October 02, 2013 – Star Varga v. Mark Ferrell, Gretchen Campbell, Desert Lakes Realty, LLC, and Does 4 Through 20, Inclusive, No. 31,268 Consolidated with 31,337 & 31,398

IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO
Opinion Number:
Filing Date: 	OCTOBER 2, 2013
No. 31,268 Consolidated with
31,337 and 31,398
STAR VARGA,
Plaintiff-Appellant/Cross-Appellee,
v.
MARK FERRELL, GRETCHEN
CAMPBELL, DESERT LAKES
REALTY, LLC, and DOES
4 THROUGH 20, INCLUSIVE,
Defendants-Appellees/Cross-Appellants,
and
SUSAN LOWE,
Defendant-Appellee.
APPEAL FROM THE DISTRICT COURT OF SIERRA COUNTY
Kevin R. Sweazea, District Judge
Lee Deschamps
Socorro, NM

Susan Lea
Elephant Butte, NM
for Appellant/Cross-Appellee
Law Offices of Stephen E. Hosford, P.C.
Arrey, NM
for Mark Ferrell and Susan Lowe
Sutin, Thayer & Browne
Susan M. Hapka
Albuquerque, NM
for Appellees/Cross-Appellants
Gretchen Campbell and Desert Lakes Realty, LLC

OPINION
FRY, Judge.
{1} 	This case arises from the purchase of a home in Elephant Butte, New Mexico.
The purchaser discovered construction defects after she took possession and as a
consequence, she sued the seller, the seller’s broker, and her own brokers. The district
court granted the purchaser’s brokers summary judgment, but refused to award the
brokers their attorney fees, as required by the purchase agreement, because their
defense had been provided by their insurer. 	We conclude that the district court
erroneously failed to enforce the attorney fees provision of the purchase agreement
and reverse.
BACKGROUND
{2} 	Star Varga purchased a home owned by Defendant Mark Ferrell in Elephant
Butte, New Mexico. Defendants Gretchen Campbell and Desert Lakes Realty, LLC
(collectively, Campbell/DLR) worked with Varga and her mother, Susan Lea, as their
buyers’ brokers. After the sale, Varga discovered defects in the home that had not
been disclosed prior to the sale, so she sued Ferrell, Ferrell’s broker (Defendant Susan
Lowe), and Campbell/DLR for, among other things, their failure to disclose their
alleged knowledge of the defects.

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{3} 	The district court granted Campbell/DLR summary judgment on all of Varga’s
claims against them, and Campbell/DLR filed a motion for attorney fees in accordance
with the purchase agreement, which provided:
Should any aspect of this [a]greement result in dispute, litigation, or
settlement, the prevailing party of such action including Broker shall be
entitled to an award of reasonable attorney[] fees and court costs.
The agreement defined “broker” as including “listing and cooperating brokers and
salespersons.” 	Campbell/DLR were designated as the selling brokers in the
agreement.
{4} 	Following a hearing on Campbell/DLR’s motion, the district court stated that
the purchase agreement was intended to benefit and protect all of the “real estate
people” involved in the transaction and the companies they worked for. The court
stated that it would award attorney fees to Campbell/DLR as the prevailing party, and
that it would determine the amount of the award after Campbell/DLR filed their
attorney’s billing statements and after an additional hearing on the matter.
{5} 	Campbell/DLR 	filed 	the 	billing 	statements 	totaling 	$71,196.41. 	At 	a
subsequent hearing, the district court asked if an insurance company was providing
Campbell/DLR’s defense so that Campbell/DLR did not have to pay attorney fees.
Campbell/DLR’s counsel responded that under New Mexico law, real estate brokers
are required to have insurance, and that Campbell/DLR’s insurer had indeed provided

1Varga and Ferrell also filed appeals from the district court’s judgment, which
we have addressed in a memorandum opinion filed concurrently with this Opinion.
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their defense. However, counsel argued that Campbell/DLR would not be allowed to
keep any fees awarded because those fees would go to their insurer. Counsel also
cited an Oregon case for the proposition that a contract provision allowing an attorney
fee award to the prevailing party is not impacted by the fact that the prevailing party’s
fees were paid by someone else.
{6} 	The district court stated that it was not going to award attorney fees to the
insurance company for providing a defense it was contractually obligated to provide.
The court stated that it would have entertained an award of fees if Campbell/DLR had
to pay their attorneys out of their own pockets. This appeal followed. 1
DISCUSSION
Standard of Review
{7} 	While a district court has broad discretion when deciding whether to award
attorney fees, “that discretion is limited by any applicable contract provision.” Fort
Knox Self Storage, Inc. v. W. Technologies, Inc., 2006-NMCA-096, ¶ 29, 140 N.M.
233, 142 P.3d 1. 	And “[w]hen a contract provides that the prevailing party in the
litigation shall be awarded reasonable attorney fees and costs, a trial court may abuse
its discretion if it fails to award attorney fees.” Aspen Landscaping, Inc. v. Longford

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Homes of N.M., Inc., 2004-NMCA-063, ¶ 21, 135 N.M. 607, 92 P.3d 53. 	The
meaning of a contract provision is an issue of law that we review de novo. Id.
The District Court Erroneously Failed to Enforce the Attorney Fees Provision
of the Purchase Agreement
{8} 	We conclude that the purchase agreement required the district court to award
reasonable attorney fees to Campbell/DLR as the prevailing parties. The district court
correctly 	interpreted 	the 	agreement’s 	fee 	provision 	as 	being 	applicable 	to
Campbell/DLR as the selling brokers and the intended beneficiaries of the agreement.
The fee provision specifically stated that it applied to brokers, the purchase agreement
defined “broker” as including cooperating brokers, and Campbell/DLR were identified
in the agreement as selling brokers. The district court also properly determined that
Campbell/DLR were the prevailing parties in the dispute with Varga. See Cent. Sec.
& Alarm Co. v. Mehler, 1998-NMCA-096, ¶ 23, 125 N.M. 438, 963 P.2d 515
(explaining that “[w]hen judgment is in favor of a defendant who has moved for
summary judgment, the defendant is a prevailing party”). 	The problem is that the
district court then decided to disregard its correct interpretation of the fee provision
in the purchase agreement because Campbell/DLR’s insurer had provided their
defense such that Campbell/DLR did not have to pay their attorneys out of their own
pockets.

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{9} 	There is nothing in the purchase agreement that provides an exception to the fee
provision when fees are paid by a third party. 	The court’s duty under these
circumstances was to “interpret[] the contract that the parties made for themselves,
and absent any ambiguity, the court may not alter or fabricate a new agreement for the
parties.” Hedicke v. Gunville, 2003-NMCA-032, ¶ 24, 133 N.M. 335, 62 P.3d 1217
(internal quotation marks and citation omitted). Here, the district court altered the
parties’ agreement by reading into it an exception for insurer-paid attorney fees.
{10} 	We find persuasive the Oregon case relied on by Campbell/DLR, Domingo v.
Anderson, 938 P.2d 206 (Or. 1997). In that case, the grantors gave a trust deed to the
defendant, an attorney, to secure payment of a debt, and the grantors then defaulted.
Id. at 206 n.1. After the property was sold at a trustee’s sale, the grantors sued the
defendant and challenged the sale. Id. The trial court granted the defendant’s motion
for summary judgment, and the defendant sought an award of attorney fees in
accordance with a provision in the trust deed. Id. at 206-07. The defendant’s attorney
had been retained by an attorneys’ liability fund. 	Id. at 207 n.3. 	The trial court
awarded the defendant his attorney fees consistent with the deed’s provision, the court
of appeals reversed, and the supreme court reversed the court of appeals. Id. at 207-
08.

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{11} 	The grantors’ argument in support of the court of appeals’ decision was that the
defendant “[was] not entitled to an award of attorney fees because a third party paid
for his lawyer in this case.” Id. at 207. This is the same basis on which the district
court in the present case denied Campbell/DLR’s request for attorney fees. 	The
Oregon Supreme Court in Domingo disagreed, stating that the contractual provision
requiring the deed’s grantor to pay the defendant’s attorney fees “do[es] not contain
any condition or qualification rendering [it] inapplicable if a third person, rather than
one of the parties to the litigation, pays the lawyer’s fees.” 	Id. 	Therefore, the trial
court’s decision awarding the defendant his attorney fees “was correct under the
contract.” Id. at 208.
{12} 	Like the court in Domingo, we conclude that the purchase agreement required
the district court to award attorney fees to Campbell/DLR as the prevailing parties in
the dispute with Varga. 	Consistent with our courts’ longstanding policy favoring
enforcement of contracts as written, “[a] court should . . . not interfere with the
bargain reached by the parties unless the court concludes that the policy favoring
freedom of contract ought to give way to one of the well-defined equitable exceptions,
such as unconscionability, mistake, fraud, or illegality.” Nearburg v. Yates Petroleum
Corp., 1997-NMCA-069, ¶ 31, 123 N.M. 526, 943 P.2d 560. Neither Varga nor the
district court made any suggestion that the purchase agreement’s attorney fees

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provision was equitably unenforceable. Thus, on remand, the only task for the district
court 	is 	to 	determine, 	within 	its 	discretion, 	a 	reasonable 	amount 	to 	award
Campbell/DLR for their attorney fees.
Varga’s Arguments in Favor of Affirmance on Other Grounds
{13} 	While we hold that the district court properly interpreted the purchase
agreement and then improperly failed to enforce it, we may affirm the court’s decision
on a ground that was not relied on below if reliance on the new ground would not be
unfair to the appellant. Meiboom v. Watson, 2000-NMSC-004, ¶ 20, 128 N.M. 536,
994 P.2d 1154. Varga makes a number of arguments in support of affirmance, none
of which are persuasive.
{14} 	Varga argues that the purchase agreement contemplates that the only broker
who might be entitled to recover attorney fees is one who is sued for breach of the
agreement and who prevails in that litigation. 	Varga does not explain how the
language in the agreement supports her argument, and we see nothing in the attorney
fees provision supporting her view. 	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.”). 	To the contrary,
because the parties to the agreement were the buyer and the seller, we fail to see how
a broker could be sued for breach of the agreement. But, in any event, a broker is

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expressly mentioned in the agreement as a potential prevailing party entitled to
attorney fees.
{15} 	Along the same lines, Varga appears to contend that only parties who are sued
for breach of the agreement are entitled to an award of attorney fees if they prevail;
thus, she maintains that Campbell/DLR may not recover fees because they were not
sued for breach of the purchase agreement. This argument is contrary to New Mexico
law, which holds that negligence claims are claims “in connection” with an agreement
requiring an award of attorney fees to the prevailing party in the event of litigation
brought “in connection” with the parties’ agreement. Fort Knox, 2006-NMCA-096,
¶¶ 28, 32. Here, Varga’s negligence and fraud claims against Campbell/DLR were
“aspects” of the purchase agreement that resulted in litigation, as contemplated by the
attorney fees provision.
{16} 	Varga next makes seven arguments consisting solely of her allegation that
Campbell/DLR have failed to provide New Mexico legal authority supporting various
aspects of their arguments on appeal. Varga does not herself make any substantive
arguments on these issues, nor does she cite any relevant authority suggesting that our
interpretation of the attorney fees provision is wrong. 	We therefore decline to
consider her contentions. See Headley, 2005-NMCA-045, ¶ 15 (explaining that this
Court has no duty to review an argument that is not adequately developed).

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CONCLUSION
{17} 	For the foregoing reasons, we reverse the district court’s order denying an
award of attorney fees to Campbell/DLR. On remand, the district court shall award
Campbell/DLR attorney fees in an amount it deems reasonable.
{18} 	IT IS SO ORDERED.
CYNTHIA A. FRY, Judge
WE CONCUR:
MICHAEL D. BUSTAMANTE, Judge
J. MILES HANISEE, Judge