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Gandydancer, LLC v. Rock House CGM, LLC

Supreme Court of New Mexico

November 14, 2019

GANDYDANCER, LLC, Plaintiff-Respondent,
ROCK HOUSE CGM, LLC, AND KARL G. PERGOLA, Defendants-Petitioners.

          Original Proceeding on Certiorari Clay Campbell, District Judge.

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

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


          David K. Thomson, Justice.

         {¶1} The district court certified for interlocutory review whether the New Mexico Unfair Practices Act (UPA), NMSA 1978, §§ 57-12-1 to -26 (1967, as amended 2019), supports a cause of action for competitive injury. The Court of Appeals accepted interlocutory review and held that a business may sue for competitive injury based on a plain reading of the UPA. Gandydancer, LLC v. Rock House CGM, LLC, 2018-NMCA-064, ¶ 1, 429 P.3d 338. We reverse because the Legislature excluded competitive injury from the causes of action permitted under that statute. We further observe that Gandydancer relied upon dicta in Page & Wirtz Construction Co. v. Soloman, 1990-NMSC-063, ¶ 22, 110 N.M. 206, 794 P.2d 349. Therefore, we formally disavow reliance on Page & Wirtz or prior New Mexico case law that conflicts with this opinion.

         I. BACKGROUND

         {¶2} GandyDancer, LLC, and Rock House CGM, LLC, are business competitors, and both provide railway construction and repair services to BNSF Railway Company. BNSF awarded contracts to Rock House to provide goods and services in New Mexico.

         {¶3} GandyDancer filed a complaint with the New Mexico Construction Industries Division (CID) in 2015 that alleged Rock House violated the Construction Industries Licensing Act (CILA), NMSA 1978, §§ 60-13-1 to -59 (1967, as amended through 2013), by performing unlicensed construction work in New Mexico. CID is the state agency charged with investigating violations and prosecuting actions to enforce CILA. See § 60-13-9(G) (providing that CID "shall . . . employ such personnel as the division deems necessary for the exclusive purpose of investigating violations of [CILA]"). CID and Rock House entered into a stipulated settlement agreement resolving the alleged licensing violations.

         {¶4} GandyDancer thereafter filed a complaint in district court against Rock House. The complaint alleges theories of competitive injury, including a claim that Rock House engaged in unfair methods of competition to obtain contracts with BNSF contrary to the UPA. GandyDancer alleges that Rock House's acts amount to an "unfair or deceptive trade practice" under Section 57-12-2(D) of the UPA, because:

[Rock House] knowingly made false and misleading statements to GandyDancer employees that [Rock House] solicited and to BNSF by failing to disclose that: (i) [Rock House] did not have the necessary experience or licenses to provide railroad contracting services; (ii) [Rock House was] not authorized by the State of New Mexico to provide such services; (iii) [Rock House was] able to provide lower bids and non-bid time and material rates because they failed to comply with New Mexico's contractor licensing laws, Department of Transportation registration and tax regulations, Federal Rail Safety Administration safety regulations, and other violations set forth above and to be proved at trial and, thus did not incur any expenses related to such compliance; and (iv) [Rock House was] at risk of being enjoined by the State of New Mexico for contracting without a license and that such an injunction would cause work at BNSF's project to stop.

         GandyDancer seeks damages under the UPA on a theory that had Rock House disclosed its licensure status, BNSF would have awarded GandyDancer the contracts. We note that BNSF is the consumer of services in this case but is not a party and has not asserted any claims in this action.

         {¶5} Rock House filed a motion to dismiss the complaint, arguing in part that the UPA did not provide a competitor standing to sue. In other words, Rock House argued that the UPA does not create a cause of action for competitive injury. The district court denied Rock House's motion to dismiss the UPA claim and certified the question, "whether the [UPA] affords private-party standing to business competitors who are both sellers of services, or only to buyers of goods and services," for interlocutory review. The Court of Appeals accepted review, affirmed the district court, and held 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." Gandydancer, 2018-NMCA-064, ¶ 1.


         A. Standard of Review

         {¶6} This Court reviews de novo whether a plaintiff has a cause of action or standing to sue under the UPA. See San Juan Agric. Water Users Ass'n v. KNME-TV, 2011-NMSC-011, ¶ 8, 150 N.M. 64, 257 P.3d 884 (observing that a cause of action or standing created by statute is a question of law).

         B. The Legislature Limited the Right to Pursue a Cause of Action Under the UPA

         {¶7} In general, standing in New Mexico courts "is not derived from the state constitution, and is not jurisdictional." Deutsche Bank Nat'l Trust Co. v. Johnston, 2016-NMSC-013, ¶ 11, 369 P.3d 1046 (internal quotation marks and citation omitted). However, "[w]here the Legislature has granted specific persons a cause of action by statute, the statute governs who has standing to sue." San Juan Agric. Water Users, 2011-NMSC-011, ¶ 8 (citing ACLU of N.M. v. City of Albuquerque, 2008-NMSC-045, ¶ 9 n.1, 144 N.M. 471, 188 P.3d 1222). "Standing then becomes a jurisdictional prerequisite to an action" because standing is interwoven with subject matter jurisdiction. Deutsche Bank, 2016-NMSC-013, ¶ 11 (internal quotation marks and citation omitted).

         {¶8} GandyDancer and Rock House argue over whether the UPA contemplates competitor standing. However, a more precise framing of the issue is whether the UPA creates a cause of action to recover lost profits damages from a competitor. "A cause of action is defined as an 'aggregate of operative facts which give rise to a right enforceable in the courts.'" Key v. Chrysler Motors Corp., 1996-NMSC-038, ¶ 11, 121 N.M. 764, 918 P.2d 350 (citation omitted). This Court has determined that there is no significant difference between having standing to sue and having a cause of action under the UPA. Id. ¶¶ 10-12. So whether this Court discusses it as a cause of action or standing, "both doctrines allow plaintiffs to enforce a right in the courts." Id. ΒΆ 11. A plaintiff must demonstrate that ...

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