October 14, 2016 – Cobb v. Gammon, KVBu

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IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO

Opinion Number:

Filing Date: October 14, 2016

NOS. 32,936, 32,945 & 32,953 (Consolidated)
GARY AND KIMBERLY COBB,

Plaintiffs-A ppellees,
and

CLARENCE G. SIMMONS and
SUSAN BEGY SIMMONS,

Third-Party Defendants-A ppellees,
V.

JOSEPH GAMMON and LINDA
GAMMON,

Defendants-A ppellants,
and
FFFP, LLC

Third-Party Defendants-A ppellants.

APPEAL FROM THE DISTRICT COURT OF SANTA FE COUNTY
George P. Eichwald, District Judge

Wray & Girard, PC
Katherine Wray
Albuquerque, NM
Sanders & Westbrook, PC
Maureen A. Sanders
Albuquerque, NM
for Appellees Simmons
The Hemphill Firm, P.C.
Linda G. Hemphill
Santa Fe, NM
Paul W. Grace LLC
Paul W. Grace
Santa Fe, NM
for Appellants Gammon
Dixon, Scholl & Bailey, P.A.
Gerald G. Dixon
Lisa Joynes Carrillo
Albuquerque, NM
for Appellants FFFP, LLC and French & French Fine Properties, Inc.

OPINION
KENNEDY, Judge.
{1} 	Joseph and Linda Gammon, builders in search of a property to split and
develop, purchased a piece of property with the help of their realtor, French & French
Fine Properties, Inc. (FFFP). Neither the Gammons nor FFFP took notice of a
covenant creating a minimum lot size for that property, and the Gammons created two
impermissibly small lots from the property they purchased. The neighboring property
owners sued the Gammons and FFFP seeking to enforce the covenant. Meanwhile,
Clarence and Susan Simmons (Simmons) purchased land adjacent to the Gammons’
property. FFFP filed a third-party action against the neighboring property owners,
including the Simmons, seeking to bind them to the outcome of the case involving the
enforceability of the covenant. The Simmons, unaware of the Gammons covenant
violation during their purchase of the property and relying on FFFP’s representations
as to the existence of an enforceable covenant, then filed suit against FFFP for
negligent misrepresentation. The district court ruled against the Gammons in the first
case dealing with enforceability, and against FFFP with regard to the negligent
misrepresentation claims.
{2} 	Only the issues presented in the Simmons’ case against FFFP remain on appeal.
FFFP asserts that the Simmons did not prove that FFFP made misrepresentations
during the sale to the Simmons and that the Simmons also did not prove the justifiable

2
reliance necessary for their negligent misrepresentation claim. FFFP appeals the
district court’s award of compensatory damages to the Simmons in the form of
disgorgement of commission, attorney’s fees, pecuniary loss, and transaction costs.
We affirm the award of compensatory damages for the pecuniary loss. We remand the
award of disgorgement of commission and transaction costs so that the district court
may recalculate those damages as set forth in this opinion. We also remand the award
of attorney’s fees so that the district court may determine which fees were incurred
while defending against FFFP’s suit, and which were incurred while affirmatively
pursuing the negligent misrepresentation claims. The Simmons are entitled only to
those attorney’s fees incurred in defending against the suit.
I. 	FACTUAL BACKGROUND
{3} 	In 1980, HMBL Venture (HMBL) owned 116 acres of property (HMBL
Property) and split the property into four tracts (Tracts 1, 2, 3, and 4), imposing an
identical restrictive covenant upon each tract when it was sold. The restrictive
covenant attached to each of the four tracts that made up the HMBL Property, and the
lots resulting from subdivision of those tracts included seven provisions, two of which
are relevant to this appeal. The first reads, “[t]his land shall not be divided into parcels
of less than five acres.” The second provides, “[t]he covenants and restrictions shall
run with and bind the land until the year 2020. They may be enforced by any person
who has title to any of the property which is subject to these same restrictive

1We acknowledge that French & French has changed hands several times,
resulting in several name changes. For the sake of clarity, however, we refer to all
present and past versions of French & French Fine Properties, Inc., French & French
Sotheby’s, FFFP LLC, and any other variations of the name, as FFFP.
2Goldstein is not a party to this appeal.
3
covenants.” Each of the four tracts within the HMBL Property were subsequently
divided and sold.
A. 	The Gammons’ Purchase of Lot 4A2
{4} 	In 2002, the Gammons purchased five acres within Tract 4 of the HMBL
Property (Lot 4A2). The Gammons were represented by a broker from FFFP.1 The
warranty deed conveying Lot 4A2 stipulated that the tract was “SUBJECT TO:
Restrictions, reservations and easements of record.” The restrictive covenant for Lot
4A2 was recorded in Book 530, page 343, of the records of the Santa Fe County
Clerk. Prior to closing on Lot 4A2, the Gammons received information from their title
insurance company that disclosed the existence of the restrictive covenant as well as
where it was recorded. Neither the Gammons nor their FFFP broker reviewed the text
of the covenant, despite receiving documents containing this information from the title
insurance company.
{5} 	After purchasing Lot 4A2, the Gammons divided their five-acre parcel into two
two-and-one-half acre lots and constructed a house on one of the lots. The Gammons
sold that house and lot to Lawrence Goldstein in October 2003.2 While constructing

4
a house on the second two-and-one-half acre lot, the Gammons discovered they were
in violation of the covenant burdening Lot 4A2. FFFP assured the Gammons it would
fix the problem with the restrictive covenant.
{6} 	FFFP discussed potential remedies to the violation with both the Gammons and
Goldstein. These remedies included “condominiumizing” both of the violating lots
within Lot 4A2, acquiring acreage from surrounding lots to bring each lot into
compliance with the minimum size requirement, and obtaining a waiver of or
amendment to the existing covenant from all HMBL Property owners. Ultimately,
FFFP pursued plans to get all landowners within the HMBL Property to waive
objections to or consent to amending the restrictive covenant that burdened the tracts
within the HMBL Property.
{7} 	In August 2005, FFFP hand-delivered letters to all HMBL Property owners
requesting signatures to “resolve an expiring deed restriction.” The letter was
accompanied by a copy of the relevant deed and restrictive covenant, a diagram
specifying which tracts had acquiesced to the waiver and amendment as well as which
tracts within the HMBL Property were in violation of the covenant, and copies of the
proposed waiver and amendment. Because of FFFP’s circulating the letter, Gary and
Kimberly Cobb (the Cobbs) learned of the Gammons’ covenant violation, as well as
three other restrictive covenant violations within the HMBL Property. The Cobbs

3Lot 4C abuts the Gammon/Goldstein property, while lots 4B and 4D each share
one corner with the Gammons’ property.
5
refused to sign the waiver and amendment. FFFP’s attempts to get the waiver and
amendment signed by other neighboring property owners were also unsuccessful.
B. 	Simmons and the Trust Property
{8} 	Lots 2A, 3B, 3C, 3D, 4B, 4C, and 4D within the HMBL Property belonged to
a trust (Trust Property) that Cowden Henry and Thomas Craddock managed as
trustees.3 Ray Rush and Tim Van Camp, brokers for FFFP, listed the Trust Property
for sale. The Simmons were searching for property in the Santa Fe area that was
protected from dense development, had unobstructed views, was in a quiet setting, and
had low potential for adjacent development. The Simmons were working with Neil
Lyon, another FFFP broker, during their search. Lyon and Van Camp showed the trust
property to the Simmons, and during the Simmons’ many subsequent visits to the
property, the FFFP brokers told them that some of the neighbors were interested in
amending the existing covenants. On May 2, 2005, unbeknownst to the Simmons who
were contemplating purchasing the Trust Property, Van Camp obtained Henry’s and
Craddock’s signatures, as trustees for the Trust Property, on the waiver and
amendment to the covenant that FFFP was circulating among the HMBL Property
owners. The Simmons signed a purchase agreement on May 13, 2005, and closed on
the property on June 15, 2005. Both houses on the Gammons’ Lot 4A2, which was

4Plaintiffs in the case included Gary and Kimberly Cobb, who owned Tracts 1-
4, Carl Gilbert and Sandra Bonchin, who owned Tracts 1-1A, Perry and Barbara Jeffe,
who owned Lots 1-2 and Jafet Gonzalez and Deborah Wirth, who owned Lot 1-1B.
6
adjacent to Tract 4C of the purchased Trust Property, existed when Simmons
purchased the Trust Property. In late 2008 and early 2009, FFFP approached the
Simmons, requesting that they either turn over a portion of the trust property to cure
Lot 4A2’s violation, or sign the waiver and amendment. The Simmons refused to
consent to either proposed solution. The Simmons were neither offered the reasonable
value of the property in exchange for the acreage, nor provided with a copy of the
waiver or amendment that the sellers had signed.
II. 	PROCEDURAL HISTORY
{9} 	After finding out about the Gammons’ covenant violation through FFFP’s
attempts to obtain signed a waiver and amendments, the Cobbs joined with other
HMBL lot owners (collectively, the Cobb Plaintiffs) and filed suit in January 2006
against the Gammons and Goldstein.4 In the complaint, the Cobb Plaintiffs sought
enforcement of the covenant through declaratory judgment and an injunction, and they
requested punitive damages. The Cobb Plaintiffs later amended their complaint,
adding a claim against FFFP and the Gammons for conspiracy to breach the covenant,
a claim against FFFP for aiding and abetting, and requesting punitive damages against
FFFP.

5The district court also awarded pre-judgment interest on the unjust enrichment
damages, taxable costs, and post-judgment interest.
6The district court also awarded taxable costs and post-judgment interest.
7
{10} 	In 2009, the Gammons, Goldstein, and FFFP filed a third-party complaint
against all others who owned lots within the HMBL Property, including the Simmons,
seeking judgment binding the property owners to any judgment rendered in FFFP’s
case against the Cobb Plaintiffs. The Simmons filed a counterclaim against the
Gammons, Goldstein, and FFFP. In that counterclaim, the Simmons sought a
declaratory judgment regarding the covenant violation and an injunction requiring
compliance with the restrictive covenants; they also brought claims of negligent
misrepresentation and constructive fraud against FFFP.
{11} 	The Cobb Plaintiffs’ claims, the Gammons and FFFP’s third-party complaint,
and the Simmons’ counterclaim were all tried together in a district court trial that
lasted eleven days. After trial, the district court issued extensive findings of fact and
conclusions of law. The district court’s final judgment, entered on April 16, 2013,
awarded the Cobb Plaintiffs unjust enrichment damages and punitive damages against
the Gammons and FFFP.5 It also awarded the Simmons compensatory damages
against FFFP.6 The Gammons and FFFP appealed the district court’s judgment, and
the appeals were consolidated. After briefing, the parties settled the Cobb Plaintiffs’
claims against FFFP.

7Though primarily briefed by the Cobb Plaintiffs and the Gammons, FFFP, and
the Simmons both briefed the issue of whether the covenants are enforceable.
Furthermore, both parties objected to the dismissal of the Cobb Plaintiffs’ appeal on
the basis that the covenant issue needed to be addressed. It is relevant to our
consideration of the Simmons’ appeal, and we address it.
8
III. 	DISCUSSION
{12} 	The Cobb Plaintiffs prevailed against both the Gammons and FFFP. As a result
of the settlement, the Cobb Plaintiffs’ judgment and claims against FFFP are
dismissed from this appeal. While this appeal was pending, the parties alerted this
Court to the fact that the Gammons have undergone bankruptcy proceedings, and the
bankruptcy court discharged the Gammons’ debts, including the district court’s
judgment for the Cobb Plaintiffs.
{13} 	The Gammons concede that, with respect to the issues of damages, their appeal
from the district court judgment is moot. An issue is moot when no actual controversy
exists, and the court cannot grant actual relief. Gunaji v. Macias, 2001-NMSC-028,
¶ 9, 130 N.M. 734, 31 P.3d 1008. We agree with the Gammons that the issues of
damages are moot in light of their bankruptcy discharge, and we do not address them.
However, FFFP’s appeal of the judgment in favor of the Simmons remains. We begin
with a discussion of the covenant from which this litigation originates. 7
A. 	The Enforceability of the Restrictive Covenant

9
{14} 	The HMBL Property was sold in four different tracts and at four different times.
While Tracts 2, 3, and 4 were conveyed subject to a restrictive covenant in 1980, Tract
1 was not conveyed until 1982. The Tracts were later subdivided into lots. The
Gammons’ property was located in Tract 4.
{15} 	Though the FFFP’s arguments regarding the covenant’s enforceability are
poorly developed and circular, they can be summarized into two broad statements: the
covenant in this case does not run with the land, and the Cobb Plaintiffs, the Simmons,
and other HMBL Property owners cannot enforce the covenant due to the lack of a
general plan or scheme within the HMBL Property. The Gammons first suggested that
the covenant in question was personal, rather than one that runs with the land. Citing
Suttle v. Bailey, 1961-NMSC-044, ¶ 13, 68 N.M. 283, 361 P.2d 325 (holding that
grantor’s reservation of general power to dispense with restrictive covenants destroyed
mutuality or reciprocity so necessary to create a covenant that runs with the land), in
support of this theory, the Gammons reasoned that there was never an enforceable
restrictive covenant governing the HMBL Property because there was no “mutuality
and no reciprocity” between the restrictions imposed upon Tract 4 and Tract 1. We
address each of the Gammons’ arguments in turn. A determination of whether the
restrictive covenant could be enforced against the Gammons required the district court
to interpret the covenant; we review such a legal determination de novo. See Heltman
v. Catanach, 2010-NMCA-016, ¶ 5, 148 N.M. 67, 229 P.3d 1239; see also Smart v.

10
Carpenter, 2006-NMCA-056, ¶ 7, 139 N.M. 524, 134 P.3d 811 (stating the rule that
appellate courts review the district court’s conclusions of law de novo).
1. 	Requirements for Covenant Running With the Land
{16} 	In order to establish an enforceable covenant running with the land, the
covenant must touch and concern the land, the original covenanting parties must
intend the covenant to run with the land, and the successor to the burden must have
notice of the covenant. Lex Pro Corp. v. Snyder Enters., Inc., 1983-NMSC-073, ¶ 7,
100 N.M. 389, 671 P.2d 637. The Gammons concede they had constructive notice,
which satisfies the notice requirement for restrictive covenants. See id.; NMSA 1978,
§ 14-9-2 (1886-87).
{17} 	In determining whether a covenant touches and concerns the land, we conduct
“an objective analysis of the contents of the covenant itself.” Cypress Gardens, Ltd.
v. Platt, 1998-NMCA-007, ¶ 8, 124 N.M. 472, 952 P.2d 467. A covenant touches and
concerns the land if its performance renders the burdened land less valuable while
rendering the benefitted land more valuable. See Lex Pro Corp., 1983-NMSC-073, ¶
8. In more archaic terms, restrictions on the use of land are “mutual, reciprocal,
equitable easements in the nature of servitudes in favor of owners of other lots within
the restricted area, and constitute property rights which run with the land.” Montoya

8There remains “no practical distinction in our case law between equitable
servitudes and restrictive covenants that would necessitate the continued use of
separate terms[.]” Dunning v. Buending, 2011-NMCA-010, ¶ 10, 149 N.M. 260, 247
P.3d 1145.
11
v. Barreras, 1970-NMSC-111, ¶ 12, 81 N.M. 749, 473 P.2d 363. The express terms
of the restrictive covenant in this case place a burden on the Gammons’ property
prohibiting the creation of lots smaller than five acres while benefitting the other
HMBL Property owners’ interest in their property by allowing them to enjoy a lower
density of development, less traffic, and unobstructed views.8
{18} 	Where the deed does not specify that the covenant is to run with the land, we
must turn to an evaluation of the parties’ intent regarding the covenant. Dunning,
2011-NMCA-010, ¶ 18 (requiring a consideration of the circumstances surrounding
the transaction and the objective of the parties making the restriction in analysis of the
parties’ intent). That is not necessary here, as the express language of the covenant
provides that “the covenants and restrictions shall run with and bind the land until the
year 2020.” When covenant provisions are unambiguous, the district court must
“enforce the expressed intentions as set forth in covenants.” Aragon v. Brown, 2003-
NMCA-126, ¶ 11, 134 N.M. 459, 78 P.3d 913. The Gammons’ recorded deed
specifically enumerates that Lot 4A2 is subject to recorded restrictions, and the
restrictive covenant in this case is recorded. The covenant in this case therefore
“touches and concerns” the land, as established by its clear language, and the

9To the extent that this argument is aimed toward characterizing the covenant
at issue as a personal one that does not bind the covenantor’s successors in interest,
Lex Pro Corp., 1983-NMSC-073, ¶ 12, it fails in light of the above analysis
characterizing the covenant as one running with the land.
12
Gammons had notice of the covenant’s existence. We hold that the restrictive
covenant in this case runs with the land.
{19} 	The Gammons’ reliance on Suttle for their argument that this is a personal
covenant, is unpersuasive. In Suttle, our Supreme Court looked at the issue of whether
“a reservation by the grantor of a general power to dispense with restrictions [is] a
personal covenant, or one which runs with the land[.]” 1961-NMSC-044, ¶ 4.
Applying the general rule that covenants burdening land sold under a general plan of
restriction could be enforced by one landowner against another within a subdivision,
id. ¶ 5, the Court concluded that a grantor’s reservation of the right to alter or annul
the covenant destroyed the mutuality and reciprocity necessary to create a covenant
running with the land, because no subsequent grantee had any assurance that the
restrictions might not be altered without his consent. Id. ¶ 13. Because the grantor’s
reserved right to alter the covenant made the covenant personal, there existed “no right
as between the individual grantees to enforce the restrictive covenants[.]” Id. Here,
HMBL made no reservation of right to amend or annul the covenant; Suttle is
inapposite. We next address the Gammons’ assertion that no right to enforce the
covenant exists because the HMBL Property lacks a general plan or scheme.9

10Although this is the argument made, the reference to Tract 4 seems to be a
typographical error. It appears the Gammons meant Tract 1, as that is the tract in
which the Cobb Plaintiffs’ lots are located.
13
2. 	General Plan or Scheme
{20} 	The Gammons contend that they had no notice “that covenants affecting [Lot
4A2] potentially could be enforced by the owners of other lots within Tract 4” and that
the lack of a general plan or scheme within the HMBL Property kept them from
receiving notice of the restrictive covenant on Lot 4A2. 10 More specifically, they
suggest that because the HMBL Property was sold piecemeal and at different times,
there was no general plan in existence and the covenant does not touch and concern
the entire HMBL Property. This view is incorrect.
{21} 	“[W]here an owner of a tract subdivides and sells under a general plan of
restrictions, the restrictions may be enforced by one grantee against another.” Sharts
v. Walters, 1988-NMCA-054, ¶ 8, 107 N.M. 414, 759 P.2d 201. The “absence of an
observable general plan does not negate the express language” of the restrictive
covenant. Dunning, 2011-NMCA-010, ¶ 16. When a covenant meets the requirements
for an enforceable covenant running with the land, proof of a general plan or scheme
is unnecessary. Id. ¶ 14. The existence of a general plan or scheme is mostly used to
prove three things: that covenanting parties intended a covenant to run with the land,
that a purchaser had notice of the covenant, or that restrictions apply to parcels even

14
where they have been omitted from the written deed. Id. ¶ 13. In this case, those things
are established, and the purposes of proving a general plan or scheme are already
fulfilled. Proof of a general plan or scheme is therefore unnecessary.
{22} 	Even if the general plan doctrine were applicable here, the Gammons’ argument
would fail because a general plan can be inferred from the circumstances of this case.
The existence of a general plan “may be inferred from the inclusion of similar
restrictions in the deeds from a common grantor[.]” Restatement (Third) of Prop.:
Servitudes § 2.14 cmt. f (2000). The restrictive covenants affecting each HMBL
Property tract are not merely similar or substantially similar; all four contain identical
language. The district court concluded that inclusion of identical language in all of the
deeds in an area demonstrates a grantor’s intention to benefit all of the lots in the area.
See Rowe v. May, 1940-NMSC-019, ¶ 32, 44 N.M. 264, 101 P.2d 391 (acknowledging
that the identical language of the covenant in all deeds in the relevant area “could bear
no other reasonable inference than that such deeds from the original grantor . . . gave
sufficiently adequate and clear expression to its intention that the restriction was for
the benefit of all the lots” (emphasis omitted)); Lockwood v. Steiner, 1984-NMSC-
100, ¶ 9, 101 N.M. 783, 689 P.2d 932 (affirming narrow construction of restrictive
covenant based on evidence that conveyances to all initial lot owners contained
identical restrictive covenants that ran with the land). Though the HMBL Property
may not have carried specific indicia typical to a general plan such as representations

15
in sales brochures, advertisements, and oral statements, see Sharts, 1988-NMCA-054,
¶ 10, we conclude that a general plan exists within the HMBL property.
3. 	Covenant’s Reference to “This Land”
{23} 	The district court found that HMBL intended that any person whose property
was subject to the restrictive covenants on the HMBL Property could enforce them.
The district court also found that because the same restrictive covenant was imposed
on all conveyances of property within the HMBL Property, all owners of all lots
within HMBL Property could enforce the covenant against the Gammons. The
Gammons and FFFP suggest that the language of the restrictive covenant applies only
to Lot 4A2, such that other property owners within the HMBL Property cannot seek
enforcement of the covenant. The restrictive covenant provides, “[t]his land shall not
be divided”; the Gammons and FFFP assert “this” refers only to the tract concerned,
and because the covenants were attached to the tracts at different times and in different
conveyances, the covenant on Lot 4A2 cannot be enforced by anyone in another tract
within the HMBL Property.
{24} 	We construe the covenant as a whole rather than separate specific words and
phrases from the rest of the provisions. See 20 Am. Jur. 2d Covenants, Conditions and
Restrictions § 15 (2016) (stating the rule that covenants are to be construed as a whole
and indicating that “[t]he intention of the parties is to be gathered from the entire
context of the agreement, and not from a single clause” (footnote omitted)); 21 C.J.S.

16
Covenants § 5 (2016) (“In interpreting any single provision in a covenant, the entire
agreement must be viewed as a whole.”). Restrictive covenants are used “to assure
uniformity of development and use of a residential area to give the owners of lots
within such an area some degree of environmental stability.” Cunningham v. Gross,
1985-NMSC-050, ¶ 8, 102 N.M. 723, 699 P.2d 1075 (internal quotation marks and
citation omitted).
{25} 	The Gammons’ and FFFP’s argument is flawed because it interprets the phrase
“this land” in geographical isolation from the rest of the covenant language when the
covenant permits enforcement “by any person who has title to any of the property
which is subject to these same restrictive covenants.” When considered as a whole, the
provisions of the covenant reveal that the phrase “this land” is neither ambiguous, see
Cain v. Powers, 1983-NMSC-055, ¶ 9, 100 N.M. 184, 668 P.2d 300 (stating that first
step in construing covenant language is to determine whether ambiguity exists), nor
does it support the interpretation suggested. While the phrase “this land” alone may
refer to any portion of Tract 4, interpreting it to mean that only people who own a
portion of Tract 4 may enforce the covenant is contrary to its express terms. Other
provisions in the covenant reveal that any person who owns a portion of the HMBL
Property and whose title is subject to a restrictive covenant identical to the one they
seek to enforce may do so. This interpretation is particularly persuasive in light of the

17
general plan, discussed above, that can be inferred from the identical restrictive
language in each of the four tract conveyances.
{26} 	To allow the Gammons’ and FFFP’s interpretation of this language to prevail
would promote an illogical result, id. (noting that restrictive covenants must be
considered so that an “ ‘illogical, unnatural or strained construction’ will not be
effected”), as it would render the covenant unenforceable against any tract owned
entirely by one owner. For example, if Tract 3 were owned entirely by one owner, the
owner of Tract 3 could divide it into impermissibly small lots without repercussions
from the owners in Tracts 1, 2, or 4, who would be unable to enforce the covenant,
because their land was restricted through separate conveyances. We therefore
conclude that the restrictions were clearly created to preserve the entire HMBL
Property’s “genuine residential character, the symmetry and beauty of the area, and
for the general good of all interested, [make it] an attractive and valuable residential
district.” Rowe, 1940-NMSC-019, ¶ 32. The Gammons’ and FFFP’s attempts to
weaken the covenant’s ability to do so by limiting the ability of others to enforce it
fails as well. We hold that the restrictive covenant at issue in this case is valid and can
be enforced by any owner of land within the HMBL Property. With the resolution of
this issue as a backdrop, we turn specifically to FFFP’s appeal of the judgment in
favor of the Simmons.

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B. 	Issues on Which Simmons Prevailed
1. 	Negligent Misrepresentation
{27} 	We 	review 	the 	district 	court’s 	findings 	regarding 	FFFP’s 	negligent
misrepresentation for substantial evidence. See Golden Cone Concepts, Inc. v. Villa
Linda Mall, Ltd., 1991-NMSC-097, ¶¶ 12-13, 113 N.M. 9, 820 P.2d 1323 (affirming
the court’s findings of negligent misrepresentation that were supported by substantial
evidence). To prove negligent misrepresentation, the Simmons were required to prove
that (1) FFFP made a material misrepresentation of fact to the Simmons, (2) the
Simmons relied upon that representation, (3) FFFP knew the representation was false
or made it recklessly, and (4) FFFP intended to induce the Simmons to rely on that
representation. See Saylor v. Valles, 2003-NMCA-037, ¶ 17, 133 N.M. 432, 63 P.3d
1152. These elements must be established by a preponderance of the evidence. Golden
Cone Concepts, Inc., 1991-NMSC-097, ¶ 13. Negligent misrepresentation requires a
failure to exercise ordinary care in obtaining or communicating a statement, or “an
intent that the plaintiff receive and be influenced by the statement where it is
reasonably foreseeable that the plaintiff would be harmed if the information conveyed
was incorrect or misleading.” Eckhardt v. Charter Hosp. of Albuquerque, Inc., 1998-
NMCA-017, ¶ 55, 124 N.M. 549, 953 P.2d 722.
{28} 	FFFP suggests that the Simmons could not have met their burden in proving
negligent misrepresentation without proving FFFP’s brokers failed to exercise

19
reasonable care or competence through expert testimony as to the appropriate standard
of care. FFFP also suggests that there is insufficient evidence of justifiable reliance
and causation of damages to support negligent misrepresentation or an accompanying
damages award. We disagree.
a. 	Expert Testimony Regarding Standard of Care
{29} 	Negligent misrepresentation can be established by commission or omission.
See, e.g., R.A. Peck, Inc. v. Liberty Fed. Sav. Bank, 1988-NMCA-111, ¶¶ 9, 12, 108
N.M. 84, 766 P.2d 928 (stating the rule that “a person may be held liable for damages
caused by a failure to disclose material facts to the same extent that a person may be
liable for damages caused by . . . negligent misrepresentation” so long as there exists
a duty to disclose). While a broker may be held liable for negligent misrepresentation
if he or she fails to exercise reasonable care or competence in obtaining or
communicating information, the precise level of care and competence required will
vary. See Gouveia v. Citicorp Person-to-Person Fin. Ctr., Inc., 1984-NMCA-079,
¶ 10, 101 N.M. 572, 686 P.2d 262. FFFP asserts that in order to show that it failed to
exercise reasonable care and competence in obtaining and communicating information
to the Simmons, the Simmons were required to proffer expert testimony regarding
whether FFFP’s conduct meets the requisite standard of care. Because no expert
testimony was proffered, FFFP asserts that the Simmons failed to establish the
elements of negligent misrepresentation. We disagree as to both assertions.

20
{30} 	FFFP cites to Amato v. Rathbun Realty, Inc., 1982-NMCA-095, ¶ 11, 98 N.M.
231, 647 P.2d 433, as support for its assertion that expert testimony is required to
establish whether a broker failed to properly advise a client regarding the condition
of property. Amato dealt with the negligence of a broker in the summary judgment
context. The movants in that case presented a single affidavit that stated the sources
of information that the broker relied upon and disclaimed any knowledge of the
complained-of defects in the property being sold. Id.¶ 10. The court concluded that
the showing made was insufficient to make a prima facie showing that no issue of fact
existed as to whether the broker in that case was negligent. Id. ¶ 11 (stating that
without an expert’s testimony that broker “did not breach the standard of care of
brokers in the community, no prima facie showing was made”). In this case, the
Simmons only needed to prove at trial by a preponderance of evidence that FFFP did
not exercise reasonable care or competence in communicating the disclosures relevant
to the property to the Simmons.
{31} 	Liz Cale was a qualifying broker with FFFP when the Simmons purchased the
Trust Property. She had supervised approximately 160 brokers within FFFP, had been
a licensed qualifying broker since 1989, and had acted in both an associate broker and
qualifying broker capacity within FFFP.
{32} 	Cale testified as to what FFFP’s brokers should have disclosed to the Simmons
as well as the ways in which those disclosures could have occurred. Cale testified that

21
the existence and circulation of the waiver and amendment should have been disclosed
to the Simmons. Similarly, she testified that the fact that the sellers of the property had
signed the waiver and amendment prior to the Simmons’ purchase should have been
disclosed to the Simmons. She also acknowledged that the FFFP brokers were aware
of the Gammons’ covenant violation, and could have disclosed to the Simmons that
an adjoining property was in violation of the covenant. Cale stated that disclosure of
this information could have been made in the purchase agreement or any of the
subsequent negotiations, through a modified disclosure document, through a separate
disclosure from the seller to the buyer, or verbally. Despite these opportunities for
disclosure, nothing in the seller’s disclosure statement mentioned the waiver,
amendment, or known covenant violation present on the adjacent property. In fact,
Cale acknowledged that no documentation from the sale could demonstrate that the
Simmons or any similarly situated buyer was notified that the waiver and amendment
existed or had been signed by the seller. This evidence demonstrated both a standard
of care for the realtors, and the facts of non-disclosure.
{33} 	Section 16.61.19 NMAC sets out the duties of brokers and defines the
disclosures that brokers are required to make when working with consumers, requiring
the “disclosure of any adverse material facts actually known by the [broker] about the
property or the transaction[.]” 16.61.19.8(H) NMAC (1/1/2004). FFFP uses this same
language in its purchase agreement to define the duties of its brokers. This is mirrored

22
in FFFP’s statement in its own purchase agreement that it assumes the duty of
“disclosure of any adverse material fact actually known,” and the evidence also
supports a conclusion that FFFP breached the duty it imposed on itself in the purchase
agreement.
{34} 	It is undisputed that Neil Lyon was working for FFFP during the Simmons’
purchase of the Trust Property. In fact, throughout his career at FFFP, he worked in
several different capacities, including vice president, managing broker, and selling and
listing agent. When questioned regarding the nature of his relationship with the
Simmons during the purchase of the Trust Property, Lyon obtusely responded by
stating “I think it’s clearly defined by the basic licensee duties.” The district court
could reasonably infer that the “basic licensee duties” that Lyon references are those
contained in the purchase agreement, which also match the standards set out in
16.61.19.8 NMAC.
{35} 	It is also beyond dispute that the FFFP brokers involved in the Simmons’
purchase—Van Camp, Rush, and Lyon—knew of the covenant, the covenant
violation, and FFFP’s ongoing efforts to remedy the violation through the waiver and
amendment. It is undisputed that Van Camp and Rush represented the sellers of the
Trust Property, and as such, Van Camp knew that the sellers had signed the waiver
and amendment at their behest prior to the Simmons submitting their first purchase
agreement. Van Camp and Lyon both testified that the Simmons were aware of the

23
covenant, the violation, and the efforts to enact a waiver and amendment to the
covenant. The Simmons, however, testified that they were unaware of the existence
of a covenant violation or waiver and amendment. This discrepancy is a matter for the
fact-finder to resolve, and not a legal impediment to establishing the elements of a
cause of action such as negligent misrepresentation. See, e.g., New Mexicans for Free
Enter. v. City of Santa Fe, 2006-NMCA-007, ¶ 71, 138 N.M. 785, 126 P.3d 1149
(stating that “ ‘where there is conflicting evidence, the [district] court, as fact[-]finder,
resolves all disparities in the testimony and determines the weight and credibility to
be accorded to the witnesses’ ” (alteration omitted) (quoting Tres Ladrones, Inc. v.
Fitch, 1999-NMCA-076, ¶ 16, 127 N.M. 437, 982 P.2d 488)).
{36} 	According to his testimony, Mr. Simmons was unaware at any time prior to
closing on the property, that the waiver and amendment existed and that the sellers
had signed them. Mr. Simmons testified that had he and his wife known of the
covenant violation and the waiver and amendment before purchasing the house, they
would not have purchased the house. In fact, and known to Lyon, prior to viewing the
property in question, the Simmons had abandoned interest in another home upon
discovering it was embroiled in pending litigation and was affected by dust from a
neighbor’s construction.
{37} 	FFFP’s brokers insisted that they achieved the result of making the relevant
disclosures to the Simmons, but could proffer few or no details regarding the manner

24
or method in which those disclosures were made. According to Van Camp’s testimony
regarding disclosure of the covenant violation, waiver, and amendment, he indicated
to the Simmons that there was a possibility the waiver and amendment could be
signed by HMBL Property owners in the future, rather than disclosing that the sellers
had already signed the waiver and amendment. Although Van Camp testified that he
told the Simmons that the waiver and amendment was signed, he could not recall
when, where, or how many times he revealed that information. Van Camp also
testified that he gave the Simmons a copy of the waiver and amendment, but the copy
he provided was not the one previously signed by the sellers. Lyon’s testimony was
similar, as he had no recollection of where he had seen the waiver and amendment,
whether a copy had been given to the Simmons, or whether the copy he saw bore the
sellers’ signatures. From these vague facts, a fact-finder could conclude disclosure
was not made at all.
{38} 	The district court determined that the FFFP brokers neither informed the
Simmons that the sellers had executed the waiver and amendment, nor provided the
Simmons with a copy of the waiver and amendment. It also found that, based on
Cale’s testimony, the FFFP brokers should have disclosed that information to the
Simmons. The district court found that the sole disclosure made—that some neighbors
were interested in altering the covenants at some point in the future—was a factual
misrepresentation in light of FFFP’s possession of a waiver and amendment signed

25
by sellers. The district court concluded that Van Camp and Lyon’s testimony—that
they told the Simmons that the waiver and amendment had been signed and gave the
Simmons copies of those documents—was not credible. This determination was based
on the lack of evidence of such disclosure in this case’s lengthy record, as well as
FFFP’s subsequent unsuccessful attempts to obtain another waiver and amendment
from the Simmons in 2008-2009.
{39} 	The district court, acting as the fact-finder in this case, is entitled to assess the
credibility of the witnesses and assign weight to their testimony accordingly. See, e.g.,
New Mexicans for Free Enter., 2006-NMCA-007, ¶ 71 (stating that “[i]t is well
established that where there is conflicting evidence, the trial court, as fact[-]finder,
resolves all disparities in the testimony and determines the weight and credibility to
be accorded to the witnesses” (alteration, internal quotation marks, and citation
omitted)); Mares v. Valencia Cty. Sheriff’s Dep’t, 1988-NMCA-003, ¶ 8, 106 N.M.
744, 749 P.2d 1123 (acknowledging that appellate courts do not second-guess a fact-
finder’s determination where it is supported by substantial evidence).The district court
concluded that FFFP’s actions violated the obligations set forth under 16.61.19.8(A)
NMAC and the Simmons’ purchase agreement to act with honesty and to disclose any
adverse material facts. Reviewing the evidence in favor of the party that prevailed
below, we conclude that a reasonable mind could accept the evidence presented as
adequate to support a conclusion that FFFP breached its duty to exercise reasonable

11The language of the purchase agreement provides, “Buyer understands and
acknowledges that Broker cannot and does not warrant or guarantee the condition of
the Property . . ., nor does Broker guarantee that all defects have been disclosed by
Seller.” “Both Parties acknowledge that Broker did not and cannot examine the status
of . . . future development plans[.]” Furthermore, the agreement states that “Buyer
acknowledges that Buyer has not received or relied upon any representations by either
Broker or Seller with respect to the condition of the Property other than those
contained in th[e] Agreement, or in the Property Disclosure Statement[.]” In fact, it
specifies that “[a]ny disclosure Buyer obtains should not be deemed by Buyer as a
substitute for due diligence by Buyer, such as inspections by qualified professionals.”
Most importantly, the purchase agreement addresses future development:
Buyer is aware that the Property may be affected by future development
of property in the neighborhood or surrounding areas, including, without
limitation, 	view, 	noise, 	traffic, 	local 	services, 	safety 	and 	water
restrictions. 	. 	. 	. 	Buyer 	agrees 	that 	Seller 	and 	Broker 	make 	no
26
care or competence in communicating information regarding the Trust Property to the
Simmons prior to their purchase of the property. See Smith v. FDC Corp., 1990-
NMSC-020, ¶ 13, 109 N.M. 514, 787 P.2d 433 (setting forth substantial evidence
standard). Because they were supported by substantial evidence, the district court’s
findings were appropriate in this instance, as FFFP, through its brokers, knew that
potential involvement in litigation was an adverse material fact to the Simmons, based
on their abandoning interest in another home for just that reason.
b. 	Justifiable Reliance
{40} 	FFFP also asserts that the written purchase agreement precludes the Simmons
from justifiably 	relying 	on 	representation 	regarding 	the 	possibility 	of 	future
development surrounding the property. 11 The Simmons assert that they would not have

representation as to the preservation of present/future views, and that
p r e s e n t / f u t u r e 	v i e w s 	m a y 	b e 	a f f e c t e d 	b y 	f u t u r e
development/construction/alteration of neighboring property or other
impairments.
27
bought the property had they known of the existence of the covenant violation and
waiver and amendment. They assert that they relied on Lyon and Van Camp’s
misrepresentations as to the existence of the covenant and their right to enforce it,
absent any waiver or amendment, to protect their expectations regarding development
density, traffic, and dust.
{41} 	FFFP’s assertion that the sales agreement precludes a claim of negligent
misrepresentation is loosely based on a concept originating in Rio Grande Jewelers
Supply, Inc. v. Data General Corp., 1984-NMSC-094, ¶¶ 6, 8, 101 N.M. 798, 689
P.2d 1269. In Rio Grande Jewelers Supply, our Supreme Court addressed a very
specific issue: whether, in a sale of goods context governed by the New Mexico
Uniform Commercial Code, a commercial purchaser may maintain an action in tort
against the seller for pre-contract negligent misrepresentations where the subsequently
executed written sales contract contains an effective provision disclaiming all prior
representations and all warranties not contained in the contract. Id. ¶ 1. The Court’s
analysis blended a consideration of the parol evidence rule with an acknowledgment
of our State’s freedom of contract policy. Id. ¶ 3. Reasoning that the representations

28
alleged in the negligent misrepresentation count were the same as those alleged for
breach 	of 	warranties, 	the 	Court 	concluded 	that 	the 	claim 	for 	negligent
misrepresentation was “nothing more than an attempt to circumvent the operation of
the Commercial Code” and an attempt “to allow the contract to be rewritten under the
guise of an alleged action in tort.” Id. ¶ 6.
{42} 	This case is distinguishable from Rio Grande Jewelers Supply, as it deals with
a real estate contract rather than a contract governed by the New Mexico Commercial
Code. In addition, the purchase agreement’s limitation of liability does not limit
FFFP’s tort liability for its conduct in this case. The purchase agreement does not
alleviate FFFP’s duty to disclose material facts regarding valuable property rights;
rather it imposes a duty to do so. The only thing that the purchase agreement disclaims
is reliance on representations regarding possible future occurrences. The Simmons’
reliance was on FFFP’s representations as to the present status of the property,
particularly the covenant and the existence of a waiver and amendment, as it existed
at the time of the sale. The Simmons thus relied on representations regarding a
valuable property right rather than any representations regarding future adjacent
development. While it is true that “freedom of contract and notions of contractually
assumed duties and liabilities can act to limit general tort liability in certain
circumstances when limited liability is expressly bargained for[,]” this case does not
present such a circumstance. State ex rel. Udall v. Colonial Penn Ins. Co., 1991-

29
NMSC-048, ¶ 37, 112 N.M. 123, 812 P.2d 777. This is particularly true in light of
FFFP’s knowledge of the covenant violation, their role in actively promoting waivers
among the HMBL Property owners, and their specific assertions that they informed
the Simmons of the status of these issues. We therefore conclude that FFFP’s assertion
that the Simmons’ reliance was not justified is without merit.
2. 	Negligence Per Se
{43} 	FFFP suggests that Simmons failed to prove that FFFP did not exercise the
reasonable care or competence required of brokers. In doing so, FFFP challenges the
district court’s findings regarding negligence per se. FFFP reasons that the duties
enumerated in 16.61.19.8 NMAC (1/1/2004) do not have the specificity required to
satisfy a claim of negligence per se. Negligence per se consists of four elements:
(1) There must be a statute [or regulation] which prescribes certain
actions or defines a standard of conduct, either explicitly or implicitly,
(2) the defendant must violate the statute [or regulation], (3) the plaintiff
must be in the class of persons sought to be protected by the statute, and
(4) the harm or injury to the plaintiff must generally be of the type the
Legislature through the statute sought to prevent.
Thompson v. Potter, 2012-NMCA-014, ¶ 32, 268 P.3d 57 (alteration, internal
quotation marks, and citation omitted). FFFP challenges the district court’s conclusion
only as to the first and second elements. Negligence per se exists only where a
statutory or regulatory provision imposes an absolute duty to comply with a specific
requirement. See Heath v. LaMariana Apartments, 2008-NMSC-017, ¶¶ 8-9, 143

30
N.M. 657, 180 P.3d 664. The statute or regulation at issue “must specify a duty that
is distinguishable from the ordinary standard of care.” Thompson, 2012-NMCA-014,
¶ 32. It is the court’s task “to determine whether the statutory or regulatory provisions
at issue define with specificity what is ‘reasonable’ in a particular circumstance, such
that the [fact-finder] does not have to undertake that inquiry.” Heath, 2008-NMSC-
017, ¶ 9 (emphasis added).
{44} 	FFFP’s argument that the duties enumerated in 16.61.19.8 NMAC are not
sufficiently specific to satisfy a claim of negligence per se overlooks the very specific
provision of 16.61.19.8(H) NMAC (1/1/2004), which requires brokers to disclose in
writing “any adverse material facts actually known by the associate broker or
qualifying broker about the property or transaction[.]” This is a clear standard of
conduct that FFFP was required to comply with, and in our discussion of negligence
we have set forth the evidence supporting the district court conclusion that FFFP
failed to comply with this standard. FFFP failed to make the disclosures required by
this regulation, and as customers, the Simmons are people that the regulation is aimed
at 	protecting. 	The 	expenses 	the 	Simmons 	incurred 	in 	relying 	on 	FFFP’s
representations and purchasing the Trust Property are the type of harm that the
regulation is intended to prevent. We therefore reject FFFP’s argument that the first
and second elements of negligence per se were not proven here.
3. 	Damages

31
i. 	Actual Damages for Negligence Per Se and Negligent Misrepresentation
{45} 	The district court concluded that the Simmons suffered actual damages as a
consequence of FFFP’s negligent misrepresentation and negligence per se. As a result,
it awarded the Simmons $123,000 for overpayments in the purchase of three of the
lots within the Trust Property. The district court arrived at this value by concluding
that the Gammons’ covenant violations diminished the value of three lots within the
Trust Property by $41,000, or 17%, per lot. The diminishment in value was due to the
increased development, density, and degradation of view caused by the covenant
violation, and resulted in an actual value of $199,000 for each of those lots despite the
Simmons having purchased them for $240,000.
{46} 	FFFP asserts that there is insufficient evidence to establish damages for
diminution in value of the Trust Property. See, e.g., Weststar Mortg. Corp. v. Jackson,
2003-NMSC-002, ¶ 8, 133 N.M. 114, 61 P.3d 823 (“If the verdict below is supported
by substantial evidence, which we have defined as ‘such relevant evidence that a
reasonable mind would find adequate to support a conclusion,’ we will affirm the
result.” (quoting Landavazo v. Sanchez, 1990-NMSC-114, ¶ 7, 111 N.M. 137, 802
P.2d 1283)). While diminution of value is relevant as a measure of damages for injury
to real property, McNeill v. Burlington Resources Oil & Gas Co., 2008-NMSC-022,
¶ 27, 143 N.M. 740, 182 P.3d 121, the measure of damages for a negligent
misrepresentation is that which is necessary to compensate for pecuniary loss caused

32
by the misrepresentation. Restatement (Second) of Torts § 552B(1) (1977) (stating
that such damages include “the difference between the value of what he has received
in the transaction and its purchase price or other value given” and pecuniary loss
suffered as a consequence of reliance upon the misrepresentation); see First Interstate
Bank of Gallup v. Foutz, 1988-NMSC-087, ¶ 8, 107 N.M. 749, 764 P.2d 1307. FFFP
is therefore advocating the use of the incorrect measure of damages. See Varga v.
Ferrell, 2014-NMCA-005, ¶¶ 49-50, 362 P.3d 96.
{47} 	At trial, the district court heard the testimony of Barry Hunnicutt, a real estate
appraiser. Hunnicutt conducted an appraisal of the Trust Property in 2011, and
conducted a retrospective appraisal to determine the value of the Trust Property in
June 2005. Hunnicutt’s appraisal can be separated into two parts: the appraisal of Lot
4C within the Trust Property, and the appraisal of the rest of the lots of the Trust
Property. As to Lot 4C, Hunnicutt concluded that the construction of the Gammons’
house on Lot 4A2 impacted the view corridor in such a way that the lot suffered a
17% diminution in value. Hunnicutt’s conclusion in this respect took only the
Gammons’ house—not the Goldstein house—into account because it was the only one
on Lot 4A2 that was in Lot 4C’s sight line. Hunnicutt acknowledged that he was
aware that the Gammons’ house’s impact on Lot 4C’s view already existed as of June
2005. Nonetheless, Hunnicutt concluded that Lot 4C had suffered a 17% diminution,
resulting in a value of $199,000.

33
{48} 	For the rest of the lots within the Trust Property, Hunnicutt applied a
hypothetical condition to evaluate the value of the land. That hypothetical was that
each lot of five or more acres that was contiguous to the Trust Property could be split
into two lots and any vacant lot less than five acres could be built on. Applying that
hypothetical to Lots 4D and 4B, Hunnicutt similarly concluded that there was a 17%
diminution in value as to those lots and as such they were worth only $199,000.
Hunnicutt’s conclusions as to both Lot 4C and the remaining lots were based on
adversely impacted views, which were downgraded from “very good” to “good.”
FFFP did not submit any evidence regarding the value of the Trust Property.
{49} 	A reasonable mind would find this evidence adequate to support the district
court’s award of $41,000 for each of the three lots within the Trust Property. The
Simmons had the burden of providing evidence of pecuniary loss, and they did so by
proffering evidence regarding the difference between the value of the Trust Property
and the purchase price that they paid in reliance upon FFFP’s misrepresentations.
FFFP’s argument that the district court improperly awarded future damages that were
not “reasonably certain to occur” is unpersuasive. Cf. Frank Bond & Son, Inc. v
Reserve Minerals Corp., 1959-NMSC-016, ¶ 4, 65 N.M. 257, 335 P.2d 858 (stating
that “damages may be awarded where there is no uncertainty as to whether the rights
of the plaintiff were invaded, even though there may be some uncertainty respecting

34
the amount of damages sustained” (quoting Stern v. Dunlap Co., 228 F.2d 939, 943
(10th Cir. 1955)).
ii. 	Actual Damages for FFFP’s Commission
{50} 	The district court awarded the Simmons actual damages in the amount of
$452,287.95. Of that amount, $123,000 was for the difference between the purchase
price and value of the Trust Property, and $202,725 was for commissions and gross
receipts taxes paid to FFFP that “would not have been paid but for [FFFP’s] negligent
misrepresentations.” FFFP asserts that by awarding actual damages for both the
property value and for the commission paid, the district court awarded impermissibly
duplicative damages. FFFP also asserts that the Simmons never proved that they paid
the commission, and could not do so because the commission was paid by seller out
of the sales proceeds. The Simmons assert that seller received the money to pay
FFFP’s commission from them at closing.
{51} 	While we agree with FFFP’s assertion that the Simmons elected to pursue
damages for the negligent misrepresentation claim alone, we disagree with FFFP’s
conclusion that the district court could not award damages based on FFFP’s
commission because doing so would be duplicative. Cf. Miller v. Bank of Am., N.A.,
2015-NMSC-022, ¶ 24, 352 P.3d 1162 (“A damage award including both diminution
in value attributable to breach and disgorgement of profit is not necessarily a double
recovery.”). The relevant rule on this issue is that “[w]here there are different theories

12
FFFP presents an unclear argument on this point, suggesting that the Simmons
pursued an equity claim, and that the commission was awarded as an element of
damages in equity. Thus, FFFP argues, the district court could not award actual
damages of diminished value and carry costs plus “additional equitable damages.”
This argument is unclear and undeveloped, and we do not address it. See Headley v.
Morgan Mgmt. Corp., 2005-NMCA-045, ¶ 15, 137 N.M. 339, 110 P.3d 1076 (“We
will not review unclear arguments, or guess at what [a party’s] arguments might be.”).
35
of recovery and liability is found on each, but the relief requested was the same,
namely compensatory damages, the injured party is entitled to only one compensatory
damage award.” Hood v. Fulkerson, 1985-NMSC-048, ¶ 12, 102 N.M. 677, 699 P.2d
608.
{52} 	This is not a case where the Simmons pursued multiple theories of recovery,
prevailed, and were required to make an election among awards.12 See Cent. Sec. &
Alarm Co. v. Mehler, 1996-NMCA-060, ¶ 12, 121 N.M. 840, 918 P.2d 1340
(requiring an election of remedies if the plaintiff pursues several theories of recovery
and liability is found on each). Instead, the Simmons pursued a single theory of
recovery in asserting negligent misrepresentation, prevailed, and are entitled to a
single award of compensatory damages ($452,287.95), which happens to be
comprised of multiple components; loss of property value, commissions, and
transaction 	costs 	respectively 	($123,000, 	$202,725, 	and 	125,562.95). 	As
acknowledged by FFFP, the Simmons pursued only the negligent misrepresentation
claim. The district court awarded compensatory damages for only that claim. FFFP

36
points to no case law to support its suggestion that a court errs in considering multiple
sources of pecuniary loss when calculating the appropriate compensatory damages
award in a negligent misrepresentation claim. FFFP therefore cannot prevail on this
point. See In re Adoption of Doe, 1984-NMSC-024, ¶ 2, 100 N.M. 764, 676 P.2d 1329
(stating that “[w]e assume where arguments in briefs are unsupported by cited
authority, counsel after diligent search, was unable to find any supporting authority.
We therefore will not do this research for counsel[,]” and employing the rule that
issues raised in briefs but unsupported by authority are not reviewed on appeal).
{53} 	We 	next 	address 	FFFP’s 	argument 	that 	the 	Simmons 	cannot 	recover
compensatory damages for commissions that they did not pay. The Simmons suggest
that the evidence proffered at trial demonstrated that their mortgage included FFFP’s
sales commission, and that the seller’s payment of the commission was financed by
money provided by the Simmons at closing. Both parties point to the title company’s
settlement statement as the only evidence pertinent to this issue. That document lays
out the sales price of the Trust Property. The document states that $190,800 in
commission was to be “Paid From Seller’s Funds at Settlement” and includes $11,925,
also to be paid from seller’s funds, for gross receipts tax on FFFP’s commission.
FFFP’s commission was added to other fees and was included in a “reduction in
amounts due to Seller.” Thus, we conclude that substantial evidence supports the

37
Simmons’ assertion that FFFP’s commission was paid out of money that the Simmons
paid to purchase the Trust Property.
{54} 	Disgorgement is a remedy that requires a wrongdoer to give up the benefits
obtained as a result of his wrongdoing. See Peters Corp. v. N.M. Banquest Inv’rs
Corp., 2008-NMSC-039, ¶ 32, 144 N.M. 434, 188 P.2d 1185. “The decision whether
to order a defendant to disgorge profits and the amount of profits to be disgorged rests
within the sound discretion of the [district] court.” Id. The remedy of disgorgement
may not be used punitively, and a causal connection must exist between the breach
and the benefit sought to be disgorged. Id. The evidence supports the conclusion that
the Simmons paid $123,000 more than the value of the Trust Property because of
misrepresentations made by FFFP. See Jacobs v. Phillippi, 1985-NMSC-029, ¶ 5, 102
N.M. 449, 697 P.2d 132 (reviewing an appeal of damages award for substantial
evidence). Thus, FFFP’s misrepresentations and its commission are only causally
connected 	by 	the 	portion 	of 	the 	commission 	that 	arose 	from 	the 	$123,000
overpayment that the Simmons made. FFFP is therefore properly required to disgorge
the portion of its commission that was paid as a result of its misrepresentations. We
conclude that FFFP is entitled to keep its commission from the sale of the Trust
Property except for the portion stemming from the $123,000 that the Simmons
overpaid. We remand so that the district court may adjust the amount of commission
to reflect the $123,000 diminution in the Trust Property’s value.

38
iii. 	Carry-Cost Damages
{55} 	The district court awarded the Simmons $202,725 for FFFP’s commission and
gross receipts taxes that would not have been paid but for FFFP’s actions, and
$126,562.95 in mortgage principal and interest, which also would not have been paid
but for FFFP’s actions. The parties have labeled these “carry-cost” damages—a
characterization that we will continue using throughout the remainder of this opinion.
FFFP asserts that the district court’s award of carry-cost damages was improper
because it violates due process principles and because there is insufficient evidence
to support the award. Due process has been provided where a party is afforded timely
notice, a reasonable opportunity to be heard, a reasonable opportunity to confront and
cross-examine adverse witnesses and present evidence, representation by counsel, and
a hearing before an impartial decision maker. In re Pamela A.G., 2006-NMSC-019,
¶ 12, 139 N.M. 459, 134 P.3d 746. FFFP’s due process argument hinges on its
assertion that, because the chart was only used as a demonstrative aid during closing
arguments, FFFP never had the chance to cross-examine any witness as to the
calculations of the carry costs listed in the chart.
{56} 	During closing arguments, the Simmons presented the district court with a
demonstrative aid, which laid out the calculations behind their request for carry-cost
damages. In that chart, the Simmons added the monthly mortgage cost and real estate
tax for the portion of the Trust Property that had, according to Hunnicutt, diminished

13The slight discrepancy in amounts is due to a miscalculation in the chart’s
total. When the values listed in the chart are added and multiplied correctly, the total
carry-cost amount is $126,562.95.
39
in value, namely, Lots 4B, 4C, and 4D, as well as the real estate commission paid to
FFFP. Those costs were then multiplied by seventy-three—the number of months
between Simmons’ purchase and the trial. Adding together those calculations, the
chart suggests a carry-cost damage award in the amount of $126,561.95. The district
court awarded Simmons $126,562.95 in carry-cost damages.13
{57} 	The record reveals, however, that during his testimony, Mr. Simmons set forth
the basic formula that is used in the chart. Mr. Simmons testified that he had a 5.5%
annual interest on his mortgage and that he had owned the property for seventy-three
months. Mr. Simmons also testified as to what he believed the real estate tax rate was
in 2010, and stated that it should be considered in the calculation of damages. FFFP
had the opportunity to cross-examine Mr. Simmons, and availed itself of that
opportunity.
{58} 	FFFP’s assertion that there is insufficient evidence to support the carry-cost
damages award is also without merit. Not only was there testimony from Hunnicutt
regarding the diminution of value of the Trust Property lots and testimony from Mr.
Simmons regarding the monthly mortgage rate, but there was also a title insurance
settlement statement entered into evidence. That exhibit listed the amount of the

40
Simmons’ mortgage principal, county taxes, and the daily rate of interest. This
evidence, considered together, is substantial enough to support the district court’s
findings as to the amount of damages. Landavazo, 1990-NMSC-114, ¶ 7 (defining
substantial evidence and acknowledging that “[e]vidence is substantial even if it
barely tips the scales in favor of the party bearing the burden of proof”). As such, the
district court’s assessment of carry-cost damages against FFFP will stand.
{59} 	The district court’s calculation of carry-cost damages included FFFP’s entire
commission for the sale of the Trust Property. Because the value of Lots 4B, 4C, and
4D within the Trust Property is 17% less than the original purchase price, the
commission used for purposes of calculating carry-cost damages must be recalculated
in light of that lower value. We therefore remand for the district court to recalculate
the amount of FFFP’s commission, and the carry-cost damages associated therewith,
pursuant to this opinion.
iv. 	Attorney’s Fees as Compensatory Damages
{60} 	Damages allowable for negligent misrepresentation are “those proximately
caused by the misrepresentation.” Charter Servs., Inc. v. Principal Mut. Life Ins. Co.,
1994-NMCA-007, ¶ 10, 117 N.M. 82, 868 P.2d 1307. We must therefore determine
whether FFFP’s misrepresentations regarding the covenant violations, waiver, and
amendment caused the Simmons’ expense of attorney’s fees associated with
involvement in this lawsuit. See id. (defining proximate cause as “that which in a

41
natural and continuous sequence unbroken by any new independent causes produces
the injury and without which the injury would not have occurred” (internal quotation
marks and citation omitted)). We review an award of attorney’s fees for abuse of
discretion. N.M. Right to Choose/NARAL v. Johnson, 1999-NMSC-028, ¶ 6, 127 N.M.
654, 986 P.2d 450. “The district court abuses its discretion if it enters findings of fact
that are not supported by substantial evidence.” Atherton v. Gopin, 2015-NMCA-087,
¶ 25, 355 P.3d 804. If substantial evidence exists to support the district court’s
conclusion, we will not disturb that conclusion on appeal. Landavazo, 1990-NMSC-
114, ¶ 7.
{61} 	The district court awarded “compensatory damages in the form of reasonable
attorney’s fees” in the amount of $152,552.36. This award was based on the court’s
finding that “[a]s a consequence of the lack of required disclosure, . . . [t]he Simmons
closed on the purchase of the . . . Trust Property and purchased property they would
not have purchased had [FFFP] acted with honesty and reasonable care.” Thus, the
district court found that “[t]he Simmons have been required to retain counsel in order
to protect their interests as a direct consequence of the original non-disclosures and
misrepresentations by [FFFP]. The Simmons[’] costs and fees arising from being sued
by [FFFP] constitute additional damages arising from the wrongful conduct of
[FFFP].” The court further concluded that FFFP “hoped to leverage the Simmons into
executing the Amendment by subjecting them to the costs of suit and attorneys’ fees

42
by suing the Simmons” and that “[t]he costs and attorneys’ fees incurred by the
Simmons are a direct consequence of the series of misrepresentations and regulation
violations” of FFFP. As such, the district court concluded that the Simmons are
entitled to recover those costs and fees in accordance with Charter Services, Inc.,
1994-NMCA-007.
{62} 	In Charter Services, Inc., an employer purchased an insurance policy, relying
on an insurance agent’s assurance that no additional workers’ compensation policy
would be necessary if the employer chose one particular policy. Id. ¶ 2. The employer
relied on that representation and purchased the policy. Id. Subsequently, an employee
was injured, and sued the employer for workers’ compensation. The employee
asserted that she was fired in retaliation for her workers’ compensation case, and she
also filed a wrongful discharge claim. Id. ¶ 3. The employer incurred thousands of
dollars in attorney’s fees in defending the suit that the employee brought. Id. ¶ 5.
Employer 	later 	filed 	suit 	against 	its 	insurance 	company 	for 	negligent
misrepresentation regarding the coverage of the group insurance policy, id. ¶ 1, and
it was awarded the total amount of attorney’s fees for defending against both of the
employee’s claims. Id. ¶ 5. The insurance company appealed, arguing that only the
fees for the workers’ compensation claim should have been awarded against it. Id. ¶
8.

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{63} 	We disagreed and affirmed the district court’s determination that the employer
was entitled to recover all of its legal costs incurred during the suit against its
employee. Id. ¶ 11. This Court pointed out that the appropriate damages in a negligent
misrepresentation case are “those proximately caused by the misrepresentation.” Id.
¶ 10. This Court also reasoned that because all of the employer’s costs in defending
against 	the 	employee’s 	lawsuit 	flowed 	directly 	from 	the 	insurance 	agent’s
misrepresentations concerning the policy, the employer was entitled to recover
attorney’s fees. Id. ¶ 11.
{64} 	Though not cited by either party, we also find First National Bank of Clovis v.
Diane, Inc., 1985-NMCA-025, 102 N.M. 548, 698 P.2d 5, to be instructive. The bank
sued the corporation on promissory notes evidencing a loan, and the corporation filed
a third-party claim against the broker, who had negotiated the loan on the
corporation’s behalf. Id. ¶ 3. The corporation prevailed against the broker. Id. ¶ 4. The
broker then filed a cross-claim against his attorney, alleging malpractice on the basis
that he had sought the attorney’s advice regarding the legality of the brokerage fee he
had charged, and for which the corporation had ultimately recovered damages. Id.
¶¶ 4-5. In the cross-claim, the district court awarded the broker $25,000 in attorney’s
fees incurred “as a proximate result of the advice given to [the broker]” by the
attorney. Id. ¶ 31. The attorney appealed.

44
{65} 	We acknowledged the general rule that attorney’s fees are not allowable absent
a statute or agreement authorizing them, and agreed with the attorney that the broker
could not recover attorney’s fees for the malpractice action he brought against the
attorney. Id. This Court did, however, allow the broker to recover the attorney’s fees
incurred while defending the suit against the corporation: “where, as here, a client is
required to engage counsel to defend a separate action proximately resulting from his
attorney’s negligence, reasonable fees incurred may be awarded[.]” Id. ¶¶ 33, 35
(emphasis added). In total, the award of $25,000 in attorney’s fees was remanded so
that the district court could recalculate the award, allowing only the attorney’s fees
incurred in defending against the corporation’s third-party claim.
{66} 	These cases reveal that a party can recover attorney’s fees incurred to defend
against litigation where it is involved in the litigation by a third party, resulting from
reliance on the representations of another. First National Bank of Clovis, demonstrates
that attorney’s fees are recoverable in a procedural posture such as this one, where
attorney’s fees incurred as a result of one action are recoverable in another action.
This case is analogous to First National Bank of Clovis because both cases question
whether a party acting as both a plaintiff and a defendant may be awarded attorney’s
fees. In First National Bank of Clovis, the broker acted as a defendant when he was
brought into the primary action through a third-party action, just as the Simmons acted
as defendants when they were brought into this litigation through FFFP’s third-party

14FFFP represented the Gammons in their purchase of Lot 4A2, the sellers
during their sale of the Trust Property, and the Simmons during their purchase of the
Trust Property. As FFFP is willing to play fast and loose with its roles in representing
these parties, it must face the consequences of doing so.
45
complaint in the Cobb Plaintiffs’ litigation over the validity of the covenants. See id.
¶ 3. The broker then acted as a plaintiff by filing a cross-claim against his attorney,
whose representations proximately caused his involvement in the third-party action,
just as the Simmons acted as plaintiffs by filing a countersuit against FFFP, whose
actions also proximately caused the Simmons’ involvement in the third-party action.
See id ¶ 4. We see no reason for FFFP’s role as both the plaintiff in the third-party
action and the defendant in the counter-suit to alter our analysis under First National
Bank of Clovis, particularly in light of the various roles it played in the sale and resale
of the HMBL Property. 14
{67} 	Following the precedent set forth in Charter Services, Inc., and First National
Bank of Clovis, we conclude that the Simmons are entitled to recover attorney’s fees
spent in defending against FFFP’s third-party action against them. The Simmons are
not, however, entitled to attorney’s fees incurred while litigating their counter-claim;
to allow such a recovery would violate the American Rule. See N.M. Right to
Choose/NARAL, 1999-NMSC-028, ¶ 9 (stating that generally, the American Rule
provides that “absent statutory or other authority, litigants are responsible for their
own attorney’s fees”). We therefore reverse, so the district court may award only those

46
attorney’s fees incurred in defending against FFFP’s third-party action. See Charter
Services, Inc., 1994-NMCA-007, ¶ 8 (“[W]hen an attorney’s services are rendered in
pursuit of multiple objectives, some of which permit a fee and some of which do not,
the trial court must apportion the fees and award only those that are compensable.”).
IV. 	CONCLUSION
{68} 	The restrictive covenant in this case is enforceable by anyone owning a lot
within the HMBL Property. FFFP negligently misrepresented the status of the
covenant’s waiver and amendment to the Simmons during the sale of the Trust
Property. As a result, the Simmons are entitled to actual damages. The Simmons
provided sufficient evidence that they overpaid $123,000 for Lots 4B, 4C, and 4D and
that award is affirmed. We remand the remaining portion of the Simmons’ award so
that the district court may recalculate the appropriate amount consistent with this
opinion. This recalculation includes a reduction in FFFP’s commission proportionate
to the $123,000 overpayment, a corresponding reduction in the amount of commission
used to calculate carry-cost damages, and a differentiation between attorney’s fees
incurred in defending the third-party action (recoverable) and in pursuing the
negligent misrepresentation claim (not recoverable).
{69} 	IT IS SO ORDERED.
RODERICK T. KENNEDY, Judge

WE CONCUR:

MICHAEL E. VIGIL, Chief Judge

MICHAEL D. BUSTAMANTE, Judge

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