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Gandydancer, LLC v. Rock House CGM, LLC

Court of Appeals of New Mexico

July 30, 2018

GANDYDANCER, LLC, Plaintiff-Appellee,
ROCK HOUSE CGM, LLC, and KARL G. PERGOLA, Defendants-Appellants.


          The New Mexico Law Group PC Robert Neil Singer Albuquerque, NM Adams Corporate Law, Inc. Addison K. Adams Santa Ana, CA for Appellee

          Butt, Thornton & Baehr, P.C. Michael P. Clemens Rodney L. Schlagel Rheba Rutkowski Albuquerque, NM for Appellants


          JULIE J. VARGAS, Judge.

         {¶1} In this interlocutory appeal, we consider whether the language in NMS A 1978, Section 57-12-10(B) (2005) of New Mexico Unfair Practices Act (UPA) allowing "[a]ny person who suffers any loss ... as a result of any ... act or practice declared unlawful by the [UPA to] bring an action[, ]" creates a private right of action for businesses seeking to bring suit against competitors for unfair competition practices. Taking into consideration both the plain language of the statute and the UPA's remedial purpose as a consumer protection statute, we hold that a business may sue a competitor under the UPA only if the conduct alleged involves consumer protection concerns or trade practices addressed to the market generally. Because Plaintiffs claims against its business competitor do address such concerns, we affirm.


         {¶2} Plaintiff Gandydancer, LLC and Defendant Rock House CGM, LLC are both construction companies providing railroad contracting services to BNSF Railway Company (BNSF). In the spring of 2015, Plaintiff submitted a complaint to the New Mexico Construction Industries Division (CID), alleging Defendant had performed unlicensed construction work in violation of the Construction Industries Licensing Act (CILA), NMS A 1978, §§60-13-1 to -59 (1967, as amended through 2013). Following an investigation, Defendant entered into a stipulated settlement agreement with CID agreeing to pay administrative penalties. A week before the stipulated settlement agreement was approved by CID's supervisory commission, Plaintiff sued Defendant in district court raising several claims, including a UPA claim. Plaintiffs complaint alleged that Defendant operated its business without satisfying the mandatory licensing requirements, induced Plaintiffs former employees to divulge confidential trade secrets, and used those trade secrets to convince BNSF to hire Defendant instead of Plaintiff without disclosing to BNSF that it was unlicensed.

         {¶3} Defendant filed a motion to dismiss, asserting Plaintiff had no standing to bring the UPA claim and failed to state any claims upon which relief could be granted. Following a hearing, the district court denied Defendant's motion to dismiss Plaintiffs UPA claim and certified the question of "whether the [UPA] affords private-party standing to business competitors who are both sellers of services, or only to buyers of goods and services" to this Court for interlocutory review. Defendant then filed an application for interlocutory appeal, which this Court granted pursuant to Rule 12-203 NMRA and NMSA 1978, Section 39-3-4(B) (1999).


         {¶4} Defendant raises three issues on appeal. First, Defendant contends that our prior decisions and the legislative intent of the UPA to protect consumers limits its grant of standing to "a person who purchased goods or services[, ]" notwithstanding the broad language of Section 57-12-10(B) allowing "[a]ny person who suffers any loss of money or property" to bring a claim. Next, Defendant claims Plaintiff has failed to state a viable UPA claim, requiring dismissal with prejudice of its complaint. Finally, Defendant argues that to allow Plaintiff to bring a UPA claim against a competitor for failing to obtain a license would result in an improper usurpation of the government's regulatory authority. We are not persuaded by Defendant's arguments and affirm the district court.

         A. Standard of Review

         {¶5} A business competitor's standing to bring a private right of action under the provisions of the UPA is an issue of first impression in New Mexico. See First Nat'l Bancorp Inc. v. Alley, 76 F.Supp.3d 1261, 1263 (D.N.M. 2014) (acknowledging no New Mexico court had directly decided the issue of competitor standing under the UPA); Navajo Nation v. Urban Outfitters, Inc., 935 F.Supp.2d 1147, 1174 (D.N.M. 2013) (acknowledging undecided nature of competitor standing). Statutory interpretation, as well as a party's standing to litigate a particular issue are both questions of law we review de novo. Town of Silver City v. Scartaccini, 2006-NMCA-009, ¶ 11, 138 N.M. 813, 126 P.3d 1177.

         B. Plaintiffs Standing to Bring a Claim

         {¶6} Defendant effectively makes two arguments as to why Plaintiff cannot bring a claim under the plain language of the UPA. First, Defendant argues that the provision in Section 57-10-12(B) allowing "[a]ny person who suffers any loss" to bring a claim is tempered by the legislative intent of the UPA and our prior case law limiting standing to buyers of goods and services. Second, Defendant contends that, while the UPA ...

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