March 16, 2010 – Bill J. Papatheofanis v. Katherine Allen, No. 28,079

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IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO

Opinion Number:

Filing Date: __ MARCH 16, 2010

NO. 28,079
BILL J. PAPATHEOFANS,
Plaintiff/Counter- Defendant-A ppellee,
V.
KATHERINE ALLEN,
Defendant/Counter- Claimant-A ppellant.

APPEAL FROM THE DISTRICT COURT OF LOS ALAMOS COUNTY
James A. Hall, District Judge

Scheuer, Y ost & Patterson, P.C.
Tony F. Ortiz

Knistin L. Davidson

Santa Fe, NM

for Appellee

James K. Leven
Chicago, IL

for Appellant

OPINION
FRY, Chief Judge.
{1} 	Defendant Katherine Allen appeals from a jury verdict finding her liable for
fraud, breach of fiduciary duty, malicious abuse of process, and defamation. Based
on 	these 	findings 	of 	liability, 	the 	jury 	awarded 	Plaintiff 	Bill 	Papatheofanis,
Katherine’s ex-husband, $257,500 in compensatory and punitive damages. On appeal,
Katherine argues that there was insufficient evidence to support the elements of a
fraud claim and that New Mexico’s public policy either prohibits spouses from
recovering against each other for intentional torts or requires that there be sufficiently
outrageous conduct before spouses can bring intentional tort claims against each other.
For the following reasons, we affirm the judgment entered against Katherine.
BACKGROUND
{2} 	Katherine and Bill were married in 2002 and had one child, Matthew, in 2004.
In 2005, Bill and Katherine filed for divorce. Prior to the divorce, a number of events
transpired that form the basis of the civil complaint at issue in this appeal.
{3} 	In October 2004, Katherine informed Bill that if something were to happen to
him, their son would not have any interest in the family home, which was Bill’s solely
owned property, and that Bill therefore needed to sign a quitclaim deed giving
Katherine a one-half interest in the home. At the time, Bill did not have a will, and

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consequently, Katherine’s representation about what would happen if Bill died was
contradicted by New Mexico law. 	As the district court instructed the jury, New
Mexico law provides that one-fourth of an intestate estate passes to a surviving spouse
if the decedent has surviving issue, and the remainder of the estate passes to the
surviving issue. As a result of Katherine’s representation, Bill executed a quitclaim
deed prepared by Katherine giving up one-half of his previously undivided interest in
his property. 	Bill testified that he signed the quitclaim deed because he trusted
Katherine, who was an attorney and a mortgage loan officer familiar with real estate
and the law.
{4} 	In January 2005, Katherine opened a credit card account without Bill’s
knowledge, apparently by forging Bill’s signature on the application form. Because
Katherine had the bills sent to a post office box that Bill was unaware of, Bill did not
find out about the credit card account for a significant period of time. According to
Bill’s testimony, Katherine had obtained more than one credit card by forging his
signature. In addition, after Katherine left Bill, she attempted to lease a new vehicle
using Bill’s information without Bill’s authorization. 	Just prior to leaving Bill,
Katherine had also filed a patent application for an invention of Bill’s without his
knowledge or consent.
{5} 	In June 2005, Katherine sought an order of protection from domestic abuse,

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alleging that Bill had twisted Katherine’s mother’s arm and had threatened to shoot
and kill her when Katherine and her mother had met Bill outside the Santa Fe
cathedral. During the alleged incident, however, Bill was surreptitiously recording the
encounter, and the tape of the incident did not reflect any of the threats or conduct that
Bill was accused of. Shortly after finding out that Bill had a tape recording of the
incident, Katherine dropped the domestic violence complaint against him.
{6} 	In July 2006, Bill was escorted out of his work area at Los Alamos National
Laboratory so that he could speak with some investigators from the office of the
department of energy’s inspector general. The investigators informed Bill that they
were investigating allegations that Bill had embezzled money from the laboratory, that
he was fraudulently selling equipment to the laboratory, that he was mentally unstable,
that he had gone on frivolous travel, had unauthorized laboratory equipment at home,
and had accepted illegal gratuities from companies he had purchased equipment from.
The investigators then proceeded to search Bill’s vehicle in the parking lot. Following
that search, Bill consented to have his home searched. Bill eventually discovered that
Katherine had made the allegations against him. 	None of the allegations that
Katherine had raised were substantiated by the investigation or the search of Bill’s
home.
{7} 	Based on Katherine’s conduct, Bill filed a civil complaint for fraud, breach of

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fiduciary duty, defamation, and malicious abuse of process. 	Bill alleged that
Katherine had (1) committed fraud by inducing him to quitclaim his home to her; (2)
breached her fiduciary duty as a spouse and an attorney by forging his name on credit
card applications, the car lease application, and the patent application; (3) abused
process by filing false allegations in the domestic violence complaint; and (4) defamed
him 	by 	filing 	false 	allegations 	that 	resulted 	in 	the 	department 	of 	energy’s
investigation. Following trial, a jury found Katherine liable on all four of Bill’s tort
claims and awarded Bill $197,500 in compensatory damages and $60,000 in punitive
damages. Katherine appeals.
DISCUSSION
1. 	The Fraud Verdict Is Supported by Substantial Evidence
{8} 	Katherine first argues that there was insufficient evidence to support the jury’s
finding that she committed fraud when she induced Bill to quitclaim his property to
her. In order to prevail on a fraud claim, a plaintiff must prove the existence of “(1)
a misrepresentation of fact, (2) either knowledge of the falsity of the representation
or recklessness on the part of the party making the misrepresentation, (3) intent to
deceive and to induce reliance on the misrepresentation, and (4) detrimental reliance
on the misrepresentation.” 	Cain v. Champion Window Co. of Albuquerque, 2007-
NMCA-085, ¶ 22, 142 N.M. 209, 164 P.3d 90 (internal quotation marks and citation

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omitted). In support of her argument, Katherine contends that (1) her statement that
Matthew would benefit from the quitclaim deed was an opinion and not an actionable
statement of fact because there are a number of scenarios under which Matthew would
benefit, and (2) if her statement was one of fact, she did not know that it was a
misrepresentation of fact.
{9} 	In reviewing for substantial evidence, we “resolve[] all disputes of facts in favor
of the successful party and indulge[] all reasonable inferences in support of the
prevailing party.” McNeill v. Burlington Res. Oil & Gas Co., 2007-NMCA-024, ¶ 16,
141 N.M. 212, 153 P.3d 46 (filed 2006) (internal quotation marks and citation
omitted), aff’d, 2008-NMSC-022, 143 N.M. 740, 182 P.3d 121. “The question is not
whether substantial evidence exists to support the opposite result, but rather whether
such evidence supports the result reached.” Id. (internal quotation marks and citation
omitted). 	“Substantial evidence is such relevant evidence that a reasonable mind
would find adequate to support a conclusion.” Landavazo v. Sanchez, 111 N.M. 137,
138, 802 P.2d 1283, 1284 (1990).
{10} 	Bill testified that Katherine had told him that “she was very concerned that if
something [were to] happen to [him], that because the house was only in [his] name,
that it was the best thing for Matthew to do this [q]uitclaim [d]eed” and that otherwise,
“if something were to happen to [Bill], Matthew would get nothing.” Bill testified

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that he believed Katherine because “she’s an attorney[,] she’s a mortgage loan
officer[,] she understands real estate[,] she understands the law, and [he] trusted her.”
As a result of these representations, Bill signed the quitclaim deed giving a one-half
interest in his property to Katherine. Katherine denied at trial that she had told Bill
that the quitclaim deed would benefit Matthew; however, she acknowledged that she
had admitted making the statement at a deposition prior to trial.
a. 	Katherine’s Statement Was Actionable
{11} 	Katherine argues that her statement that Matthew would benefit from the
quitclaim deed was an opinion, not a representation of fact, and notes that as a general
rule, statements of opinion and statements regarding future events are insufficient to
support an action for fraud. 	Register v. Roberson Constr. Co., 106 N.M. 243, 245,
741 P.2d 1364, 1367 (1987). We disagree.
{12} 	Katherine relies on Martinez v. Martinez, 2004-NMCA-007, 135 N.M. 11, 83
P.3d 298 (filed 2003), in which the trial court specifically found that a husband’s
statement that a piece of property was not community property “was a statement of
his opinion as to the legal status of the property, not a statement of fact.” Id. ¶ 10. On
appeal, this Court deferred to that finding but applied “a recognized exception to the
general rule that misrepresentations of law are not actionable, which exception makes
such misrepresentations actionable when the parties occupy a fiduciary relationship

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or where one party has a superior means of information.” Id. ¶ 11 (internal quotation
marks and citation omitted). Because the parties were in a fiduciary relationship at the
time, the misrepresentations were actionable. Id. Thus, our holding in Martinez does
not ultimately support Katherine’s argument.
{13} 	Here, there is no finding that Katherine’s statement was one of opinion and not
of fact. However, assuming that her statement was an opinion, Katherine, like the
husband in Martinez, made a representation regarding the legal status of the property
while in a fiduciary relationship with her husband. See In re Bivians’ Estate, 98 N.M.
722, 731, 652 P.2d 744, 753 (Ct. App. 1982) (explaining that a “fiduciary relationship
between [a husband and wife] stem[s] from the marital relationship”). Specifically,
she contended that the legal status of the property was such that Matthew would
receive no interest in the property if Bill were to die intestate. Her misrepresentation
of the legal status of the property was therefore an actionable statement.
b. 	Katherine Knowingly Made a Misrepresentation of Fact
{14} 	Katherine also argues that there was insufficient evidence to support the jury’s
finding that she either knew that her statement that Matthew would benefit from the
quitclaim deed was false or that she was reckless in making the statement.
“[A]ffirmative evidence ([either] circumstantial or direct) of each element is necessary
to support a finding of fraud.” Varbel v. Sandia Auto Elec., 1999-NMCA-112, ¶ 21,

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128 N.M. 7, 988 P.2d 317. 	A jury is permitted to infer the requisite intent from
circumstantial evidence, provided the inference is reasonable. 	Eckhardt v. Charter
Hosp. of Albuquerque, Inc., 1998-NMCA-017, ¶ 56, 124 N.M. 549, 953 P.2d 722
(filed 1997).
{15} 	While there is no direct evidence that Katherine knew that the quitclaim deed
would be less beneficial to Matthew than the status quo if Bill were to die intestate,
there is circumstantial evidence that supports the jury’s finding. 	At trial, while
Katherine did not remember telling Bill that the quitclaim deed was in Matthew’s best
interest, she did not deny that she had made that statement and, in fact, she
acknowledged that in her deposition she had stated that she “could have said that.
“When asked why, based on what she knew without looking at any statutes, the
quitclaim deed would have been in Matthew’s best interest, Katherine stated that she
did not “know why that would be in his best interest.”
{16} 	The jury could infer that Katherine either knew that her representation was
untrue, since she told Bill the transfer would benefit Matthew when she did not know
how it would benefit him, or that Katherine was reckless in making the statement.
Notably, Katherine did not contend that she thought the statement was true when she
made it, nor did she contend that Matthew would in fact have benefitted from the
transfer.

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{17} 	In addition, at the time that she made the statement, Katherine was employed
as a mortgage loan officer and, according to Bill, Katherine understood real estate
issues. Around the same time that Katherine induced Bill to sign the quitclaim deed,
Katherine 	received 	information 	regarding 	the 	calculation 	of 	child 	support.
Approximately four months after Bill signed the deed, Katherine obtained an appraisal
of the house without Bill’s knowledge or consent, and two months later, Katherine
moved out of the home. Viewed in the light most favorable to the jury’s verdict, the
timing of these events, as well as Katherine’s experience with real estate and her
admission that she did not know why the deed would be in Matthew’s best interest,
allowed the jury reasonably to infer that Katherine knowingly misrepresented the
necessity of executing the deed in order to obtain an interest in the home prior to
divorcing Bill.
2. 	Spouses Are Permitted to Bring Intentional Tort Claims Against Each
Other
{18} 	Katherine next argues that this Court should vacate the entire judgment entered
against her because New Mexico public policy either prohibits spouses from seeking
damages for intentional torts against each other or limits interspousal tort claims to
situations where the nature of the tort is sufficiently outrageous. Katherine contends
that there is “well-founded New Mexico precedent” that “claims of intentional torts
by one spouse against the other” should not “proceed unless sufficiently outrageous.”

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In support of this assertion, Katherine directs us to Hakkila v. Hakkila, 112 N.M. 172,
812 P.2d 1320 (Ct. App. 1991), a case where we concluded that interspousal
intentional infliction of emotional distress (IIED) claims must meet a higher standard
than ordinary IIED claims, and Medina v. Medina, 2006-NMCA-042, 139 N.M. 309,
131 P.3d 696, a case where we concluded that a spouse’s bigamous relationship does
not allow a court to reduce that spouse’s share of community property. We disagree
with Katherine’s assertion that these cases either preclude a spouse from bringing an
intentional tort claim or limit interspousal tort claims to outrageous conduct.
{19} 	Our recognition in Hakkila that the tort of IIED should be limited in the marital
context was based on three factors that are unique to both marriage and the tort of
IIED itself: “(1) preventing burdensome litigation of the commonplace, (2) protecting
privileged conduct and (3) avoiding groundless allegations of causation.” 112 N.M.
at 177, 812 P.2d at 1325. 	As to the first factor, we explained that “[c]onduct
intentionally or recklessly causing emotional distress to one’s spouse is prevalent in
our society” and that “even when the conduct of feuding spouses is not particularly
unusual, high emotions can readily cause an offended spouse to view the other’s
misconduct as ‘extreme and outrageous.’” 	Id. at 176, 812 P.2d at 1324. We thus
concluded that the tort must be construed narrowly to avoid transforming typical
marital disputes into IIED claims. Id.

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{20} 	With respect to the second element, we recognized that the nature of a claim of
outrage “is certain to require exposure of the intimacies of married life,” which would
offend “the privacy interests of the defending spouse.” Id. at 177, 812 P.2d at 1325.
We explained that the risk of exposing the intimate details of the marriage
differentiated IIED from other recognized intramarital torts like negligence and
battery because determining fault in an automobile accident or a battery does not
require a litigant to divulge the personal and intimate details of a marriage. Id.
{21} 	Finally, as to the third element, we explained that IIED should be limited in the
marital context because of the unique nature of the injuries that must be proved to
prevail on an IIED claim. 	Specifically, we noted that it would be difficult to
determine whether a party’s injuries were caused “by the outrageousness of the
conduct” or by other privileged conduct such as rejection by a spouse. Id. We noted
that such a problem does not exist with other torts like negligence or battery, where
the “injuries to the other spouse can readily be tied to the tortious conduct.” Id.
{22} 	After concluding that these three unique factors of IIED required limitation of
the tort in the marital context, we noted that “[a] cautious approach to the tort of
intramarital outrage also finds support in the public policy of New Mexico to avoid
inquiry into what went wrong in a marriage” and that “New Mexico was the first state
to provide for no-fault divorce on the ground of incompatibility.” Id. at 177-78, 812

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P.2d at 1325-26. 	However, the primary basis of our holding was the unique
connection between the marital relationship and the tort of IIED. Hakkila did not, as
Katherine argues, broadly hold that all intentional torts should be limited to extremely
outrageous conduct. Rather, it held only that, given the unique elements that must be
proved to prevail on an IIED claim, that tort must be limited in the marital context.
{23} 	Similarly, Medina does not stand for the proposition that an intentional tort
brought by one spouse against the other must be limited to conduct that shocks the
conscience of the court. 	Medina involved a husband’s claim that his wife was not
entitled to her share of community property upon divorce because she had engaged
in bigamy following their separation. 	2006-NMCA-042, ¶ 5. 	In holding that the
wife’s bigamy did not affect the distribution of the community property, we noted that
“a spouse does not forfeit community property rights merely by engaging in
misconduct relative to the marriage” and that “to inject an element of moral fault into
the rules governing the distribution of community property on divorce might be
inconsistent with New Mexico’s system of no-fault divorce.” 	Id. ¶¶ 10, 13. 	We
further held that while “[e]qual division of community property should be the norm
even where bigamy is involved,” a spouse could “be deprived of community property
due to bigamy if the circumstances of the case shock the conscience of the court.”
Id. ¶ 29.

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{24} 	Contrary to Katherine’s assertions, Medina dealt solely with the effect marital
misconduct has on the distribution of community property and concluded that a trial
court may order an unequal distribution of community property only in a case in
which it would be inequitable and violate good conscience to obtain an equal share.
Id. ¶ 33. The present case is not analogous.
{25} 	One key element of the public policy noted in Medina and Hakkila is the
concern with preventing accusations of marital misconduct and elements of private
personal relationships from being brought into the courtroom. Both cases sought to
prevent details regarding the breakdown of the personal relationship between the
spouses from being the subject of litigation. In Hakkila, the IIED claim was based on
conduct in the marriage that related to the marriage itself—allegations that the
husband abused, insulted, berated, demeaned, and refused to engage in sexual
relations with the wife. 112 N.M. at 173, 812 P.2d at 1321. Similarly, the misconduct
at issue in Medina was the wife’s marriage and cohabitation with another man while
she remained married to her husband. The purpose of preventing marital misconduct
from being the subject of litigation is to “remove[] fault-finding from the personal-
relationship dynamics of marriage and divorce” and to avoid “dramatic courtroom
accusations and counter-accusations of fault.” Vigil v. Haber, 119 N.M. 9, 11, 888
P.2d 455, 457 (1994) (internal quotation marks and citation omitted). 	The focus,

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however, is not on barring anything that happens during a marriage from being
brought before the court, but instead on preventing those things that led to the
breakdown of the marriage from being considered in the distribution of community
property or in a tort claim. See Hakkila, 112 N.M. at 178, 812 P.2d at 1326. In other
words, the public policy applied in Hakkila and Medina represents a concern that the
reasons a relationship ends would become the subject of litigation as both parties
accuse each other of causing the dissolution of the marriage.
{26} 	Here, in contrast, the types of claims that Bill has asserted do not involve
misconduct within the confines of the marriage such as unfaithfulness or demeaning
and insulting behavior stemming from the marital relationship. Therefore, there was
little risk that the reasons for the dissolution of Bill and Katherine’s marriage would
become the subject of the litigation. 	Instead, the claims that Bill recovered
for—fraud, breach of fiduciary duty, defamation, and malicious abuse of process—are
types of misconduct that, while they happened to occur during the course of a
marriage, are unrelated to the marital relationship itself. Resolution of the tort claims
did not require the court to delve into the intimate details of the parties’ marriage or
the reasons for its dissolution. Bill’s fraud claim, for example, dealt solely with the
economic damages Bill suffered as a result of Katherine’s misrepresentation regarding
Matthew’s interest in Bill’s property. The breach of fiduciary duty claim involved

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allegations that Katherine obtained a vehicle in Bill’s name without his knowledge or
permission, registered a patent in her name using Bill’s intellectual property, and
surreptitiously obtained credit cards to Bill’s detriment. 	The malicious abuse of
process claim stemmed from Katherine’s accusation that Bill had threatened to kill
Katherine’s mother and her initiation of a domestic violence complaint, and the
defamation claim involved a report Katherine had made to the inspector general that
Bill was misusing government property at his workplace.
{27} 	None of these claims involve accusations of marital misconduct, the details of
Bill’s personal relationship with Katherine, or issues regarding who was at fault for
the dissolution of their marriage. Indeed, Katherine’s actions that formed the basis of
the defamation and malicious abuse of process claims occurred well after Katherine
had already left the home while the divorce was already pending. While Katherine’s
conduct that led to the fraud and breach of fiduciary duty claims occurred during the
course of the marriage, this conduct was not alleged to have had anything to do with
the reasons that Katherine left the marriage, and the evidence Bill introduced to prove
these claims did not delve into any personal details of his relationship with Katherine.
{28} 	Because the claims Bill asserted do not implicate any of the unique concerns
that caused us to limit intramarital IIED claims and because they do not require
scrutiny of the breakdown of his marital relationship with Katherine, we decline to

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interpret the holdings in Hakkila or Medina so broadly as to preclude or limit Bill’s
tort claims. We therefore apply the general rule that spouses are permitted to sue each
other for intentional torts and reject Katherine’s assertion that we must vacate the
judgment entered against her. See Flores v. Flores, 84 N.M. 601, 602, 604, 506 P.2d
345, 346, 348 (Ct. App. 1973) (holding that “one spouse may sue the other for
intentional torts”).
3. 	Katherine Failed to Preserve Her Argument That the Tort Claims Should
Have Been Consolidated With the Divorce Proceedings
{29} 	Katherine finally argues that if spouses are able to bring intentional torts against
one another, those claims must be consolidated with any pending divorce proceedings.
In response, Bill contends that Katherine failed to preserve this argument. We agree.
{30} 	Prior to trial, Katherine filed a motion to consolidate, arguing that all of the
matters alleged by Bill’s complaint occurred in the course of the marriage and that the
case should therefore be consolidated with the pending divorce case. According to
Bill, Katherine withdrew this motion at a September 26, 2006, hearing and stipulated
to the court’s jurisdiction to adjudicate Bill’s tort claims separate from the divorce
case. In response to this assertion, Katherine does not dispute that she withdrew her
motion at the September 26 hearing. However, she contends that she preserved her
argument by filing a post-trial motion in which she argued that the divorce and tort
proceedings should have been joined and that she “did not stipulate that intentional

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tort actions . . . may [be] brought outside the context of divorce litigation.”
{31} 	The record on appeal contains no transcript of the September 26 hearing, but
Katherine does not dispute that she withdrew her motion for consolidation at that
hearing. As a result, Katherine waived any objection she had to the litigation of Bill’s
claims in a proceeding separate from the divorce case. 	See State v. Varela, 1999-
NMSC-045, ¶ 25, 128 N.M. 454, 993 P.2d 1280 (explaining that in order to preserve
an issue for appeal, a party must make a timely objection that specifically apprises the
trial court of the nature of the claimed error and invokes an intelligent ruling thereon).
Furthermore, Katherine’s post-trial motion came too late for the trial court to correct
any alleged error in allowing the separate proceeding on Bill’s tort claims. 	See
Goodloe v. Bookout, 1999-NMCA-061, ¶ 13, 127 N.M. 327, 980 P.2d 652 (“Raising
the matter in their motion for a new trial came too late; objections must be raised in
time for the trial judge to correct the error to prevent prejudice.”).
{32} 	Katherine contends that even if she failed to preserve her claim, we should
nonetheless address it under the public policy exception to our preservation
requirement. 	While preservation of an issue below is generally required for an
appellate court to address an issue, we can address an unpreserved issue if resolution
of that issue “is likely to settle a question of law affecting the public at large or a great
number of cases and litigants in the near future.” Azar v. Prudential Ins. Co. of Am.,

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2003-NMCA-062, ¶ 28, 133 N.M. 669, 68 P.3d 909. 	We decline to apply the
exception here, where Katherine invited the error by withdrawing her pre-trial motion.
See State v. Handa, 120 N.M. 38, 46, 897 P.2d 225. 233 (noting that the doctrine of
fundamental error, another exception to our preservation requirement, “has no
application in cases where the defendant, by his own actions, invites error”).
CONCLUSION
{33} 	For the foregoing reasons, we affirm the judgment entered against Katherine.
{34} 	IT IS SO ORDERED.
CYNTHIA A. FRY, Chief Judge

WE CONCUR:

MICHAEL D. BUSTAMANTE, Judge

LINDA M. VANZI, Judge

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