## Facts

- Keith and Opal Mock acquired ranches through a multi-party exchange and, as part of the deal, sold property to Roger Schmitz, who executed a $230,000 promissory note.
- For transaction structuring reasons, the note was made payable to Leo Smentowski, who held only nominal title; the Mocks retained the beneficial interest.
- In 1981, Smentowski borrowed from Colorado National Bank–Exchange, and the Bank took possession of the Schmitz note as purported collateral.
- Evidence supported that the Bank knew Smentowski lacked any beneficial interest in the note but used the note to strengthen its collateral position.
- After Smentowski defaulted, the Bank demanded that Schmitz pay the Bank directly and threatened foreclosure, treating the note as Smentowski’s asset.
- To protect their interests, the Mocks drew on a separate credit line, restricting their financing and harming their cattle operation.
- The Mocks asserted a cross-claim against the Bank, later including prima facie tort; a jury found for the Mocks and awarded damages.
- The Bank appealed, challenging recognition and proof of prima facie tort, the late amendment adding that claim, and related defenses tied to note-holder status and equitable ownership.

## Issues

1. Whether New Mexico recognizes prima facie tort as an independent cause of action for intentional injury inflicted by otherwise lawful conduct without sufficient justification.
2. Whether the evidence and pleadings supported the jury’s finding of prima facie tort against the Bank, including intent to injure and lack of sufficient justification.
3. Whether the Bank’s asserted status regarding the promissory note (and any resulting trust theory) defeated the Mocks’ claim as a matter of law.
4. Whether allowing a late amendment to add prima facie tort was an abuse of discretion or violated due process.

## Decision

- The New Mexico Supreme Court affirmed the judgment for the Mocks.
- The court recognized prima facie tort as a valid cause of action in New Mexico.
- The court held the evidence supported the jury’s finding that the Bank intentionally injured the Mocks without sufficient justification.
- The court rejected the Bank’s arguments that prima facie tort requires “disinterested malevolence” as the sole motive.
- The court upheld the trial court’s permission to amend the pleadings to add prima facie tort, finding no due process violation.
- The court rejected the Bank’s remaining defenses concerning its rights in the note and the effect of the Mocks’ beneficial ownership.

## Legal Principles

- Prima facie tort in New Mexico requires: (1) an intentional act by the defendant that is otherwise lawful, (2) intent to injure the plaintiff, (3) actual injury, and (4) absence of sufficient justification determined by balancing relevant social and economic interests.
- The tort functions as a limited remedy for intentional injuries not adequately addressed by established tort categories; it is not a substitute where traditional tort elements squarely apply.
- Proof of “disinterested malevolence” is not required; mixed motives do not bar liability if, after balancing, the intentional injury is unjustified.
- In assessing justification, a defendant’s knowledge of another’s equitable or beneficial interest can weigh heavily against claimed entitlement to act based on formal legal rights.
- Trial courts may allow amendment to add a prima facie tort claim when the opposing party had notice of the underlying facts and an opportunity to defend, consistent with due process.

## Conclusion

The court adopted prima facie tort in New Mexico and affirmed a verdict against a bank that, despite knowing a promissory note’s true beneficial owners, asserted control over the note to pressure payment and protect its collateral position, causing foreseeable business injury without sufficient justification.


Schmitz v. Smentowski, 109 N.M. 386, 785 P.2d 726 (N.M. 1990)