August 2, 2017- Blue Canyon Well Association v. Denise Jevne, No. 34,655

IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO
Opinion Number: 	_______________
Filing Date: 	August 2, 2017
NO. 34,655
BLUE CANYON WELL ASSOCIATION,
Plaintiff-Appellee,
v.
DENISE JEVNE,
Defendant-Appellant.
APPEAL FROM THE DISTRICT COURT OF SANTA FE COUNTY
Francis J. Mathew, District Judge
Sommer, Karnes & Associates, LLP
Karl H. Sommer
Santa Fe, NM
for Appellee
Graeser & McQueen, LLC
Christopher L. Graeser
Santa Fe, NM
for Appellant

OPINION
VARGAS, Judge.
{1} 	In this appeal we address whether Plaintiff Blue Canyon Well Association
(Blue Canyon) was a legal entity with capacity to sue Defendant Denise Jevne.
Specifically, we consider the applicability of NMSA 1978, Section 53-10-1 (1937) to
Blue Canyon’s claim that it was entitled to bring the suit as an unincorporated
association. We hold that Blue Canyon’s legal capacity to sue Jevne as an
unincorporated 	association 	is 	dependent 	on 	its 	compliance 	with 	statutory
requirements, and because it failed to comply with the statutory requirements, Blue
Canyon lacked the capacity to sue Jevne. We reverse the judgment of the district court
and remand the case for further proceedings.
I. 	BACKGROUND
{2} 	The members of Blue Canyon and Jevne are all owners of real property in Santa
Fe County that claim to be parties to a well sharing and easement agreement (the
Agreement). Blue Canyon was formed to maintain and manage the well pursuant to
the Agreement. Some years later, a dispute arose between Jevne and the other owners
regarding Jevne’s unpaid water well expenses. As a result, Blue Canyon brought a
claim against Jevne in magistrate court, seeking $7,651.50 for past due bills, costs
associated with well use, and attorney fees and charges. The complaint was signed,

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“Blue Canyon Well Ass’n: Anna & Joe Durr, Frank & Billie Martinez, Lesley King,
President[.]” After a trial on the merits, the magistrate court entered judgment
awarding Blue Canyon $2,600.00 in damages and $6,697.02 in attorney fees. Jevne
appealed that judgment to the district court.
{3} 	Shortly after Jevne appealed the judgment, the individuals who signed the
complaint on behalf of Blue Canyon (collectively, Movants) filed a motion in district
court, seeking to amend the caption of the case in order to “properly identify
Plaintiffs” by substituting their names for Blue Canyon. In the motion to amend,
Movants pointed out that they had each signed the complaint as individuals on behalf
of Blue Canyon, but stated that “while there is a Well Agreement in the matter, there
is no Blue Canyon Well Association per se.” They therefore requested that they be
identified as Plaintiffs in Blue Canyon’s place. In opposing the motion, Jevne saw the
motion as an improper attempt to establish the Durrs’ right to use the well. Jevne
claimed that the Durrs were not a part of the Agreement and were not valid users
without first filing a declaratory judgment action to establish their status. Jevne
recognized Blue Canyon’s status as an unincorporated association and its power to sue
and collect judgments, but requested that the appeal be dismissed in light of Movants’
denial of Blue Canyon’s existence.
{4} 	The district court held a hearing on Movants’ motion to amend and ordered the
parties to provide supplemental briefing. In Movants’ supplemental brief, they again

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asserted that Blue Canyon was “not a legal entity properly formed under Section 53-
10-1[,]” and as such, they, individually, were the proper real parties in interest in the
case. Having retained new counsel, Jevne changed positions in her supplemental
response, arguing that Blue Canyon was a non-existent entity. Jevne also asserted that
Movants’ motion was actually a motion to substitute parties without complying with
Rule 1-025 NMRA and that the case must be dismissed because the judgment in favor
of a non-existent entity was “uncollectible.”
{5} 	The district court denied Movants’ motion to amend the caption and rejected
Movants’ claim that Blue Canyon did not exist as a legal entity because it had not
complied with the filing requirement of Section 53-10-1 for the creation of an
unincorporated association. The district court held that the use of the word “may” in
Section 53-10-1 indicated that filing statements and other documents referenced in the
statute to create an unincorporated association is permissive. Following a de novo trial
on the merits, the district court entered judgment in favor of Blue Canyon and entered
findings of fact and conclusions of law that the Agreement was created in March
1991, that Blue Canyon was formed to carry out the requirements of the Agreement,
and that Blue Canyon “is an unincorporated association with the capacity to sue and
be sued.”
{6} 	Jevne filed a motion to amend the judgment and a motion for new trial, both
attacking the district court’s judgment. The district court held a hearing on Jevne’s

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post-judgment motions, denying both. Jevne appeals, challenging the district court’s
judgment in Blue Canyon’s favor, as well as its denial of those two motions.
II. 	DISCUSSION
{7} 	On appeal, Jevne claims that the district court erred when it held that Blue
Canyon was authorized to maintain this action as an unincorporated association
notwithstanding that Blue Canyon had not filed the documents described in Section
53-10-1 (statutory documents) with the county clerk. Now forced to argue a position
contrary to the position they took in the district court, Blue Canyon first contends that
the district court correctly held that the use of the word “may” in the statute renders
the filing of any statutory documents by Blue Canyon to be permissive. Furthermore,
Blue Canyon argues, because unincorporated associations are recognized by both
statute and common law, it is not required to comply with the statutory requirements
to be a common law unincorporated association and sue in the name of the
association. We are not persuaded by either argument.

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A. 	Section 53-10-1 Requires the Filing of Statutory Documents to Form an
Unincorporated Association
{8} 	Statutory interpretation is an issue of law that we review de novo. Moongate
Water Co. v. City of Las Cruces, 2013-NMSC-018, ¶ 6, 302 P.3d 405. The text of a
statute is the “primary, essential source of its meaning[,]” and where a statute’s
language is clear and unambiguous, we are required to “give effect to that language
and refrain from further statutory interpretation.” NMSA 1978, § 12-2A-19 (1997);
Nat’l Educ. Ass’n of N.M. v. Santa Fe Pub. Schs., 2016-NMCA-009, ¶ 6, 365 P.3d 1
(internal quotation marks and citation omitted).
{9} 	A court’s “primary goal when interpreting a statute is to give effect to the
Legislature’s intent[,]” which “is to be determined primarily by the language of the
act, and words used in a statute are to be given their ordinary and usual meaning
unless a different intent is clearly indicated.” N.M. Bldg. & Constr. Trades Council
v. Dean, 2015-NMSC-023, ¶ 11, 353 P.3d 1212 (internal quotation marks and citation
omitted); see State ex rel. Helman v. Gallegos, 1994-NMSC-023, ¶ 23, 117 N.M. 346,
871 P.2d 1352. “Whether words of statutes are mandatory or discretionary is a matter
of legislative intent to be determined by consideration of the purpose sought to be
accomplished.” State ex rel. Robinson v. King, 1974-NMSC-028, ¶ 10, 86 N.M. 231,
522 P.2d 83. We interpret statutes “to avoid rendering the Legislature’s language
superfluous.” Baker v. Hedstrom, 2013-NMSC-043, ¶ 24, 309 P.3d 1047. We consider

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all parts of the statute together, “read[ing] the statute in its entirety and constru[ing]
each part in connection with every other part to produce a harmonious whole.” Key
v. Chrysler Motors Corp., 1996-NMSC-038, ¶ 14, 121 N.M. 764, 918 P.2d 350.
{10} 	Section 53-10-1, authorizing the formation of unincorporated associations
provides:
Whenever two or more persons shall desire to form an association
for the promotion of their mutual pleasure or recreation . . . or an
association not for the individual profit of the members thereof, and
without incorporating the same as a corporation, or maintaining title of
its property in trust . . .[, t]he said persons or members desiring to form
such an association . . . may file in the office of the county clerk . . . a
statement containing the name of such association, its objects and
purposes, the names and residences of the persons forming such
association, together with a copy of its articles of association and any
rules and/or regulations governing the transactions of its objects and
purposes and prescribing the terms by which its members may maintain
or cease their membership therein.
(Emphasis added.) We acknowledge, and the parties are quick to point out, that
generally, the words “shall” and “must” express a “duty, obligation, requirement or
condition precedent” while “may” confers a “power, authority, privilege or right.”
NMSA 1978, § 12-2A-4(A), (B) (1997). However, in this instance, the power,
authority, privilege or right signaled by the use of the word “may” in the statute is not
the power, authority, privilege, or right to file documents. Instead, it is the right to
form an association as opposed to a corporation, trust, or other legally viable entity.
The plain language of Section 53-10-1 clearly sets out that whenever two or more

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persons wish to form an association for the limited purposes described therein without
incorporating or maintaining title to its property in trust, then those persons may do
so by filing statutory documents with the county clerk. For those intending to create
an association under Section 53-10-1, the filing of statutory documents is mandatory.
{11} 	This interpretation is consistent with the purpose of Section 53-10-1. While
avoiding some of the burdens and complexities associated with the formation of a
corporation or a trust, Sections 53-10-1 to -8 (1937, as amended through 1959) (the
Act), allow those involved in the limited activities described to enjoy the benefits of
acting as a single unit rather than a group of individuals, and limit any recovery of a
judgment against the association to its joint or common property, provided they satisfy
its abbreviated requirements.
{12} 	Other sections of the Act confirm the mandatory nature of statutory document
filing. First, unless the filing of statutory documents to create an unincorporated
association is mandatory, the detailed list of information to be included in the statutory
documents set out in Section 53-10-1 would be unnecessary surplusage. Even more
persuasive of the mandatory nature of the statute is the language in Section 53-10-7,
which provides, “[a]ny association or club formed under the provisions of [the A]ct
. . . may exist for such period of time not exceeding twenty years as may be fixed in
the statement required to be filed by Section [53-10-1].” (Emphasis added.) Were we

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to interpret the language related to the filing of statutory documents to be permissive,
our interpretation would render Section 53-10-1 at odds with Section 53-10-7
describing the document filing as “required.” “If statutes appear to conflict, they must
be construed, if possible, to give effect to each.” NMSA 1978, § 12-2A-10(A) (1997).
By interpreting the statutory document filing as mandatory, we avoid a conflict and
give effect to the provisions of both Section 53-10-1 and Section 53-10-7.
{13} 	Blue Canyon nevertheless argues that the Act is intended to be generally
permissive and that equity requires us to interpret Section 53-10-1 to authorize
permissive filing. We are not persuaded. Blue Canyon’s argument in this regard is
largely based on an alternative reading of the plain language in Section 53-10-1. Blue
Canyon argues that we should interpret Section 53-10-1 so that the “required to be
filed” language is rendered functionally superfluous, reasoning that the word
“required” simply “does not carry the same weight or measure of authority” as words
like “shall” and “may.” Because “we refrain from reading statutes in a way that
renders provisions superfluous[,]” we decline to follow Blue Canyon’s interpretation,
particularly because an interpretation that filing statutory documents is mandatory
gives meaning and effect to each term used in the Act. State ex rel. E. N.M. Univ.
Regents v. Baca, 2008-NMSC-047, ¶ 10, 144 N.M. 530, 189 P.3d 663 (declining to
interpret statute as permissive where doing so would render it superfluous).

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B. 	Common Law Unincorporated Associations Have No Capacity to Sue
{14} 	Blue Canyon argues that it was the proper party to file suit against Jevne
because New Mexico law recognizes common law unincorporated associations. New
Mexico law, Blue Canyon contends, permits the formation of unincorporated
associations either by common law or under the Act, and Section 53-10-5, conferring
a right to sue upon unincorporated associations, applies to both statutorily created and
common law associations.
{15} 	Our Supreme Court, however, long ago resolved the legal viability of
unincorporated associations that were not statutorily created. In Flanagan v. Benvie,
1954-NMSC-074, ¶ 7, 58 N.M. 525, 273 P.2d 381, the court unequivocally held,
“unincorporated associations, clubs and societies, unless recognized by statute, have
no legal existence[.]” (Emphasis added.) In Flanagan, the Court explained that the
association’s failure to organize in accordance with the statute precluded it from
taking advantage of the right conferred by the Act to hold property in the name of the
association. Id. ¶ 11. Similarly, in State ex rel. Overton v. N.M. Tax Comm’n, 1969-
NMSC-140, ¶ 14, 81 N.M. 28, 462 P.2d 613, our Supreme Court found that a common
law unincorporated association formed to advocate for tax equity was not a legal
entity and had no right to bring an action unless its members were permitted to do so
as members of a class under Rule 1-023 NMRA.

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{16} 	The Act grants unincorporated associations formed under Section 53-10-1 a
series of rights, including the right to “hold and acquire real or personal property by
deed, lease or otherwise, in the name of [the] association,” pursuant to Section 53-10-
2; the right to mortgage or sell such property, conveying it by deed signed by an
officer of the association, pursuant to Section 53-10-3; and the right to sue or be sued
in the name of the association, with the collection of any money judgment against the
association limited to its joint or common property, pursuant to Section 53-10-6.
Implicit in both the Flanagan and Overton decisions is the fact that an association
wishing to take advantage of the rights conferred upon unincorporated associations
by the Legislature, including the right to bring suit in the name of the association, can
only do so by complying with the requirements of Section 53-10-1.
{17} 	Arguing that the Act distinguishes between common law associations and
statutorily created associations, Blue Canyon points out that some sections of the Act
refer to an “association or club formed under the provisions of th[e] act,” while
Section 53-10-6, conferring associations with the right to sue in their own names, does
not. Compare § 53-10-7, with § 53-10-6. Because Section 53-10-6 does not refer to
associations or clubs formed under the provisions of the Act, Blue Canyon concludes
that the right to sue is statutorily conferred on all unincorporated associations, whether
formed at common law or by statute. Legislative silence, however, “is at best a
tenuous guide to determining legislative intent.” Swink v. Fingado, 1993-NMSC-013,

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¶ 29, 115 N.M. 275, 850 P.2d 978. We see no reason to allow the absence of the
language to outweigh its explicit language that filing statutory documents with the
county clerk is required to create an unincorporated association. To do so would be
to disregard our canons of statutory interpretation.
{18} 	On 	appeal, 	the 	parties 	do 	not 	dispute 	that 	neither 	Movants 	nor 	their
predecessors in interest ever filed the statutory documents required by Section 53-10-1
to form an unincorporated association. Instead, Blue Canyon’s formation was based
on an unrecorded well sharing and easement agreement that did that did not satisfy the
requirements of Section 53-10-1. Absent such a filing, Blue Canyon cannot avail itself
of the rights conferred by the Act, including the right to sue granted by Section 53-10-
5.
{19} 	In sum, in order to become an incorporated association entitled to exercise the
right to sue, Blue Canyon was required to file the documents delineated in Section 53-
10-1. Having failed to do so, we hold that Blue Canyon was not an unincorporated
association under Section 53-10-1 and had no legal capacity to sue and to obtain
judgment against Jevne. As Blue Canyon’s lack of capacity to sue is sufficient for
reversal, we need not reach Jevne’s argument that Blue Canyon is not the real party
in interest. The judgment in favor of Blue Canyon against Jevne was improperly
entered, is of no effect, and must be vacated.

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III. 	CONCLUSION
{20} 	We reverse the decision of the district court insofar as it grants relief in favor
of Blue Canyon against Jevne, and we remand this matter for proceedings consistent
with this opinion.
{21} 	IT IS SO ORDERED.
____________________________________
JULIE J. VARGAS, Judge
WE CONCUR:
___________________________
JONATHAN B. SUTIN, Judge
___________________________
J. MILES HANISEE, Judge