address the merits of the competing views on that issue because there was never a conviction that resulted from the nolo plea in this case. Plaintiffs seek only to admit evidence of Michael Jusbasche‘s nolo plea itself rather than a resulting conviction. Without exception, the plain language of
{27} Even those jurisdictions permitting the introduction of evidence of a conviction predicated on a nolo plea instead of the plea itself often involve proceedings where the fact of the conviction had independent legal significance and was not being offered to create any inference of the pleader‘s guilt. See Wayne R. LaFave et al., 5 Criminal Procedure § 21.4(a) at 951-52 (4th ed. 2015) (“Judgment following entry of a nolo contendere plea is a conviction, and may be admitted as such in other proceedings where the fact of conviction has legal significance (e.g., to apply multiple offender penalty provisions . . . .)“).
C. The Purpose of Rule 11-410 Would Be Frustrated by Evidentiary Use of the Nolo Plea in This Case
{28} Plaintiffs have acknowledged that
{29} Despite their arguments to the contrary, Plaintiffs undoubtedly seek to introduce evidence of Michael Jusbasche‘s nolo plea as an implicit admission that he may have committed the offense to which he pleaded. His nolo plea would be relevant to Plaintiffs’ claims of fraud and misrepresentation only if it supported some inference of wrongdoing. Plaintiffs belie their own argument by conceding that information pertaining to Michael Jusbasche‘s nolo plea would “[o]f course” create a question in the factfinder‘s mind about whether Michael Jusbasche actually stole the proprietary maps from his former employer. They acknowledge, as the sole basis of their theory that Defendants materially misrepresented their fitness to engage in the joint business venture, the fact that Michael Jusbasche pleaded nolo contendere to a crime of dishonesty and did not defend himself rather than any factual finding of dishonesty by an independent court or other investigative source.
{30} The distinction Plaintiffs seek is a distinction without a principled difference. The attempted use of the nolo plea in this context necessarily depends on asking the factfinder to infer from the nolo plea alone that Michael Jusbasche may in fact have stolen property from the former employer and that if Plaintiffs had known that he may have done so they would not have gone into business with him. This use would not only violate the plain language of
{31} We conclude that
III. CONCLUSION
{32} We reverse the decision of the Court of Appeals and affirm the district court‘s grant of summary judgment.
{33} IT IS SO ORDERED.
CHARLES W. DANIELS, Chief Justice
WE CONCUR:
PETRA JIMENEZ MAES, Justice
EDWARD L. CHÁVEZ, Justice
JUDITH K. NAKAMURA, Justice