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Midway Leasing, Inc. v. Wagner Equipment Co.

United States District Court, D. New Mexico

March 1, 2019

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

          COURT'S FINDINGS OF FACT AND CONCLUSIONS OF LAW

         THIS MATTER came before the Court on a bench trial held December 3-4, 2018. Attorneys Alan Wilson and Alexandra Jones appeared for Plaintiff Midway Leasing, Inc. (“Midway”), and Attorneys Elizabeth Heaphy and Robert Muehlenweg appeared for Defendant Wagner Equipment Company (“Wagner”). The Court has given due consideration to the testimony received and the admitted exhibits and has reviewed the transcript of the proceedings (Docs. 60 & 61), the proposed findings of fact and conclusions of law submitted by the parties (Docs. 63 & 64), and relevant authorities. Having further heard the arguments of counsel on February 20, 2019, the Court now sets forth its Findings of Fact and Conclusions of Law.

         FINDINGS OF FACT

         I. The Parties

         1. Plaintiff Midway is a New Mexico corporation, with its principal place of business in Bernalillo County, New Mexico, and its sole owner and president is Mr. D. McCall. Undisputed; McCall Testimony, Trial Transcript (“Trial Tr.”), Vol. I, 45:10-14.

         2. Midway owns, leases, finances and develops commercial real estate as well as provides consulting services in all aspects of real estate development. McCall Testimony, Trial Tr., Vol. I, 45:10-14.

         3. Defendant Wagner is a heavy equipment dealer based in Colorado that has transacted business in New Mexico since 2002 when it purchased Rust Tractor, the Caterpillar dealership then owned by Jack Rust. Wagner Testimony, Trial Tr., Vol. II, 398:22-399:13.

         4. Bruce Wagner has served as Wagner's president and chief operating officer for at least twelve years. Wagner Testimony, Trial Tr., Vol. II, 398:14-21.

         II. Wagner Engages Midway's Services for South Valley Project

         A. The Consulting Agreement

         5. The instant dispute involves the development of real estate located at Rio Bravo Blvd N.W. and I-25 in the South Valley of Albuquerque in Bernalillo County. Undisputed.

         6. For many years, Wagner has maintained its Albuquerque-area headquarters at a facility on Osuna Road (4000 Osuna Road NE). Wagner Testimony, Trial Tr., Vol. II, 399:14-16.

         7. By 2015, Wagner had acquired the South Valley property on which it planned to construct a new facility for conducting its Albuquerque-based operations. Wagner Testimony, Trial Tr., Vol. II, 399:17-400:1.

         8. In the spring of 2015, Wagner was also building a new facility in Bloomfield, New Mexico and two of its employees - Kevin Pomeroy and Chris Foster - were tied up with the development of that project. Thus, Wagner needed outside assistance to get the South Valley development project moving. Wagner Testimony, Trial Tr., Vol. II, 400:23-401:11.

         9. Bruce Wagner and McCall met in about 2010 when both were involved in helping young people show livestock at various competitions, and they developed a friendship. McCall Testimony, Trial Tr., Vol. I, 53:8-19; Wagner Testimony, Trial Tr., Vol. II, 400:6-15.

         10. In early 2015, Bruce Wagner informally requested, and received, some assistance from McCall with that South Valley development because McCall has extensive experience in commercial real estate development and management. McCall Testimony, Trial Tr., Vol. I, 54:2-55:18.

         11. In spring 2015, McCall insisted on a written contract with Midway setting forth compensation if Defendant wanted McCall to continue to assist in those development efforts, and a “Consulting Agreement” was executed in June 2015. McCall Testimony, Trial Tr., Vol. I, 55:19-56:4; Exhibit S.

         12. Pursuant to the written Consulting Agreement, Midway's compensation for McCall's development services was based on 1½% of the construction costs for the South Valley project. Exhibit S.

         B. Work on Getting the Industrial Revenue Bonds (IRBs)

         13. During the time it was considering buying the South Valley property, Wagner employees discussed with Bernalillo County representatives, including Mayling Armijo, the director of its Economic Development Department, economic incentives including the potential availability of IRBs. Pomeroy Testimony, Trial Tr., Vol. II, 291:20-23; 292:20-293:12.

         14. The IRB program is designed to encourage and incentivize businesses to undertake industrial projects in Bernalillo County. Businesses that build and equip facilities under the auspices of the program can obtain certain benefits, including property tax exemptions. No public financing was involved in Wagner's South Valley project. Perry Bendicksen Testimony, Trial Tr., Vol. I, 181:25-182:10; McCall Testimony, Trial Tr., Vol. I, 55:25-56:6.

         15. Wagner decided in about July 2015 that it should look more closely at whether to apply to participate in the County's IRB program, and Wagner employees asked McCall to look into the IRB application process. Pomeroy Testimony, Trial Tr., Vol. II, 321:1-321:18; 332:6-24.

         16. McCall had previously worked on only one other IRB application involving Moncor, but it was unsuccessful. Although he did not consider himself to be an expert on IRBs in July 2015, he certainly was familiar at that time with such entitlements as well as other discretionary programs and economic incentives. He also had negotiation experience and regularly worked with County and State entities and elected officials in the area of real estate development. McCall Testimony, Trial Tr., Vol. I, 135:20-136:9; Trial TR., Vol. I, 45-48.

         17. On July 28, 2015, McCall sent an email about IRBs to Kevin Pomeroy, Wagner's Facilities & Maintenance Manager. The email stated, in part:

I have scheduled a meeting at 1:30 at Art De La Cruz County Commissioner's office [on July 29], if there is any way possible can you see if [Wagner's CEO, Bruce Wagner] would consider going. I think this is a meeting where we can get on the table what they can offer for the IRB's such as property tax exemptions, gross receipts on construction and whatever else they may have available. This would be a great kickoff start.

McCall Testimony, Trial Tr., Vol. I, 141:16-25; Exhibit B.

         18. McCall arranged a July 29, 2015 “kickoff” meeting with Commissioner De La Cruz and other County representatives at which Bruce Wagner, Kevin Pomeroy and McCall also attended. Pomeroy Testimony, Trial Tr., Vol. II, 333:6-13; Wagner Testimony, Trial Tr., Vol. II, 403:18-405:3.

         19. Until July 29, 2015, the day of the kickoff meeting, Wagner had assumed McCall's work on the IRB project would be included as part of Midway's services under the Consulting Agreement. On the day of the “kickoff” meeting, McCall informed Bruce Wagner that he believed that the IRB services were outside the scope of Midway's Consulting Agreement with Wagner. Wagner Testimony, Trial Tr., Vol. II, 404:17-22; Pomeroy Testimony, Trial Tr., Vol. II, 310:24-311:1.

         20. At that time, Bruce Wagner responded that he was unsure if the services were outside the scope of the Consulting Agreement, that he would look into it and that he would treat McCall fairly. There was no discussion of compensation methodology if the IRB services be found to fall outside the scope of the Consulting Agreement. Wagner Testimony, Trial Tr., Vol. II, 404:15-25.

         21. The parties have since stipulated that the compensation that is owed to Midway for the IRB work performed by McCall is separate, apart and distinct from the written Consulting Agreement. Undisputed.

         22. There were no further discussions regarding compensation for work performed by Midway in obtaining the IRBs until October 15, 2015. Undisputed.

         23. Wagner Equipment authorized McCall to represent Wagner in communications with professional staff and elected officials of the County, with the objective of obtaining the County's approval of the IRBs for its proposed new ...


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