Justia Consumer Law Opinion Summaries

The case concerns a dispute that arose after a company, Motiva Performance Engineering, failed to deliver on an agreement to upgrade a vehicle for the plaintiff, resulting in a jury verdict against Motiva for breach of contract, fraudulent misrepresentation, and violation of the Unfair Practices Act. The company’s managing member, who was also its attorney, transferred Motiva’s Ferrari to another company he controlled shortly after the verdict and subsequently used the car as collateral for a loan without disclosing this to the court. Additional questionable conduct included failing to disclose or potentially backdating a promissory note and depositing insurance proceeds into his personal account. These acts occurred while the court was overseeing asset proceedings to satisfy the judgment against Motiva.Following these actions, the district court held a hearing and issued a sanctions order against the managing member and his associated entities for what it termed remedial contempt, requiring payment of the underlying judgment and a $50,000 donation to charity. The sanctions order also referenced Rule 1-011 NMRA (Rule 11) violations due to misstatements in court filings. The managing member moved for reconsideration, arguing the evidence did not support remedial contempt, but appealed the order before the motion was decided. The New Mexico Court of Appeals affirmed the sanctions on both inherent powers and Rule 11 grounds, though a dissent questioned the breadth of conduct relied upon under Rule 11.The Supreme Court of the State of New Mexico held that the district court erred by imposing punitive contempt sanctions without affording criminal-level due process protections and that such sanctions could not be justified under the court’s inherent powers without those protections. However, the court upheld the sanctions under Rule 11, as the due process requirements for Rule 11 are not equivalent to those for contempt. The holding was limited to willful misstatements made in documents filed with the court. The court affirmed the Court of Appeals in part, reversed in part, and remanded for further proceedings. View "Butler v. Motiva Performance Engineering, LLC" on Justia Law

Eileen Dalton purchased two used cars under separate finance contracts which contained provisions that retained self-help remedies for both parties, and that allowed either party to compel arbitration of any claim or dispute arising out of the contracts that exceeded the jurisdiction of a small claims court (which in New Mexico was $10,000). One of the cars was repossessed without judicial action. Dalton sued, alleging fraud, violations of the New Mexico Uniform Commercial Code, unfair trade practices, conversion, breach of contract, breach of the covenant of good faith and fair dealing, and breach of warranty of title. Santander Consumer USA moved to compel arbitration based on the clause contained in the finance contracts. Dalton argued that the arbitration clause was substantively unconscionable on its face, and therefore unenforceable because the self-help and small claims carve-outs were unreasonably one-sided. After review of the provisions at issue here, the Supreme Court held that the arbitration provision in this case was not substantively unconscionable because: (1) lawful self-help remedies were extrajudicial remedies; and (2) the small claims carve-out was facially neutral because either party had to sue in small claims court if its claim was less than $10,000, or arbitrate if its claim exceeds $10,000, thereby neither grossly unfair nor unreasonably one-sided on its face. View "Dalton v. Santander Consumer USA, Inc." on Justia Law