Justices uphold fraud suit dismissal

Case involved deal in Taos Ski Valley

SANTA FE — The New Mexico Supreme Court, overturning a state Court of Appeals decision, has upheld a trial judge’s 2014 dismissal of a lawsuit involving a Taos Ski Valley condominium and hotel deal that went sour.

At issue was whether state District Judge Sarah Backus properly threw out the case because she believed a prior no-contest plea involving theft of trade secrets by one of the parties could not be introduced in a civil fraud lawsuit.

The case involves a dispute between Taos residents Michael Jusbache and his wife Rebecca Mark-Jusbache, a former Enron executive, who had entered into a 2003 deal with ski valley residents William and Marci Kipnis to develop what was then Edelweiss Lodge and Spa into condominiums. The Kipnis couple sued the Jusbaches in 2011 alleging they improperly took over the Edelweiss and drained it of its assets.

The Kipnises maintain that the Jusbaches, when asked by William Kipnis, denied “there was anything in their personal histories he should know about before going into a business relationship with them.” Kipnis said he would not have entered the deal if he had known about Michael Jusbache’s 1984 no contest plea to a charge of trade secrets theft — oilfield locator maps valued at $40 million — from his then-employer, Shell Oil Co. In a deferred adjudication program, Jusbache paid a fine and served probation and ended up without a conviction on his record.

Last year, the state Court of Appeals decided that court rules do not prohibit admission of the no-contest pleas “when they are not offered as proof of guilt.” Whether Jusbache was actually guilty of the trade secrets charge is “immaterial” to whether he should have disclosed the fact that he had been accused, the appeals court said.

But the Supreme Court, in its Thursday ruling, said language in New Mexico’s Rules of Evidence “plainly prohibits” admissibility of a nolo contendre or no-contest plea in subsequent proceedings. A nolo plea is “not an express or implied admission of factual guilt” and is intended to encourage plea negotiations, says the Supreme Court opinion. “Despite the best efforts of Plaintiffs to maintain they are not attempting to use the nolo plea as a basis for an inference of wrongdoing, they inevitably are doing so,” the high court found.

A statement provided by the Jusbaches last week says they were “pleased” by the ruling.