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Blue Canyon Well Association v. Jevne

Court of Appeals of New Mexico

August 2, 2017

DENISE JEVNE, Defendant-Appellant.

         APPEAL FROM THE DISTRICT COURT OF SANTA FE COUNTY Francis J. Mathew, District Judge

          Sommer, Karnes & Associates, LLP Karl H. Sommer Santa Fe, NM for Appellee

          Graeser & McQueen, LLC Christopher L. Graeser Santa Fe, NM for Appellant


          JULIE J. VARGAS, Judge

         {1} In this appeal we address whether Plaintiff Blue Canyon Well Association (Blue Canyon) was a legal entity with capacity to sue Defendant Denise Jevne. Specifically, we consider the applicability of NMSA 1978, Section 53-10-1 (1937) to Blue Canyon's claim that it was entitled to bring the suit as an unincorporated association. We hold that Blue Canyon's legal capacity to sue Jevne as an unincorporated association is dependent on its compliance with statutory requirements, and because it failed to comply with the statutory requirements, Blue Canyon lacked the capacity to sue Jevne. We reverse the judgment of the district court and remand the case for further proceedings.

         I. BACKGROUND

         {2} The members of Blue Canyon and Jevne are all owners of real property in Santa Fe County that claim to be parties to a well sharing and easement agreement (the Agreement). Blue Canyon was formed to maintain and manage the well pursuant to the Agreement. Some years later, a dispute arose between Jevne and the other owners regarding Jevne's unpaid water well expenses. As a result, Blue Canyon brought a claim against Jevne in magistrate court, seeking $7, 651.50 for past due bills, costs associated with well use, and attorney fees and charges. The complaint was signed, "Blue Canyon Well Ass'n: Anna & Joe Durr, Frank & Billie Martinez, Lesley King, President[.]" After a trial on the merits, the magistrate court entered judgment awarding Blue Canyon $2, 600.00 in damages and $6, 697.02 in attorney fees. Jevne appealed that judgment to the district court.

         {3} Shortly after Jevne appealed the judgment, the individuals who signed the complaint on behalf of Blue Canyon (collectively, Movants) filed a motion in district court, seeking to amend the caption of the case in order to "properly identify Plaintiffs" by substituting their names for Blue Canyon. In the motion to amend, Movants pointed out that they had each signed the complaint as individuals on behalf of Blue Canyon, but stated that "while there is a Well Agreement in the matter, there is no Blue Canyon Well Association per se." They therefore requested that they be identified as Plaintiffs in Blue Canyon's place. In opposing the motion, Jevne saw the motion as an improper attempt to establish the Durrs' right to use the well. Jevne claimed that the Durrs were not a part of the Agreement and were not valid users without first filing a declaratory judgment action to establish their status. Jevne recognized Blue Canyon's status as an unincorporated association and its power to sue and collect judgments, but requested that the appeal be dismissed in light of Movants' denial of Blue Canyon's existence.

         {4} The district court held a hearing on Movants' motion to amend and ordered the parties to provide supplemental briefing. In Movants' supplemental brief, they again asserted that Blue Canyon was "not a legal entity properly formed under Section 53-10-1[, ]" and as such, they, individually, were the proper real parties in interest in the case. Having retained new counsel, Jevne changed positions in her supplemental response, arguing that Blue Canyon was a non-existent entity. Jevne also asserted that Movants' motion was actually a motion to substitute parties without complying with Rule 1-025 NMRA and that the case must be dismissed because the judgment in favor of a non-existent entity was "uncollectible."

         {5} The district court denied Movants' motion to amend the caption and rejected Movants' claim that Blue Canyon did not exist as a legal entity because it had not complied with the filing requirement of Section 53-10-1 for the creation of an unincorporated association. The district court held that the use of the word "may" in Section 53-10-1 indicated that filing statements and other documents referenced in the statute to create an unincorporated association is permissive. Following a de novo trial on the merits, the district court entered judgment in favor of Blue Canyon and entered findings of fact and conclusions of law that the Agreement was created in March 1991, that Blue Canyon was formed to carry out the requirements of the Agreement, and that Blue Canyon "is an unincorporated association with the capacity to sue and be sued."

         {6} Jevne filed a motion to amend the judgment and a motion for new trial, both attacking the district court's judgment. The district court held a hearing on Jevne's post-judgment motions, denying both. Jevne appeals, challenging the district court's judgment in Blue Canyon's favor, as well as its denial of those two motions.


         {7} On appeal, Jevne claims that the district court erred when it held that Blue Canyon was authorized to maintain this action as an unincorporated association notwithstanding that Blue Canyon had not filed the documents described in Section 53-10-1 (statutory documents) with the county clerk. Now forced to argue a position contrary to the position they took in the district court, Blue Canyon first contends that the district court correctly held that the use of the word "may" in the statute renders the filing of any statutory documents by Blue Canyon to be permissive. Furthermore, Blue Canyon argues, because unincorporated associations are recognized by both statute and common law, it is not required to comply with the statutory requirements to be a common law unincorporated association and sue in the name of the association. We are not persuaded by either argument.

         A. Section 53-10-1 Requires the Filing of Statutory Documents to ...

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