hot springs land development motion for summary judgement 2015

7/23/2019 Hot Springs Land Development MOTION for Summary Judgement 2015

1/36

7TH JUDICIAL DISTRICT

SIERRA

COU

FILED

IN MY

1W1l2U5 1:40

DISTRICT COURT

/s/ Lindsey Huston 10/

SEYENTH JUDICIAL

DISTRICT

COURT

COUNTY

OF

SIERRA

STATE

OF

NEW

MEXICO

IIOT

SPRINGS LAND DEVELOPMENT, LLC,

A New

Mexico

Limited Liability

Company, and

HOT

SPRINGS

MOTORPLEX DEYELOPMENT, LLC,

A

New

Mexico

Limited

Liability

Company,

Plaintiffs,

Y.

No.

D-721-CV-2014-00073

CITY

OF

TRUTH

OR

CONSEQUENCES,

A

New

Mexico

Municipality,

Defendant.

DEF'ENDANT,S

MOTION foT

SUMMARY JUDGMENT

on

COUI{TS

I

and

tr

and

MEMORANDUM

in

SUPPORT

COMES

NOW

Defendant,

the City

of

Truth

or

Consequences

("the

City"),

through

undersigned

counsel, and

hereby

moves

for

summary

judgment

pursuant

to

Rule 1-056(8),

NMRA

on

Counts

I

and tr

of

Plaintiffs'

Complaint

for

Damages. The

grounds

for

this

motion

are that the Option Agreement

for

Purchase

and Sale

of

Rights referenced in

Counts

I

and

II

terminated by

its

own terms, and

Plaintiff

Hot

Springs

Motorplex

Development,

LLC

("Hot

Springs")

failed

to exercise

its option

under the agreement. Therefore,

no

breach

of

contract

occurred.

Plaintiff Hot

Springs Land Development,

LLC

is not

a

party

to

the

agreement.

I.INTRODUCTION

The

Option

Agreementwhich is

the

subject of these claims

related

to a

grant

of

sole and

exclusive option by

the City to

Hot

Springs

Motorplex Development,LLC

to

purchase

water and

sewer capacity

at

set

prices

for

a

set

duration. Plaintiff

paid

two

hundred

thousand

dollars


2/36

($200,000)

under

the

Agreement,

and the

City held the water and sewer

capacity

for

the benefit

of Hot

Springs

for

the

entire

period

of

the

Agreement. Plaintiff

never

exercised any option

pursuant

to the agreement.

The

Option

Agreement expired under

its durational terms,

and

each

party

received

the benefit of

its

bargain.

The

Option

Agreement

for

Purchase and Sale of

Rights

is

attached as

Exhibit

1

to this

motion. The

Option

Agreement

was amended once

to

extend the

duration

of

the

option

to

purchase

for ninety

(90)

days

from February

73,2011

until

August 13,

2011.

The

First Amendment to Option

Agreement for Purchase

and

Sale of Rights

is

attached

as

Exhibit 2.

Count

I

of

Plaintiffs'

Complaint

alleges

Breach

of

Option

Agreement as

a

claim for

money

damages. Complaint,

p.

12. Count

tr alleges

Breach

of

Option

Agreement

and asks

for

the equitable

relief

of

rescission. Complaint,

pp.

l4-15.

Neither remedy

is

available to

Plaintiff

because

the City was

in full compliance with the

Agreement

terms, and the options

expired under

the durational term of the

Agreement.

Additionally,

Plaintiff

irrevocably

waived

any

right

to

damages

in

the event of a default

by the

City,

absent

strict compliance

with

procedures

under the

agreement,

which

procedures were not

followed. Ex.

1,

fl9.

Hot

Springs

Motorplex

Development,

LLC

notified

the

City

on or about

August

9, 2011

that

it

wanted to exercise

a

partial

option under the

Agreement. However,

for

numerous reasons

described

below, the August

g,

2Ol1

letter

was

not effective

to

exercise

any option

under the

terms of

the

Agreement;

and,

therefore,

the

options

to

purchase

sewer and

water capacity expired

on

August

13,2011. Plaintiffs

correspondence of August

9,2A11 is attached as

Exhibit

3. The

City's

response

to this

letter

from

the City

Attorney

denying

the

purported

exercise

of

an option

is

attached

as

Exhibit

4.


3/36

The

Affidavit

of

the

City

Manager and

the Affidavit

of

the City

Water/lVastewater

Director in

support of this

motion

are attached

as

Exhibits 5

and

6,

respectively.

Other claims

in the

Complaint

have been dismissed based

upon

the

expiration

of the

statute

of

limitations. The instant motion

only

addresses the two counts

which

are

not

barred by

the three

year

statute

of

limitations.

Standard

for

Summary Judsment

"A party

against whom a claim

...

is

asserted ...

may move

with or without supporting

ffidavits

for

a summary

judgment

as

to all

or any

part

thereof."

Rule 1-056(8),

NMRA.

"Summary

judgment

is

appropriate where there

are

no genuine

issues

of material fact

and

the

movant is

entitled to

judgment

as a

matter

of

law.

Where

reasonable minds

will

not

differ

as

to an

issue

of

material fact,

the courl

may

properly gmnt

summary

judgment.

All reasonable inferences

are construed

in

favor

of the

non-moving

party."

Montsomery

v.

Lomos Altos. Inc., 2007-NMSC-2,

fl8,

141

N.M

21, 150 P.3d 97 I.

1.

II.

STATEMENT

OF UNDISPUTED

MATERIAL FACTS

Hot

Springs

Motorplex

Development,

LLC ("Hot

Springs") and

the

City of

Truth

or

Consequences entered

into

an

Option


or

Sale

of Rights

("Option

Agreement"

or

"the

contract") on August 77

,2007

. Complaint,

l2l.

Exhibit I hereto.

The Option Agreement

granted

an option to

Hot

Springs to

purchase

available sewer

capacity, a

right of first

refusal

to

purchase

future sewer capacity and available

water

capacity,

and a

right

of

refusal

to

purchase

future

water

capacity

from

the City

for

prices

set

in

the agreement,

paragraph

3,

and

more

specifically delineated

in Ex. B

to the Option

Agreement.

Ex.

l,

and Ex.

B

thereto.

As

consideration

for the Option

Agreement, the

City

agreed

to hold the

current

sewer and

water

capacity

and

future

capacities

off

the

market for

the

period

of the

agreement,

unless

2.


4/36

,:

Hot

Springs

gave

written

permission

to

release

any

portion

of

the

capacities covered

by

the Option

Agreement.

Ex. I,

ll

l.

4.

As

consideration

for

the

Option

Agreement,

Hot

Springs

paid

two hundred thousand

dollars

($200,000)

to the

City.

Ex. l,

fl2;

Ex. 5,

fl7

,

Affidnvit

of

Juan

A.

Fuentes.

5. The

Option

Agreement

set

the

purchase

price

for

available sewer

capacity at

two

million

seven

hundred fifty-five thousand seven

hundred twenty-eight dollars

($2,755,728.00).

Fx.l,

n3.A.

6. The

Option

Agreement set the

purchase price

for

available

water capacity at

four

million

eighty-thousand

dollars

($4,080,000.00).

Er.

I,

n3.8.

7.

The right

to

purchase

available sewer capacity

is

defined

in

Exhibits

A and

B

to the

agreement.

Ex. l,

Recital A;

Ex.

A

and

Ex. B

to

Ex. 1.

8. The right

to

purchase

water capacity

granted

under the Option

Agreement is

the

right

to

purchase

eighty

percent (80%)

of the existing

annual

capacity of

the

municipal water

utility

system.

fu. A.13

to Ex. l.

9.

The

water

capacity

reserved

under the

Option

Agreement amounted

to

six

hundred

eighty

(680)

acre

feet

per year

at

a

price

of

six

thousand

dollars

($6,000.00) per

acre

foot

per

year.

Ex. B to fu. l.

10.

The

contract states that

"This

Agreement shall expire and shall be deemed terminated

if

Hot

Springs

fails

to exercise

its

option, or

any

part

thereof, on or before

February

13,

2011

." Ex.

l,

Jl5.

11. The

parties

agreed

to

an extension

of

the

contract

until

August i3,

2011 in

the

First

Amendment to Option

Agreement for Purchase and Sale of

Rights. Ex. 2,

\Lb


5/36

12. The First Amendment

to

the Option

Agreement

states

"Any

failure

by either

Party at any

point

in

time during the term

of the Option

Agreement,

as

amended,

to

insist

upon strict

and

timely

compliance

with the

terms and

provisions

of such

document shall

not

be

deemed

a waiver

either expressly

or

impliedly

by

either

Party

or

[sic]

any

of

their

respective rights

under

any such document

nor

shall the same

excuse

the

other

Parly's

obligation

to strictly

and

timely

perform

its obligation

hereunder

and

therein."

b.

2,

n4.

13.

The contract

states

that

"This

Agreement,

including Exhibits

A

and

B

attached

hereto,

contains

the

entire

Agreement

between the City

and

Hot

Springs and a1l other

representations,

negotiations and

agreements,

written

and

oral, including

any letters

of

intent which

pre-date

the

Effective Date hereof,

with

respect to

Rights

or

any

portion

thereof, are superseded by

this

Agreement

and are of no

force

and effect.

This

Agreement

may

be

amended and

modified

only by

instrument, in writing, executed by all

parties

hereto." Ex. l,

\16.

14. The contract specifies the

manner in

which

Hot

Springs exercises

any option under the

agreement

in

paragraph

4.

It

requires 1)

written

notice given

within

the

time

of

the

Agreement,2)by U.S.

Mail,

facsimile,

or

hand delivery 3) to the City

Manager 4)

with a

copy to Jay

Rubin,

EsO, 5)

specifying

the

number

and

nature

of

rights

to

which

the

option

is

being exercised,

6) indicatin

g

a

datefor closing within

10

to sixty days of the

notice.

Ex. l,

n14,

24.

15. The

"closing"

of

a

purchase

of

rights requires

payment

of

"good

funds"

to

the

City

Utilities

Departinent,

which

are

defined

as

"immediately availa.ble U.S.

federal funds."

Ex.

t, T.]T3.C and 6.


6/36

15.

Greg

Neal,

on

behalf

of

Hot

Springs, sent a

letter

to

the

then

City

Manager

on or

about

August 9,2011

that

"Hot

Springs

wishes to

purchase

$200,000

worth of

non-adjudicated

transferable water"

"pursuant

to Section

4

of the Option

Agreement

.-

Ex.

3.

17.

This letter

did

not

contain the

information required to be specified

in

a

notice

of

exercise

of

option: specifically

the number and

nature

of

the

rights

being

exercised, and a date

for

closing.

Er.

3.

18. This leuer indicated that Hot Springs wished to

purchase

$200,000

worth of

non-

adjudicated

water.

The

Option

Agreement

was

for

eighty

percent (80%)

of

the City's

available

water

capacity,

and has

no reference

to "non-adjudicated"

water.

Ex.

3; Ex.

A

to

Fx. l.

19. The

Option

Agreement

states

that

"All

Deposits

shall apply

to

and

be credited

against the

Purchase

Price, and shall be equally divided between the Sewer

Purchase Price

and the

Water

Purchase Price at the exercise

of

the

Seventh

Option

(as

these terms are defined

below;."E

Ex. I,12.D. The"Purchase Price" is

defined

as the

"Sewer

Purchase

Price,

the

Future

Sewer Purchase

Price

(if

any), the

Water

Purchase

Price,

and

the

Future Water

Purchase Price

(if

any)."

Ex. 1,

n3.C.

20. The

Option

Agreement indicates that the "Purchase

Price" is

the sum of the

purchase

prices

for

water and sewer capacities, or six

million

eight-hundred

thirty-five thousand

seven hundred twenty-eight

dollars

($6,835,728.00).

Ex.

1,l3.A; See

also Ex.

C

to Fx. l.

21. The

Option

Agreement requires

the

payment

of

a

"Purchase

Price"

relating

to

water

capacity and/or sewer capacity

in

order

for

any deposit

to

be

credited

against a

"purchase

price,'

and

the deposits

"are

nonrefundable

to

Hot Springs

unless

the

City

defaults

I

The

Option

Agreement

does

not contain

any

definition

or

reference to the

"seventh

Option"


7/36

hereunder

or cannot

deliver

any

or all of

the

Rights

pursuant

to the

fOption

Agreement]."

Ex.

t,

12.D.

22.Hot

Springs

did

not

pay

or

agree

to

pay

to

the

City

"the

Purchase Price

for

the Rights

then being

purchased,

in

certified

United

States

funds...."

as

required

by the contract.

Ex.

l,

n2.C.;

Ex. 5,

nl1,

Affidqvit

of

Juan A.

Fuentes.

23.Hot Springs

never

extended any

water

or sewer

transmission

lines from

its

property

to

connect to

City

water or sewer

lines

as

required by the contract to

receive

City

services.

Ex. l,110.C;

Ex. 5,

n1^3,

Afrtdavit of

Juan

A. Fuentes.

24.The

Option Agreement

expires

and

is

deemed

terminated

if

Hot

Springs

fails

to

exercise

its

option,

or any

part

thereof on or before

August 13,2011. Ex.

l,

n5;

Ex.

2,

nl.b

[extends

date

/rom

February

] 3,

20

I

I until August

I 3, 201

il.

25.The

contract

requires Hot

Springs

to

give

the

City

"a

reasonably

detailed

notice

specifying...breach," and

a thirty day

period

to cure.

Ex.

l,

\9.

26. The City did not

receive

a

notice

of a breach of the Option

Agreement

or an opporfunity

to

cure

the

alleged breach.

27

.

The contract

provides

that the City

has

thirty

(30)

days

to cure

a

breach.

If

the City

does

not

do

so,

Hot

Springs

must

give

the

City

notice of

its

election

of

remedies, either

specific

performance

or

return

of

the

"deposit"

within

thirfy

(30)

days

of

the

City's

default.

If

Hot

Springs does

not

give

notice

of

its

election of

remedies

to

the

City,

it

cannot demand specific

performance

and

"Hot

Springs

agrees

that

it

irrevocably

waives

any

right

to

damages."

Ex.

l,

fl9.


8/36

28.

At all

times

of

the duration

of

the

Option

Agreement,

the

City

possessed

the water

and

sewer capacity

indicated in Exhibits

A

and

B

to

the

Option

Agreemenl and

reserved

the

same

to the benefit of

Hot

Springs.

Ex. 6,

18,

Affidavit of

Jesus

A.

Salayandia.

29. The

Option

Agreement

provides

that the

prevailing

party

in litigation regarding the

enforcement

of the

Agreement

shall be awarded

attorney's

fees

and costs

of

suit.

Ex.

l,

12s.

III.

MEMORANDUM

of

POINTS

and

AUTHORITIES

A.

Law

Resardins

Ontion

Contracts

This

case

requires

the

interpretation

of

an

option

contract.

"An

option

is

a

contract

whereby one

party

agrees

to

keep an

offer

open

for

a stated

period

of time upon

specified terms

and

conditions,

and

may

become

binding upon both

parties,

depending on

whether the

optionee

exercises

his

right."

Zobel

v.

Bellamah Land

Co..

1967-NMSC-269,fl9,78

N.M

586, 435 P. 2d

205, citing Hoffmann v. McCanlies. 76 N.M. 2I8,220,

413

P.2d

697

,

698

(1996).

"An

option

is

'a

continuing and

irrevocable

offer which the optionor cannot

withdraw

during a stated

period.

It

vests

the

optionee

with

a

power

of

acceptance, and

when the optionee

accepts

the offer

in

the

prescribed

manner, the option

is

deemed to

have

been exercised

as to

create

a

binding bilateral

contract."'

Fru-Con

Construction Com. v.

KFX.

Inc., 153 F.3d 1150, 1157-1158

(1Oth

Cir

1998)

(citation

omitted).

"To

be valid,

an option

must

be supported by consideration, and'the

consideration

for

the

option

[must

be]

a

thing

apart

from

the consideration

for

the

[underlying]

sale."'

Id.,

p.

1158,

citing lo Ragan

v.

Schreffler"

306

S

W.2d

494,499

(Mo.

1957).

To be legally enforceable, a contract

requires

consideration exchanged

between the

parties.

See

Garcia v.

Middle

Rio

Grande Conservanclz

Dist., 1996-NMSC-029,

'lT

9, 121

N.M.

728,978P.zd7.

Consideration sufficientto support a contract

may

be

money

payment

or cafl


9/36

"be

either a detriment

incurred

by

promise

or a benefit

to the

promisor."

Fru-Con

Construction

Corp.,

ll58

(citations

omitted).

In

order to exercise

an option

granted pursuant

to

an option contract,

the optionee

must

give

an

"unequivocal

and unqualified

expression

of

intention

to

exercise

an

option and

affirmative

performance

of the expressed

method

of exercising

it.''

Northcutt

v.

McPherson,

1970-NMSC-099,

fl

9,

81

N.M.

743,473 P.2d357,

(citations

amitted).

"The

language

of the

agreement

itself

controls

as

to what act or acts constitute

an

election to exercise an

option."

Id.

B.

Hot

Sprinss

Did

Not

Exercise

its

Ontion Under the

Contract

and so the

Option

Agreement

Expired

Under

its Own

Terms.

Hot

Springs

required the assurance

of

certain

utility

services

in

order to

proceed

with

development

plans

for

real

property

in

Sierra County.

Therefore,

Hot

Springs

requested

and

obtained the sole and

exclusive

rights

to connect to City water and sewer services

in

an amount

equal

to

a

portion

of

the available

supply.

The full

and complete agreement

for

these option

rights

is

contained

in

the Option


and Sale of

Rights, Exhibit 1. Fact 13.

As

consideration

for

the

contract,

the

City agreed to

hold the

agreed

upon cuffent

and

future

sewer and water capacities off the

market for

the

four

(4)

years

of

the agreement,

for

the

sole and

exclusive benefit

of

Hot

Springs.

Er. l; Facts 2-3. The First Amendment

to

Option

Agreement for Purchase and Sale of

Rights

extended the option contract

for

an

additional

ninety

(90)

day

period,

until

August 13,2011.

Ex.

2,

T.b;

Fact

11.

As

consideration

for

the contract,

Hot

Springs

paid

the City two

hundred thousand dollars.

Fact 4. This

payment

is referenced in

the

contract

as

"Deposits."

Ex.

Ir12.

The contract calls

forpayments of

"purchase

prices"

for

available sewer connections and available water capacity

in

U.S.

federal

funds. Fact

15. The

contract allows

for Hot

Springs

to

exercise

purchase

options in increments, or

portions.

Ex. l,


10/36

nn4,

5;Fact24. If Hot

Springs

fails

to exercise

its

options by the termination date of the option

contract, the contract expires and

is

deemed terminated.

Ffr. 1,

fl5;

Fact 24.

1. Hot

Sprinss'

letter

of

August 9" 2011 is invalid

to exercise anv

option

under

the

contract.

Although

Plaintiffs

allege that

Hot

Springs

attempted to exercise

its

options under the

contract on August 9,2071

(Complaint,

n6n,

the

letter

by Greg Neal to the then City Manager,

Ellen Lindsey on

that date,

(Ey.

3)

does

not

comply with the terms

for

exercise

of

an

option

to

purchase

water

under the

contract.

Although

the

leuer

specifically

references

Section

4

of the

Option

Agreement, Mr.

Neal

failed

to comply

with

that

paragraph

in

several

respects. The letter

refers

to

"non-adjudicated,

transferable

water."

The

water

rights

capacity

refers

to

increments

of

water

owned by

the

City

in

units

of "AFY'

(acre

feet

per year),

at the

price

of

six

thousand

dollars

per

acre foot. Er. B

to

Ftx.

l. There is no reference

in

the contract

to

"non-adjudicated"

water.

F'act

18. The

only

manner

in

which water

is

sold under the contract is

through water

transmission

lines,

which

lines

are the responsibility

of

Hot

Springs to construct.

Fx. 1,110

C;

Bact

23. No

such

lines have

been constructed. Fact 23. Thus,

the

letter fails

to

specify the

"nature

of

rights"

required under the notice

provision

of the contract. Ex. I

,

14;

Fact 14.

The letter failed

to

specify

"the

number"

of

the

rights

sought.to be exercised,

but

merely

statedthe desire

to

"purchase

$200,000

worth"

of water.

Fact

16.

The

letterfailed

to

specify a

"closing"

date

for

the

purported purchase

as

required

by

the

contract.

Ex.

I,

\4;

Fact

17.

A

"closing"

is required for

the

purchase

of

rights,

which

requires

payment

of

"good

funds" to the

City's

Utilify

Department,

on

a

date stipulated

in

the

notice

of

exercise

of

an

option

.

Ex.

l,

J1J13-

7; Facts 14

and

15. The August

9,

2011

letter did not reference

any

payment

of

funds

to the

City

for

a

"purchase

price."

Fx. 3;Facts 17,

2l and22.

10


11/36

The Option

Agreement

expressly

grants

the

parties

the

right

to

insist upon

strict

and

timely

compliance

with

the

contract

terms.

Ex.

2,

14;

Fact

12. The City

is

entitled

to the

affirmative

performance

of

the expressed

method of

the

exercise

of an option

by

Hot Springs.

Northcutt

v.

McPherson.

Hot

Springs

failed

to

timely

comply

with the

notice

requirements of

the contract

in

order

to exercise

an

option to

purchase

water under

the

agreement.

The

Option

Agreement

provides

that

if

Hot

Springs

fails to

exercise

any option,

the

contract

terminates

or

expires

on the agreed

upon

date,

August

13,2011.

Ex.

I

15;

Ex.

2,

fll.b;

Fact

24.

Because the

letter of

August

9,

2011 was

not

a

valid exercise

of any

option,

the Option

Agreement

terminated

by

its

own

terms,

both

parties received the benefit

of their

bargain,

and

neither

party

has

liability to the

other

party.

C.

Even if the

August

9, 2011

Letter

Were

a

Valid

Exercise

of

a

Partial

Option

Under

the Contract.

Hot

Sprines

is

l{ot

Entitled

to

Anv

Damases

From

the

Citv

Pursuant

to the

Express

Contract

Terms.

The

City

Attorney,

Jaime

F.

Rubin,

responded

to the

Hot

Springs

letter on or

about

August

29,2077.

Ex.

4.

His

letter explained

the

multiple

grounds

as

to why

Hot Springs

did

not

comply

with

the Option Agreement terms,

and an

implied

attempt

to

convert the

"deposif' to

a

purchase

price

was

invalid.

Plaintiffs'

Complaint

alleges

that the City

breached

the Option

Agreement

by

rejecting

Hot Springs

attempt

to

exercise

its

options.

Complaint,

llBB.

However,

the Complaint

fails to

allege

that

Plaintiff

provided

the City with

a

reasonably

detailed

notice of

a

breach

of

the

contract,

nor

the

opportunity

to

cure

a

breach, as

required under

the

agreem

ent.

Ex. l,

119;

Facts

25-26.

No such

notice was

received, and

this contract

provision

works

to

prohibit

any

claim

for

damages,

or

specific

perlormance under

the

contract.

Facts

26-27.

11


12/36

D.

Hot

Sprinqs is Not

Entitled

to

Rescission

of the Contract.

Counts I and tr

of the Complaint

allege that

"[u]pon

information

and

belief'

the

City

did

not

have

ability or

authority to

provide

Plaintiffs

with

eighty

percent

of the

City's

current

excess

water and

sewer capacity and

ninety-five percent

of

the

City's

future water

and sewer capacity.

Complaint,'ulT 100,

107.

The

Complaint fails

to

specify the source

of this

information

or belief,

and

Defendant

is

unaware of any basis for it. Fact

28. Because

the

City

reserved

the water

and

sewer connection

availability

for

Hot

Springs during the

period

of the

Agreement,

its forbearance

of allocating

these

utilities

to

other developers constituted

sufficient

consideration

under

the

contract. Plaintiffs

are,

therefore,

not

entitled

to

the remedy

of

rescission

as

requested

in

Count

II

because

they

have received

the

full

benefit of their

bargain.

E. The

Citv

is

Entitled

to Pavment

of

its

Attorneys'

Fees

bv Hot

Springs.

The

Option

Agreement

provides

that

the

prevailing

parly

in

litigation

to enforce the

contract

shall be

awarded reasonable

attorneys' fees. Ex.

1,

fl

25; Fact 29.

Should the

Court

grant

this Motion

for

Summary

Judgment on Counts I

and

tr relating

to disputed claims

under the

Option

Agreement, Defendant

asks

for

an award

of

its

reasonable

attorneys'

fees

and expenses

incurred.

Where

a contact contains

an

unambiguous

provision

for

attorneys'

fees to

the

prevailing

party,

the

failure

to enforce

it

is

an abuse

of

discretion. Dennison

v.

Marlowe,

1989-

NMSC-041,

flfl6,

8,

108

N.M.

524,755

p.2d726.

IV.

CONCLUSION

Count I

of the Complaint

asks

for money

damages for

breach

of

the

Option Agreement

based

upon

Plaintiffs'

claim

that

the City

falsely

warranted

that

it

could

provide

the option

for

designated

sewer and

water

capacity,

and that

it

breached

the agreement by refusing

to honor

an

attempted exercise

of

its

option.

There is no factual

basis

for

the allegation

that the City

did

not

L2


13/36

have

ability

and

authority

to

provide

the utilities

to

Hot

Springs

under the terms of

the

Agreement.

Therefore,

the

City

provided good

and sufficient consideration

under

the Option

Agreement

and

no

breach

is

stated.

Fufiher,

Hot

Springs did

not

strictly

comply

with

the

requirements to exercise any option

for

water

service, and because

the

parties

and

the

case

law require strict compliance

with contract

terms to

exercise

an option,

this

claim

for

breach

against the

City

also

fails. Even if

the

City

were

in

breach,

the Option

Agreement

has

strict

notice

provisions,

requiring an opportunity

to

cure, and

timely election of a

remedy against the

City

in

event

of default.

These

provisions

were

not followed

by Hot

Springs,

and so

the

very

terms

of

the

contract

prohibit

any

award

of

damages or

return

of

its

deposit

to

Hot

Springs.

Hot

Springs claims

this

remedy

of

rescission

on the

basis

of

alleged

failure

of

consideration.

However, this

remedy

is

based upon an allegation

that the City

did

not

have

the

ability

to

deliver

the available excess sewer

and

water capacity

referenced

in

the contract.

Hot

Springs

has

provided

no factual

support

for

this allegation,

made

"upon

information

and

belief."

Hot

Springs

has

the

burden

to

demonstrate

specific

evidentiary facts

to

require

a

trial

on this

claim,

and

cannot

merely rest

on

the

Complaint

allegations.

Romero

v.

Philip

Monis

Inc..

2010-NMSC-

035,

fll0,

148

N.M

713, 242P.3d280.

(Citations

omitted).

Therefore,

on the

basis

of

undisputed

facts,

the

City

is

entitled

to

summary

judgment

in

its favor on Counts

I

and

tr

of

the Complaint.

WHEREFORE

Defendant

respectfully requests that this Court

grant

its

Motion

for

Summary

Judgment on Counts

I and

II,

for

its

attorneys'

fees

and

expenses

in

connection

with

this

motion, and

for

such other and

further relief

that the

Court

deems

just

and

proper.

13


14/36

Resp

ectfully sub

mitted,

By.

/s/ Robvn Hoffinan

Robyn Hoffman, Esq.

ROBYNHOFFMAN,

Post

Office

Box 836

Tijeras,

New

Mexico

Esq. LLC

87059

James

P.

Sullivan,

Esq.

BRENNAN

&

SIILryAN,

P.A.

128 East DeVargas

Salta Fe,

New

Mexico 87501

(s0s)

ees-8s14

CERTIFICATE OB SBRVICE

The undersigned hereby

certifies that

on

this

1't day

of

October, 2015,

the foregoing

was

served

electronically through

the Seventh

Judicial

District

Court's

electronic

file

and serve

system to the

following:

Luis

G. Stelzner,

Esq.

Jaime

L.

Dawes, Esq.

Stelzner, Winter, Warburton

Flores,

Sanchez,

Dawes, P.A.

Post

Office

Box 528

Albuquerque,

NM

87103

505-938-7770

505-938-7781

FAX

idrEstelzner.com

Attorneysfor

Plaintffi

/s/ Robvn Hoffinan

Robyn

Hoffman

AND

Attorney s

for

Defendant

By:

't4


15/36

THIS

OyrrON

AGREEIffiNT'FOR

PURCHASE

AND

SALE OF

RI0I{TS

(lA$eemeat}

is

rnade

by. aud

berween

the CITI{

0F

TRtm{

OR CONSEQUENCES, 8ry"rt,

f,vlelco

m-Untoipal

*rporatirn

(hereinafter

refened

to

a*

ihe

'Cili')

at{

Hot,spriqgs

Motorplex_Develorpment,

tti,

u

N**

iM+xico

timitsd

}iahility

conrpaay

ftereinafter

referted to

as

"HEt

Sp:ing$

')'

RECITAI-S

A.

The

City is

the

orvher

of certain

right$

putainTg

lo

fr:

Cityt

municipal

utility

systeus'

lhese

rSlghts't

flr

defmed

and

more

particularly described an

Exhibit

A,

B.

Tte

Cigy

is desirous

of:granting

to

Hat

Springs,

and

Hot Sl"try

is desirous

of

purchasing

*a

oUhj"i*g

ilom

the City,

the exc.lusive

optior

to

Flrrchase

the

Right*

from

the

City

as

set

forth

below.

AffREEI\.ENI

NOW

TIIEREFOE{E,

i[ consideration

of the

mutual

covenants

hereinafter

set forth,

the

parties

hereto

agree

as

follows:

1,

OmION,

Ihe

Cif-y

granls

to

Hot Springs

the

sole

and

exclusiw

optioa

irevocable

witfrU

Opfo:r Period

defined

below,

to

purchase tlre Righlsi

suljr,ct to

the

terms

and

conditions

of this

Aglcement.

The

option hereby

granted

shall

be exercisable

dt

any

ti&e'

and

from

tt*.

to

tiue,

in-*hole

Or in

part,

dUring

the

Option

Period

defined

below.

2,

.OP'IIOND.ryOsrr:

A,

hitial

Dpposit

On

or

before

August

22,2007, Hot

Springs

slall

gay.tg

the

Cfiy

rhe

su:u

,)f T.wEhry

ffious+ad

Dsllars

($20,000.00) as

a

initial

_d+otit

(the

'lloitial

G?"rirf-

within

its

possas*ioi

tsHst

Springs

concerningrthe

quaufity,

oatwe,

and.

quality

of

the

Rights,

B,

Seco,nd

DeEsit.

Hot Spritrgs

shall

pay

the

City

the tum.

of

One

Hundred

Eighty

Thousaurd

pottars

($1S0;000-00)

on

or

before

(i)

Fchntqy

,ry,

2l#8

oJ

(1)

fi've

(5)

tulines*

days after

rhe

clo_$ing

dare:cf,

Hot

Spriugs's

caotempllted

gi$ticlf$v$e

land

exchange

hetrxeen

Uot

Spr;ag$ and

tne Nelv

lvlexico

State

Land

Offit+

('l$ecpud

l.and

Exqhaq$e"),

w.hicheqer

occurr firtt.

C,,

Extension.of

Secoad

Deposits.

Jf

the

Second

Lmd

Exchaoge

does

not

occur

withln ttr"

time

period

d.*ignated io

tnis patagraph

?

due

io

del*ys

ca-ujed

by.

eithe

the

initiallaud

exchange

bet*nesn

the

Bureau

of

Land

Management

and

tle

New

Mexico Statetrarid

Office

t

@),

which

is

projected

.t9

b1[*neml*t

2ry1'

:'

to:

*

ltt--y

eausrd

Ufttitq"*

Mexico

[;ad

Office

in the Second

I"and Exchaage,

whieh

is

pmjected

to

be

in

December

200?,

Hot

Spring$

may

extend

pnymtnt

+f

the' Seti)trd

Dgfglit

by

purchasing

up,

to

Gi*

**t-**ion

periodr.

Hot

Sprhg$ mfly

puritrase

an

exteu*ion

period

by

providing notice

in

EXHIB]T

1


16/36

the

manner

for

giving'notice

provided

ra this Agreement

within

ten

(10)

days

of

the

second

n.po*itt

due

d*tl

togither

with

paytn*t of the

following

extension

fees:

(ii

FirstExtension: $2,000.00

(ir)

Second

Exteasion:

$2,000'00

(iii)

ThirdExtensioul

$2,000-00

Any

such

extension

period

shall

last either

(i)

ninely

(90]

days or

{ii)

uutil

the closing

date

of

the

Second

l-and

Exchange,

whichever

oceurs

first.

D,

the

First

Deposit,

Second

Deposit,

and all

extension

fees,

if

any'

shall be

ref+rred

to

colleetively

as

"Dpg0E{q.u

,{ll

Depositi

shatl

apply

to

and

be oedited

against

the

purchase

price,

and

snaU

ue

divided

equally

berwesn

ths

Sewer Purchase

Price

and

the Water

purchase

price

at

exercjse

of

the

scheduted

Seveath

Option

(as

these

teuns

are defioed

below).

The

City

need

not separately

ilccount

for

the

Deposits,

of,

pay intereq

thereo:r.

Except

as

otheri,iise

expressly

piovided-herein,

thc

Depositl. at-e_nog$rnAable

to

Hot

Springs

rurless

the

cioy

AJ*rtr-n

*r*i*r

or

cannct

deliver

*y

or all

of

,rh:

Ri8hts

pwsulT

to

the

terns

hereof'

If

the

Deposits

flre

not

paid

by

Hot

springi

in

Good

Fmds

(defiued belorv)

when

due,

this

Apeement

shall

be null

and

void.

3,

PURCTIASE

PRICE

A,

purchase.-Price

Relating to

SewS,I.

Tte

purchase

price

for Available

Sewer

capacrty

shall

be

$2,?55,?28"00

(lhu

l'sewu

Purdaqg-Eigq")'

The sewer

Purqhase

Price

*rirorfy

inclu,rles

u

ifghi of

first

refiisat

to

ptxchas-e

-f.umt"

Sewer'Capacity

as it

becomes

available

for

Connecti#s

after

the

Effective

bate

of

fhis

Agreeme.l:t

at

a

pricre

equal

to

the

p"tfirn*

price

for

such

Ccnnections'kp

or hoakup

fees

(the

"Future

Sewff

Euchage

Erige").

B.

pu$chase

Price

Relajing

to

.Water.

The

purchaseprice_for

Available'Water

capacity

shall

be

$+,@

as may

bi

deteminecl

in

accorilanace

with

e.tibii A

*A f*riUit

g'(thu

'@').

the Water

Purshase

Price

expressly

ilil;

a right

of

first

refirsal

to

purcn*"

nutore

Water

Capaeity

at d-ptice

*-4tq

the actual

pJ*

pxa

fi

tl*

purchase

of waier

rights

added

to the

City's lYater

Riehu

Portfolio

after

the

Eff."iu"

Date

of r}is

Ageement,

as

su"h

price

is

evideaced

by

*

purchase agteement

("Fu ue

lVuerPurp,b$ePrice").

C,

,,purchase

lltipe''

De.frlqd

The

Sewer Purchase

Price,,

the Future

Sewer

Rrrchase

price

(if

*yi,

rfrc

Wut*r

f*.nuil-Prh",

andthe

Funre

Water

Purchase

Price

(if

any)

are

referred

to

in this Agre+meut

collectively

as

the

*'Pulchaie

Pnce."

On

any.

closing

Date

(as

hereinafter,defined)

andla

accordance

with

Paragraph*

4

and

5

hereto,

Hot

Springs

aErees to

pay

t,

tl"

City

the

purchase

Pnce

for

the Rights then

legg_purchased,

in

certified United

States

fuod*,

Uy

wire

transfer

or

other

irymediately

available

ll'Saj{erat

funds

{"gqqdl$rnd$")'

The

neposits

*trall

be

credited

against

the

Purchase

Pnce

at

the Fina[ Closing'

4.

E)CER.CISE

pF

OPTION.

Hot

Springs

may

exergise

its

option

in

wholeor

in

part

by

grving

*itter*otGEe-r*of

o

the Crty at

anytime

on

or

before

the

expilation

or lermination


17/36

i

I

of fhis Agreement

in

the

:lranser

for

giving

notice

provided,i* this

Agreernent.

such

aotice

shall

*p*ify

tf,e

auurber

aud nature

of

Rights

io

which

the

option is

being

exercised

and

a date

for

.,'r,o*iof

on

the

purchase

(a

''e-lggi:rg"

or

"Clssing

Date'),

which

date shaIl

not

be

lsss

thar

ten

(10)

Jor

*or"

-th*

sixty

(60)

days

after

the

date of

the nodce

of

exffcise

of

option.

Upon

i"iir".y

of

*ch

notice,

tiis

Agreemeat

and

the notise

of exercise

of

option

shall constitutq

in its

entirety,

the

conkact

for

sale

of the

Rights b+ing

purchased'

5.

FINAL

CLpSING.

No

iater

than

Febraary

73,2Ll7,notwithstaflding

Closings

otr any

po.tioo

of th*

option

previorqly-exercisefl

Hot

Springs

shall

Close

on its

option

fot

any

.**Jitig

Sewer

Purcdase

Price

and

Water

Purchase

Price

("Final-ebdgg').

If

no

po$iofl-

of

the

optioi

is exercised

inpartprior

to February 13,

2011,

Hot

ftnings

will

pay

$6,635,728.00

at

the Ffual

Closrng.

fhis agreement

shall terminate

upon

the

Fiaal

Closing.

This

Agreement

shall

expire

flftil sha1

be deemed

terrninated

if Hot Springs

fails

to

exercise

its option, or

any

part

thereof,

on

orbefore

February

13'

2011.

6"

CLOSINS.

Closing

shaE

be

haudled througlr

the City's

Utilities

Deparfment.

parries

need

noibe

proseat at

Ciosing

so

long

as

Good

Funds are

timely

received

by the Citls

Utilities

Departrnent.

For

a1l

purpo*ts

herein,

the "Closi g-tr4 c" or

"el@g"

shall

bs the

date

that is

pop;dy

specified

by H*

Springs

in the

r*pectivlgotice

of exercise.

After

Closing

on

*y

Righte

iucluaing

tut

not

limited to

the

Final

Closing,

Hot Springs

may,

in its

sole

discretion,

use

such

Rigfuts

or

allow

others

to use suehRights'

7.

cLosING

PROCEpURES.

At

each

closing, the Rights

thgn being

purchryjd

shatl

hg*11rr*yETy

th"

Ciry

to Hot

Springs

by a bill

of

sale, whi+h

shali be

prepared

by Hot

Springs.

g.

HOT

SPRINGS'S

DEFAULT.

Nohroithstanding

anything

to

the

contrary

contained

in t1l*

ggreemsf,t,

Hot Springs

shall not

be

in

lrreach

or

default

hereuader

udess

the

City

is not

in defauli

hereunder,

and

within

20

days

aftu H$

Springs's

receipt of lotice

(ii

Hot

Springs

fails

to

cure any

material

breaeh

of

any

obligation

of Hot

Springs under

this Agreement

*ni*ii*

set

forth

in sulh notice

or

(ii)

Hot

Springs

fails

or refrrsfl.s

to complete

the

punchase

of

auy

Rights

as

to which

Hot

Springs

has exercieed

its option

to

purchase herouuder.

If

any

such

failure-contiaues

beyond

sucbcw"

period,

rhe

Ciry

may

terminate

this

Agreernent,

and

retain the

Deposits

as the

ugried-upo,

liquidired

damages.

The-pmties

agree

an{

slipulate that

as

of

the

Edective

D*te

of-this

Agreement,

the

exact

amount

of

darnages

for

hotding

the

Rights

off

the

market

rpould

be

exueilely

dfficult

to

ascerlain

aad

that

1trs

lsffiaining

uneamed Deposits

'

constituts

a

reasonable

andiair

approximation

of sudr

damages

alrd

is not

a

penalty'

The

City

agrees

that

it

irtevocably

waives

any other

dght

to darnages'

g.

TIEJCIIY'S

DEFAULT.

Notwithstandirg

anythine

to

the

c0Etary

coiltained_

iil

thi*

Agr*e*"rrg

6"Effiuil

oot be

ia ilefault

hereunder

and

Hot

Springs

shall

rot

be

entitled to

o*r"iir

*y

remedies hereuuder unless

Hot

Springs

ny

rytl*flrlted

hereunder,

md

the

City

(il

has

howledge

that

eny

repre$effation

or

warranly

made

by

the

Crty

herein

is

or beco:nes

false in

any

mrterial

respect;

tir

(ii)

fam

to

eure

its

breeih

of

a

material

coye.nant

or

obligation

made or

.,rriertak*o

by

tie

Ciry here*rder

withirr thirty

(30)

days

of the City's

receipt

of

a

reascrably

detailed

toti+e

specifying

surfo

breach;

or

(iii)

refuees t9 colvey

aly Rights

in

accordance

herewirh, within

rhirry-(3g)

aays

of

the

Cilfs

receipr

of notice

of such

breach.

Any

Closing

shall

)


18/36

auromatically

by

extended

to allorv

the

City

to

effect

the

abov+

referenced

cures,

After

ths expiration

of the

cure

period

provided

above,

atd

within

thirry

(30)

day$

J

the

City's

defaulr,

HoiSprings

shall

givc

iU"

Ci*

rvritten

flotice

of

Hot

Spryq1s

gtecti.on

of

one

of

the

folto.xdng

,"miai#

(il

to

ieek

specific

perfomrance

of

thecitt's

obligations

hereunder'

or

(ii)

to

termirlate

this

Agreement

and

thereupon receive

aretum

of

theDeposit'

if

Hot Sprirrgs

fails

to

cause

the

City

to

receive

sueh

election

within

such

thirty

(30)

day

period,

ffJSp*rg*Ihil

huu*

no further

right

to demand

specific

perforrrance.

Hot

Springs agress

th*t

it inroo*utiy

waives

any right

to

damages.

Notwithstanding

the foregoing

rights,

if

following

a

d* City a*tiuu,

tue

citylai

cr:red

thsbreach

priorto

the City's exercise

any

remedy

provided

in

&i*

egr*r**ot,

tfr"

Ciry shall

have

no further

rig$tto

exercise

any

temedy

for the cwed

default'

A

Authoritv.

The

parties hereby

reprEsflnt

aucl

ruauant

to

ons

anoth+r

that

each

has capacity

to eoil

ioto-thrs

Agreement

and that

the

person

signing

below. on

behalf

af

rfoi

spriog, o,

ti*

ciry

represents

rhfl

l*

or

she

is

duiy

authorized

to

executs

this

Agreement

and

tobind

the

party

for which

he

or she

is

simi:rg'

B.

The

City's.'Wmrailty.

The

City

r#arrailt$

that it

is

fhe

owner

of the

Rights

identified

in

Exhibit

B

wldch-"vrflership

is unencumbered.

The

Ciry

flrrfher

.wanatrt

that it has

no

knowledge

of

any material

defestive

condition

of

such

Rights, Bor

any

viulation of

*ny

1aw

or

regulation

affecting

such

Righis

C,

Mutual

Acknowledement.

The

paties

agree

and

acknowled-ge

that it

is

Hot

Spring*,s

,*spoosibility

io

ext"od

the

sewer

anil

water

tsn$mission

system

lines

to

Hot

tp"**rt

froperty*om

rhJclosest

point

that

the

Cify

has its sewer

and

water

transmission

iines

at the

time

that

Hot

Sprinp

elects

io

establish

those

Connecrions.

It

is frrrther

understood

that

the

City

may

participuL

irim*

cost

of

the

sewer

and

water

Eansmission

liaes

iJ the extension

of

those

line$

Uenents

itre

city.

Further,

Hot

Spdngs

will

be

entitled to

reiubursement

from

other

pnoplrty

o*"*rs

that

connect

to the

selvsr

und

water

tensmission

liaes

imtalled

by

l{ot

Spnngs'

L

uAaiiioo,

the

City:rill

provide

ss\rer

and

water

service

to

Hot Spriugs

as

long

as

Hot

Spriugs

A*

c"mp5rd

wirh

att *ppii.aht*.tate

and

local

regulations

related to such

consftuction.

D.

No

Waiver

of

Dcvelopment.Fees.

The

parties agrec.

and

acl


19/36

lL.

CONFmENTIALITY.

The

City

and

Hot Springs

hereby

agree

to

treat

(and shall

**

gofi

f*itn

&-.rt*

to

raus*

its RelatedParties

to so

treal} this Agreement

as

con{idential.

pJoi

ro

executiofi

of

&is Agreement

and

any

Closing

theforegoing

$ontetrce

will

noJ

be

consar*A

to

prohibit

auy ofthe

undersigned

from

disclosing

to its

respective

Related

Parties

such

terms of

the

Agreernentor

Closingor

information

about

the

Ri$ts

as are

neeessary

to be

disclosed

ta them

iaorder

to

consurmate

the

Agreement

or

Closing

includirrg,

without

limitation,

the

City's

obligations

to

reveal

the

tertrs

of

such agreemeats

to its

governing

body

and

*iai*"fo*re

obligaticnl

mandated

by

the New

Mexico

Inspection

of

Public

Recotds

Act

aad

aay

other

applicable

laws,

rules

or

regulations.

13.

SURRENDEts.

IIot

Springs

may surrender

all

or

part of

the

Rights

to the

City at

any

time

p,io,

to[Gffioo

*och

Rights.-For

any

Riglris

so

su:=Endered,

Hot

Springs

shallhave

"o'ouiisutioo

,o

Clo**in

*och

surieadered

Rights

nor

to

p|{

the

respective

Sewer

Purchase

Frice

or"Water

Furchase

pricB

relating

to

such

surrendered

Rights,

and the

Purehase

Price

shall

be

teduced

accordingly.

Hoi

Springs

may

deduct such

leduced

amounts

from

the

ffiinimum

Closing

requirements

of

subsequelrt

siheddea

Closings at

Hot Springs's

sole

discretion.

14.

RELEASE

Upon

written

reque$t

of

the

City,

providing

+vidence

to Hot Springs

of the

need

of futur*

out*.

capacrty

or

future

sewer capacity

for

developments

within-the

City

of

Truth

or Consequences

that

me

unrelated

to Hot

Springs

s_ptoporty,

IIot

Springs

shall

release

to

the

City,

at

no

cost

to the

City, its

right

of flrst

refusal with

respect

to

the aEouflt

ot

amounts of

the

total

Future

Sewer

Capacity

anO/or

the

total Future

Watm Capaciry

re_quested by

ihe

CitS

at

u

"oo**pording

reductioo-io

*oy

Hrhue

Sewer

Purchase

Price

or

Future

Wate{

Pruchase

Price.

15.

gAPTION$.

The captions

contained

herein

are

for

coRvetience

only

and are not

a

part

of

this

Agreement.

16,

ENTIRE

AGREEMENT.

Ttjs Agreement,

including

Exhibits

A

and-B

attached

hereto,

cootrios

th*

"otirc

Agr.em"nt

benreen

the

City and

Hot

Springs

and all otler

representatiorls,

negotiations

arrd

agreemrnts,

rvrifien

and

oral, iecluding any letters

of

intent

*ti"n

prr.datethe

Effective

Date

fereof,

witlt

respect

t9 the

$Shts

or any

portion.thereof'

are

supersedea

by

this

Agreement

and are

of

no force

afld

effect.

This

Agreement

may be

amended

and

modifiedonly

hy

insUurnent

in

writing,

executed

by all

parties hereto'

ll, ASSIGNMENT.

Except

for

an

assignment

to an

afflrliate thereof,

no

pariy

hereto

shall

have

tU"

ttght

to

assign

this

Agreement

or

any

of

its rights

or obligations

her+urrder

to

auy

p*r*o*,

*rporalio*

o, olth*,

entifi

without

the

writteu

approval

of the

other

parties'

which

approval

shall

not

be

unreasouably

withheld-

lg.

PARTIES

BOIIND.

This

Agfeement

shall be binding

upon

the^parties,

their

sucsessor$

*nd

**igns,

subj**t

ta

the

provisions

and

limirations

on

assignment

set

forth

above

.

19,

APPLIC.ABLE

I,AH.

This

Agreement

shall

te

consEued

by and

eontrolleil

uuder

the iaws

of

the State

of Nsw

Mexico'

20.

PARTIAL

IFWAL4)ruY.

Lr

the event

that any

paragraph

or-portion

of

ths

Agreemeut

ir

Uet*in"a

to U*

unconstitrrtional,

urmfiforceable

or invalid,

such

paragraph or

)


20/36

)

?ortion

of this A$eement

sball

bs sEicken

ftom

and

construedfor all

purpotes not

to.tortstitute

a

i,urt

*f

thie

Agrirnent,

Bod

the remaiuing

portion

of

this-Agreement

shall

rerrain

ilr

full force

und effect

and

shall,

for

all

pqposes,

coE$titute

this

eatire

Agreement.

Zl.

gONSTRUCTION OF AGRFEh,iENT.

All

parties

hertto acknowledgo

thatthey

have

had

tt

"

t*o"tit of

ind"prodeut

counsel

with

regmd

to

this

Agreernent

and

that

this

Agrr"**ot

has been

prepared

as a resrrlt

af

the

joint

efforts

of

all

parties and

their

respective

;;;i,

gccordingly,

^a1l

prntio

agee

that the

provisions

of

this Agreement

shall

not

be

consilued

or intqpreted

for

or

agairst

any

party

hereto

based

upoa

authorship'

22. COUNTERPARTS.

This

Agreement

may

be

executed

in any

number

of

csunterpa*s,

J"tr

of

which

when

executed

and

delivered

shall

be ur

original,

but

all

suc'h

counterparts

shall

constitutE

one andthe

same

instrnment.

23.

TE{E

Time

is

of

the

esse'nce

of

this Agreeme'tt'

24,

NOTICES.

Notices

hereunder

shall

he

given

to

the

partres set

forth_telow

and

shall

be

*.d.Ilffid-de1iroy,

facsimile,

overnight delivery

or

by

regular

rnail

ff

grven

by

i*g.l*

mail,

thelotice

shall

be rleemed

to

have

beer

givenwithin

a

reEu-red

time if

deposited

in

tnIU,S.

Mail,

postage

prepaid,

within

the

tine

limit.

For

the

purpory

of

calculating

time

limits

whieh

run

ftom

tne

gifing of

a

particular

notice

the

time

shall

be calculated

from

actual

receipt

of

the

notice.

Notices

shall

be addressed

as follows:

If to

the

CitY:

Mr.

Jaime

Aguilera

City

Managor

City

of

Truttr or

Consequences

505

Sims

Street

Ttuth

or

Consequences,

New

Mexico

87901

Tet

505-89466?3

Fax:

505-894-7767

'With

a

copy to

(rvhich

will not

constihrte

notice)

Jay Rubin,

Esquire

P.O.

Drawer

151

Truth

or Consequences,

NM

87901

TeL

505-894-3031

Fax

505-894'3282

ff

tc

Hot sPrffii"

***ory

B.

Nea1,

c.E.o.

Hot Springs

Motoqplex

Development,

LLC

3E16 W.

Linebaug

Aveuue

SuitE

210

Tampa,

FL 33618

Te1: 813-961-8400


21/36

)

-'

Fax:813'96i'8410

Wiih

a eopy

io

(which

will

not constitute

notice)

Michelle

lIenrie,

Esquire

Brownstein,

IIyatt,

Farber

&

Schreck

201

Thtud StreetNW

Suite

1700

Albuquerque,

NM

87L42

Tel;

505-244'0??0

Fax:505-24+9266

25.

ATTORNtrY'S

FEES.

In the

event litigation

or

arbi*ation

is required

by

either

pafiy to enforce

the terms

of this Agreemeut,

the

prevailins

pffiy

iu

such action

or

proceeding,

it

uti,

io

addition

to all

other

relief

panted

or awarded

by

the

coud

or

arbittator,

reeover

its

reasonabie

attomeyis'

fees

incurred

by

reason

of such

action

or proce,eding

md

all

costs

of suit or

arbiuation

and

thoie

ineuned in

prepmation thereof

at

both

the

trial

and

appellate

levels.

26.

FEES.

DEpqSiTS,

REBATES

AND

REFUNDJ.

Notwithrtaniling

any contrary

provision of

this

Agreement,

all utility

and other

sircilar

refuuds and

relate$

of

eosts,

fees

or

'Atpo*it*

having

beei

paid

by the Cify,

shall

be th+ sole

property

of

and shall

be rehuned

to the

City.

7|7.

NONBUSINESS

DAY.

If

a Closing

Date

hereir is to

occur

on a holiday

or

other

nonbusiness

dan

or

any

period of time

set

forih

in

this

Conhact

expires

on a

holiday

or other

nonbusiness;day,

ilren such

Closing

Date

or expiration

date

shall

be the

next

business

day.

E*r"pt

as

$t*iedin

this Pmagraph,

"d*,"

as

used

in

this

Agreement,

,oeafi$

a

calendar

day,

28.

FORCE

B,IAJEURE.

In &e

event

that either

party is

rendered

whotly or

in

parE

by

forc+ majeue

unable

to caffy out

its obligations

under

this

Agreemen

it

is

ageed that on

such

party's

Siri"g

rictics

and

fu]l

particulars

of

such

force majeure

to

the other

parfy as soofl

as

io**iUf*-rtt*.*tf.*

occlrrrence

of

the

causes

relied

ol, ihen

the obligations

of

thp

prytq

rying

such

'"oir*,

so far

as

they

are

a.ffected by

such

force

majerua

shall

be suspended

during the

cantinuance

of

any

inatitity

sc caused,

but for

ao longer

perlod,

and

such

cause shall,

so far

as

possiblg

be

rernedied

with

atl

reasonable

dispatch.

Tle

te_1n

"force ruaj.qlfg"

as

used

hereln

it utt

111"*

acts

of

God, strikes.

lockouts

or

other

industrial

disturbarrces,

acts

of

the public

enemy, rvars,

blockades,

insurrections,

riot$,

epidemics,

landslides,liglrtning,

earthquakes,

fires,

stonns,

floods,

vrashouts,

arrest and.resilaint

of

mltrs

aad

peoples,

eivil disturbaaces,

enplosion$,

Ur*aUlu

or

aicident

to

m.achinery,

failwe

to

obtain

materials

and supplies

due to

governmeatal

regutatlom

and

causes

of

Like

or

similat

kind, whether

herein

eflumerated

orrot,

and not

within

thJ

connol

of

the

party

claiming

suspension,

and why

by

the

exercise

of

due

diligence

such party

is unable

to

ovsrco.Ee.

29.

EFFECTI\E

DATE

The

"EffEgiire_Date"

or

the

"dAte,hgICQfu

shall be Augusi

L7,20W.

IN WffNESS

WHEREOF,

the

said

parties have

exe+uted

this

irstnrment as of

the

Effective

.)


22/36

Date

of this

Agreement'

CITY:

crrY

OF

TRUTIT

OR

CONSEQUENCES

By:

Date:

IIOT

SPRING$:

HOT SPRINGS

MOTORPLH(

DEVELOPIyIENT,LLC,

a

New

Mexico

limited

liability

company

)


23/36

Eshi-bitA

nRi#s"

7.

RiBhJ

to

Purchase

Se-,ver

CapacilY. As

used in

this

Agrcemeut,

"Al3iiabtg-Sewet

ee&Agiry,"

rneans

eighty

perceot (S0%)

of

the existing

daily

capacity

of

the

City's.'Wastewaier

friitmj"t

Plmt

("Efug[").

As descrihed

on

Exhibit

B,

the

Available

Sewer Capacity

is

918.57

sewf,

Connectian

uuits.

A

"epurEgl&g"

meaxs

a

billing

unit

(whether

residerttial,

commercial,

or othenvise)

for

which

the

City

comrnits

to

provide

sewer servics fiom

the

Plant.

Connections

also

are

cororrronly called

"tap$"

or

n$errice

agreelnests,"

2.

Rieht

to

Purchq$p

Future

Sew.er

Capaciry.

As used

in

this

Agreement"

"Futurg

Sgr,ryer

Capaclty"

ffieans

uinety five

percerrt

(95%)

of

the

futrue

expanded

daily

capacity

of

the

Plaot reached

at

any time before

the

expiration

or

termination

of this

Ageement.

3.

RiE&t

to

P.urctrase.Water

Capacity.

As

used in

this

Agreement,

"Av@le-5la{ed

.&p$ciry"

meaos eighty

percent

(809o) of

the

existing

annual capacity

of

the

Ciry's

'Watet

Rights

Portfolio-

The City's

"H$ter,

Rishts

Portfolio"

is

the

collectiou

of

all

water

rigfrts

owned or

leased

by

ihe

City for

rnunicipal

purposes that

are

distributed througfu

a

water

utility

system.

As

dascribed ou

Exhibit B,

the

Available

Water Capacity

is approximately

850

acre

feet

per

year.

If

the

City

determines that

thp

Available

Water

Capacity

was greater than or

less than

the estimated

850 acre feet

per

year ar

of

the

Effective

Date

of

this Agreement,

the

Riglits

identified

herein

sha]I

include

(a)

the

right to

purcLase

809o

of

the

actual

Avaiiable

Watr

Capacity at the

price

Fer

affe

foot

of

capacity

established

in Exhibit B,

and

O)

the

right

to

adjust

the

Water

Putchase

Price accordingly.

4.

Risht to

Pffchase

Fuhre

Water Capgc-its.

As

used

in this

Agreernent,

"Erhrq

Water

Cgpacity" flsans

uinety

five

perceirt

(9580)

of

the

urnual

capaclty

of the

City's

Water

Righrs Porfolioheld

at

anytimebefore

the expiration

or

termiilation

of

this Agreement.

)


24/36

Exhibit.B.

The

below-described

"eggggb

Cgp4i$

'

relates

to the treatment capacify of

the City of

Truth or

Consequences

Waste Waler Treatmsnt

pi*at

("Plant')

ard

the

estimated

number

of

fnwsr

Connections

that rhe Plant

can

procsss

it

a ?4

hour

period.

The

Plant is

rated

as

a

1,000,000

gallon per day Plant, The

curtenr number

of

active

Connections

use

appraximateiy

?50,000

galions

per

day of the

rated capacity. The remaining

250,0il0

gallons per

day

that

the

Flant can

proce$s

equate

approximately to 1,148.22

Cormections.

100?oofcurrerfsewerConnectionCapacity-....

.,,.7,148,22

80fo

of

crurent

sewer

ConnectionCapaciry.....

.,,...,..918.576

$3,000

per

tap,.......

.....x

$.3.000.00

Total

purchase

price......., .......,"...$2,755,?28.0O

The

"lVaierlRil#E

Be$erse C3qap.ily"

reiate.s

to

the

amount

of

ressrye

capacity of

water that

the

Seller

cunentiy owns.

The is

presently

unused Water

Right$

Reserve Capacity is approximateiy

850

acre feet

per year

(AFY).

100% of cuffent

Watff Rights Reserve

Capacity..................850 AFY

80flo of current Water Rights

Reserve

Capacity......,,...........680 AFy

Price

per

acre

foot of capacity..

..............x

$6.000.00

Total

purchase price........ .$4,080,000.00

)

)

10


25/36

Exhibit C

Summery

of Key Dates

fJ$der

this Aqrm.en[

tlhis

Sunwery

is

for

convenietwe

anly

and

does nat

sutrErede

the

termt

o

thi*

Agreemenr,)

Effective

Date

of

fiis

Agreerneot.,

........,.......August

1?,

?007

OptionDerosit

ff2)

Initial Deposiil

..

$20,0S0...

...,....,........August

22,

2007

SecondDepe$it

..,.-.....

.......+$180.000.

................February 13,2008

Total

Deposit

(wir&out

extensions].".........$200,000

Purchase

Bics

(qt3]

Total

Sewer

Purchase

Price................

...

fi2.7

55,7

28

Total Water huchase

Pries......,,.........

+14,080S90

Total,

PurchasePriee.....

..

$6,835J28

Paylne+t

of

Pur&aselti*

ft[5)

)

puymeetatFinal

Closingr

$6.635.728.

...........February

13,2011

'

PIus TotalDeposits

......-............

...

.

.

...S200S00

Total

Paid..

.,......

$dS35JZe

11


26/36

)

*r.r**u

or**,ffi*

oriu

ou***:

(Ihis

Sammary

is

for

convenienee

only and does

not

supercede

the

terms of

thls

Agreement.)

1.

Hot

Springs will

pay

a

fee

for the exelusive

option

to acquire

certain

'*rights."

2.

This

fee is payable in two

installments

totaling

$200,000.

3.

The

option

expires after

a

rnaximum

of 210 days,

uuless

extended

(for

additionat

feas).

4,

Before the

option

expires.

Hot

$prings must decide

whether

to

forfeit

the

option

or

exercise

the option.

5, If

Hot

Springs

forfeits

the

option,

it lcses

all

fees

paid'to

date.

6.

If

IIot

Springs

exercises the

option, it

must pay

more

in

order

to receive

the

"rights.',

7.

The

'tights"

are

come*tiors

to the

Citt's

water and

$ewer system,

also calied

"laps,,

01.

"sefyice

agf

gelheflts.

"

B,

HotSprings

is notbuying

the

City's

waterrights

or

its

sewereffluent.

?.

Hot Spriugs

S

payfig

up

ftont to

raserve

capacity

in

the City's

water

and

sewer

sy$terr

for

IIot Springo'future

use

in

its project.

10.

Hot Sptings

is

not buying

atl

of

the

capacity

rn the City'e

water and sewer

systern.

ft

is

buytng

oniy

patt

of the

capacity.

The City

can

do whatever

it

wants

with the

reuaining

capacity,

11.

If

the City

expands

its

capacity,

Hot Springs

would have

a reseryation

for

a

share

of tle

expruded

capacity

udess

the

CitynqIls

ir.

12. Hot Spriags

is

paying

fair market

value

for these

taps:

$3000

per

seuror

tap

and

$d000

per

ac.re

foot of

water connecticns.

y.

For the

optioned

$Fu*

of

&e

City's

current

capacity,

Hot

Springs.would

pay

a

total

of

$2,755,728

for

sewer

and

$4,080,0S0

for

water.

74.

The

purchase

price

can

be

paid

over

a three-year period.

Hot Springs

cao

use

only

the

anrount

of

tap#cannectiors

that

ithas

paid

for.

15.

Hot

Sprinp

must pay

its

finai

payment of the

full

purch*se

priceby

February

13,

20L1.

T2


27/36

@

rlfi$T

AA.{E}{DSTET.ITT.O

OPTISX

AGREEIYIE}TI

FOR.

PURCITASB A}ID

SALE

OF

RIGTITE

ltis FIR$T

Affi{Ehl$ff

r{

OPfiO},.i

FOR

FUR#HASE

A}.ID

SAI.E OF

RISIrrS

(lhe

Tiffit .Am&Ed1

ic' eateqed

tirtq

Es of.

ISIIfS

(lhe

Tiffit

im&EdJ

id eateued

ihto ry

d

WE

--_-X&11

by aud btfwem

&e Cigr

of

hot springs land development motion for summary judgement 2015

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