July 26, 2017- David J. Fogelson and Corinne Fogelson v. Eric Wallace and Mark Bozzone, No. 35,086

IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO
Opinion Number: __________
Filing Date: July 26, 2017
NO. 35,086
DAVID J. FOGELSON and CORINNE
FOGELSON, husband and wife,
Plaintiffs-Appellees/Cross-Appellants,
v.
ERIC WALLACE and MARK BOZZONE,
Defendants-Appellants/Cross-Appellees,
and
WALLEN DEVELOPMENT, INC.;
DEVELOPMENTS BY WALLEN, LLP;
BANK OF AMERICA, N.A.;
RAY’S FLOORING SPECIALIST, INC.;
and ESTANCIAS AT SANTIAGO
HOMEOWNERS’ ASSOCIATION,
Defendants.
APPEAL FROM THE DISTRICT COURT OF SANDOVAL COUNTY
George P. Eichwald, District Judge

Hunt & Davis, P.C.
Catherine F. Davis
Albuquerque, NM
for Appellees
New Mexico Litigation Group, LLC
Robert M. Koeblitz
Albuquerque, NM
for Appellant Wallace
Lorenz Law
Alice T. Lorenz
Albuquerque, NM
Lastrapes, Spangler & Pacheco, P.A.
Matthew M. Spangler
Bernalillo, NM
for Appellant Bozzone

1Appellants each retained appellate counsel and submitted separate appellate
briefs. Some appellate issues are raised by both Appellants, while others are raised
only by Wallace or Bozzone.
2Because collateral estoppel cannot apply to a default judgment, we do not
analyze this argument. See Blea v. Sandoval, 1988-NMCA-036, ¶ 14, 107 N.M. 554,
761 P.2d 432 (“[A] default judgment has no collateral estoppel effect.”).
OPINION
WECHSLER, Judge.
{1} 	This appeal results from a dispute between parties to a contract for the
construction of a new home in Bernalillo, New Mexico. Appellants/Cross-Appellees
Eric Wallace and Mark Bozzone (Appellants) appeal the district court’s ruling that
they are jointly and severally liable for intentional torts, including prima facie tort,
intentional 	interference 	with 	contractual 	relations, 	and 	civil 	conspiracy.1
Appellees/Cross-Appellants David and Corinne Fogelson (Appellees) appeal the
district court’s dismissal of various claims, including unfair trade practices against
both Appellants and conversion against Bozzone.
{2} 	Appellants first argue that the doctrines of res judicata or collateral estoppel
barred Appellees’ claims against them.2 Bozzone did not raise res judicata at trial, but
Wallace filed a motion to dismiss that ostensibly also applied to Bozzone and argued
that res judicata barred Appellees’ claims. As to Wallace, the requirements for res
judicata are met, and Appellees’ claims against him were barred. We therefore reverse

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the district court’s judgment against Wallace. As to Bozzone, Appellees first argue
that Bozzone waived res judicata by failing to raise it at trial. Even if Wallace’s
motion to dismiss was procedurally sufficient to raise this issue for Bozzone,
Appellees made fact-specific allegations against Bozzone. These allegations negated
the applicability of Wallace’s res judicata argument as to Appellees’ claims against
Bozzone. Appellees’ claims against Bozzone were not, therefore, barred by res
judicata.
{3} 	Bozzone additionally argues that the district court erred in (1) failing to dismiss
Appellees’ claim of prima facie tort and (2) ruling that he was liable for intentional
interference with contractual relations because no duty existed between him and
Appellees. With respect to Bozzone’s first argument, we agree and reverse the district
court’s ruling on Appellees’ claim of prima facie tort.
{4} 	We reinterpret Bozzone’s second argument to question whether substantial
evidence supports the district court’s ruling that he was liable for intentional
interference with contractual relations. We conclude that the district court’s ruling in
this regard was predicated upon its finding that Bozzone was a de facto officer or
director of Wallen Development, Inc. and other affiliated corporate entities. We in
turn also conclude that substantial evidence does not support the district court’s ruling

3
on Appellees’ claim of intentional interference with contractual relations and reverse
on that claim as well.
{5} 	Bozzone further argues that reversal of the district court’s rulings on Appellees’
claims of prima facie tort and intentional interference with contractual relations
necessitates that we reverse the district court’s ruling on Appellees’ claim of civil
conspiracy as a matter of law. We agree and reverse on that claim.
{6} 	In their cross-appeal, Appellees first argue that the district court erred in
dismissing their unfair trade practices claim. Although we take no position on the
merits of the claim, we reverse the district court’s dismissal as a matter of law and
remand for additional proceedings on Appellees’ unfair trade practices claim as to
Bozzone only. Appellees additionally argue that the district court erred in dismissing
their conversion claim against Bozzone. For the reasons discussed herein, we conclude
that this claim lacks merit.
{7} 	Although for different reasons, we reverse the district court’s judgment against
each Appellant. We remand for additional proceedings to determine whether Bozzone
engaged in unfair trade practices.
I. 	BACKGROUND
{8} 	In 2007, Appellants, through various corporate entities to be discussed herein,
along with Larry Filener, purchased Wallen Development, Inc. and other affiliated

4
corporate entities (collectively, Wallen) from Garry and Mary Wallen. They retained
Jenice Montoya as the titular president and general manager of Wallen. Wallace was
Wallen’s president and vice president. Filener was Wallen’s registered agent,
secretary, and treasurer. Montoya oversaw the day-to-day operations of the company.
{9} 	On May 25, 2008, Wallen entered into a purchase agreement (the Purchase
Agreement) with Appellees for the construction and purchase of a residential home
(the Home) in Bernalillo, New Mexico. The Purchase Agreement contained an
arbitration agreement (the Arbitration Agreement), mandating that disputes between
the “Seller” and the “Purchasers” be settled by binding arbitration. Wallen was
defined as “Seller,” and Montoya signed the Purchase Agreement on behalf of Wallen.
The Purchase Agreement also contained a cash addendum that called for four
incremental cash payments. Construction of the Home began, and Appellees paid
$165,111 of the total due under the Purchase Agreement.
{10} 	After experiencing significant financial difficulties, Wallen ceased operations
in late February 2009. Appellees were notified of this closure by their Wallen sales
associate. They attempted to contact Montoya and Bozzone about Wallen’s plan, if
any, to complete and deliver the Home. They then retained counsel, who, on March
18, 2009, sent Wallen a demand letter. Appellees copied Appellants and Filener on
this letter.

5
{11} 	Appellees filed a complaint in arbitration against Wallen in district court
seeking to enforce the Arbitration Agreement (the First Complaint). Wallen did not
appear at the ordered arbitration proceeding, and the arbitrator entered an award in
favor of Appellees. The arbitrator found that Wallen (1) breached the Purchase
Agreement, (2) committed fraud, and (3) violated the Unfair Practices Act, NMSA
1978, §§ 57-12-1 to -26 (1967, as amended through 2009), and awarded Appellees
compensatory damages in the amount of $165,111. The arbitrator also awarded
punitive damages in the amount of $165,111, as well as pre-judgment interest, costs,
attorney fees plus gross receipts tax, and arbitrator fees. The district court entered a
judgment confirming the arbitration award (the Arbitration Judgment). Wallen did not
pay the Arbitration Judgment.
{12} 	Appellees then filed a complaint in the district court against Wallace, Filener,
and other individuals and entities (the Second Complaint). Bozzone was not named
in the Second Complaint. Appellees amended the Second Complaint (the Amended
Complaint) to add Bozzone and Wallen and to remove Filener and other individuals
and entities. The Amended Complaint alleged conversion, fraud, unfair trade
practices, and civil conspiracy against Appellants. It also alleged intentional
interference with contractual relations against Bozzone only.

3The legal rationale underlying the district court’s ruling makes clear that its
dismissal of Appellees’ unfair trade practices claim applied to Wallace as well.
6
{13} 	Wallace filed a motion to dismiss the Amended Complaint, raising res judicata
as an affirmative defense. The parties litigated the motion, and it was denied by the
district court. Approximately two months after this denial, Bozzone answered the
Amended Complaint. He did not raise res judicata in his answer. Bozzone then filed
a motion to dismiss Appellees’ unfair trade practices claim, which the district court
granted.3 The district court also granted Bozzone’s motion to dismiss Appellees’ fraud
and conversion claims following the close of Appellees’ case in chief at trial.
{14} 	After trial, the district court ruled that (1) Wallace was liable for prima facie tort
and civil conspiracy and (2) Bozzone was liable for prima facie tort, intentional
interference with contractual relations, and civil conspiracy. As a basis for these
rulings, it found that:
1. 	[Wallen was] purchased by [Appellants and] . . . Filener[.]
. . . .
16. 	. . . Wallace was active at a high level in the management
of the business.
17. 	. . . Bozzone was active at a high level of management,
staffing, land purchases, [and] strategic planning for sales.
. . . .

7
19. 	[Appellants] and . . . Filener knew that subcontractors could
lien properties.
. . . .
22. 	[Appellees] 	signed 	a 	Purchase 	Agreement 	with
Wallen . . . to purchase a home to be constructed [in] . . . Bernalillo, New
Mexico.
. . . .
24. 	[Appellees] were to pay cash for the house.
. . . .
30. 	[Appellants] and . . . Filener were aware that there was just
a general operating account that all monies were put into.
. . . .
44. 	In September of 2008, construction financing was being cut
off by Wachovia [Bank.]
. . . .
51. 	The decision to push payables and not pay vendors timely
was made by [Appellants] collaboratively.
. . . .
55. 	Construction credit with Charter [Bank] and Compass
[Bank] was expiring in December of 2008.
. . . .
60. 	[Appellants] and . . . Filener knew, or should have known,
that [Appellees] had purchased property and were paying cash for it.

4The district court additionally found that Appellees “have received nothing in
return for their payment of $165,111.” Although this finding was accurate at the time,
Appellees subsequently purchased the Home in a foreclosure sale, using $40,000 of
the unpaid Arbitration Judgment.
8
. . . .
69. 	Liens were being filed because of the instructions given by
[Appellants] to delay payments to vendors.
70. 	. . . Bozzone became directly involved in the decisions
about which liens to pay and that liens on closed homes should be paid
first.
71. 	Even though [Appellees] had paid cash, other homes were
being put ahead of [Appellees’] home for payment of liens based
on . . . Bozzone’s instructions to pay closed homes first.
72. 	[Appellants] were directly responsible for the failure to pay
vendors on [Appellees’] home based on their decision to not pay vendors
timely and which vendors to pay.
. . . .
78. 	. . . Bozzone instructed . . . Montoya that [Wallen] would
close.
79. 	. . . Bozzone told . . . Montoya not to keep a skeleton staff
to finish up the few homes within 30 days of completion.
. . . .
81. 	. . . Bozzone was only interested in information regarding
the three homes for which he provided construction financing. 4

9
(Citations omitted.) The district court entered judgment against Appellants jointly and
severally for compensatory damages in the amount of $165,111 and punitive damages
in the amount of $165,111. It also awarded pre-judgment interest and costs. This
appeal followed.
II. 	RES JUDICATA
{15} 	Whether the Arbitration Judgment is res judicata to Appellees’ claims in the
present case is a question of law that we review de novo. See Anaya v. City of
Albuquerque, 1996-NMCA-092, ¶ 5, 122 N.M. 326, 924 P.2d 735. Although the issue
has been raised on prior occasions, our appellate courts have yet to decide whether res
judicata applies to arbitration proceedings. See, e.g., Guest v. Berardinelli, 2008-
NMCA-144, ¶ 29, 145 N.M. 186, 195 P.3d 353 (declining to analyze the plaintiff’s
undeveloped argument that the claims brought against her could have been raised at
a previous arbitration proceeding); Bank of Santa Fe v. Marcy Plaza Assocs., 2002-
NMCA-014, ¶ 15, 131 N.M. 537, 40 P.3d 442 (“Assuming, but not deciding, that res
judicata would apply to an arbitration award[.]”). It appears that the majority general
rule is that an arbitration proceeding can, depending on the particular circumstances,
be subject to res judicata. See Restatement (Second) of Judgments § 84(1), at 286
(1982) (“[A] valid and final award by arbitration has the same effects under the rules
of res judicata, subject to the same exceptions and qualifications, as a judgment of a

10
court.”); see, e.g., Behrens v. Skelly, 173 F.2d 715, 720 (3d Cir. 1949) (holding that
the arbitrator’s decision “on the merits of the claim . . . bars further litigation of the
controversy by the parties and their privies”).
{16} 	The doctrine of res judicata is “founded on principles of fairness and justice[,]”
Kirby v. Guardian Life Ins. Co. of Am., 2010-NMSC-014, ¶ 61, 148 N.M. 106, 231
P.3d 87, and “ensures finality, advances judicial economy, and avoids piecemeal
litigation.” Bank of Santa Fe, 2002-NMCA-014, ¶ 14. To achieve these purposes, res
judicata “bars litigation of claims that were or could have been advanced in an earlier
proceeding.” State ex rel. Martinez v. Kerr-McGee Corp., 1995-NMCA-041, ¶ 11, 120
N.M. 118, 898 P.2d 1256. We believe that the principles of res judicata apply
regardless of whether the parties have previously resolved their claims through a
judgment in a litigated or arbitrated proceeding, but we emphasize that each
arbitration case is to be scrutinized against these principles on a case-by-case basis and
that res judicata is to be applied, or not, based on the particular circumstances of the
arbitration proceeding and any court confirmation of an arbitration award. See Deflon
v. Sawyers, 2006-NMSC-025, ¶ 4, 139 N.M. 637, 137 P.3d 577 (“Determining
whether parties are in privity for purposes of res judicata requires a case-by-case
analysis.”).

11
{17} 	“A party asserting res judicata . . . must establish that (1) there was a final
judgment in an earlier action, (2) the earlier judgment was on the merits, (3) the
parties in the two suits are the same, and (4) the cause of action is the same in both
suits.” 	Potter 	v. 	Pierce, 	2015-NMSC-002, 	¶ 	10, 	342 	P.3d 	54. 	The 	finality
requirements are satisfied and are therefore not at issue in the present case. See NMSA
1978, § 44-7A-27 (2001) (conferring jurisdiction to enter judgment on an arbitration
award); First State Bank v. Muzio, 1983-NMSC-057, ¶ 9, 100 N.M. 98, 666 P.2d 777
(holding that a prior default judgment is res judicata “on issues which were, or could
have been, determined in the earlier action”), overruled on other grounds by
Huntington Nat’l Bank v. Sproul, 1993-NMSC-051, ¶ 32, 116 N.M. 254, 861 P.2d
935.
{18} 	Appellants argue on appeal that the district court’s entry of the Arbitration
Judgment precluded Appellees from relitigating the same issues against them in the
subsequently filed case. As a threshold matter, we elaborate on our previously
discussed determination on the issue of waiver.
A. 	Waiver
{19} 	“[R]es judicata is an affirmative defense which must be raised or it is
permanently waived.” Xorbox v. Naturita Supply Co., 1984-NMSC-062, ¶ 12, 101
N.M. 337, 681 P.2d 1114; see Rule 1-008(C) NMRA (“In pleading to a preceding

12
pleading, a party shall set forth affirmatively . . . res judicata[.]”). The defense may be
raised in either a responsive pleading or a motion to dismiss. See Universal Life
Church v. Coxon, 1986-NMSC-086, ¶ 9, 105 N.M. 57, 728 P.2d 467; Xorbox, 1984-
NMSC-062, ¶ 12. The purpose of the raise-or-waive requirement for res judicata is to
“provid[e] the plaintiff with notice and the opportunity to demonstrate why the
affirmative defense should not succeed.” Robinson v. Johnson, 313 F.3d 128, 134-35
(3d Cir. 2002).
{20} 	On April 13, 2012, approximately six months before Bozzone entered his
appearance in this case, Wallace filed a motion to dismiss the Amended Complaint,
asserting that it “is barred by the [d]octrine . . . of [r]es [j]udicata.” On May 24, 2012,
the district court heard argument on this issue, among others, and denied the motion.
It is clear, therefore, that Wallace raised, and by extension preserved, his res judicata
argument. Crutchfield v. N.M. Dep’t of Taxation & Revenue, 2005-NMCA-022, ¶ 14,
137 N.M. 26, 106 P.3d 1273 (“To preserve error for review, a party must fairly invoke
a ruling of the district court on the same grounds argued [on appeal].”).
{21} 	During the May 24, 2012 hearing, Wallace repeatedly invoked Bozzone, and
the preclusive effect of the Arbitration Judgment as to “Defendants within privity”
with Wallen, despite the fact that Bozzone had not yet entered an appearance in the
case. Appellants argued, to the contrary, that Bozzone was not represented at the

13
hearing. The district court denied the motion as a matter of law, implying that res
judicata did not apply to nonsignatories of arbitration agreements.
{22} 	On October 10, 2012, Bozzone filed his answer to Appellees’ Amended
Complaint. He did not assert, in his answer or otherwise, that res judicata barred
Appellees’ claims. In his brief in chief, Bozzone argues that he preserved his res
judicata defense in his opening statement at trial. An opening statement is not a
permissible mechanism by which to raise an affirmative defense. Cf. Proper v. Mowry,
1977-NMCA-080, ¶ 31, 90 N.M. 710, 568 P.2d 236 (“The primary purpose of [an
opening statement] is to inform the jury of the nature of the case[.]”). However, under
the unique circumstances of this case, we conclude that another doctrine, law of the
case, would negate Appellees’ argument that Bozzone waived res judicata if, but only
if, the allegations against Appellants were substantially the same such that a legal
ruling as to Wallace would directly apply to Bozzone. See United States v. LaHue, 261
F.3d 993, 1010 (10th Cir. 2001) (“[W]hen a rule of law has been decided adversely
to one or more codefendants, the law of the case doctrine precludes all other
codefendants from relitigating the legal issue.” (internal quotation marks and citation
omitted)); Alba v. Hayden, 2010-NMCA-037, ¶ 7, 148 N.M. 465, 237 P.3d 767
(“Under the law of the case doctrine, a decision on an issue of law made at one stage

14
of a case becomes a binding precedent in successive stages of the same litigation.”
(internal quotation marks and citation omitted)).
{23} 	We therefore review whether Wallace’s res judicata argument applied equally
to Bozzone such that the law of the case doctrine applies. The Amended Complaint
alleged (1) when Wallen ceased operations, it had the Home and several other
unfinished homes under contract; (2) of the homes that were unfinished when Wallen
ceased operations, only those for which Bozzone provided construction funding were
completed; and (3) the Bozzone-funded homes were eventually sold and the
construction financing was paid off. These allegations formed the basis of Appellees’
intentional interference with contractual relations claim against Bozzone, which
alleged that Bozzone improperly induced Wallen to breach the Purchase Agreement
by deciding to complete only homes for which he provided construction financing.
{24} 	Although the First Complaint alleged fraud, it did not allege the specific
conduct raised in Appellees’ intentional interference with contractual relations claim,
including the decision not to complete construction on the Home but, instead, to
complete construction on other homes in which Bozzone had a personal financial
interest. Appellees did not allege this conduct against Wallace. It would, therefore,
stretch credulity to conclude that Wallace’s motion to dismiss raised these issues such
that res judicata would bar Appellees’ claims against Bozzone.

15
{25} 	Because the law of the case doctrine does not apply, we review whether res
judicata barred Appellees’ claims as to Wallace only. Wallace argues that the identity
of parties and identity of cause of action requirements were met such that res judicata
precluded Appellees’ claims against him. Appellees claim that (1) Wallace was not
in privity with Wallen in the arbitration proceeding because he was not a signatory to
the Arbitration Agreement and (2) the intentional torts alleged in the present case are
not the same claims adjudicated in the arbitration proceeding.
B. 	Privity
{26} 	Res judicata’s privity requirement applies to both the parties in the previous
action and those with whom the parties are in privity. See Deflon, 2006-NMSC-025,
¶ 2 (“Res judicata prevents a party or its privies from repeatedly suing another for the
same cause of action.”). “Privity requires, at a minimum, a substantial identity
between the issues in controversy and showing that the parties in the two actions are
really and substantially in interest the same.” Boyd Estate ex rel. Boyd v. United
States, 2015-NMCA-018, ¶ 25, 344 P.3d 1013 (internal quotation marks and citation
omitted). Although a “parent-subsidiary relationship does not of itself establish
privity[,]” 18A Charles Alan Wright, Arthur R. Miller & Edward H. Cooper, Federal
Practice and Procedure § 4460, at 634 (2d ed. 2002), the Restatement (Second) of

16
Judgments recognizes that claim preclusion is appropriate if members of an ownership
group directly control a corporate entity:
When the corporation is closely held, . . . interests of the corporation’s
management and stockholders and the corporation itself generally fully
coincide. By definition, the stockholders are few in number and either
themselves constitute the management or have direct personal control
over it. In many respects, the enterprise is a proprietorship or partnership
conducted in corporate form. . . . For the purpose of affording
opportunity for a day in court on issues contested in litigation, . . . there
is no good reason why a closely held corporation and its owners should
be ordinarily regarded as legally distinct.
Restatement (Second) of Judgments § 59 cmt. e, at 99; see, e.g., Sparks Nugget, Inc.
v. Comm’r, 458 F.2d 631, 639 (9th Cir. 1972) (“ ‘It would seem that the public policy
underlying the doctrine of res judicata, as a bar to repetitious litigation, would support
a finding of privity between a close corporation and its sole or controlling
stockholder.’ ” (quoting 1B James Wm. Moore, Moore’s Federal Practice ¶ 0.422[3]
(2d ed. 1996))). We therefore conclude that privity may exist when the interests of a
corporate entity and members of its ownership group “fully coincide.” Restatement
(Second) of Judgments § 59 cmt. e, at 99.
{27} 	The district court found that Wallen was “purchased” by Appellants and
Filener. This finding of fact is supported by documentary evidence but fails to
describe the series of corporate entities involved. Wallace’s Exhibit R shows that, in
a two-step process, Wallen was sold to Wall2 Builders. Wall2 Builders was a limited

17
partnership, in which the general partner was Wall2 Holdings, LLC. The members of
Wall2 Holdings, LLC were Wallace, Filener, and Mooresville Development, LLC
(Mooresville). Bozzone was the managing member of Mooresville. The limited
partners in Wall2 Builders were Filener, Mooresville, and a limited partnership named
“8Fish.” Wallace was the president of 8Fish. Wallace, through 8Fish, owned
approximately sixty-five percent of Wall2 Builders. Filener, individually, and
Bozzone, through Mooresville, owned approximately ten percent and twenty-five
percent of Wall2 Builders, respectively. As such, Wallace, through corporate entities
he controlled, owned a controlling interest in Wall2 Builders and, by extension,
Wallen. Wallace also served as both president and vice president of Wallen.
{28} 	In addition to establishing Wallen’s ownership and management structure, the
evidence also indicated that Wallace—in concert with Bozzone and Filener—directly
controlled 	Wallen’s 	financial 	and 	strategic 	decision-making. 	One 	particularly
compelling example of this control is an email message Wallace sent to Bozzone on
April 29, 2008—approximately one month before Appellees signed the Purchase
Agreement and approximately ten months before Wallen closed. The email message
stated, in part:
Here is the plan of attack, in summary: (1) get all the necessary data to
[the banking expert], . . . (3) get [the banking expert] to review the
situation and give us an opinion[,] . . . (4) take [the banking expert’s]
banking recommendations and act on them preliminarily which I expect

18
to include (a) a negotiation with [the former owner] that he has to
convert his loans to equity or some other workable arrangement[,] (b) a
negotiation 	with 	the 	banks 	based 	on 	[the 	banking 	expert’s]
recommendations or make a decision on the appropriate . . . approaches
that are recommended, (c) make internal changes as needed which may
include (i) [Montoya’s] emphasis as general manager with insistence that
she make [general manager] decisions, not actions based on what
[Filener], [Wallace], or [Bozzone] just dictate, (ii) internal cuts, (iii)
focus on sales and marketing, (iv) reduce incentives, (v) focus only on
the Alb[uquerque] and current markets until directed otherwise by us,
(vi) other actions based upon the analysis. We will probably sublease the
office space and turn the building back over to [the former owner], if
possible, and go find cheaper space. We are not moving based on what
is best for [Filener], and this was discussed with and agreed to by
[Filener]. He is investigating space separate from Wallen’s needs. Please
have confidence that [Filener] will do whatever is best for the company
and what we (you and I) ask him to do or not to do. Again, I need
[Montoya] to act as the [general manager] and not a puppet of us.
This email message is consistent with Montoya’s testimony, which strongly implied
that her duties as general manager were limited to overseeing Wallen’s day-to-day
operations and that her input on strategic or financial decisions was limited.
{29} 	Although Wallen’s financial circumstances were such that no money was
flowing from Wallen to Wall2 Builders during the time period at issue, Wallace’s
control over Wallen appears satisfied under the circumstances. See Garcia v. Coffman,
1997-NMCA-092, ¶ 18, 124 N.M. 12, 946 P.2d 216 (“Control is not mere majority
or complete stock control, but complete domination, not only of finances, but of
policy and business practice in respect to the transaction attacked so that the corporate
entity as to this transaction had at the time no separate mind, will or existence of its

19
own.” (alterations, internal quotation marks, and citation omitted)). In addition to
serving as both president and vice president of Wallen, Wallace—through other
corporate entities—was the controlling stockholder of Wall2 Builders and Wallen. He
engaged in negotiations with Wallen’s lenders. He determined (1) the timing of
payments 	to 	creditors 	and 	vendors 	and 	(2) 	that 	Wallen 	would 	close—the
“transaction[s] attacked” in the present case. Id. (internal quotation marks and citation
omitted). Perhaps most significantly, he characterized Wallen’s general manager as
a “puppet.”
{30} 	Although Montoya and other Wallen employees controlled the day-to-day
operations of Wallen, Wallace exercised the type of control contemplated in
Section 59, comment e of the Restatement (Second) of Judgments, which discusses
the possibility that “the enterprise is a proprietorship or partnership conducted in
corporate form.” Under these circumstances, Wallace’s interests “fully coincide[d]”
with Wallen’s such that he was in privity with Wallen for purposes of res judicata. See
id.
{31} 	Appellees’ argument against a determination that privity existed between
Wallace and Wallen relies in part on Heye v. American Golf Corp., 2003-NMCA-138,
¶ 8, 134 N.M. 558, 80 P.3d 495, for the proposition that “a legally enforceable
contract is a prerequisite to arbitration[,]” and in part on Deflon for the proposition

20
that privity does not exist when claims are brought against corporate employees in
their individual capacities. See Deflon, 2006-NMSC-025, ¶ 5 (citing Morgan v. City
of Rawlins, 792 F.2d 975, 980 (10th Cir. 1986), and holding that “privity does not
exist where an initial lawsuit is brought against an employer and a second lawsuit is
then brought against an employee acting in his or her individual capacity”).
{32} 	First, aside from their citation to Heye, Appellees develop no additional legal
argument for the proposition that a nonsignatory to an arbitration agreement cannot
be in privity with a signatory under the facts of this case. See State v. Sanchez, 2015-
NMCA-077, ¶ 14, 355 P.3d 51 (explaining that when a party “has cited no authority
on [a] factual nuance, we may assume none exists”). The Arbitration Agreement
provided that “[i]n the event that a dispute arises between Seller and Purchasers in any
way relating to or arising from the construction, including . . . the terms and
provisions of th[e Purchase] Agreement, Purchasers and Seller agree to resolve the
dispute exclusively th[r]ough binding arbitration.” The Purchase Agreement provided
for the “construction and sale of the [l]ot and completed [h]ome.” When Wallen failed
to deliver a completed home, a dispute related to the construction arose. In the
Amended Complaint, Appellees alleged that Wallace’s (1) use of funds paid by
Appellees pursuant to the Purchase Agreement for alternate purposes and (2)
misrepresentations related to his intent to deliver a completed home constituted

21
conversion, fraud, unfair trade practices, civil conspiracy, and prima facie tort. Like
the 	underlying 	breach 	of 	contract 	claim, 	these 	claims 	arose 	from 	“a
dispute . . . relating to . . . the terms and provisions” of the Purchase Agreement. Even
accepting that “a party cannot be required to submit to arbitration any dispute which
he has not agreed so to submit[,]” United Steelworkers of Am. v. Warrior & Gulf
Navigation Co., 363 U.S. 574, 582 (1960), in our view, the particular circumstances
in this case show that Wallace, the controlling stockholder, president, and vice
president of Wallen, should have been named as a party in the arbitration proceeding
to defend against alleged claims of tortious conduct on his part, including but not
limited to fraud. See NMSA 1978, § 44-7A-7(b) (2001) (“The court shall decide
whether an agreement to arbitrate exists or a controversy is subject to an agreement
to arbitrate.”); see also Thomson-CSF, S.A. v. Am. Arbitration Ass’n, 64 F.3d 773,
776-78 (2d Cir. 1995) (holding that five theories, based in common law and agency
principles, justify binding nonsignatories to arbitration agreements: “1) incorporation
by reference; 2) assumption; 3) agency; 4) veil-piercing/alter ego; and 5) estoppel”);
Potter, 2015-NMSC-002, ¶ 1 (“Res judicata is a judicially created doctrine designed
to promote efficiency and finality by giving a litigant only one full and fair
opportunity to litigate a claim and by precluding any later claim that could have, and
should have, been brought as part of the earlier proceeding.”).

22
{33} 	Next, in Deflon, which was first litigated as Deflon v. Danka Corp., 1 F. App’x
807 (10th Cir. 2001), the plaintiff filed claims against her former employer in the
United States District Court for the District of New Mexico for alleged violations of
Title VII, the Equal Pay Act, and state law tort claims. Deflon, 2006-NMSC-025, ¶ 1.
All of the plaintiff’s claims were based on the conduct of Danka employees. Id. After
the United States District Court granted summary judgment on all claims, the plaintiff
filed claims against Danka employees in state district court for (1) intentional
infliction of emotional distress, (2) intentional interference with contractual relations,
(3) defamation, (4) prima facie tort, and (5) civil conspiracy. Id. The district court
ruled that res judicata and collateral estoppel barred the plaintiff’s claims. Id. The
plaintiff appealed the district court’s ruling as to intentional interference with
contractual relations and civil conspiracy to this Court, which affirmed. Id. Our
Supreme Court reversed, holding that because “[p]arties to a contract cannot bring an
action for tortious interference [with contract],” the plaintiff could not have brought
this claim against Danka in federal court. Id. ¶ 6 (internal quotation marks and citation
omitted). It thereafter held that privity did not exist given the nature of the plaintiff’s
intentional interference and related conspiracy allegations against the defendants. See
id. ¶ 10 (“Because we interpret [the p]laintiff’s complaint as alleging that [the
d]efendants acted outside the scope of their corporate authority, we do not find [the

23
d]efendants and Danka in privity for purposes of the intentional interference with
contract a claim.”).
{34} 	Appellees did not allege intentional interference with contractual relations
against Wallace. Instead, they alleged conversion, fraud, unfair trade practices, civil
conspiracy, and prima facie tort. Unlike intentional interference with contractual
relations, these claims may be brought by one party to a contract against the other.
See, e.g., § 57-12-2(D)(17) (defining “unfair trade practices” to include “failing to
deliver the quality or quantity of goods or services contracted for”); Gasparini v.
Pordomingo, 972 So. 2d 1053, 1055 (Fla. Dist. Ct. App. 2008) (explaining that one
party to a contract may bring a claim for civil theft or conversion against another if the
conduct alleged “go[es] beyond . . . a failure to comply with the terms of a contract”);
Beaudry v. Farmers Ins. Exch., 2017-NMCA-016, ¶¶ 1-3, 388 P.3d 662 (affirming a
judgment on the plaintiff’s prima facie tort claim arising from an employment
contract), cert. granted (No. 36,181, Dec. 19, 2016); Kaveny v. MDA Enters., Inc.,
2005-NMCA-118, 	¶¶ 	17-18, 	138 	N.M. 	432, 	120 	P.3d 	854 	(holding 	that
misrepresentations in inducing a contract constituted fraud). Therefore, inasmuch as
Appellees’ claims fell within the scope of the Arbitration Agreement, we see no
reason why Appellees could not have brought these claims against Wallace in the
arbitration proceeding.

24
{35} 	Our conclusion on the issue of privity is closely tied to the facts of this case and
is 	bolstered 	by 	evidence 	indicating 	that 	Appellees 	were 	aware 	of 	Wallen’s
management structure prior to filing the First Complaint against Wallen alone. On
March 18, 2009, Appellees sent a demand letter to Wallen, which they copied to
Wallace. The act of copying Wallace on their demand letter demonstrated Appellees’
awareness of Wallace as a potential party to their claims.
{36} 	Certainly, there are circumstances in which the absence of discovery could
justify a plaintiff’s failure to name potential parties in arbitration, including unknown
partners, investors, or stockholders who may be liable for the conduct that gave rise
to the claim or claims. Under such circumstances, res judicata should not apply as a
bar to subsequent intentional tort claims. Wallace, however, was the controlling
stockholder, president, and vice president of Wallen. His involvement in the
management of Wallen was known to Appellees at the time they filed the First
Complaint.
{37} 	Additionally, the circumstances of this case are not such that Appellees have
been unable to secure a judgment for the full amount of their compensatory damages.
See Gandy v. Wal-Mart Stores, Inc., 1994-NMSC-040, ¶ 12, 117 N.M. 441, 872 P.2d
859 (stating that a “proper application of the doctrine of res judicata[] will prevent
double recovery and duplicative proceedings”); cf. Ritchie v. Landau, 475 F.2d 151,

25
156 (2d Cir. 1973) (holding that a plaintiff bringing a subsequent action for fraud
“must 	be 	able 	to 	show 	actual 	damages 	resulting 	from the 	fraud 	which 	are
distinguishable from the damages which he has already recovered in a prior
adjudicatory proceeding”). The arbitrator awarded Appellees the full amount of
compensatory damages alleged. We do not consider the fact that the Arbitration
Judgment proved partially uncollectible to be relevant to a res judicata analysis.
C. 	Same Cause of Action
{38} 	The identity of the cause of action requirement is determined using “the
transactional approach,” that “considers all issues arising out of a common nucleus of
operative facts as a single cause of action.” Potter, 2015-NMSC-002, ¶ 11 (internal
quotation marks and citation omitted). “The facts comprising the common nucleus
[are] identified pragmatically, considering (1) how they are related in time, space, or
origin, (2) whether, taken together, they form a convenient trial unit, and (3) whether
their treatment as a single unit conforms to the parties’ expectations or business
understanding or usage.” Id. (internal quotation marks and citation omitted).
1. 	Relatedness of Facts
{39} 	The First Complaint alleged breach of contract, unfair trade practices, and
fraud. After Wallen failed to appear for the arbitration proceeding, the arbitrator found
that Wallen (1) breached the Purchase Agreement, (2) engaged in unfair trade

26
practices by “failing to provide the services contracted for and failing to provide the
quality of goods purchased[,]” and (3) committed fraud by “intentionally receiving
payments from [Appellees], refusing to complete construction and sale of the [Home]
described in the [P]urchase [A]greement, refusing to return the monies paid by
[Appellees], demanding payment of additional funds from [Appellees] two weeks
before going out of business, and converting the monies tendered by [Appellees] for
their benefit instead of returning the funds to [Appellees].”
{40} 	Both the First Complaint and the Amended Complaint alleged fraud and unfair
trade practices. As to Wallace, the Amended Complaint additionally alleged prima
facie tort, conversion, and civil conspiracy. Although these claims expand upon those
alleged in the First Complaint, in determining whether res judicata bars the subsequent
suit, we examine whether “the same operative facts form the basis of both . . .
complaint[s]” and whether “[t]he same alleged wrongs are sought to be redressed in
both lawsuits.” Ford v. N.M. Dep’t of Pub. Safety, 1994-NMCA-154, ¶ 31, 119 N.M.
405, 891 P.2d 546; see also Gandy, 1994-NMSC-040, ¶ 11 (stating that a plaintiff
cannot recover under both contract and tort theories for the same harm).
{41} 	The operative facts in the present case are similar with respect to time, space,
and origin to those in the arbitration proceeding in that Appellees’ claims in both arose
from conduct related to the purchase and construction of the Home, including business

27
decisions made during the same time period. As to Wallace, the Amended Complaint
alleged (1) conversion resulting from the use of Appellees’ money “for expenses
unrelated to the construction of the [Home]”; (2) fraud resulting from the inducement
of Appellees “to continue making payments . . . notwithstanding . . . that the
subcontractors and suppliers were not being paid and Wallen . . . was preparing to go
out of business”; (3) unfair trade practices resulting from misrepresentations that they
“intended to provide construction services for the construction of [the H]ome” and
“were paying [Appellants’] subcontractors [with] monies received from [Appellees]
and intended to convey the [Home] to [Appellees] free and clear of any and all liens”;
(4) civil conspiracy resulting from Appellants “taking [Appellees’] money, but failing
to construct the [H]ome . . . and transfer it to [Appellees] free of liens”; and (5) prima
facie tort resulting from Appellants “using [Appellees’] money to pay expenses for
things other than the construction of the . . . Home, . . . continuing to accept
[Appellees’] money after it became apparent that Wallen . . . was in serious financial
difficulty and would be unable to continue . . . , and . . . completing only homes on
which . . . Boz[z]one held the construction financing.”
{42} 	These claims arose from the same conduct alleged against Wallen in the First
Complaint. Beginning in March 2008, Appellees made payments pursuant to the terms
of the Purchase Agreement. They made the last of these payments on February 9,

28
2009, just weeks before Wallen closed. The monies paid by Appellees went into a
general fund rather than being dedicated to the specific purpose of constructing the
Home. Vendors and suppliers other than those working on the Home were paid with
the monies paid by Appellees. Appellees did not close on the Home prior to the date
Wallen ceased operations. These are the “same operative facts” and “same alleged
wrongs” that formed the basis of the First Complaint. Ford, 1994-NMCA-154, ¶ 31.
2. 	Trial Convenience
{43} 	“In considering whether the facts form a convenient unit for trial, we examine
overlap of the witnesses and evidence relevant to the claims in the two lawsuits.”
Anaya, 1996-NMCA-092, ¶ 14. This analysis is complicated by the fact that only
Appellees appeared and provided testimony in the arbitration proceeding. However,
we have no reason to believe that the witnesses or evidence relevant to Appellees’
claims in the arbitration proceeding and in the trial on the Amended Complaint would
not substantially overlap.
{44} 	As discussed above, the First Complaint made allegations that are essentially
the same as those in the Amended Complaint. At trial, the primary witnesses included
David Fogelson, Montoya, Wallace, Bozzone, and Filener. Their testimony described
the conduct of the parties and the extent to which Appellants controlled Wallen during
the relevant time period. The documentary evidence included (1) email messages and

29
other internal documents memorializing Wallen’s business practices during the
relevant time period and (2) additional documents establishing the connection between
Wallace, Wallen, and other corporate entities. These primary witnesses and documents
are the same as would have been required to prove the claims alleged in the First
Complaint had Wallen appeared.
{45} 	In Anaya, this Court held that “allegations of conduct by different persons in
dissimilar situations and at distinct times . . . suggest that the claims advanced in the
two cases do not form a convenient trial unit.” Id. ¶ 15 (emphasis added). Because
none of these considerations is present in the present case, Appellees’ claims against
Wallace formed a convenient trial unit regardless of Appellees’ decision not to bring
the claims together in the arbitration proceeding.
3. 	Parties’ Expectations
{46} 	Similarly, in considering whether the application of res judicata would be
consistent with the parties’ expectations, we review whether Wallace “had reason to
expect that the additional claims raised . . . were precluded by the judgment . . . in the
prior lawsuit.” Id. ¶ 17. Generally speaking, our analysis focuses upon the expectation
of the party asserting res judicata. See Bank of Santa Fe, 2002-NMCA-014, ¶ 21
(evaluating the reasonableness of the lessor’s expectation of finality); Anaya, 1996-
NMCA-092, ¶ 17 (evaluating the reasonableness of the defendants’ expectation of

30
finality). But see Myers v. Olson, 1984-NMSC-015, ¶ 14, 100 N.M. 745, 676 P.2d 822
(evaluating the reasonableness of each former spouse’s expectation of finality with
respect to a stipulated divorce decree). Such expectations can be based upon the
procedural posture of each proceeding relative to the other. See Anaya, 1996-NMCA-
092, ¶ 17 (noting that “[a]s of the time of the trial and judgment in [the first case], the
action underlying th[e] appeal was pending in district court”).
{47} 	In Anaya, the two cases proceeded simultaneously, with one reaching trial and
judgment first, while the other was still in discovery. Id. Under those circumstances,
we held that the parties had no reason to expect that the issues developed in the second
case were res judicata under the first judgment. Id.
{48} 	In the present case, the initial case proceeded independently to completion, and
the district court confirmed the Arbitration Judgment. Only after Wallen failed to pay
the Arbitration Judgment, did Appellees file the Amended Complaint against
Appellants in their individual capacities. As discussed above, Wallace’s interests fully
coincided with Wallen’s such that privity existed, and in our view, he should have
been named as a party in the arbitration proceeding to defend against alleged claims
of tortious conduct. It was, therefore, not unreasonable for Wallace to expect that
additional claims arising from “a common nucleus of operative facts” would be barred
by res judicata. Potter, 2015-NMSC-002, ¶ 14.

31
D. 	Torts Committed by Appellants in Their Individual Capacities
{49} 	Appellees argue that the claims were not the same as those adjudicated in the
arbitration proceeding because the Amended Complaint alleged intentional torts
against Wallace in his individual capacity. We are not persuaded.
{50} 	It is well established that officers and agents of corporations can be held
individually liable for their tortious acts. See Kaveny, 2005-NMCA-118, ¶ 20
(“Officers of corporations can be held personally liable when they commit intentional
torts.”); Kreischer v. Armijo, 1994-NMCA-118, ¶ 5, 118 N.M. 671, 884 P.2d 827
(“[A]n agent may be held individually liable for his own tortious acts, whether or not
he was acting for a disclosed principal.”). Appellees cite both of these cases for the
proposition that, because the district court “found intentional torts were committed by
[Appellants], it is clear that the subject matter of the arbitration [proceeding] and the
instant case is not identical.”
{51} 	“[T]he difference between a tort and contract action is that a breach of contract
is a failure of performance of a duty arising or imposed by agreement; whereas, a tort
is a violation of a duty imposed by law.” Kreischer, 1994-NMCA-118, ¶ 6 (internal
quotation marks and citation omitted). In the First Complaint, Appellees alleged
breach of contract, unfair trade practices, and fraud. In the Amended Complaint,
Appellees alleged unfair trade practices and various intentional torts. The Arbitration

32
Judgment and the findings of fact and conclusions of law in the present case both
outline the bases for the judgments against Wallen and Wallace in his individual
capacity.
{52} 	These factual bases, however, have no bearing on our res judicata analysis. Res
judicata bars subsequent litigation that “could have, and should have, been brought
as part of the earlier proceeding.” Potter, 2015-NMSC-002, ¶ 1. Kaveny and Kreischer
speak only to the defendants’ individual liability and not to claim preclusion. See
generally Kaveny, 2005-NMCA-118, ¶ 20 (analyzing issues raised without reference
to res judicata); Kreischer, 1994-NMCA-118, ¶ 5 (same).
{53} 	Appellees’ answer brief, after listing various factual findings made by the
district court, states that “[n]one of [the] allegations for prima facie tort [or]
conspiracy . . . were part of the [First Complaint] against Wallen.” We disagree and
conclude that, as to Wallace, the Amended Complaint is merely a restatement of
Appellees’ breach of contract, unfair trade practices, and fraud claims from the First
Complaint.

5See Deflon, 2006-NMSC-025, ¶ 9 (holding that “[a]n officer acting outside the
scope of his or her employment and in his or her own private interest has no authority
to breach the corporation’s contract, and that officer should not be able to hide behind
a corporate shield for unauthorized conduct”); Kaveny, 2005-NMCA-118, ¶ 20
(holding that “[o]fficers of corporations can be held personally liable when they
commit intentional torts”); Ettenson v. Burke, 2001-NMCA-003, ¶ 17, 130 N.M. 67,
17 P.3d 440 (holding that “a corporate officer is privileged to interfere with his
corporation’s contracts only when he acts in good faith and in the best interests of the
corporation, as opposed to his own private interests”); Stinson v. Berry, 1997-NMCA-
076, ¶ 17, 123 N.M. 482, 943 P.2d 129 (holding that “if an officer or director directs
or actively participates in the commission of the tortious act of the corporation, he [or
she] will be liable, along with the corporation”).
33
E. 	Conclusion as to Wallace
{54} 	The identity of party and cause of action requirements for res judicata are met
with respect to Wallace. We therefore reverse the judgment against him.
III. 	BOZZONE’S LIABILITY FOR INTENTIONAL TORTS
{55} 	We next review the district court’s ruling that Bozzone, in his individual
capacity, was liable for prima facie tort, intentional interference with contractual
relations, and civil conspiracy. Our task is complicated by the fact that the district
court’s findings of fact fail to expressly define the relationship that existed between
Bozzone and Wallen. However, each of the cases cited in the district court’s
conclusions of law discusses the imposition of individual tort liability to an officer
and/or director of a corporation.5 Given its citation to these cases, we conclude that
the district court predicated its conclusions of law upon a finding that Bozzone was
a de facto officer or director of Wallen.

34
{56} 	Viewing the district court’s conclusions of law in this light, Bozzone’s agency-
based arguments on appeal are more properly characterized as a question of the
sufficiency of the evidence: whether substantial evidence supports a finding of
liability with respect to each element of (1) prima facie tort, (2) intentional
interference with contractual relations, and (3) civil conspiracy. We address the
arguments raised by Bozzone on appeal through this lens. To the extent that Appellees
argue that Bozzone did not preserve such an argument at trial, Bozzone’s motion to
dismiss at the close of Appellees’ case in chief operated as a challenge to the
sufficiency of the evidence. See Mayer v. Smith, 2015-NMCA-060, ¶¶ 7-9, 350 P.3d
1191 (describing a motion to dismiss in a non-jury trial as a challenge to the
sufficiency of the evidence).
A. 	Prima Facie Tort
{57} 	As a threshold matter, we consider whether the district court erred in denying
Bozzone’s motion to dismiss Appellees’ claim of prima facie tort at the close of
Appellees’ case in chief. “We review the denial of a motion to dismiss de novo
because such a motion tests the legal sufficiency of the allegations.” Padilla v. Wall
Colmonoy Corp., 2006-NMCA-137, ¶ 7, 140 N.M. 630, 145 P.3d 110.
{58} 	Although Bozzone’s motion to dismiss focused generally on Appellees’ failure
to prove the elements of prima facie tort, at trial, counsel described prima facie tort as

35
a “catchall” claim. In Bogle v. Summit Investment Co., this Court discussed the
applicability of prima facie tort under similar circumstances and held that when
“intentional interference with contract[ual relations] . . . was the appropriate tort
action[,] . . . there was simply no need to resort to prima facie tort.” 2005-NMCA-024,
¶¶ 22-24, 137 N.M. 80, 107 P.3d 520. This holding established that prima facie tort
(1) “should be used to address wrongs that otherwise escaped categorization, but
should not be used to evade stringent requirements of other established doctrines of
law” and (2) was inapplicable regardless of the fact that the plaintiff was unable to
prove its claim of intentional interference with contractual relations. Id. ¶¶ 22, 24
(internal quotation marks and citation omitted).
{59} 	Appellees acknowledge in their answer brief that recovery under both theories
is not permitted. Appellees disregard Bogle, however, in arguing that the district
court’s ruling on Bozzone’s motion to dismiss their prima facie tort claim was related
to the outcome of their intentional interference with contractual relations claim. The
existence, not the outcome, of a colorable, alternate claim in tort determines the
applicability of prima facie tort. See id. ¶ 24 (holding that when “existing causes of
action provide[] reasonable avenues to a remedy[,] . . . [p]rima facie tort has no
application”).

36
{60} 	Following Appellees’ case in chief, the district court ruled that the evidence at
trial supported a claim for intentional interference with contractual relations. The
district court therefore erred in denying Bozzone’s motion to dismiss Appellees’ prima
facie tort claim. We reverse the judgment against him as to that claim.
B. 	Intentional Interference With Contractual Relations
{61} 	“Substantial evidence is relevant legal evidence which a reasonable person
would accept as adequate to support a conclusion[.]” Durrett v. Petritsis, 1970-
NMSC-119, ¶ 10, 82 N.M. 1, 474 P.2d 487. In reviewing whether substantial evidence
supports a verdict, we “indulge all reasonable inferences in support of the verdict[],
disregarding all inferences or evidence to the contrary.” Id. ¶ 9. Substantial evidence
must support each element of a claim. See Lucero v. Lucero, 1994-NMCA-128, ¶ 21,
118 N.M. 636, 884 P.2d 527 (“[E]vidence must be adduced to support each element
necessary to support a claim.”), superseded by statute on other grounds as stated in
Chapman v. Varela, 2009-NMSC-041, ¶ 21, 146 N.M. 680, 213 P.3d 1109.
{62} 	To establish a claim of intentional interference with contractual relations, a
party must prove five elements: (1) the defendant had “knowledge of the contract
between [the plaintiff] and the corporation[;] (2) performance of the contract was
refused[;] (3) [the defendant] played an active and substantial part in causing [the
plaintiff] to lose the benefits of his [or her] contract[;] (4) damages flowed from the

37
breached contract[;] and (5) [the defendant] induced the breach without justification
or privilege to do so.” Ettenson, 2001-NMCA-003, ¶ 14 (internal quotation marks and
citation omitted). We assume that the first four factors are met in the present case and
focus our analysis on the fifth factor: whether justification or privilege excused
Bozzone’s inducement of the breach of the Purchase Agreement.
{63} 	Corporate officers may be held liable for their own intentional torts. See Deflon,
2006-NMSC-025, ¶ 9 (“An officer acting outside the scope of his or her employment
and in his or her own private interest . . . should not be able to hide behind a corporate
shield for unauthorized conduct.”). However, this Court has recognized that “a
corporate 	officer 	is 	privileged 	to 	interfere 	with 	his 	[or 	her] 	corporation’s
contracts . . . when he [or she] acts in good faith and in the best interests of the
corporation[.]” Ettenson, 2001-NMCA-003, ¶ 17. This determination requires that
district courts undertake a fact-specific inquiry that examines “the motivating forces”
behind the inducement of the breach—specifically whether the breach “serve[d the
defendant’s] private interest with no benefit to the corporation.” Id. ¶ 18 (internal
quotation marks and citation omitted).
{64} 	Only an officer or director of Wallen could have directed Montoya’s actions or
made decisions about delaying payments to vendors and closing the company as
described in the district court’s findings of fact. The central question before this Court

38
is, therefore, whether Bozzone (1) made these decisions while acting outside the scope
of his duties as a de facto officer and (2) was motivated by private rather than
corporate interests. The district court decided this question in the affirmative. We
disagree that the evidence—even when viewed in a light most favorable to the
verdict—supports such a conclusion.
{65} 	During 2008 and early 2009, Wallen lacked cash resources. The cash it did
have, including that from Appellees’ payments pursuant to the Purchase Agreement,
was pooled and allocated in a manner determined by the management group, including
Bozzone. One of these determinations was to use Appellees’ money to pay vendors
and other outstanding debts instead of prioritizing payment to subcontractors working
on the Home. In February 2009, Wallen ran out of money and ceased operations.
Because the Home (1) was not complete and (2) had mechanic’s liens attached,
Wallen’s closure resulted in a breach of the Purchase Agreement.
{66} 	The Amended Complaint alleged that Bozzone decided to breach the Purchase
Agreement in favor of completing homes in which he had a personal financial interest
by virtue of having provided construction financing. With respect to this allegation,
the district court found that (1) Bozzone told Montoya not to complete construction
on unfinished homes, including the Home, that were within thirty days of closing and
(2) Bozzone was only interested in information regarding homes for which he had

39
provided the construction financing. The district court applied these findings in ruling
that Bozzone was liable for intentional interference with contractual relations.
{67} 	Our review of the evidence and trial transcript does not reveal any indication
that the decision that Wallen would cease operations or the resulting breach of the
Purchase Agreement served Bozzone’s private interests or disregarded corporate
interests. Nor does our review reveal any indication that determinations to make
payment to and to withhold payment from certain vendors served Bozzone’s private
interests or disregarded corporate interests. The overwhelming weight of the evidence
implies instead that despite efforts by Bozzone to stretch available resources, Wallen
closed because it was unable to secure additional credit needed to remain open due to
the overall nature of the housing industry in 2008 and 2009.
{68} 	The testimony and evidence cited by the district court in support of its finding
of fact number eighty-one, which states that “Bozzone was only interested in
information 	regarding 	the 	three 	homes 	for 	which 	he 	provided 	construction
financing[,]” demonstrated only that Bozzone had a specific interest in three specific
homes at a specific moment in time; not that he was “only interested” in those three
homes overall. Even if after making the decision to cease operations Bozzone took a
particular interest in certain properties, such conduct did not necessarily serve purely
private interests or disregard corporate interests. See id. ¶ 21 (observing that an

40
officer’s interference with a contract is not—as a matter of law—contrary to the best
interest of the company merely because the officer “stood to profit in tandem with the
corporation”).
{69} 	Despite the district court’s conclusion that “Bozzone’s actions were without
justification or privilege,” no finding of fact suggests the manner in which Bozzone’s
conduct was undertaken in bad faith or was contrary to Wallen’s best interests. See id.
¶ 17 (“[A] corporate officer is privileged to interfere with his [or her] corporation’s
contracts . . . when he [or she] acts in good faith and in the best interests of the
corporation[.]”). “A conclusion of law must find support in the findings of fact.”
O’Shea v. Hatch, 1982-NMCA-013, ¶ 17, 97 N.M. 409, 640 P.2d 515. Absent
findings of fact that support a conclusion of law as to each element of the claim
alleged, substantial evidence does not support the district court’s ruling. See Lucero,
1994-NMCA-128, ¶ 21 (“[E]vidence must be adduced to support each element
necessary to support a claim.”).
{70} 	At least one of the district court’s findings of fact refers to decisions made by
Wallen, or by Bozzone in his individual capacity, as violative of Appellees’ “rights.”
We are unclear as to the “rights” to which this finding of fact refers. Appellees had a
“right,” based in contract law, to receive the benefit of the Purchase Agreement. They
also had a “right” to enforce the Purchase Agreement and to be compensated for

41
damages resulting from a breach. They did not have a “right” to have the construction
of the Home prioritized above other corporate interests or to be informed in real time
as to the financial health of the corporation. Nor did they have a “right” to priority
compensation from monies derived from steps taken to wind down the corporation.
Officers of insolvent corporations have a fiduciary duty not to place their own
interests above those of creditors. See Smith v. Cox, 1992-NMSC-029, ¶ 6, 113 N.M.
682, 831 P.2d 981 (“When a corporation becomes insolvent and can no longer
continue in business, the directors and other managing officers occupy a fiduciary
relation towards creditors by reason of their position and their custody of the assets.”
(internal quotation marks and citation omitted)). However, the evidence does not show
that, with respect to the three homes for which Bozzone provided construction
financing, he utilized Wallen’s assets in a manner that prioritized his own interests
over Appellees’ interests.
{71} 	Although we are sympathetic to the circumstances in which Appellees found
themselves in the aftermath of Wallen’s closure, substantial evidence does not support
a conclusion that Bozzone’s conduct constituted intentional interference with
contractual relations. We therefore reverse the judgment against him as to that claim.

42
C. 	Civil Conspiracy
{72} 	As stated by our Supreme Court in Deflon, “civil conspiracy is not actionable
by itself and survives only if the underlying claim . . . survives[.]” 2006-NMSC-025,
¶ 16. Because we reverse the district court’s ruling that Bozzone intentionally
interfered with contractual relations, we also reverse the judgment against him as to
Appellees’ claim of civil conspiracy.
D. 	Conclusion as to Bozzone
{73} 	For the reasons discussed herein, we reverse the judgment against Bozzone as
to Appellees’ claims of prima facie tort, intentional interference with contractual
relations, and civil conspiracy.
IV. 	APPLICABILITY OF THE UNFAIR PRACTICES ACT
{74} 	On cross-appeal, Appellees argue that the district court erred in dismissing their
unfair trade practices claim against both Appellants. In support of their argument,
Appellees claim that case law relied upon by the district court is inapplicable to the
factual scenario in the present case and that “construction services”—such as those
provided to Appellees by Wallen—fall within the scope of Section 57-12-2. This
argument raises a question of statutory construction that we review de novo. See Pub.
Serv. Co. of N.M. v. Diamond D Constr. Co., 2001-NMCA-082, ¶ 48, 131 N.M. 100,
33 P.3d 651.

43
{75} 	“Our primary goal in interpreting statutes is to give effect to the [L]egislature’s
intent.” Id. In doing so, we “look to the plain language of the statute to discern
[legislative] intent.” Carrillo v. My Way Holdings, LLC, 2017-NMCA-024, ¶ 22, 389
P.3d 1087. “When statutory language is clear and unambiguous, this Court must give
effect to that language and refrain from further statutory interpretation.” Id. (internal
quotation marks and citation omitted).
{76} 	The Unfair Practices Act “prohibits misrepresentations made in connection with
the sale of goods or services by a person in the regular course of his trade or
commerce.” Lohman v. Daimler-Chrysler Corp., 2007-NMCA-100, ¶ 21, 142 N.M.
437, 166 P.3d 1091 (alteration, omissions, internal quotation marks, and citation
omitted). The key terms for purposes of our statutory interpretation, are “trade or
commerce,” which is statutorily defined as the “sale . . . of any services and any
property,” Section 57-12-2(C); “goods,” which this Court has previously defined as
“personal estate as distinguished from realty”; and “services,” which this Court has
previously defined as “work done by one person at the request of another.”
McElhannon v. Ford, 2003-NMCA-091, ¶ 17, 134 N.M. 124, 73 P.3d 827 (internal
quotation marks and citations omitted).
{77} 	In McElhannon, we discussed these terms in the context of real estate
transactions, concluding that “[t]o the extent goods and services are combined to

44
create a structure that is permanently affixed to realty, . . . a sale of a completed house
is not a sale of goods or services for purposes of Section 57-12-2(D).” McElhannon,
2003-NMCA-091, ¶ 17. We predicated our holding in McElhannon upon the fact that
the house at issue was “completed,” such that, in context, the definitions of goods and
services are “combined” rather than viewed independently. Id. ¶¶ 3, 17.
{78} 	The factual scenario in the present case is distinguishable from McElhannon
and presents a question of first impression for this Court. Rather than entering a sales
agreement for a completed house, the Purchase Agreement called for Wallen to
construct the Home on a designated vacant lot. Importantly, Appellees never received
a “completed” house because Wallen closed before completing construction on the
Home. Under such circumstances, the “combined” view of goods and services
expressed in McElhannon does not apply. Instead, we must consider the plain
meaning of the word “services” as it is used in Section 57-12-2(D).
{79} 	In Keiber v. Spicer Construction Co., 619 N.E.2d 1105, 1106 (Ohio Ct. App.
1993), the Ohio Court of Appeals analyzed the applicability of the Ohio Consumer
Sales Practices Act (OCSPA) under similar circumstances. The plaintiffs’ claims arose
from a sales agreement between the parties for the construction and purchase of a new
house. Id. With the exception of breach of contract, the district court dismissed the
plaintiffs’ claims as barred by “extant . . . case law.” Id. This ruling appeared to result

45
from the district court’s reading of precedential case law holding that the OCSPA was
“inapplicable to pure real estate transactions.” Id. at 1106-07 (internal quotation marks
and citation omitted).
{80} 	At the time Keiber was decided, the OCSPA defined “consumer transactions
as a sale . . . of an item of goods, a service, franchise, or intangible to an individual for
purposes that are primarily personal, family, or household[.]” Id. at 1107 (omission,
internal quotation marks, and citation omitted). Interpreting the statute, the Ohio Court
of Appeals held that
[a]lthough the OCSPA has been deemed not to apply to the sale of a pre-
existing residence, we conclude that a contract to build a new home is
distinguishable; a residential contractor, especially when engaged in the
design, construction, and sales of multiple dwellings, is a supplier of
consumer-oriented services for purposes of the OCSPA.
Id. It based its conclusion, at least in part, on the plain language of the statute, which
provided “no express exclusion of residential construction services.” Id.
{81} 	The same can be said of Section 57-12-2. The construction services provided
by Wallen were undoubtedly “work done by one person at the request of another.”
McElhannon, 2003-NMCA-091, ¶ 17 (internal quotation marks and citation omitted).
Section 57-12-2(C) currently defines “trade or commerce” as the “sale . . . of any
services and any property.” The all-encompassing nature of this definition does not
render it ambiguous. See Martinez v. Cornejo, 2009-NMCA-011, ¶ 16, 146 N.M. 223,

46
208 P.3d 443 (“A statute is ambiguous when it can be understood by reasonably
well-informed persons in two or more different senses.” (internal quotation marks and
citation omitted)). In the absence of language expressly including or excluding
construction services, construction services rendered prior to the completion of a
residential home are “any services” as defined in Section 57-12-2.
V. 	CONVERSION
{82} 	Appellees additionally argue that the district court erred in granting Bozzone’s
motion to dismiss their conversion claim pursuant to Rule 1-041(B) NMRA. This
Court reviews “the involuntary dismissal of a plaintiff’s case under Rule [1-0]41(B)
for failure to carry a burden of proof as we review any other judgment on the merits.”
Camino Real Mobile Home Park P’ship v. Wolfe, 1995-NMSC-013, ¶ 14, 119 N.M.
436, 891 P.2d 1190, overruled on other grounds by Sunnyland Farms, Inc. v. Cent.
N.M. Elec. Coop., 2013-NMSC-017, ¶¶ 14-16, 301 P.3d 387. In doing so, we are
“bound by the trial court’s findings of fact unless they are demonstrated to be clearly
erroneous or not supported by substantial evidence.” Roybal v. Morris, 1983-NMCA-
101, ¶ 30, 100 N.M. 305, 669 P.2d 1100.
{83} 	“Conversion is the unlawful exercise of dominion and control over personal
property belonging to another in exclusion or defiance of the owner’s rights, or acts
constituting an unauthorized and injurious use of another’s property, or a wrongful

47
detention after demand has been made.” Muncey v. Eyeglass World, LLC, 2012-
NMCA-120, ¶ 22, 289 P.3d 1255 (internal quotation marks and citation omitted). We
address each segment of this definition in turn.
A. 	Unlawful Exercise of Control in Exclusion or Defiance of the Owner’s
Rights
{84} 	A cognizable claim for conversion derives from a “right” related to personal
property. “Rights,” however, are not self-determined but must, instead, arise from
either contract or law. The Purchase Agreement created a duty on the part of Wallen
to construct and deliver the Home. It did not, however, convey Appellees a “right” to
earmark monies paid to specific uses.
{85} 	In D’Ambrosio v. Engel, the plaintiff provided a deposit on the purchase of a
sailboat pending inspections. 741 N.Y.S.2d 42, 43 (App. Div. 2002). Following the
inspections, the plaintiff declined to complete the transaction and demanded return of
his deposit. Id. The defendants refused. Id. The plaintiff filed a claim to recover the
deposit, and the trial court entered a judgment in the amount of the deposit, plus costs.
Id. 	The plaintiff later filed additional claims, including prima facie tort and
conversion. The trial court dismissed these claims. Id. at 43-44. The appellate court
affirmed, holding that the plaintiff “failed to show that there was a legal duty imposed
upon the defendants independent of the contract itself, or that the defendants engaged

48
in tortious conduct separate and apart from their failure to fulfill their contractual
obligations.” Id. at 44 (alterations, internal quotation marks, and citation omitted).
{86} 	We find D’Ambrosio persuasive as to Appellees’ conversion claim. Appellees
paid $165,111 pursuant to the Purchase Agreement. The Purchase Agreement
expressly entitled them to remedies articulated therein. It did not, however, create an
independent duty related to monies paid by Appellees pursuant to the Purchase
Agreement. Because “such duty must spring from circumstances extraneous to, and
not constituting elements of, the contract,” substantial evidence supports dismissal.
Id. (internal quotation marks and citation omitted).
B. 	Unauthorized and Injurious Use of Another’s Property
{87} 	Similarly, substantial evidence supports a finding that Bozzone did not
participate in the “unauthorized and injurious use” of Appellees’ property. Muncey,
2012-NMCA-120, ¶ 22 (internal quotation marks and citation omitted). The Purchase
Agreement does not dictate or in any way restrict Wallen’s use of monies paid by
Appellees pursuant to the Purchase Agreement. The district court’s findings of fact
related to the use of monies paid by Appellees, while generally supported by
Montoya’s testimony, find no support in the Purchase Agreement. See Littell v.
Allstate Ins. Co., 2008-NMCA-012, ¶ 13, 143 N.M. 506, 177 P.3d 1080 (“In
reviewing a sufficiency of the evidence claim, this Court views the evidence in a light

6 Appellees’ 	demand 	letter 	indicated 	that 	it 	was 	copied 	to
mbazzone@wallenbuilders.com. Based upon spelling alone, this is not an email
address owned by Bozzone. Furthermore, a sampling of the admitted documents
demonstrate that Bozzone’s email address was mark@baydevco.net.
49
most favorable to the prevailing party and disregards any inferences and evidence to
the contrary.” (alteration, internal quotation marks, and citation omitted)). Because
neither Wallen nor Bozzone engaged in unauthorized use of Appellees’ property
“separate and apart from their failure to fulfill their contractual obligations,”
substantial evidence supports dismissal. D’Ambrosio, 741 N.Y.S.2d at 44 (alterations,
internal quotation marks, and citation omitted).
C. 	Wrongful Detention After Demand
{88} 	Finally, no evidence supports a finding that Bozzone refused a demand to return
Appellees’ property. See Nosker v. Trinity Land Co., 1988-NMCA-035, ¶ 20, 107
N.M. 333, 757 P.2d 803 (stating that “the demand must be made before the action for
conversion is brought”). On March 18, 2009, Appellees sent a demand letter to
Wallen, which was copied to Wallace, Bozzone, and Filener. However, this
correspondence appears to have been directed to an incorrect email address,6 a
circumstance that calls into question whether Bozzone was aware of Appellees’
demand. Furthermore, the uncontroverted evidence at trial was that Bozzone played
no role in the liquidation and distribution of Wallen’s assets after operations ceased.
As such, even if we impute knowledge of Appellees’ demand to Bozzone, substantial

50
evidence supports dismissal because Bozzone took no part in the decision-making
process to detain Appellees’ money after demand was made.
VI. 	CONCLUSION
{89} 	For the reasons discussed herein, we reverse the district court’s judgment as to
both Appellants and remand as to Bozzone only for additional proceedings consistent
with this opinion.
{90} 	IT IS SO ORDERED.
________________________________
JAMES J. WECHSLER, Judge
WE CONCUR:
________________________________
LINDA M. VANZI, Chief Judge
________________________________
JONATHAN B. SUTIN, Judge