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Mannick v. Wakeland
Citations: 138 N.M. 113; 2005 NMCA 098Docket: Nos. 24,078, 24,280
Court: New Mexico Court of Appeals; August 24, 2004; New Mexico; State Appellate Court
Two related cases are under appeal: a foreclosure case where Paul and Kathy Mannick (the Mannicks) foreclosed on a judgment lien against Robin Wakeland’s property, and a waste case where the Mannicks sought damages from Wakeland for actions that devalued the property. The district court denied Wakeland’s motion to enter judgment on a prior mandate awarding her a $30,000 homestead exemption, pending a hearing in the waste case. The court found that Wakeland committed waste and issued an order equitably estopping her from claiming the homestead exemption. On appeal, the court examined the district court's equitable powers, concluding that while equitable estoppel was not applicable, equity required supervision of payments to ensure that Wakeland partially satisfies the Mannicks’ judgment. Wakeland raised several issues on appeal, including challenges to the court's authority to consolidate cases, the finding of voluntary waste, the basis for concluding she committed a prima facie tort, and the court's authority under the Uniform Fraudulent Transfer Act to invalidate a Declaration she filed. She also argued for a favorable ruling based on conceded issues by the Appellees and requested costs on appeal. The court affirmed all issues except for a subissue regarding costs from a prior appeal, ordering that each party bear its own costs for this appeal. Background information includes judicial notice of records from previous proceedings, confirming that the Mannicks had foreclosed on Wakeland's house, in which they discovered significant property damage caused by her actions, including graffiti and removal of fixtures. In the appeal concerning the foreclosure judgment, the Mannicks sought to ascertain if Wakeland had already utilized her homestead exemption due to alleged waste. The court determined that any claims for property damages must be pursued in the district court. Subsequently, the Mannicks and their successor, Coppler. Mannick, P.C., initiated a claim against Wakeland for voluntary waste and fraudulent transfer on April 15, 2002. The district court, aiming to resolve potential conflicts, added a provision to the foreclosure judgment stating Wakeland was entitled to her homestead exemption, contingent on the outcome of the waste case. Wakeland appealed this addition, which was reversed by the court, asserting that such a set-off constituted an impermissible garnishment of her exemption under the homestead exemption statute. The court instructed Coppler. Mannick to pursue their claims for waste independently. In March 2003, Wakeland sought a hearing to enforce her homestead exemption, but the new district judge denied the motion, deciding to address it during the pending trial of the waste case. The trial occurred in April 2003, during which evidence was presented regarding property damage caused by Wakeland. The district court found her actions to be malicious and awarded the Mannicks and Coppler. Mannick $34,100 in actual damages and $10,000 in punitive damages, while also voiding the Declaration. Addressing the foreclosure case, the district court concluded that allowing Wakeland to recover her homestead exemption would unjustly enrich her under the unique circumstances of the case, leading to a ruling of equitable estoppel against her claim for the $30,000 exemption. Wakeland appealed this decision, resulting in a continuation of both the foreclosure and waste case appeals. Cases have been consolidated on appeal under Rule 12-202(F)(2) NMRA, allowing the Court to consolidate independently of district court actions. The Court does not recognize Wakeland’s claim of a right to a randomly chosen panel under Rule 12-210(B)(3) NMRA, and denies her motions to vacate the notices of submission concerning panel assignment. Wakeland’s assertion that facts from the waste case cannot influence the foreclosure case is rejected; the Court finds that the only issue on appeal regarding foreclosure involves whether the judgment in the waste case can estop Wakeland from collecting owed amounts, allowing for the use of factual records from the waste case to assess the judgment's propriety. Wakeland also challenges the district court's finding of voluntary waste, contending New Mexico does not recognize this tort unless a joint tenancy or contractual relationship is present. The Court reviews this legal question de novo and affirms that New Mexico recognizes common law causes of action unless superseded by statute. Waste, rooted in common law, historically defined occupant rights and consequences of misuse, evolving to require only single damages. Waste is considered a property-related cause of action necessitating a specific relationship between the wrongdoer and the claimant. The elements of waste include: (1) an act constituting waste (destruction, misuse, alteration, or neglect of property), (2) the act must be committed by someone legally in possession, and (3) the act must prejudice another's interest in the estate. The Court clarifies that New Mexico does recognize the claim of waste, citing Blake v. Hoover Motor Co. as precedent, where the state adopted a less severe approach than the English common law concerning waste liabilities and damages. Wakeland's argument regarding waste centers on the claimant's vested interest in the property. The court determined that the Mannicks, who held a lien foreclosed on December 1, 2000, had sufficient interest to pursue a waste action against Wakeland, who owned the property until she was required to vacate by January 10, 2001. The court affirmed that evidence supported findings of intentional and malicious actions by Wakeland that diminished the property's value, including filing a Declaration, removing fixtures, damaging walls, and altering windows. Testimonies from Paul Mannick and repairman Louis Chavez, along with documentary evidence, substantiated these claims. Wakeland's contention that the lien only attached to the land was rejected, as real property encompasses structures and fixtures, which she damaged. The court also clarified that the district court's judgment did not address prima facie tort, thus rendering Wakeland's related arguments moot. Concerning the Declaration of Covenants and Restrictions, Wakeland's assertion that it should not be voided under the Act due to lack of findings was dismissed, with the court reviewing statutory interpretation de novo and disagreeing with her position. The Act defines "transfer" broadly, encompassing all methods of disposing of an asset, including payment, release, lease, and lien creation. A transfer of real property is considered complete when a good-faith purchaser cannot secure a superior interest over the transferee. Wakeland's Declaration aimed to restrict water rights on the property for her lifetime and that of her descendants, preventing any future purchaser from claiming superior rights. Although the Declaration may have flaws that could render it void, it meets the criteria for a fraudulent conveyance under the Act, making it voidable. The district court found that Wakeland intended to hinder creditors in a foreclosure lawsuit, supported by both the Declaration and testimony from Paul Mannick regarding the complications it caused in clearing the title. Wakeland's challenge to the sufficiency of evidence was dismissed, as the findings justified the judgment. Additionally, the court awarded attorney fees incurred in a related case to clear the title, which Wakeland argued violated the "American rule" on attorney fees; however, these fees were deemed appropriate as they arose from an ancillary case. The Mannicks did not contest Wakeland's entitlement to a homestead exemption, but the application of equitable estoppel remains critical for the outcomes in both the waste and foreclosure cases, determining the appropriateness of the district court's decisions. The district court's authority to exercise equitable powers is a legal question, while its application of those powers for remedies is subject to abuse of discretion review. In this case, the court determined that equitable estoppel was wrongly applied. Equitable estoppel aims to prevent a party from benefitting from deceptive conduct, requiring that the conduct constitutes a false representation or concealment of material facts, with the intent that it will be acted upon by another party. The affected party must lack knowledge of the truth, rely on the misleading conduct, and suffer a prejudicial change in position as a result. For equitable estoppel to apply against Mannick, the court must establish specific factual predicates: misleading conduct, intent for that conduct to be relied upon, and knowledge of the true facts. As for the Mannicks and Coppler, they must demonstrate their lack of knowledge of the truth, reliance on the conduct of Mannick, and detrimental action taken based on that reliance. The court criticized Wakeland's destructive actions but found no evidence of deception related to the homestead exemption that the Mannicks or Coppler relied on. There were no assertions from Wakeland indicating that the Mannicks could recover owed amounts through foreclosure, nor any claims about the property's condition, as it was shown that Paul Mannick was unaware of the property's interior state prior to foreclosure. Consequently, no basis for applying estoppel was identified. Wakeland did not act deceptively regarding the homestead exemption, which is intended to prevent debtors from becoming destitute. Under New Mexico law, a claimant of a homestead exemption is not required to prove destitution, nor are there conduct requirements beyond establishing the property as a homestead. Consequently, there is no basis for the application of equitable estoppel, as there was no false representation or concealment of material facts by Wakeland. The district court's decision to delay judgment in the foreclosure case was therefore improper and has been reversed, as has the equitable estoppel finding in the waste case. Despite the reversal, the court recognized the inherent injustice in allowing Wakeland to collect $30,000 while the Mannicks faced ongoing litigation to collect their $44,100 judgment against her. The court emphasized the need to do justice, adhering to equitable principles that allow courts to address wrongs beyond strict legal interpretations. The Mannicks had previously secured a judgment against Wakeland for $87,895.08, leading to prolonged legal battles and significant costs, including over $45,000 in legal fees. Despite foreclosure proceedings, a substantial deficiency remained, necessitating the sale of the property to Coppler. Additionally, Wakeland's actions, including damaging the property and filing an impermissible covenant, appeared to be motivated by a desire to injure the Mannicks and Coppler, with little indication of harm to Wakeland herself. The district court's concerns about the fairness of the situation were justified given the circumstances. Equity's function is constrained by legal principles, limiting remedies in this case. The court upheld Wakeland's homestead exemption, which protects claimed funds from being subjected to garnishment or attachment, as confirmed by New Mexico law. Unlike some other states that impose time limits on homestead exemptions or require intent to reinvest in new property, New Mexico lacks such restrictions, rendering creditors vulnerable to debtors who may misuse these exemptions, especially when the debtor has committed property damage and has outstanding judgments against her. The district court retains equitable authority to ensure Wakeland is paid while also requiring her to pay the Mannicks, potentially through appointing a limited receiver or offsetting against a waste judgment. This approach aligns with the court's earlier rulings and aims to guarantee the Mannicks receive at least $30,000 of their judgment promptly, with further legal avenues available for any shortfall. In appellate procedure, Wakeland's claims that the Appellees conceded issues due to lack of briefing are incorrect; the burden lies on appellants to demonstrate errors, and Appellees are not obligated to file briefs. Thus, no issues have been conceded by the Appellees. Costs on appeal are governed by Rule 12-403(A) NMRA, which permits prevailing parties to recover costs unless the court decides otherwise. In this case, both affirmations and reversals in the judgments result in no clear prevailing party, allowing the court to require each party to bear its own costs. Wakeland claims unpaid costs from a prior appeal amounting to $654.04, which should be added to her $30,000 homestead exemption. The district court's judgment in *Coppler, Mannick, P.C. v. Wakeland* is affirmed concerning liability and damages but reversed regarding equitable estoppel. The case is remanded for the district court to find Wakeland liable for voluntary waste and punitive damages, awarding the Mannicks and Coppler, Mannick $44,100, voiding the Declaration of Covenants and Restrictions, and including any unchallenged provisions. The order denying Wakeland’s motion for judgment on the mandate in *Mannick v. Wakeland* is also reversed, with a remand for a judgment awarding Wakeland a cash payment of $30,654.04. The district court is instructed to oversee the enforcement of both judgments to ensure compliance, and each party is ordered to bear its own costs on appeal.