Navajo Academy v. Navajo United Methodist Mission School

785 P.2d 235 (1990)

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Nature of the Case

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Facts

The Navajo Academy (D) was a corporation formed by the Navajo Tribe to operate a prep school for college-bound youth. It moved its campus to Farmington, New Mexico from Ganado, Arizona on the invitation of the Mission School (P). P operated in conjunction with the United Methodist Church to conduct a school in Farmington. P’s facilities were deteriorating, and its enrollment was declining when it invited D to commence operations. There were no written terms and conditions, but there was a tacit understanding that D could stay on campus for as long as it provided a quality educational program for Navajo children. D had a quality program and charged no tuition and eventually P’s enrollment declined to zero, and D’s enrollment grew from 25 to 250 students in seven years. The P campus was owned by the Women’s Division of the Board of Global Ministries of the United Methodist Church. The Division leased the campus to P in a series of four-year leases, which were continually renewed. By 1982 D occupied virtually the entire campus. A plan also had to be made to fix the deteriorating buildings. D and P agreed that D would apply to the Bureau of Indian Affairs for substantial monies to fix and renovate the facilities. P would support that application with a commitment for D to use the facility on a long-term basis. P delivered to D a resolution authorizing and directing the development of a long-term lease with an indefinite period of at least 25 years. P and D also entered into a series of short-term subleases. None of these required that any rent other than a token amount be paid. The only consideration was that D would provide a quality educational program for Navajo youth. The trial court found that the subleases were not intended to replace the verbal understanding between P and D that D could occupy the campus for an indefinite period of time. P’s promise of a long-term lease was not kept. The Division has a strict policy of not leasing its property for periods longer than 4 years. The trial court did find that the Division condoned the relationship between P and D and placed representatives of P in positions of apparent authority to act for and bind the Division. In 1987, things began to fall apart, and P requested that D pay rent of $220,000 for the 1987-88 school year. Eventually, P delivered an ultimatum for D to vacate. P then sued for forcible entry and detainer seeking to evict D in magistrate court. D then brought an action in the District Court for San Juan County to prohibit the magistrate court from entertaining the eviction action. D sought a declaration that it was entitled to continued occupancy of the property under a constructive long term lease, damages of $1,800,000 for conversion as a result of its expenditures for improving the property, declaratory and injunctive relief and compensatory and punitive damages for interference with contractual relations. The court held a five-day bench trial and awarded none of the relief requested except for an order permitting D to remain on campus for three years after the date of the trial court’s judgment. The court found that D promised to give a 25-year lease in exchange for making certain expenditures by D. D did make those expenditures. It is undisputed that P never entered into the long-term lease. This appeal resulted.