October 7, 2019- Theone Oliver v. Six Springs Domestic Water Users Association, No. A-1-CA-36226

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IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO	1
THEONE OLIVER, JANET WHITE,	2
JAMES CUMMINGS, SENA MALETT	3
and LEONA DANLEY,	4
Plaintiffs-Appellees,	5
v. 	No. A-1-CA-36226	6
SIX SPRINGS DOMESTIC WATER	7
USERS ASSOCIATION,	8
Defendant-Appellant,	9
and	10
EDWARD BAKER, Individually and as	11
president of the Six Springs Domestic	12
Water Users Association, and its members	13
CARL AND JANICE TUCKER, DENNIS	14
AND BONNIE BELKNAP, ROBERT AND	15
MARGARET RICHARDSON, FRANK	16
AND CATHERINE STRANGIS, CHARLES	17
AND BEVERLY MARTIN, DAVID AND	18
AMANDA EDWARDS, DR. JAGDEV AND	19
LESLIE SIGNH, BARBARA HOUSE,	20
GERALD DODD, PATRICIA HENDZEL,	21
JOAN GOODMAN, and ESTHER BAKER,	22
Defendants.	23
APPEAL FROM THE DISTRICT COURT OF OTERO COUNTY	24
Jerry H. Ritter, Jr., District Judge	25
Court of Appeals of New Mexico
Filed 10/7/2019 9:37 AM

2
Katz Herdman MacGillivray & Fullerton PC	1
Frank T. Herdman	2
Seth R. Fullerton	3
Samuel P. Ruyle	4
Santa Fe, NM	5
for Appellees	6
Sandra A. Grisham	7
Alamogordo, NM	8
for Appellant	9
MEMORANDUM OPINION	10
VARGAS, Judge.	11
{1} 	Defendant Six Springs Domestic Water Users Association (the Association)	12
appeals from the district court’s orders granting default judgment and attorney fees	13
in favor of Plaintiffs Theone Oliver, Janet White, James Cummings, Sena Malett,	14
and Leona Danley. The Association’s appeal presents the following issues: (1)	15
whether the district court had subject matter jurisdiction; (2) whether the district	16
court erred in enforcing a purportedly invalid settlement agreement between the	17
parties; (3) whether the district court erred in striking the Association’s answer to	18
Plaintiffs’ complaint and granting default judgment in Plaintiffs’ favor; and (4)	19
whether the district court erred in awarding attorney fees to Plaintiff Oliver. We	20
affirm.	21

3
BACKGROUND	1
{2} 	Following a dispute over water rights, the Association, Edwina Danley,	2
Russell Graves, Paula Graves, Steven Wenrich, and Rita Wenrich entered into a	3
settlement agreement (the Settlement Agreement), wherein the parties agreed to a	4
division of water and water rights, to cooperate in planning, constructing, and	5
maintaining common structures and equipment needed for the division of the water,	6
and to refrain from conduct that would interfere with others’ access to the water.	7
{3} 	Several years later, Plaintiffs filed a complaint against the Association,	8
Edward 	Baker—individually 	and 	as 	president 	of 	the 	Association—and 	the	9
Association’s members (the Members). Plaintiffs alleged Baker tampered with the	10
water collection and delivery system, and diverted the “water rights” of Plaintiffs	11
without their permission. Plaintiffs sued for damages and injunctive relief, alleging	12
claims of breach of contract, breach of fiduciary duty, waste, and conversion.	13
{4} 	Baker and two other officers of the Association—none of whom were licensed	14
attorneys—filed an answer and counterclaims on the Association’s behalf. Plaintiffs	15
moved to strike the Association’s answer and counterclaims, arguing the Association	16
was required to appear in court through a licensed attorney because of its corporate	17
status, and that its non-attorney officers were not permitted to file pleadings on	18
behalf of the Association. Arguing the Association failed to plead or defend against	19
the complaint as required under the Rules of Civil Procedure and New Mexico law,	20

4
Plaintiffs sought entry of a default judgment. The Association, through counsel, filed	1
a response to Plaintiffs’ motion, arguing that it “was never served with process in	2
this case, and has yet to receive a summons[,]” and that it was “prepared to file an	3
[a]nswer and [c]ounter-[c]laim after proper service of process.” The Association	4
never filed an answer through counsel or moved to amend or supplement its answer	5
so that it may be filed by counsel.	6
{5} 	The district court granted Plaintiffs’ motion to strike the Association’s answer	7
and counterclaims. In its order, the district court ruled that the filing of pleadings on	8
behalf of the Association constituted “the unauthorized practice of law” and that the	9
pleadings should therefore be stricken from the record. Because the Association	10
failed to file a timely, proper answer, the district court found the Association was in	11
default. The district court entered a default judgment on liability against the	12
Association and reserved the determination of damages until an evidentiary hearing.	13
{6} 	Following the district court’s entry of default judgment, Plaintiffs filed a	14
motion for attorney fees and costs in the amount of $23,457 against the Association.	15
In their motion, Plaintiffs relied upon the Settlement Agreement which provided that	16
“[s]hould litigation be reasonably necessary to enforce or interpret any provision of	17
this agreement, the prevailing party, or parties, shall be entitled to recover its	18
reasonable attorney fees from the party at fault or the party responsible for litigation	19
being filed.” Plaintiffs argued the Association was responsible for the filing of	20

5
litigation, that it was found liable and was therefore “at fault[,]” and that the fees	1
sought were “reasonable and . . . reasonab[ly] necessary to enforce the terms of the	2
Settlement Agreement.” The Association requested the district court deny Plaintiffs’	3
motion, challenging the reasonableness of the attorney fees sought by Plaintiffs.	4
{7} 	Following an evidentiary hearing, the district court determined the amount of	5
damages and reserved ruling on injunctive relief and attorney fees for later	6
proceedings. Plaintiffs later moved for entry of “a final default judgment” and	7
injunctive relief. In response to the Plaintiffs’ motion, the Association argued	8
Plaintiffs were not entitled to attorney fees because they refused to accept the	9
Association’s offer of settlement prior to the commencement of the lawsuit. The	10
Association also challenged the injunctive relief sought and argued that the district	11
court was without jurisdiction to determine ownership of water rights as there had	12
been no adjudication of those rights.	13
{8} 	The 	Members 	filed 	a 	motion 	for 	summary 	judgment, 	challenging 	the	14
reasonableness of attorney fees and arguing they were not liable for attorney fees.	15
Shortly after the Members filed their motion, the district court entered a default	16
judgment and granted injunctive relief against the Association. The district court	17
ordered the Association to pay Plaintiff Oliver reasonable attorney fees in an amount	18
to be determined at a later proceeding.	19

6
{9} 	Plaintiff Oliver moved for the district court to award $55,319.14 in attorney	1
fees against the Association, arguing this motion “supersede[d]” Plaintiffs’ previous	2
motion for attorney fees because of the litigation that ensued following the	3
Association’s additional filings. After the Association failed to respond to Plaintiff	4
Oliver’s motion, she filed a notice of completion of briefing stating the Association	5
was deemed to have consented to the relief sought in her motion. Following Plaintiff	6
Oliver’s notice, the district court entered a minute order granting Plaintiff Oliver’s	7
motion for attorney fees. Shortly thereafter, the Members filed a motion to set aside	8
the district court’s minute order. In their motion, the Members noted their attorney’s	9
absence from the country and that their attorney had not been served with a “file[-	10
]stamped copy” of Plaintiff Oliver’s motion for attorney fees. The Members also	11
challenged the reasonableness of the attorney fees sought. The Association itself,	12
however, did not challenge Plaintiff Oliver’s motion for attorney fees. Accordingly,	13
pursuant to its minute order, the district court entered an award attorney fees in favor	14
of Plaintiff Oliver and against the Association in the amount of $55,319.14. This	15
appeal followed.	16
DISCUSSION	17
{10} 	In its appeal from the district court, the Association argues the district court	18
lacked subject matter jurisdiction, the district court erred in enforcing the Settlement	19
Agreement as it was not an enforceable contract, the district court erred in striking	20

7
the Association’s answer and granting default judgment, and the district court erred	1
in awarding attorney fees. We address each argument in turn.	2
Subject Matter Jurisdiction	3
{11} 	The Association first challenges the district court’s subject matter jurisdiction.	4
We review the question of whether the district court had subject matter jurisdiction	5
de novo. Piedra, Inc. v. N.M. Transp. Comm’n, 2008-NMCA-089, ¶ 34, 144 N.M.	6
382, 188 P.3d 106. “The source of a district court’s jurisdiction derives from the	7
New Mexico Constitution.” Ping Lu v. Educ. Tr. Bd. of N.M., 2013-NMCA-010, ¶ 9,	8
293 P.3d 186. “New Mexico district courts are courts of general jurisdiction having	9
the power to hear all matters not excepted by the constitution and those matters	10
conferred by law.” Id. (internal quotation marks and citation omitted); see N.M.	11
Const. art. VI, § 13 (providing the scope of the district courts’ jurisdiction).	12
{12} 	The 	Association 	argues 	the 	district 	court 	was 	without 	subject 	matter	13
jurisdiction in this case because the Settlement Agreement effectively granted water	14
rights 	through 	contract, 	contravening 	New 	Mexico’s 	statutory 	scheme 	for	15
adjudicating water rights. However, Plaintiffs’ complaint requested the enforcement	16
of Baker’s fiduciary duty as well as the terms of a contract, not the adjudication of	17
water rights. Because this case arises from claims of breaches of contract and	18
fiduciary duty, we conclude the district court had subject matter jurisdiction to	19
adjudicate Plaintiff’s claims. See Ping Lu, 2013-NMCA-010, ¶ 9 (explaining district	20

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courts’ general jurisdiction). To the extent the Association argues the district court	1
lacked subject matter jurisdiction because the Settlement Agreement was entered	2
into in violation of the Association’s articles of incorporation, we need not address	3
this question as the Association has failed to cite to any supporting authority. See	4
Curry v. Great Nw. Ins. Co., 2014-NMCA-031, ¶ 28, 320 P.3d 482 (“Where a party	5
cites no authority to support an argument, we may assume no such authority	6
exists.”). Having resolved this threshold matter, we proceed to the remainder of the	7
Association’s arguments.	8
Enforcement of the Settlement Agreement	9
{13} 	The 	Association 	next 	argues 	the 	district 	court 	erred 	in 	enforcing 	the	10
Settlement Agreement as it was unenforceable on two grounds. First, the Association	11
argues the Settlement Agreement was unenforceable because it was not signed by	12
an attorney, but was instead signed by the Association’s former president on behalf	13
of the Association. In its explanation of how the issue was preserved in the district	14
court, the Association cites the motion for summary judgment filed by the Members.	15
This motion failed to preserve the issue for two reasons. First, the motion challenged	16
the former president’s authority to bind the Association, rather than the necessity for	17
an attorney to sign the Settlement Agreement. See Rule 12-321(A) NMRA (“To	18
preserve an issue for review, it must appear that a ruling or decision by the trial court	19
was fairly invoked.”); Gonzales v. Shaw, 2018-NMCA-059, ¶ 14, 428 P.3d 280 (“In	20

9
order to preserve an issue for review, a party must have made a timely and specific	1
objection that apprised the district court of the nature of the claimed error and that	2
allows the district court to make an intelligent ruling thereon.” (internal quotation	3
marks and citations omitted)). Second, the motion was filed not by the Association,	4
but by the Members; the Association did not object on the grounds raised on appeal	5
nor join in its co-defendants’ argument. See State v. Frazier, 2007-NMSC-032, ¶ 38,	6
142 N.M. 120, 164 P.3d 1 (noting that a defendant fails to preserve an issue when	7
he does “not object or join in his co-defendant’s objections”). We therefore decline	8
to review this argument further.	9
{14} 	The Association also appears to argue its former president was without the	10
authority to bind the Association when signing the Settlement Agreement. However,	11
we decline to review this argument as it is both unclear and undeveloped. See	12
Headley v. Morgan Mgmt. Corp., 2005-NMCA-045, ¶ 15, 137 N.M. 339, 110 P.3d	13
1076 (explaining that we do not review unclear and undeveloped arguments).	14
Striking the Association’s Answer and Granting Default Judgment	15
{15} 	The Association also argues the district court erred in striking its answer to	16
Plaintiffs’ complaint and granting default judgment against the Association. With	17
regard to the district court’s order striking the Association’s answer, we first note	18
that the Association makes no argument on appeal concerning service of process,	19
which was its only stated basis argued to the district court for waiting to file a	20

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conforming answer. Rather, on appeal, the Association argues it has a constitutional	1
right to file pleadings pro se through its non-attorney officers, in direct conflict with	2
this Court’s holding in Martinez v. Roscoe, 2001-NMCA-083, ¶¶ 8, 15, 131 N.M.	3
137, 33 P.3d 887 (requiring artificial legal entities, including corporations, to file	4
pleadings 	through 	a 	licensed 	attorney). 	The 	Association 	did 	not 	raise 	its	5
constitutional argument in the district court. See Rule 12-321(A); Gonzales, 2018-	6
NMCA-059, ¶ 14. We acknowledge that the Association appears to argue it was	7
precluded from preserving this argument because the district court struck its	8
pleadings and granted default judgment. However, the Association nonetheless	9
failed to present the constitutional argument it now raises on appeal in its response	10
to Plaintiffs’ motion to strike its answer or any of its subsequent motions, during	11
which time the Association was represented by counsel. We therefore conclude the	12
Association failed to preserve this argument, and we decline to review it further.	13
{16} 	Having concluded the Association failed to preserve its argument that it was	14
constitutionally permitted to file pleadings pro se through its non-attorney officers,	15
we proceed to its argument that the district court erred in granting default judgment	16
in Plaintiffs’ favor. We review the district court’s order for an abuse of discretion.	17
See Gandara v. Gandara, 2003-NMCA-036, ¶ 9, 133 N.M. 329, 62 P.3d 1211 (“A	18
grant of default judgment . . . rests within the sound discretion of the district court.”).	19
After the district court struck the Association’s answer, the Association failed to file,	20

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amend or supplement its answer through counsel. There being no pleading or	1
defense to Plaintiffs’ complaint, filed with the district court, we conclude the district	2
court did not err in granting default judgment. See Rule 1-055(A), (B) NMRA	3
(providing that the district court may enter a default judgment “[w]hen a party	4
against whom a judgment for affirmative relief is sought has failed to plead or	5
otherwise defend as provided by these rules[,]” and the party entitled to default	6
judgment applies to the district court for such relief); Gandara, 2003-NMCA-036,	7
¶ 9 (providing the abuse of discretion standard).	8
Attorney fees	9
{17} 	The Association’s final argument is that the district court erred in awarding	10
attorney fees to Plaintiff Oliver for three reasons. First, the Association argues an	11
award of attorney fees based on the Settlement Agreement cannot stand because the	12
agreement itself is unenforceable for the reasons stated above. However, as we have	13
concluded 	the 	Association’s 	arguments 	regarding 	the 	enforceability 	of 	the	14
Settlement Agreement were unpreserved, unclear, and undeveloped, we decline to	15
review this argument further.	16
{18} 	Second, the Association argues the attorney fees were not reasonable.	17
Although the Association challenged the reasonableness of the amount of attorney	18
fees Plaintiffs sought in their initial motion for attorney fees, the district court	19
deferred ruling on the matter of attorney fees and the Association failed to challenge	20

12
the reasonableness of the amount sought in Plaintiff Oliver’s subsequent motion for	1
a greater award of attorney fees. While the Members, in their motion to set aside the	2
district court’s minute order, challenged the reasonableness of the attorney fees	3
Plaintiff Oliver sought against the Association in the subsequent motion for attorney	4
fees, the Association did not itself challenge the reasonableness of such fees nor join	5
in its co-defendants’ challenge to that effect. See Frazier, 2007-NMSC-032, ¶ 38	6
(noting that a defendant fails to preserve an issue when he does not object nor join	7
in his co-defendant’s objections). And while the Association argues it was precluded	8
from preserving this issue because it was denied the right to appear pro se through	9
its non-attorney officers, its argument fails to consider the several motions filed by	10
the Association through counsel after the district court struck its answer and	11
counterclaims. We therefore decline to review this argument further.	12
{19} 	Third, the Association argues the district court erred in granting Plaintiff	13
Oliver attorney fees because she “did not prevail.” “[T]he prevailing party” is	14
entitled to reasonable attorney fees in litigation undertaken to enforce or interpret	15
the Settlement Agreement that is the basis of Plaintiff Oliver’s breach of contract	16
and breach of fiduciary duty claims. See Fort Knox Self Storage, Inc. v. W.	17
Technologies, Inc., 2006-NMCA-096, ¶ 34, 140 N.M. 233, 142 P.3d 1 (“Under New	18
Mexico law, at the end of the entire action, the prevailing party is the party who wins	19
on the merits or on the main issue of the case.” (internal quotation marks and citation	20

13
omitted)). “The district court has broad discretion in setting attorney fees, and an	1
award will not be reversed unless there is an abuse of discretion.” Miller v. Johnson,	2
1998-NMCA-059, ¶ 34, 125 N.M. 175, 958 P.2d 745.	3
{20} 	The Association argues the Settlement Agreement does not entitle Plaintiff	4
Oliver to attorney fees because the damages awarded to Plaintiffs were less than the	5
total amount Plaintiffs sought to recover and were only a few dollars more than the	6
amount the Association proffered before Plaintiffs’ complaint was filed. The	7
Association, provides no authority for these propositions, see Curry, 2014-NMCA-	8
031, ¶ 28 (“Where a party cites no authority to support an argument, we may assume	9
no such authority exists.”), but, as we have previously explained, “[a] party who	10
wins on the merits or on the main issue of the case” is the prevailing party “even if	11
the party does not prevail to the extent of his original contention.” Fort Knox Self	12
Storage, Inc., 2006-NMCA-096, ¶ 34 (internal quotation marks and citation	13
omitted). Absent an explanation and citation to relevant authority, “[w]e will not	14
review unclear arguments, or guess at what a party’s arguments might be.” Elane	15
Photography, LLC v. Willock, 2013-NMSC-040, ¶ 70, 309 P.3d 53 (alteration,	16
internal quotation marks, and citation omitted). “To rule on an inadequately briefed	17
issue, this Court would have to develop the arguments itself, effectively performing	18
the parties’ work for them.” Id. “This creates a strain on judicial resources and a	19
substantial risk of error. It is of no benefit either to the parties or to future litigants	20

14
for this Court to promulgate case law based on our own speculation rather than the	1
parties’ carefully considered arguments.” Id. The Association has failed to explain	2
how the district court abused its authority when it awarded attorney fees to Plaintiff	3
Oliver.	4
CONCLUSION	5
{21} 	We affirm the district court’s default judgment and award of attorney fees.	6
{22} 	IT IS SO ORDERED	7
______________________________	8
JULIE J. VARGAS, Judge	9
WE CONCUR:	10
__________________________________	11
M. MONICA ZAMORA, Chief Judge	12
____________________________________________	13
JACQUELINE R. MEDINA, Judge	14