United States District Court, D. New Mexico
BERT MADERA, MONTIE CAROL MADERA, and PITCHFORK CATTLE COMPANY, LLC, Plaintiffs,
R. BRIAN COKER, SCOTT W. JOHNSON, OZARK ROYALTY CO., LLC, and CHIRON FINANCIAL, LLC, Defendants.
MEMORANDUM OPINION AND ORDER
MATTER comes before the Court upon Plaintiffs' Emergency
Motion for a Temporary Restraining Order, Lien Voidance, or
Lien Cancellation, filed July 9, 2018 (Doc.
7). Having reviewed the parties' pleadings and
the applicable law, the Court finds that Plaintiffs'
Motion is well-taken and, therefore, is GRANTED IN
matter arises from a contract dispute as to whether
Defendants are entitled to a fee for the potential sale of
certain real and personal property of Pitchfork Cattle
Company, LLC. Plaintiffs own a 35, 000 acre cattle ranch
called Pitchfork Ranch, located in Lea County, New Mexico.
Plaintiffs own mostly the surface interests, and make money
by entering into contracts with oil companies for surface
use, services, and water. Plaintiffs and Defendants entered into
an Engagement Agreement related to certain services in the
advertising and sale of the Pitchfork ranch properties.
Defendants claimed to have contacted hundreds of entities on
behalf of the Plaintiffs. See Doc.
6-4. The Plaintiffs subsequently fired the
Defendants after an allegedly botched sale of mineral rights.
Sometime later, Plaintiffs entered into a purchase agreement
to sell their remaining property interests with the primary
oil company that conducts oil and gas operations on their
learning of the sale, Defendant Chiron Financial, LLC filed a
“Notice of Agreement”, dated June 12, 2018, and
recorded said notice in the Lea County Clerk's Office on
June 18, 2018. The document was acknowledged, and signed by
Scott. W. Johnson as Managing Director of Chiron Financial.
The Notice of Agreement attaches the seven page Engagement
Agreement, which lists a 5% fee amount. The Notice of
Notice is hereby given that on the 2nd day of
October, 2017, Bert Madera and
Montie Carol Madera, of the
Pitchfork Cattle Company, LLC, (collectively
the “Company”), whose address is
125 Bellavia Circle Drive, Ruidoso, NM, entered into a
written Engagement Agreement with Chiron Financial
LLC and Ozark Royalty Co. LLC,
(hereinafter “Advisors”), for
services related to the sale of some or all of the
Company's real property and other assets, located in Lea
County, New Mexico (the “Subject Properties”).
Under the Engagement Agreement, Advisors agree to act as the
exclusive investment bankers and exclusive providers of
investment banking services related to the sale of some or
all property belonging to the Company for an initial period
of six (6) months, in return for compensation as provided for
in Paragraph B of the Engagement Agreement, to include the
obligation of paying the agreed upon fee for a sale of the
Subject Properties which consummates within twelve (12)
months of termination of the Engagement Agreement. Chiron
Financial LLC contacted hundreds of persons and entities
related to the sale of the Subject Properties. A copy of the
executed Engagement Agreement is attached hereto as Exhibit
Doc. 6-4, p. 1.
filed a complaint in the Fifth Judicial District Court, Lea
County, State of New Mexico, on June 27, 2018, seeking a
declaration of rights under the Engagement Agreement.
Doc. 1-1. This state case was removed on
July 2, 2018. Doc. 1. Because Plaintiffs did
not realize that Chiron Financial had recorded the Notice of
Agreement, Plaintiffs filed an Amended Complaint on July 9,
2018, asserting the following claims: Declaration that the
Plaintiffs Do Not Owe Chiron or Johnson Compensation for the
Sale of the Ranch (Count 1); Declaration that Plaintiffs do
not owe Ozark or Coker Compensation for the Sale of the Ranch
(Count 2); Slander of Title Against Chiron (Count 3);
Tortious Interference with Contract against Chiron (Count 4);
and Action for Voidance or Cancellation of Title Encumbrance,
or for an Injunction Ordering Immediate Release Thereof
(Count 5). Doc. 6.
same time, Plaintiffs filed an emergency motion for relief,
seeking three alternate forms of relief: (1) Lien Voidance
under NMSA § 48-1A-8; (2) Lien Cancellation under NMSA
§§ 48-12-6 or 48-2-9, or (3) a preliminary
injunction voiding, cancelling, or ordering the release of
the Notice of Agreement. Doc. 7.
of their request for relief, Plaintiffs included affidavits
discussing the Notice of Agreement. David A. Pyeatt,
president and owner of Elliot & Waldron Title &
Abstract Co., Inc., the title company involved in the sale,
filed a declaration stating that the “Notice of
Agreement seeks to notify the public, including future
purchasers of the Ranch of the obligation of the Plaintiff to
pay certain amounts to Defendants at closing of any sale of
the Ranch.” Doc. 12-2.
stated in the declaration that “[t]he Defendant's
Notice of Agreement is an adverse matter affecting the title
to the Ranch. E&W is prohibited from ignoring or insuring
over the Notice of Agreement pursuant to NMAC 18.104.22.168D
without exception to the Notice of Agreement, therefore a
release of the Notice of Agreement has been required.”
Doc. 12-2. Mr. Pyeatt also testified that
the Notice of Agreement constituted an “adverse
matter”, i.e., a document affecting title to the
properties, for which he could not issue title
insurance, but had to issue an exception. Mr. Pyeatt stated
that the sale could go through if either (1) the purchaser
accepts an exception to title policy for the Notice of
Agreement, or (2) a release of the Notice of Agreement is
recorded. Doc. 12-2.
hearing on July 12, 2018, the Court heard argument from
Plaintiffs and Defendant Chiron Financial. To comply with the
requirements of the Lien Protection Efficiency Act, the Court
issued an Order to Show Cause why the purported Notice of
Agreement, recorded in Lea County, should not be stricken as
a “nonconsensual common law lien”, pursuant to
NMSA § 48-1A-8, 9. See Docs. 13,
20. The Orders to Show Cause allowed Defendants to
present argument on why the Notice of Agreement should not be
stricken as a nonconsensual common law lien, and allowed
Plaintiffs to respond.
Court held the Order to Show Cause hearing on August 2, 2018.
At the evidentiary hearing, the Court heard testimony from
Mr. Pyeatt, and argument from Plaintiffs and Defendants
Chiron Financial and Ozark Royalty. Because Defendant Chiron
Financial threatened to sue the title company, Plaintiffs
have offered (at the insistence of the title company) to
deposit in the Court's registry the claimed sales fee,
and included such language in a proposed order tendered to
Choice of Law Provision.
Defendant Chiron Financial argues that the Court must apply
Texas law, based on a choice of law provision in the
Engagement Agreement. However, for purposes of ruling on the
Emergency Motion, the Engagement Agreement is not at issue.
Instead, the Court must decide the effect of, and any remedy
for, the filing of the “Notice of Agreement” in
the real property records of Lea County, New Mexico.
Therefore, this narrow in rem issue must be decided
according to New Mexico law.
Avoidance of Notice of Agreement pursuant to NMSA §
seeks to declare the Notice of Agreement void ab
initio as an invalid pursuant to NMSA § 48-1A-8.
Defendants have no valid interest in the real properties
or sales proceeds.
core, this case presents a simple issue. All parties agree
that Defendants have no interest in, or claim to, the
Pitchfork Ranch's real properties or proceeds, and at
most Defendants have in personam contract claims
against Plaintiffs. Defendant Chiron Financial states that
“the notice neither encumbers property as a security
nor asserts that Pitchfork owes a debt.” Doc.
not holding any apparent valid interest in the properties,
Defendant Chiron Financial filed the “Notice of
Agreement.” Defendant Chiron Financial states, in
theory, that its Notice of Agreement is insufficient to
prevent the sale or even assert an interest in the sales
proceeds. However, instead of releasing the Notice of
Agreement, stipulating to these facts to effectuate closing,
or agreeing to an escrow of the claimed sales fee as offered
by Plaintiffs, Defendants continue to assert an amorphous,
undefined interest - something that is enough to cloud title
but that allegedly falls short of being a lien that can be
declared void pursuant to NMSA § 48-1A-9. This strategy
is intended to hold the sale hostage and force Plaintiffs to
settle without adjudicating the underlying ...