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Midway Leasing, Inc. v. Wagner Equipment Co.

United States District Court, D. New Mexico

November 21, 2018

MIDWAY LEASING, INC., a New Mexico corporation, Plaintiff,
WAGNER EQUIPMENT CO., a Colorado corporation, Defendant.


         THIS MATTER comes before the Court on Defendant's Motion for Partial Summary Judgment on Affirmative Defense Based on Public Policy (Doc. 33), filed September 6, 2018. Pursuant to 28 U.S.C. § 636(c) and Fed.R.Civ.P. 73(b), the parties have consented to me serving as the presiding judge and entering final judgment. Docs. 8, 9, 10. Having reviewed the submissions of the parties and the relevant law, and having conducted oral arguments, the Court will grant Defendant's Motion for Partial Summary Judgment. Specifically, the Court finds that a contingency fee agreement for lobbying before the County Commission would be unenforceable as in contravention of New Mexico's public policy.

         I. BACKGROUND

         Plaintiff Midway is a real estate agency and developer, while Defendant Wagner is a business that assembles, sells, and leases construction equipment. According to Midway, the parties entered into an agreement in 2015 in which Midway would assist Wagner in securing the approval of Industrial Revenue Bonds (“IRBs”) to be issued by Bernalillo County. Plaintiff maintains that an unwritten IRB agreement reached in October 2015 requires that each year Wagner incurs property tax savings from the IRB awards, Wagner must pay Midway 18% of such savings. Wagner denies that the parties entered into the IRB agreement as described by Midway. Nevertheless, for purposes of this partial summary judgment motion only, Wagner “will accept as true Midway's allegation that the parties agreed to a fee based on a percentage of the tax savings Wagner will enjoy as a result of the IRBs.” Doc. 34 at 2.

         Midway's suit against Wagner sets forth the following theories for recovery of damages: (1) breach of contract, (2) unjust enrichment, and (3) quantum meruit. Wagner now moves for summary judgment on the breach of contract claim based on its affirmative defense that the contingency payment term of the parties' contract, as alleged by Midway, is unenforceable on public policy grounds.


         Pursuant to Federal Rule of Civil Procedure 56, “[t]he court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). “The movant bears the initial burden of making a prima facie demonstration of the absence of a genuine issue of material fact and entitlement to judgment as a matter of law.” Adler v. Wal-Mart Stores, Inc., 144 F.3d 664, 670-71 (10th Cir. 1998). The burden then shifts “to the nonmoving party to show that there is a genuine issue of material fact.” Bacchus Indus., Inc., v. Arvin Indus., Inc., 939 F.2d 887, 891 (10th Cir. 1991).

         A “genuine” dispute exists where the evidence is such that a reasonable jury could resolve the issue either way. See Adler, 144 F.3d at 670 (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). A mere scintilla of evidence in the non-movant's favor is not sufficient. Anderson, 477 U.S. at 252. “When applying this standard, the Court examines the factual record and reasonable inferences therefrom in the light most favorable to the party opposing summary judgment.” Hartwell v. Sw. Cheese Co., No. CV 15-1103 JAP/GJF, 2017 WL 944125, at *2 (D.N.M. Jan. 23, 2017). “Summary judgment is not ‘a disfavored procedural shortcut but rather [it is] an integral part of the Federal Rules as a whole, which are designed to secure the just, speedy, and inexpensive determination of every action.'” Garcia v. Vilsack, 628 F.Supp.2d 1306, 1308-09 (D.N.M. 2009) (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 327 (1986)).

         Both the movant and the party opposing summary judgment are obligated to “cit[e] to particular parts of materials in the record” to support their factual positions. Fed.R.Civ.P. 56(c)(1)(A). In this district, “[a]ll material facts set forth in the Memorandum will be deemed undisputed unless specifically controverted.” D.N.M.LR-Civ. 56.1(b). Here, Plaintiff Midway does not specifically controvert the material facts set forth by Defendant Wagner, but rather argues that some of Wagner's facts are not material and should be disregarded. Doc. 37 at 5-6. However, “the substantive law will identity which facts are material.” Amparan v. Lake Powell Car Rental Cos., 882 F.3d 943, 947 (10th Cir. 2018). Moreover, Plaintiff also does not set forth any of its own undisputed material facts. Instead, it provides a factual background that includes information about Wagner's prior business dealings, which are irrelevant to this motion. See Doc. 37 at 2-5. Defendant's material facts are thus deemed undisputed, and there are no genuine disputes as to any fact material to the resolution of Defendant's Motion.


         Between 2012 and 2015 Wagner acquired land in Albuquerque to build a new facility. Doc. 34, Undisputed Material Fact (“UMF”) D. In June 2015, Midway and Wagner entered into a consulting agreement whereby Midway would perform advisory services in connection with Wagner's development of its new property in Bernalillo County. UMF E. On July 29, 2015, Midway and Wagner reached an additional agreement, beyond the initial consulting agreement, for Midway to assist Wagner in obtaining IRBs from the County for Wagner's new property. UMFs J, K. As compensation, Midway asserts that Wagner agreed to pay it 18% of the property tax savings from the IRB awards each year for the succeeding 30 years. UMFs W, X. Midway's calculation for the value of its services on the IRB project is ‘the present value of the agreed percentage of actual tax savings realized by Wagner over the life of the IRBs.” UMF CC.

         Midway described its duties on the IRB project as both administrative and political. UMF O. Midway's administrative duties included coordinating Wagner's provision of information to the County to facilitate the County's evaluation of Wagner's IRB application. UMF P. Midway's political duties included working to obtain three votes of the Bernalillo County Commission in order to ultimately obtain IRBs from the County of Bernalillo. UMFs Q, S. Midway did this by communicating with Commissioners, providing them information, answering their questions, and persuading them that Wagner's project was a good use of the County's IRB incentives. UMF Q. These political activities clearly fall within the definition of lobbying. See, e.g., Black's Law Dictionary (6th ed. 1990) (stating that “lobbying” means “[a]ll attempts including personal solicitation to induce legislators to vote in a certain way or to introduce legislation”); see also NMSA § 2-11-2(D) (stating that the definition of “lobbying” includes “attempting to influence . . . an official action”).

         Midway's principal, D. McCall, “believed he could lay the groundwork to make sure that [Wagner] obtained a majority vote on the county commission.” UMF Q. Indeed, the Bernalillo County Commission unanimously approved Wagner's IRB application on October 27, 2015, and the County enacted an ordinance authorizing issuance of the IRBs. UMF Z.

         IV. ANALYSIS

         New Mexico has a strong public policy in favor of freedom of contract.[1]Berlangieri v. Running Elk Corp., 2003-NMSC-024, ¶ 20, 76 P.3d 1098. However, “[c]ontracts in violation of the public policy of the state cannot be enforced.” City of Artesia v. Carter, 1980-NMCA-006, ¶ 12, 610 P.2d 198. Contracts “are not to be held as void being contrary to public policy, unless they are clearly contrary to what the legislature or judicial decision has declared to be the public policy, or they manifestly tend to injure the public in some way.” K.R. Swerdfeger Constr. v. UNM Bd. of Regents, 2006-NMCA-117, ¶ 23, 142 P.3d 962 (citing Berlangieri v. Running Elk Corp., 2002-NMCA-060, ¶ 11, 48 P.3d 70, aff'd, 200 ...

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