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New Mexico Lawyers Serving New Mexico's Legal Needs Since 1997

April 2014 Archives

Federal Jury Finds in Favor of Applebee’s in Case of Drunk Driving Fatality

A jury in a federal civil case rendered a verdict in favor of Applebee’s relieving the restaurant chain from any liability for serving alcoholic beverages to a customer who proceeded to kill two women in another vehicle after crashing in to their car. The jury determined that the restaurant had not violated the New Mexico Liquor Control Act when it sold drinks to James Ruiz in 2010.

Receivership as an Enforcement Mechanism

It is hardly uncommon that lenders, in some transactions, require a borrower to sign a promissory note or some other agreement to establish the terms under which a loan must be repaid and the consequences if the required amount is not repaid consistently with such terms. Nor is it unusual for lenders to demand that they receive a security interest in property owned by the borrower so, if that party to the transaction defaults on the agreement, the lender has suitable collateral to recoup, at least some of its losses. Some loan agreements even apply the remedy of receivership against a company which defaults on a note or other instrument.

Seismic Data Provider Files Chapter 11 Reorganization

A Texas corporation which provides collected seismic data to oil and gas companies filed a Chapter 11 bankruptcy action in March. The company, Global Geophysical Services, Inc., has released statements indicating it hopes to reorganize and shift much of its operations to clients overseas suggesting the American market for its services has become overly competitive. Recently it has shifted many of its operations to Brazil and Dubai.

Voiding Preferential Transfers in Chapter 7 Bankruptcy Cases

The federal bankruptcy code contains provisions which seek to prevent claims from creditors based on preferential transfers made while the debtor was already insolvent and had reason to believe they would be filing for bankruptcy protection. A recent decision from the United States Bankruptcy Court illustrates how a court can carefully determine if a transfer was preferential and therefore, subject to being avoided after the debtor files for bankruptcy.

Chain of Title Inconclusive in Foreclosure Action

For the second time in the last year, the New Mexico Supreme Court held that a particular bank’s right to foreclose on a home owned by a borrower could not be enforced by grant of summary judgment. Back in 2007 Mr. and Mrs. Quintana entered in to a residential loan agreement with First Franklin Financial Corporation (“First Franklin”), a subsidiary of Merrill Lynch. Under the terms of the agreement First Franklin lent the Quintanas $152,000 to pay off an old loan and to receive a cash payout of $11,773.70. The adjustable rate mortgage initially started with a 6.9% interest rate but could potentially reach 12.9% by late in 2009 per a schedule of prescribed change dates.

HOW BORROWERS CAN RESCIND CERTAIN LOAN TRANSACTIONS POTENTIALLY TO BE REVIEWED BY U.S. SUPREME COURT

The United States Supreme Court is entertaining two different petitions filed by home borrowers seeking to exercise their rights under the federal Truth-in-Lending Act. This law gives a borrower the right, under 15 U.S.C. § 1635(a), to "rescind the transaction until midnight of the third business day following . . . the delivery of the formation and rescission forms required under this section . . . by notifying the creditor . . . of his intention to do so." The Act further creates, per 15 U.S.C. § 1635(f). a "[t]ime limit for [the] exercise of [this] exercise of [this] right," providing that the borrower's "right of rescission shall expire three years after the date of consummation of the transaction" even if the "disclosures required . . . have not been delivered." The Truth-in-Lending Act gives borrowers an opportunity to review certain mandated disclosures from lenders so as to allow them the right to rescind a loan transaction within the given time period. 

New Deals Bring Ultimate Resolution of Detroit Bankruptcy Closer

Progress on various fronts in Detroit’s Chapter 9 bankruptcy case provides hope that the City could emerge from bankruptcy by this fall. Recently the City’s Emergency Manager, after prodding by the case’s presiding judge, entered in to a deal with a few banks which had insured municipal bonds in an interest-rate swap. The nature of the transaction was such that it was widely believed that the City would be legally bound to repay those creditors in full. But Kevyn Orr, the Emergency Manager, reached an agreement in which the City would only have to pay 74% of the total amount owed.

Use of Protective Order in Litigation to Prevent Fishing Expedition

When a plaintiff or plaintiffs file a civil lawsuit against a company or companies which it claims bears liability for some damages incurred by the plaintiff(s), after the initial filings of the Complaint by the plaintiff(s) and an Answer by the defendant(s), the parties commence a period (generally but not exclusively six months in duration) of what is known as “discovery”. The discovery process basically affords all litigants the opportunity to submit questions (or interrogatories) to other parties and possible witnesses, request pertinent documents related to the matter from other parties and witnesses and conduct oral depositions in which attorneys for one side can ask other parties and witnesses questions which will be transcribed by a certified court reporter for eventual production in the form of a transcript. The “discovery” process is just what it sounds like: a chance for all parties in a civil case to get the relevant information it needs to prove or challenge a case.

Constitutional Collision and Potential Conflict of Interest Faces New Mexico’s Supreme Court Justices

A lawsuit filed directly before the New Mexico Supreme Court on April 16, 2014 presents the state’s highest court with two difficult conflicts to resolve. Or perhaps they can only resolve one of the conflicts.  A group which includes eight judges across the state, organizations representing magistrates and district judges as well as two state senators ostensibly representing the prerogatives of the State Legislature, is asking that Court to rule that the eight percent raises in salary for judicial officers - including the very justices which would rule on the case - appropriated by lawmakers this year be upheld in the face of the Governor’s line-item veto of such specific appropriation. The case sets the stage for a debate concerning two thorny issues and the decision on one issue could precipitate an even thornier problem for deciding the second one.

Risk of Losing Home for Failure to Pay Property Taxes Very Real

Homeowners in New Mexico who fail to pay the taxes on their real estate for a period of three years may lose their property at a tax sale. Section 7-38-48 (2003) provides that "taxes on real property are a lien against the real property from January 1 of the tax year for which the taxes are imposed. . . . The lien continues until the taxes and any penalty and interest are paid….If a lien exists . . ., the [D]epartment may collect delinquent taxes on real property by selling the real property on which the taxes have become delinquent."     

Two Suits Filed in Two Weeks against State’s Public Education Department

In less than two weeks’ time, New Mexico’s Public Education Department has been sued by two different groups alleging the state’s inadequate expenditures for public schools violate the State Constitution of New Mexico. Article XII, Section 1 of the New Mexico State Constitution reads, “A uniform system of free public schools sufficient for the education of, and open to, all the children of school age in the state shall be established and maintained.” Both suits emphasize the phrase “sufficient for education” as the basis for claiming that funding does not meet constitutionally-warranted levels.

General Motors’ Legal Responsibility for Injuries from Defective Ignitions Questionable

The General Motors Corporation (GM), which received federal bailout money to stay afloat, exited bankruptcy in July 2009. At that time the controlling bankruptcy order shielded GM from liability from almost all accidents occurring prior to its reorganization. Because of the concerns raised by the Attorneys General in eight states, GM did agree at the time to cover losses caused by already-known defects of older vehicles who were involved in crashes which occurred after restructuring.  A little over $500 million was placed in a special fund by GM to anticipate such claims after its reorganization.

The Importance of Attorney’s Fees Provisions in Contracts

A recent decision by New Mexico’s Court of Appeals reiterates the significance of ensuring that parties to a contract, particularly the sale of real estate, should ensure that the contract includes a provision for the award of attorney’s fees in the event of a dispute. In the case of Varga v. Ferrell, Nos. 34,403, 31,268, Consolidated with 31,337 and 31,398 (NM: Court of Appeals 2014), a home purchaser discovered after the sale that it had contained severe construction defects. The purchaser not only sued the seller and the seller’s broker but also her own broker. In the course of the litigation, the purchaser’s broker successfully won the grant of a motion for summary judgment. Accordingly, that broker does not have to go to trial and was also relieved from any liability in the matter.

New Mexico Hunters Win Case Increasing Numbers of Licenses to Hunt Certain Animals

Back in the 1970’s a hunter from the State of Texas brought a lawsuit against the State of New Mexico claiming that the system in place to determine how many licenses New Mexico hunters could receive annually for hunting bighorn sheep, oryx and ibex violated his Equal Protection rights. The Equal Protection clause of the 14th Amendment to the United States Constitution prohibits states from denying any person within its jurisdiction the equal protection of the laws. The Texas hunter, David Terk, successfully challenged the system employed by the state’s Game and Fishing Department on the grounds that the lower quotas and higher hunting fees constituted unconstitutional discrimination against non-residents in violation of that constitutional provision.

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