AI Generated Opinion Summaries

This summary was computer-generated without any editorial revision. It is not official, has not been checked for accuracy, and is NOT citable.

Facts

• In December 2007, the Country Club Estates Homeowners Association, led by then-President John Ewert, filed a declaratory judgment action to determine the legitimate governing board between two competing factions: the Ewert Board and the Fletcher Board. The court ruled in favor of the Fletcher Board and initially imposed personal liability on the Ewert Board members for attorney fees, which was later reversed, making the Association responsible for the fees. Subsequently, some former Ewert Board members sought indemnification from the Association for their legal expenses incurred during this litigation (paras 3-4).

Procedural History

• Tunis v. Country Club Estates Homeowners Ass’n Inc., 2014-NMCA-025, 318 P.3d 713 (Tunis I): The Court of Appeals remanded the case for further proceedings, finding issues of fact regarding the indemnification provision in the Association's bylaws (para 5).
• District Court Proceeding Following Tunis I Remand: On remand, the district court awarded Plaintiffs attorney fees incurred only in the declaratory judgment action, excluding fees from Tunis I and subsequent trial on remand (para 6).

Parties' Submissions

• Plaintiffs-Appellants: Argued that under the indemnity provision of the Association's bylaws, they are entitled to indemnification for attorney fees incurred in the declaratory judgment action, Tunis I, and the remand proceeding (para 7).
• Defendant-Appellee: Contended that New Mexico law bars recovery of attorney fees for pursuing enforcement of indemnification and that the indemnification provision does not apply to claims brought by former directors for indemnification (paras 11, 17).

Legal Issues

• Whether the district court erred in denying Plaintiffs’ attorney fees incurred in pursuing their indemnification claim, sometimes called “fees on fees.”
• Whether Plaintiffs are entitled to attorney fees on appeal.
• Whether Plaintiffs’ request for exemption from any potential future assessment of attorney fees imposed by Defendant is ripe for adjudication (para 1).

Disposition

• The Court of Appeals reversed the district court’s order precluding Plaintiffs’ claim for attorney fees incurred in prosecuting their claim for indemnity and remanded the issue to the district court for consideration and determination of such attorney fees.
• The Court also remanded to the district court for consideration and determination of Plaintiffs’ attorney fees on appeal.
• The Court declined to address Plaintiffs’ request for exemption from any potential future assessment of attorney fees for lack of ripeness (para 31).

Reasons

• The Court found that the indemnification provision in the Association's bylaws, which provides for indemnification of expenses including attorney fees, alters the general rule that parties pay their own attorney fees. The Court interpreted the bylaws broadly, in line with the intent to ensure that volunteer board members are not deterred from service by the fear of litigation expenses. The Court concluded that the indemnification provision includes Plaintiffs’ claims for “fees on fees” and that the bylaws cover the indemnification of former directors for actions taken in their official capacities. The Court also noted that the issue of potential future assessments by the Association is speculative and not ripe for adjudication (paras 9-30).