Willis et al v. Smith et al
MEMORANDUM OPINION AND ORDER by Senior District Judge James A. Parker granting in part re 24 First MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM regarding Rolex watches. (bap)
UNITED STATES DISTRICT COURT
DISTRICT OF NEW MEXICO
BOBBY L. WILLIS, individually and as trustee for the
BOBBY L. WILLIS AND CARRIE S. WILLIS TRUST,
WILLIS ASSET MANAGEMENT, LLC,
JTB DEVELOPMENT PROPERTIES 3, LLC, and
JTB DEVELOPMENT PROPERTIES 4, LLC,
No. 16 CV 167 JAP/LF
QUENTIN SMITH and
STOREY & CLYDE, INC.
QUENTIN SMITH and
STOREY & CLYDE, INC.,
MEMORANDUM OPINION AND ORDER
In the COMPLAINT FOR FRAUD AND OTHER CLAIMS (Doc. No. 1-1)
(Complaint) Plaintiffs Bobby L. Willis (Willis), individually and as trustee of the Bobby
L. Willis and Carrie S. Willis Trust, Willis Asset Management, LLC, JTB Development
Properties 3, LLC (JTB 3), and JTB Development Properties 4, LLC (JTB 4) (together,
Plaintiffs) claim that Defendants Quentin Smith (Smith) and Storey & Clyde, Inc.
(together, Defendants) fraudulently induced Plaintiffs to purchase several Rolex watches
that were not genuine. Defendants ask the Court to dismiss all claims related to the
purchase of the watches because Plaintiffs filed this lawsuit beyond the statute of
limitations for claims involving the sale of goods under New Mexico’s Uniform
Commercial Code (UCC). See DEFENDANTS’ FIRST MOTION TO DISMISS,
SEEKING DISMISSAL OF ALL CLAIMS REGARDING ROLEX WATCHES,
BASED ON STATUTE OF LIMITATION, STATUTE OF REPOSE, AND
SPOLIATION OF EVIDENCE (Doc. No. 24) (Motion). Plaintiffs oppose the Motion.
See RESPONSE TO DEFENDANTS’ MOTION TO DISMISS CLAIM REGARDING
ROLEX WATCHES (Doc. No. 31) (Response). Defendants replied to the Response in
support of their Motion. See DEFENDANTS’ REPLY TO THEIR FIRST MOTION TO
DISMISS, SEEKING DISMISSAL OF ALL CLAIMS REGARDING ROLEX
WATCHES, BASED ON STATUTE OF LIMITATION, STATUTE OF REPOSE, AND
SPOLIATION OF EVIDENCE (Doc. No. 32) (Reply).
To the extent that Plaintiffs claim that Defendants’ sale of non-genuine Rolexes
violates the New Mexico Uniform Commercial Code (UCC), that claim can be dismissed
because Plaintiffs brought this suit more than nine years after Plaintiffs accepted delivery
of the watches and more than three years after discovering the watches were not genuine.
Because Plaintiffs’ fraud claim was brought within the four-year New Mexico statute of
limitations period, the Court will allow that claim to proceed.
STANDARD OF REVIEW
Defendants move to dismiss under Rule 12(b)(6). “The court’s function on a Rule
12(b)(6) motion is . . . to assess whether the plaintiff’s complaint alone is legally
sufficient to state a claim for which relief may be granted.” Miller v. Glanz, 948 F.2d
1562, 1565 (10th Cir. 1991). In evaluating a Rule 12(b)(6) motion, the court must “accept
as true all well-pleaded facts [in the complaint], as distinguished from conclusory
allegations, and view the facts in the light most favorable to the nonmoving party. . . .”
Archuleta v. Wagner, 523 F.3d 1278, 1283 (10th Cir. 2008) (quotation and alteration
omitted). However, the court is under no obligation to accept bare conclusory allegations.
Hall v. Belmon, 935 F.2d 1106, 1110 (10th Cir. 1991). Nor is the court required to accept
legal conclusions without factual support. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 557
(2007); Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009). To summarize, a complaint must
contain sufficient factual allegations “to raise a right to relief above the speculative level
. . . on the assumption that all the allegations in the complaint are true.” Twombly, 550
U.S. at 555.
Consideration of Exhibits to Complaint
In deciding a Rule 12(b)(6) motion, courts typically consider only the facts
alleged in the complaint. Martin v. Central States Emblems, Inc., 150 F. App’x 852, 857
(10th Cir. Oct. 11, 2005) (unpublished) (citing County of Santa Fe v. Pub. Serv. Co. of
N.M., 311 F.3d 1031, 1035 (10th Cir. 2002)). However, if “matters outside the pleadings
are presented to and not excluded by the court, the [Rule 12(b)(6)] motion must be treated
as one for summary judgment under Rule 56. All parties must be given a reasonable
opportunity to present all the material that is pertinent to the motion.” Fed. R. Civ. P.
12(d). Courts may review documents referred to in a complaint, without converting a
motion to dismiss into a motion for summary judgment, if the documents are central to
the plaintiff’s claim and the parties do not dispute their authenticity. Martin, 311 F.3d at
1035 (citing County of Santa Fe).
Only two of the many documents attached to Plaintiffs’ Complaint are relevant to
the Motion. (See generally, Compl. Exs. 1-24.) Exhibit 1 is a document which Plaintiffs
identify as an invoice for the purchase of twenty-five PRE-OWNED ROLEX
WATCHES—LOT NUMBER 2718 from Storey & Clyde, Inc. (Id.) Exhibit 1 is dated
October 20, 2006, and the letterhead reads “Storey & Clyde, Inc., 318 South 19th Street,
Suite # 102, Sparks, Nevada 89431.” The document has two columns; the first column is
a list of twenty-five watches identified by a letter-number combination, and the second
column contains a monetary amount for each watch. The total amount for all twenty-five
watches is listed as $289,742.80. In the Motion, Defendants assert that this document is a
price list and not an invoice for the sale of watches. The Court will not consider Exhibit 1
because even though it appears to be central to Plaintiffs’ fraud claim, Defendants dispute
its authenticity and identity. Moreover, consideration of this exhibit is not necessary for
ruling on the statute of limitations issue.
Exhibit 2 to the Complaint purports to be an email message dated December 26,
2012 to Carrie Willis, Willis’ wife, from Jim Wolf on behalf of Heritage Auctions.
(Compl. Ex. 2.) Mr. Wolf reported that “all of the watches are non-genuine—not made by
Rolex[,]” and that Heritage could not auction the watches. (Id.) Plaintiffs point to Exhibit
2 as evidence that the watches they purchased from Defendants were fakes. Although
Defendants deny that the watches sold to Willis were “fakes,” Defendants do not directly
attack the authenticity of Exhibit 2. Nevertheless, the Court need not consider it. The
alleged inauthenticity of watches sold to Plaintiffs must be taken as true for purposes of
ruling on the Motion.
Plaintiffs filed the Complaint on February 1, 2016 in the Eleventh Judicial District
Court, San Juan County, New Mexico. The case was removed on March 8, 2016 based on
diversity jurisdiction. 28 U.S.C. § 1332(a)(1). The following background facts are either
alleged by the Complaint or may reasonably be inferred from the allegations in the
Purchase of Watches.1
Smith appeared on an infomercial television program that broadcast nationwide
entitled “Gemsmiths” in which Smith “made representations regarding the quality and
values of gemstones and jewelry upon which Willis relied in making purchases from
Quentin Smith’s companies.” (Compl. ¶ 3.) Willis “relied upon the representations made
by Quentin Smith and entered into a number of transactions with Quentin Smith to
purchase gemstones, jewelry and watches beginning in 2006.” (Id. ¶ 4.) One of the
purchases was for Rolex watches “for which Bobby Willis paid $ 289,742.80 . . . .” (Id. ¶
5.) Defendants admit “some watches were sold to Plaintiff Bobby Willis, [but
Defendants] dispute the number of watches sold, the identity of the seller (the seller was
Storey & Clyde, not Quentin Smith), . . . the purchase price, . . . and that the watches
were ‘fakes’ as alleged in the Complaint[.]” (Mot. at 2.)
In Claim II Plaintiffs allege that they were defrauded by Defendants’ “false
appraisals of watches, jewelry and gemstones to which Bobby Willis and his related
Although the Complaint alleges fraud in connection with other business transactions, the Court
will recite in detail only the facts that relate to the purchase of Rolex watches.
companies relied upon to their financial detriment.” (Id. ¶ 57A.) Essentially, the
Complaint alleges the following factual basis for liability: (1) in 2006, after receiving
appraisals from Defendants, Plaintiffs purchased several watches from Defendants; (2)
the watches were delivered to Plaintiffs sometime in 2006; (3) in 2012, Plaintiffs sent
several Rolex watches to an auction house; and (4) in December 2012, an agent of an
auction house refused to sell those watches claiming they were not genuine Rolexes.
Relevant Claims in the Complaint.
Claim II is for fraud in “[p]roviding false appraisals of watches, jewelry and
gemstones to which Bobby Willis and his related companies relied upon to their financial
detriment[.]” (Compl. ¶ 57A.) Claim XI is for prima facie tort alleging that Smith and
Garner intentionally caused harm to Plaintiffs, and that claim is asserted in the
alternative. Although Claim III alleges a claim for breach of contract, no reference is
made to the breach of a purchase agreement concerning the watches. (See Compl. ¶¶ 6069.) Thus, the Court will not address Claim III in this opinion. However, to avoid
confusion about what claims remain in this case, the Court will address the arguments in
the Motion and Response related to the statute of limitations period for a UCC breach of
Choice of Law.
In Claim II, which includes details alleged in ¶¶ 3-5 of the Complaint, Plaintiffs
state that they were damaged when in 2006 Defendants fraudulently represented through
appraisals that they would sell genuine Rolex watches to Plaintiffs for $289,742.80, but
Defendants delivered non-genuine Rolex watches to Plaintiffs who resided in New
Mexico. Defendants, however, argue that the Nevada UCC governing sales of goods and
the Nevada tort law governing fraud claims are applicable to all claims related to this
transaction. Defendants maintain that under Nevada law, Plaintiffs are barred by both the
UCC and fraud statutes of limitations. Defendants do not give a reason for their
insistence that Nevada law applies.
“A federal court sitting in diversity applies the substantive law, including choice
of law rules, of the forum state.” Barrett v. Tallon, 30 F.3d 1296, 1300 (10th Cir. 1994).
Under New Mexico choice of law rules related to contracts, when an agreement does not
indicate the parties’ choice of law, courts apply the “most significant relationship test.” In
re W. Wood Products, Inc., No. 11-12-10057 JS, 2013 WL 1386285, at *9 and note 5
(Bankr. D.N.M. Apr. 4, 2013) (citing In re Rotiers, 449 B.R. 133, 135 (Bankr. D.N.M.
2011)). Under that test, courts consider factors such as the place where the contract was
negotiated, the place of performance, and the location of the subject matter of the
The Complaint states that Smith “is a resident of California, but also transacts
business nationwide including San Juan County, New Mexico” and that Storey & Clyde,
Inc. is a Nevada company owned and operated by Smith. (Compl. ¶¶ 1-2.) Plaintiffs have
not alleged where they negotiated the agreement to buy the watches, or where they
received delivery of the watches. The Complaint also does not allege where Plaintiffs
reside, but in the Response, Plaintiffs assert that the watches were shipped to New
Mexico “where Willises resided at the time.” (Resp. at 6.) Thus, New Mexico appears to
have the most significant relationship to the purchase of the watches, and the Court sees
no reason to apply the Nevada UCC.
In tort actions, New Mexico courts follow the doctrine of lex loci delicti commissi
and apply the law of the place where the wrong occurred. Skyline Potato Co., Inc. v. TanO-On Mktg., Inc., 879 F. Supp. 2d 1228, 1253 note 5 (D.N.M. 2012). Again the primary
location of the fraud alleged in this case appears to be New Mexico. Defendants maintain,
without citation to authority, that the Court should apply the Nevada three-year statute of
limitations for torts. The Court disagrees and concludes that no state other than New
Mexico appears to have a more significant interest in this allegedly fraudulent
transaction. Consequently, the Court concludes that both the New Mexico UCC and the
tort law of New Mexico apply to this dispute. Cf. San Cristobal Academy v. Transitional
Living Corp., No. 10 CV 1152 JH/WDS, 2012 WL 6605992, * 7 (D.N.M. July 13, 2012)
(applying New Mexico law to claim that party was fraudulently induced to enter contract
but applying Arizona law to contract claim).
Statute of Limitations under the UCC.
An agreement for the sale of watches is one for the sale of goods as defined under
the New Mexico’s UCC. NMSA 1978 § 55-2-105 (defining “Goods” as “all things . . .
which are movable at the time of identification to the contract for sale. . . .”). Defendants
argue that Plaintiffs are barred from asserting a claim related to the purchase of the
watches because they brought this suit after the expiration of the four-year statute of
limitations under the UCC. In the Response, Plaintiffs do not dispute the application of
the UCC even though Plaintiffs do not actually assert a claim under the UCC. According
to Plaintiffs, Smith acting through the entity Storey & Clyde, Inc., was a “merchant” as
defined by the UCC with unequal bargaining power. Under New Mexico’s UCC, a
“merchant” is “a person who deals in goods of the kind or otherwise by his occupation
holds himself out as having knowledge or skill peculiar to the practices or goods involved
in the transaction[.]” NMSA 1978 § 55-2-104(1). Plaintiffs contend that since Smith is a
merchant, the UCC imposes an “implied warranty of merchantability” on the goods,
which means the goods, “must be at least such as pass without objection in the trade
under the contract description.” NMSA 1978 § 55-2-314(2). Under the facts alleged in
the Complaint, Defendants would have breached the implied warranty of merchantability
by delivering non-genuine Rolexes. Therefore, if Plaintiffs had asserted a UCC claim, it
would have been for breach of the implied warranty of merchantability.
The statute of limitations for that claim is found in NMSA 1978 § 55-2-725,
(1) An action for breach of any contract for sale must be commenced
within four years after the cause of action has accrued.
(2) A cause of action accrues when the breach occurs, regardless of the
aggrieved party’s lack of knowledge of the breach. A breach of warranty
occurs when the tender of delivery is made, except that where a warranty
explicitly extends to future performance of the goods and discovery of the
breach must await the time of such performance, the cause of action
accrues when the breach is or should have been discovered.
(4) This section does not alter the law on tolling of the statute of
limitations nor does it apply to causes of action which have accrued before
this act [this chapter] becomes effective.
NMSA 1978 § 55-2-725 (1), (2), and (4). Under the plain language of subsection
(2), Plaintiffs’ claim for a breach of the implied warranty of merchantability
accrued in 2006, when the watches were delivered. Therefore, Plaintiffs’ claim for
breach of an agreement for the sale of genuine Rolex watches is untimely. See
AIG Aviation Ins. v. Avco Corp., 709 F. Supp. 2d 1124, 1131-1132 (D.N.M. 2010)
(“actions for breach of warranty must be brought within four years of delivery,
unless the warranty explicitly guarantees future performance.”) (citing NMSA
1978 § 55-2-725).
Plaintiffs maintain that they could not have discovered that the watches were not
genuine Rolexes because they are not experts in the field and since they did not discover
that the watches were non-genuine until December 2012, this lawsuit was timely filed.
The New Mexico UCC requires that a buyer of goods that are non-conforming or
defective must give the seller notice within a reasonable time. Under the UCC, “[w]here a
tender has been accepted: (a) the buyer must within a reasonable time after he discovers
or should have discovered any breach notify the seller of breach or be barred from any
remedy[.]” NMSA 1978 § 55-2-607(3)(a). According to Defendants, Plaintiffs waited an
unreasonable time to inform Defendants that the watches were unacceptable after
Plaintiffs learned the watches were non-genuine; therefore, they should be “barred from
Defendants’ position is illustrated in Badilla v. Wal–Mart Stores East, Inc.,
--- P.3d ---, 2016 WL 5121975 (N.M. Ct. App. Sept. 15, 2016) (slip op.). In that case, the
plaintiff purchased work boots from Wal–Mart in October 2003. Id. at *1. The packaging
described the boots as “iron tough,” “rugged leather,” “men’s work boots,” and that the
boots were “designed for light to medium industrial use.” Id. Ten months after
purchasing the boots, the plaintiff was injured when the sole of one boot came loose and
caught on some debris causing the plaintiff to fall and injure himself. Id. More than three
years after the fall, the plaintiff sued Wal-Mart alleging Wal-Mart breached the implied
warranty of merchantability. Id. The New Mexico Court of Appeals framed the issue on
appeal as “whether Plaintiff’s filing suit after he discovered or should have discovered
the alleged breach amounts to reasonably timely notice, thereby complying with the
language of Section 55-2-607.” Id. at *4. The parties agreed that “[p]laintiff’s discovery
of the breach of any warranty concerning his boots occurred simultaneously with his
injury.” Id. On summary judgment, Wal-Mart argued that the plaintiff’s claim was barred
because he notified Wal-Mart, through the lawsuit, three years and two months after he
was injured; therefore, under § 55-2-607(3)(c), the plaintiff failed to give notice “within a
reasonable time” after he discovered the breach. Id. *5. The plaintiff argued that since the
UCC has a four-year statute of limitations, his claim was timely because he sued within
four years after he was injured. The court rejected the plaintiff’s argument: “Filing a
complaint within the [four-year] statute of limitations . . . cannot absolve a plaintiff of the
obligation to satisfy Section 55–2–607(3)(a) requiring that the notice be provided within
a reasonable time from the breach or discovery of the breach.” Id. (citing Wagmeister v.
A.H. Robbins Co., 64 Ill.App.3d 964, 382 N.E.2d 23, 25 (1978)). The court upheld the
dismissal concluding that, as a matter of law, the plaintiff failed to provide adequate or
timely notice of Wal-Mart’s breach of warranty under Section 55-2-607. Id. at *7.
Plaintiffs counter that one New Mexico court held that a span of four years
between the discovery of goods’ nonconformity and the filing of suit was reasonable. In
Ybarra v. Modern Trailer Sales, Inc., 1980-NMSC-044, 94 N.M. 249, 609 P.2d 331, the
plaintiffs purchased a mobile home from defendants. Id. ¶ 3. A few days after delivery,
portions of the floor began to rise and bubble, and the plaintiffs immediately complained
and demanded the defendant repair the defect. Id. ¶ 4. The defendant unsuccessfully
attempted to repair the floor on three occasions. Id. Over the ensuing three years, the
plaintiffs periodically telephoned and visited the defendant’s place of business
demanding repair. Id. ¶ 5. After the plaintiffs filed suit, the defendant sought dismissal of
the complaint arguing that the plaintiffs failed to timely notify defendant of their
revocation under NMSA 1978 § 55-2-608,2 which like § 55-2-607(3)(a), requires a buyer
to revoke acceptance of goods within a “reasonable time.” Id. ¶ 6. The court noted that
nearly four years had passed from the time the parties discovered the defect and the time
the plaintiffs filed suit. Id. ¶ 8. However, the court determined that “[t]he statute creates a
‘reasonable time’ standard and requires the trial court to make a factual determination.
We cannot say that four years is unreasonable as a matter of law.” Id. The court stressed
that the filing of suit followed “a continuing series of complaints and negotiations
regarding the unacceptability of the defective mobile home and by repeated failures on
the part of the seller to cure the defects.” Id. ¶ 9. Consequently, the court upheld the
denial of the motion to dismiss. Id.
This case is easily distinguishable from Ybarra and is similar to Badilla. Like the
plaintiff in Badilla, Plaintiffs notified Defendants, through the filing of this suit, more
than three years after they learned the watches were fakes. As in Badilla, Plaintiffs could
have preserved their remedies under the UCC if they had notified Defendants within a
reasonable time after they learned from Mr. Wolf that the watches were non-genuine.
However, unlike the plaintiffs in Ybarra, Plaintiffs did not complain and attempt to
obtain genuine watches from Defendants during the three year period between the time
they learned the watches were fakes and the filing of this lawsuit.
Plaintiffs claim that the delay in notifying Defendants should be excused because
in 2012, Willis went through a great deal of complicated legal and medical issues,
The relevant section provides, “[r]evocation of acceptance must occur within a reasonable time
after the buyer discovers or should have discovered the ground for it . . . [and] [i]t is not effective until the
buyer notifies the seller of it.” NMSA 1978 § 55-2-608(2).
“including wrongful incarceration and many other difficult financial troubles.” (Resp. at
4.) Plaintiffs assert that in 2012, Willis needed money for medical and legal bills and
decided to sell the Rolex watches in December 2012 through the Heritage Auction
House. (Id.) While these allegations explain the delay in having the watches appraised,
they do not explain why Plaintiffs waited more than three years after learning the watches
were fakes to assert their claim. Plaintiffs explain that after December 2012, Willis
continued to have significant medical and legal problems, “so a lawsuit against Smith
was not going to be top of his priority list for quite some time.” (Id.) Plaintiffs also
submit that when the auction house returned the watches, the “Willises turned them over
to Dave Fitzgerald (“Fitzgerald”) who has refused to return them. Willises are in the
process of pursuing legal action against Fitzgerald to recover the watches.” (Id. at 4-5.)
Plaintiffs maintain that since there has been no “substantial change in the condition” of
the watches, and since a reasonable time is determined under the facts of each case, “it
was reasonable that Willis was not able to pursue a lawsuit against Defendants for a few
years.” (Id. at 5.) Plaintiffs cite no legal authority for their position.
The Court concludes that it was unreasonable for Plaintiffs not to notify
Defendants until more than three years after Plaintiffs learned that the watches purchased
for $289,742.80 were not genuine Rolex watches. Thus, if Plaintiffs had explicitly
asserted a claim for breach of the implied warranty of merchantability, that claim would
be dismissed because Plaintiffs failed to notify Defendants of the breach within a
reasonable time under NMSA § 55-2-607(3)(a).
Tort Claim for Fraud
In Claim II of the Complaint, Plaintiffs actually assert that Defendants induced
them to purchase the watches based on a “fraudulent appraisal.” (Compl. ¶ 57A.) As
mentioned, Defendants maintain, without authority, that Plaintiffs’ fraud claim is barred
under the Nevada three-year statute of limitations. However, that claim is governed by
New Mexico law. Skyline Potato Co., Inc., supra. Under New Mexico law, a claimant
must bring a fraud claim within four years of “accrual.” NMSA 1978 § 37-1-4. “In
actions for relief, on the ground of fraud or mistake . . . the cause of action shall not be
deemed to have accrued until the fraud [or] mistake . . . shall have been discovered by the
party aggrieved.” NMSA 1978 § 37-1-7. Normally, the limitations period begins to run
“when the plaintiff discovers the fraud or when, with reasonable diligence, the plaintiff
could have discovered the fraud.” Tiberi v. Cigna Corp., 89 F.3d 1423, 1430 (10th Cir.
1996) (quoting Ramsey v. Culpepper, 738 F.2d 1092, 1095 (10th Cir. 1984)).3
Plaintiffs maintain that they have timely asserted a claim for fraud because they
filed this action in February 2016, less than four years after they discovered that the
watches they purchased from Defendants were not genuine. Defendants assert that
Plaintiffs’ fraud claim is untimely because with reasonable diligence Plaintiffs should
have discovered the alleged fraud as soon as they received delivery. According to
Defendants, Plaintiffs are sophisticated buyers who should have immediately spotted
non-genuine Rolexes. Alternatively, Defendants maintain that after delivery Plaintiffs
should have immediately gotten another appraisal of the watches “for insurance
Under New Mexico law, the elements of fraudulent misrepresentation are: (1) a
misrepresentation of fact; (2) either knowledge of the falsity of the representation or recklessness on the
part of the party making the misrepresentation; (3) intent to deceive and to induce reliance on the
misrepresentation; and (4) detrimental reliance on the misrepresentation. Skyline Potato, Inc., 879 F. Supp.
2d at 1248-49.
purposes.” There is no indication in the Complaint as to Plaintiffs’ level of sophistication
in determining the authenticity of the watches. And Plaintiffs allege they were given a
fraudulent appraisal; therefore, they were not required to immediately obtain another
appraisal. However, if Defendants present evidence to prove that Plaintiffs should have
been aware of the inauthenticity of the watches earlier than December 2012, Defendants
may assert that argument in a motion for summary judgment. At this stage, however, the
Court cannot conclude that Plaintiffs are barred from bringing a common law claim of
Prima Facie Tort Claim.
For Plaintiffs’ alternative claim of prima facie tort, the relevant statute of
limitations is four years. Hill v. Cray Research, Inc., 864 F. Supp. 1070, 1075 (D.N.M.
1991) (citing NMSA 1978 § 37-1-4). The Court will not dismiss Plaintiffs’ prima facie
tort claim as it relates to the purchase of watches from Defendants because the claim was
brought within the four years after Plaintiffs allegedly discovered the watches were nongenuine.
In Plaintiffs’ answers to interrogatories, Smith stated that he does not have
possession of the watches and does not know where the watches are located:
When [the watches] were returned from Heritage in approximately March
2013, Carrie Willis had Dave Fitzgerald keep them in his safe for safe
keeping. Fitzgerald and Carrie Willis had a disagreement, Fitzgerald failed
to return Willis’s belongings resulting in Carrie Willis filing complaints
with NM State Police and FBI regarding vehicles and other personal
belongings which Fitzgerald failed to return to Willis. Upon information
and belief, Fitzgerald sold these watches without Carrie Willis’ or my
knowledge or approval.
(Mot. Ex. A.) Defendants assert that without access to the watches, they cannot defend
themselves against the claims in the Complaint. Defendants argue that due to Plaintiffs’
“reckless spoliation of obviously crucial evidence, Plaintiffs should not be able to pursue
any claims related to the watches. At a minimum, all evidence regarding the authenticity
and value of the watches should be excluded, which in turn would act as a de facto
dismissal of all claims related to the watches.” (Mot. at 3.) Plaintiffs counter that they are
pursuing Mr. Fitzgerald to regain possession of the watches. They also argue that they do
not need to have possession of the watches because they have the “expert” opinion of Mr.
Wolf as proof of the fraud. Plaintiffs attach a purported “Expert Report” authored by Mr.
Wolf as Exhibit 1 to the Response.4 However, even if Mr. Wolf’s report is admitted as an
expert opinion, it cannot establish that the watches Mr. Wolf examined were the same
watches purchased from Defendants.5
More importantly, the Court cannot determine whether there has been spoliation
without considering the Answers to Interrogatories attached to the Motion and the
incomplete Expert Report attached to the Response. If those documents are considered,
the Court would have to convert the Motion into a summary judgment motion and allow
all relevant evidence to be presented on this issue. However, since discovery is in its
early stages, the Court will not convert the Motion at this time. The Court may
appropriately address spoliation later if Defendants present their spoliation argument in a
motion for summary judgment. Thus, the Court will not dismiss Plaintiffs’ claims
regarding the Rolex watches based on spoliation.
The report appears to be incomplete and refers to pictures of the watches as Exhibit 1, but no
such exhibit is attached to the report.
Notably, the report states that Mr. Wolf examined 11 watches, but Plaintiffs claim they
purchased 25 Rolex watches from Defendants.
In conclusion, the Court will dismiss any claim Plaintiffs may have asserted for
breach of the implied warranty of merchantability because, under § 55-2-607(a)(3),
Plaintiffs failed to give Defendants notice of the breach within a reasonable time after
they discovered the watches were non-genuine. The Court will not dismiss Plaintiffs’
Claim II for fraud and Plaintiffs’ alternative Claim XI for prima facie tort because
Plaintiffs brought those claims within four years after they discovered the alleged fraud.
IT IS ORDERED that the Motion is granted in part as to any claim under the
UCC, if Plaintiffs are attempting to assert such a claim, and the Motion is otherwise
SENIOR UNITED STATES DISTRICT JUDGE
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