March 17, 2015 – James A. Turner and Tracy Turner, Husband and Wife v. First New Mexico Bank, No. 33,303

IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO
Opinion Number: ______________
Filing Date: 	March 17, 2015
NO. 33,303
JAMES A. TURNER and TRACY
TURNER, Husband and Wife,
Plaintiffs-Appellants,
v.
FIRST NEW MEXICO BANK,
Defendant-Appellee.
APPEAL FROM THE DISTRICT COURT OF LUNA COUNTY
J.C. Robinson, District Judge
Martin E. Threet and Associates
Martin E. Threet
Albuquerque, NM
for Appellants
Peifer, Hanson & Mullins, P.A.
Lauren Keefe
Albuquerque, NM
Walker & Associates, P.C.
Thomas D. Walker
Albuquerque, NM
for Appellee

OPINION
VIGIL, Judge.
{1} 	This case requires us to determine whether res judicata, also known as claim
preclusion, bars the filing of a second lawsuit when a virtually identical lawsuit was
previously dismissed “without prejudice.” The district court ruled that the second suit
is barred, and we affirm.
BACKGROUND
{2} 	In October 2010, Plaintiffs filed a civil complaint in the Luna County district
court, and the case was assigned to Judge Viramontes. In response to Defendant’s
motion , Judge Viramontes ordered Plaintiffs to make a more definite statement, and
Plaintiffs filed an amended complaint (First Complaint). In general terms, the First
Complaint alleged that Plaintiffs purchased a farm and built a dairy on the farm,
financed by loans from Defendant, and that Defendant subsequently engaged in
actions by which Defendant attempted to take control and management of Plaintiffs’
business. Count I alleged that Defendant’s course of conduct “became so egregious
that it violated the standards of good faith and fair dealing that are required by [NMSA
1978,] Section 55-1-304 [(2005)] of the Uniform Commercial Code[.]” Count II
alleged that Plaintiffs repaid a loan in full and Defendant failed and refused to report
to credit reporting agencies that the loan had been repaid, with the consequence that

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the loan was reported as being past due, causing damage to Plaintiffs’ credit. Count
III alleged that Defendant’s conduct violated the standards of good faith and fair
dealing required by the Uniform Commercial Code and was sufficiently malicious,
reckless and wanton, as to warrant the imposition of punitive damages. Defendant
then filed a motion to dismiss the First Complaint in its entirety for failure to state a
claim pursuant to Rule 1-012(B)(6) NMRA. After Plaintiffs responded, Judge
Viramontes held a hearing. Following that hearing in a July 2012 order, Judge
Viramontes granted Defendant’s motion and dismissed each count of the First
Complaint “without prejudice.” Judge Viramontes reasoned that Count I alleged a
breach of the “obligation of good faith” set forth in Section 55-1-304, and this section
of the Uniform Commercial Code does not support an independent cause of action;
that Count II alleged a violation of the federal Fair Credit Reporting Act, 15 U.S.C.
§ 1681 (2012), and because the claim relates to Plaintiffs’ personal or consumer loan,
federal law preempts the state law claim; and that Count III alleged a claim for
punitive damages under the Uniform Commercial Code, which does not provide for
an award of punitive damages.
{3} 	No appeal was taken from Judge Viramontes’s order of dismissal. Instead,
Plaintiffs filed a new complaint against Defendant in September 2012 (Second
Complaint), and this case was assigned to Judge Robinson. The parties and Counts I

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and III of the Second Complaint are absolutely identical to the First Complaint. Count
II is virtually identical, adding only that Defendant’s conduct as it relates to Plaintiffs’
personal or consumer loan impacted their “business relationships” and “commercial
credit.” Defendant filed a motion to dismiss the Second Complaint on grounds that
Judge Viramontes’s order dismissing the First Complaint was binding in the case
under principles of res judicata (claim preclusion) and collateral estoppel (issue
preclusion) and for the additional reason that the Second Complaint fails to state a
claim upon which relief can be granted. Judge Robinson agreed with Defendant and
dismissed the Second Complaint in its entirety with prejudice. Plaintiffs appeal.
{4} 	The dispositive issue in this case is the effect of the order dismissing the First
Complaint on the Second Complaint. Plaintiffs argue that because dismissal of the
First Complaint was “without prejudice,” it had no effect on their right to file the
Second Complaint, and Defendant asserts that dismissal of the Second Complaint was
proper under the doctrines of claim preclusion and issue preclusion. For the reasons
which follow, we agree that claim preclusion was properly applied, and affirm.
STANDARD OF REVIEW
{5} 	The facts are undisputed; therefore, our review of whether res judicata applies
presents a question of law, which we review de novo. 	State ex rel. Peterson v.
Aramark Corr. Servs., LLC, 2014-NMCA-036, ¶ 23, 321 P.3d 128 (“ ‘When the facts

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are not in dispute, the preclusive effect of a prior judgment is a question of law
reviewed de novo.’ ” (quoting Rosette, Inc. v. United States Dep’t of the Interior,
2007-NMCA-136, ¶ 31, 142 N.M. 717, 169 P.3d 704)).
ANALYSIS
{6} 	“Res judicata [i.e., claim preclusion] is designed to relieve parties of the cost
and vexation of multiple lawsuits, conserve judicial resources, prevent inconsistent
decisions, and encourage reliance on adjudication.” Potter v. Pierce, 2015-NMSC-
002, ¶ 10, ___P.3d ___ (No. 34,365, Jan. 8, 2015) (alterations, omission, internal
quotation marks, and citation omitted); see also Alba v. Hayden, 2010-NMCA-037,
¶ 6, 148 N.M. 465, 237 P.3d 767 (“ ‘The principles of preclusion operate to promote
finality in civil disputes by relieving parties of the burdens of multiple lawsuits,
conserving judicial resources, and preventing inconsistent decisions.’ ” (quoting
Rosette, Inc., 2007-NMCA-136, ¶ 32)). Claim preclusion “bars relitigation of the same
claim between the same parties or their privies when the first litigation resulted in a
final judgment on the merits.” Deflon v. Sawyers, 2006-NMSC-025, ¶ 2, 139 N.M.
637, 137 P.3d 577 (internal quotation marks and citation omitted). The party asserting
claim preclusion must establish that “(1) there was a final judgment in an earlier
action, (2) the earlier judgment was on the merits, (3) the parties in the two suits are

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the same, and (4) the cause of action is the same in both suits.” Potter, 2015-NMSC-
002, ¶ 10.
{7} 	We first address whether the order dismissing the First Complaint is a final
judgment notwithstanding that the dismissal was “without prejudice.” The order
dismissed the First Complaint in its entirety, it fully disposed of the rights of the
parties, and otherwise disposed of the matter to the fullest extent possible, without
authorizing or specifying when an amended complaint could be filed. Moreover, the
order decisively and fully determined that Plaintiffs failed to state a cause of action,
and an immediate appeal was necessary to reverse that determination. The order
dismissing the First Complaint therefore constituted a final judgment under our
established precedent. See Vill. of Los Ranchos de Albuquerque v. Shiveley, 1989-
NMCA-095, ¶¶ 10-13, 110 N.M. 15, 791 P.2d 466 (concluding that an order
dismissing “without prejudice” for lack of standing constituted a final judgment
because the order “terminated the suit and the proceeding was completely disposed
of so far as the court had power to dispose of it”); Bralley v. City of Albuquerque,
1985-NMCA-043, ¶¶ 11-16, 102 N.M. 715, 699 P.2d 646 (concluding that an order
of dismissal “without prejudice” for failure to exhaust administrative remedies which
did not authorize or specify a definite time to file an amended complaint was a final
judgment because the order fully terminated and disposed of the case before the

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court). In Sunwest Bank of Albuquerque v. Nelson, 1998-NMSC-012, ¶¶ 7-9, 125
N.M. 170, 958 P.2d 740, our Supreme Court expressly approved Bralley and Village
of Los Ranchos and concluded itself that an order of dismissal “without prejudice” for
improper venue was a final order because the order “disposed of the matter to the
fullest extent possible in the court in which the action was filed.” Sunwest Bank of
Albuquerque, 1998-NMSC-012, ¶ 9.
{8} 	We next address whether the order dismissing the First Complaint is a judgment
“on the merits.” Here, Defendant filed a motion to dismiss pursuant to Rule 1-
012(B)(6). 	Plaintiffs responded in writing to the motion and then made oral
arguments in opposition to the motion in a notice hearing held before Judge
Viramontes. Under these circumstances, the “merits” of whether the First Complaint
stated a cause of action under Rule 1-012(B)(6) was fully and fairly litigated before
Judge Viramontes in accordance with the due process rights of Plaintiffs to notice and
an opportunity to be heard. Accordingly, we conclude that the order dismissing the
complaint constituted a judgment “on the merits” that the First Complaint failed to
state a cause of action. See Federated Dep’t Stores, Inc. v. Moitie, 452 U.S. 394, 399
n.3 (1981) (“The dismissal for failure to state a claim under Federal Rule of Civil
Procedure 12(b)(6) is a ‘judgment on the merits.’ ”); AVX Corp. v. Cabot Corp., 424
F.3d 28, 30 (1st Cir. 2005) (“Ordinarily, a dismissal for failure to state a claim is

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treated as a dismissal on the merits and there is abundant case law to this effect.”).
We therefore hold that the order dismissing the First Complaint constitutes a judgment
“on the merits” that is entitled to claim preclusion effect.
{9} 	There is no dispute that the last two requirements for claim preclusion (that the
parties in the two suits are the same, and that the cause of action is the same in both
suits) are satisfied. We only add that Count II in the First Complaint was dismissed
because preemption under the federal Fair Credit Reporting Act applies to personal
or consumer loans. To the extent the minor changes made in the wording of Count II
in the Second Complaint requires a review of the merits, the district court noted that
the complaint was filed by Plaintiffs in their individual capacities and alleged that
Plaintiffs borrowed the money in their individual capacities and that Defendant failed
to report to credit reporting agencies that Plaintiffs had repaid the loan. We also note
that the complaint alleges Plaintiffs were personally damaged. Plaintiffs cite no
authority establishing that the minor changes made in the wording to Count II convert
what is otherwise a personal loan into a commercial loan. 	Thus, regardless of the
minor changes, Count II remains preempted under the Fair Credit Reporting Act.
{10} 	For the foregoing reasons, we hold that res judicata (claim preclusion) barred
the filing of the Second Complaint.

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CONCLUSION
{11} 	The order of the district court is affirmed.
{12} 	IT IS SO ORDERED.
______________________________
MICHAEL E. VIGIL, Chief Judge
I CONCUR:
___________________________________
M. MONICA ZAMORA, Judge
TIMOTHY L. GARCIA, Judge (specially concurring).

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GARCIA, Judge (specially concurring).
{13} 	I write to specially concur with the majority and disagree with the application
of res judicata to dispose of the merits of Plaintiffs’ appeal. Because I disagree with
the majority, I would hold that the dismissal of the First Complaint “without
prejudice” by Judge Viramontes precludes the application of res judicata to the
Second Complaint. However, as to the merits of Plaintiff’s Second Complaint, I agree
with Judge Robinson’s alternative position that Plaintiff’s Second Complaint fails to
state a claim upon which relief can be granted under Rule 1-012(B)(6). As a result, the
dismissal of the Second Complaint should be affirmed on that basis.
{14} 	The first issue is whether Judge Viramontes’s order dismissing the First
Complaint without prejudice constitutes a final judgment “on the merits” for the
purposes of res judicata. The majority correctly points out that certain federal courts
recognize the application of res judicata to a dismissal without prejudice under a
factual scenario similar to this case. Majority Opinion ¶ 8. However, our appellate
courts appear to disagree with this federal position and do not apply the doctrine of
res judicata when the district court, without any specific qualifications or limiting
instruction, utilizes its discretion to dismiss a complaint “without prejudice.” See
Sunwest Bank v. Nelson, 1998-NMSC-012 ¶ 7, 125 N.M. 170, 958 P.2d 740
(addressing a dismissal without prejudice in the context of finality so as to permit an

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immediate appeal but also acknowledging that separate proceedings on the merits are
appropriate and overcome the doctrine of res judicata when claims are dismissed
without prejudice); Marquez v. Juan Tafoya Land Corp., 1981-NMSC-080, ¶ 9, 96
N.M. 503, 632 P.2d 738 (noting that “a dismissal without prejudice contemplates the
right to further proceedings”); Watkins v. Local Sch. Bd., 1975-NMSC-048, ¶¶ 8, 12,
88 N.M. 276, 540 P.2d 206 (recognizing that a dismissal without prejudice along with
a limited opportunity to amend the complaint within twenty days only became final
and binding when no amended pleadings were filed within the time period allowed);
Bankers Trust Co. of Cal. v. Baca, 2007-NMCA-019, ¶¶ 9-10, 141 N.M. 127, 151
P.3d 88 (denying the application of res judicata to the dismissal of a foreclosure action
without prejudice that was based upon significant inactivity by the bank); Salazar v.
Yellow Freight Sys., Inc., 1990-NMCA-003, ¶¶ 11-13, 109 N.M. 443, 786 P.2d 57
(denying the application of res judicata to a recommended decision arising during the
first of two workers’ compensation administrative proceedings where the first claim
was dismissed without prejudice); Bralley, 1985-NMCA-043, ¶ 18 (recognizing that
“[t]he words ‘without prejudice’ when used in an order or decree generally indicate
that there has been no resolution of the controversy on its merits and leaves the issues
in litigation open to another suit as if no action had ever been brought”); Chavez v.
Chenoweth, 1976-NMCA-076, ¶¶ 25-27, 89 N.M. 423, 553 P.2d 703 (denying the

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application of res judicata to numerous claims against third parties arising from an
automobile accident that were dismissed without prejudice in various separate
actions). “A dismissal ‘without prejudice’ gives the complainant the right to state a
new and proper cause of action, if he can, and does not take away any rights of
defense to the action.” Bralley, 1985-NMCA-043, ¶ 18. Based upon this established
precedent in New Mexico, the merits of Plaintiffs’ Second Complaint should be
addressed anew.
{15} 	As the majority recognized, Plaintiffs’ Second Compliant is identical to the
First Complaint except for some minor additional language added to Count II.
Majority Opinion ¶ 3. The modified claims were fully addressed by Judge Robinson
and I agree with his analysis and the dismissal of Plaintiffs’ Second Complaint under
Rule 1-012(B)(6). The minor wording modification made to Count II did not establish
an issue of fact regarding whether Plaintiffs’ individual loan under Count II was
preempted under the federal Fair Credit Reporting Act. Plaintiffs have failed to
provide this Court with any authority to support their position that a personal loan
impacting their business relationships and commercial credit avoids preemption under
the federal Fair Credit Reporting Act. See Jojola v. Fresenius Med. Clinic, 2010-
NMCA-101, ¶ 7, 149 N.M. 51, 243 P.3d 755 (recognizing that where a party fails to

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provide any authority for an argument, we will presume that none exists). As a result,
the rewording of Count II was also properly dismissed pursuant to Rule 1-012(B)(6).
{16} 	For the reasons stated herein, I specially concur with the majority and would
affirm the district court’s dismissal of Plaintiffs’ Second Complaint.
__________________________________
TIMOTHY L. GARCIA, Judge