Bd. of Cnty. Comm'rs v. N.M. Taxation & Revenue Dep't

• Decision Date: 28 January 2021
• Docket Number: NO. S-1-SC-37803,S-1-SC-37803
• Citation: Bd. of Cnty. Comm'rs v. N.M. Taxation & Revenue Dep't, 480 P.3d 870 (N.M. 2021)
• Parties: BOARD OF COUNTY COMMISSIONERS, HARDING COUNTY; Mosquero Municipal Schools, Board of Education; and Roy Municipal Schools, Board of Education, Petitioners-Respondents, v. NEW MEXICO TAXATION AND REVENUE DEPARTMENT and Stephanie Schardin Clarke, Secretary of the New Mexico Taxation and Revenue Department, Respondents-Petitioners.
• Court: New Mexico Supreme Court

480 P.3d 870

BOARD OF COUNTY COMMISSIONERS, HARDING COUNTY; Mosquero Municipal Schools, Board of Education; and Roy Municipal Schools, Board of Education, Petitioners-Respondents,

v.NEW MEXICO TAXATION AND REVENUE DEPARTMENT and Stephanie Schardin Clarke, Secretary of the New Mexico Taxation and Revenue Department, Respondents-Petitioners.

NO. S-1-SC-37803

Supreme Court of New Mexico.

Filing Date: January 28, 2021

Hector H. Balderas, Attorney General, David E. Mittle, Special Assistant Attorney General, Santa Fe, NM for Respondents-Petitioners

Gallegos Law Firm, P.C., Jake Eugene Gallegos, Michael Joseph Condon, Santa Fe, NM for Petitioners-Respondents

THOMSON, Justice.

{1} The Harding County Board of County Commissioners, the Mosquero Municipal Schools Board of Education, and the Roy Municipal Schools Board of Education (collectively, Petitioners) petitioned the First Judicial District Court for a writ of mandamus to compel the New Mexico Taxation and Revenue Department and the department's Secretary Stephanie Schardin Clarke (collectively, the Department) to establish values for two high-voltage transmission lines in Harding County and report those values to the Harding County Assessor (Assessor) so that property taxes could be assessed on the lines.

{2} Following a hearing on the petition, the district court issued its peremptory writ of mandamus (Peremptory Writ) to the Department and ordered the Department to "discharge [its] legal duties and obligations" in order to allow the Assessor to assess property taxes on the lines. Approximately six months later, the Department filed a certificate of compliance, representing that it had fully complied as ordered.

{3} Disputing that the Department had complied as ordered, Petitioners filed a motion for an order to show cause. Petitioners also requested "attorney fees and costs incurred in securing compliance with the [Peremptory] Writ." After full briefing and a hearing, the district court held the Department in contempt for failing to comply with the district court's order and awarded Petitioners their costs and fees related to the order to show cause. The Department appealed and sought review of the Peremptory Writ, the contempt holding, and the award of costs and fees.

{4} The Court of Appeals declined to review the merits of the Peremptory Writ, concluding that the Department failed to timely appeal that final order. Bd. of Cnty. Comm'rs, Harding Cnty. v. N.M. Tax'n and Revenue Dep't , A-1-CA-36305, mem. op., ¶ 24, 2019 WL 2743840 (May 24, 2019) (nonprecedential). However, the Court of Appeals reviewed the "issues relating to the Contempt Order and the Order for Fees and Costs" and affirmed the district court. Id. ¶¶ 25, 41, 50. The Department petitioned this Court for certiorari review pursuant to Rule 12-502 NMRA. We granted certiorari, and we now affirm.

I. BACKGROUND

{5} Underlying this appeal is the district court's determination that the Department has a statutory duty to establish a value for two high-voltage transmission lines in Harding County and to report that value to the Assessor for tax years 2009 through 2015.¹ The cost of construction for these lines was paid by Tri-State Generation & Transmission Association (Tri-State). The Hess line was completed in 2008, and the Whiting line was completed in 2013. After the lines were constructed, Tri-State transferred the ownership of those lines to Springer Electric Cooperative, Inc. (Springer)—apparently at no cost to Springer—and Springer owned both the Hess line and the Whiting line during the tax years in question.

{6} In New Mexico, "[a] tax is imposed upon all property subject to valuation for property taxation purposes under Article 36 of Chapter 7 NMSA 1978." NMSA 1978, § 7-37-2 (1982). The Hess line and the Whiting line are taxable properties if they are subject to valuation and not exempt from taxation. See NMSA 1978, § 7-36-7 (2008) ("Property subject to valuation for property taxation purposes.").

{7} Generally, property that is taxable must be valued and the "value allocated to the governmental units in which the property is located" so that property taxes can be assessed and collected. See NMSA 1978, § 7-36-14(B), (C) (1985). The Department "is responsible and has the authority" to value these two electrical "transmission line[s]" for property taxation purposes. See NMSA 1978, § 7-36-2(B)(4), (C)(3) (1995) ("Allocation of responsibility for valuation and determining classification of property for property taxation purposes; county assessor and department."). In addition, the Department is empowered to investigate as necessary to enforce the Property Tax Code. See NMSA 1978, § 7-38-2 (1973) ("Investigative authority and powers.").

{8} As part of the process for valuation, assessment, and collection of property tax, Springer is required to annually report all of its "property subject to valuation for property taxation purposes" to the Department. NMSA 1978, § 7-38-8 (2007). However, Springer did not report the value of the Hess line in 2009 through 2015, or the Whiting line in 2013 through 2015, apparently because it takes the position that the lines are exempt from taxation for property tax purposes.

{9} Regardless of whether Springer reports a value for all of its property, including the Hess line and the Whiting line, the Department is required to value that property and annually "mail a notice to each property owner informing the property owner of the net taxable value of the property owner's property that has been valued for property taxation purposes." NMSA 1978, § 7-38-20(B) (2012). Upon receipt of the notice of valuation, the "property owner may protest the value" assigned by the Department. NMSA 1978, § 7-38-21(A) (2015). And the Department is obliged to resolve "[a]ll protests ... within one hundred twenty days of the date the protest is filed unless the parties otherwise agree." NMSA 1978, § 7-38-23(C) (2015).

{10} After the valuation process concludes, the Department must certify the value to the county wherein the property is located, NMSA 1978, § 7-38-30 (1973) ("Department to allocate and certify valuations to county assessors."), which in this case is Harding County, so that the Assessor may prepare the tax schedule for Harding County property subject to taxation, NMSA 1978, § 7-38-35 (2007), and in conjunction with the Harding County Treasurer, may "prepare and mail property tax bills" to the proper party, NMSA 1978, § 7-38-36 (1977) ("Preparation and mailing of property tax bills."), which in this case is Springer.

{11} Petitioners took the position that the transmission lines are taxable and in 2012 began sending requests to the Department to perform its duty to perform valuations of the lines. The record does not evince whether the Department initially took a position on the taxability of the transmission lines, but the record is clear that the Department did not issue a notice of valuation for tax years 2009 through 2011. See NMSA 1978, § 7-35-2(E) (1994, amended 2018) (defining "net taxable value" as "the value of property upon which the tax is imposed and is determined by deducting from taxable value the amount of any exemption authorized by the Property Tax Code"). Because the Department never completed the valuation portion of the process, no property tax could be assessed, imposed, or collected by Harding County.

{12} In 2012, a Department attorney issued a memorandum that concluded that the Hess line "should be assessed for property tax[ation]." Also in 2012, the Department issued its first notice of valuation for the Hess line. However, Petitioners continued to be unable to assess, impose, or collect any property tax because Springer protested the valuation each year from 2012 through 2015, and the Department agreed to indefinitely waive the time limit for resolving the Hess line protests. See § 7-38-21 (concerning a property owner's right to protest the valuation); § 7-38-23(C) (concerning the parties' option to waive the deadline for resolution of a protest). As a result of the indefinite delay, no property tax was imposed or collected for the Hess line for tax years 2012, 2013, 2014, or 2015.

{13} In 2013, construction on the Whiting line was completed. Although ownership of the line was not clear, Petitioners believed that Springer was the owner and informed the Department. Nonetheless, the Department did not issue Springer a notice of valuation for the Whiting line in the relevant tax years, despite the fact that it had issued notices of valuation for the Hess line in those years. Nor does it appear that the Department investigated whether Springer owned the Whiting line.

{14} Since the valuation process for the Hess line and the Whiting line had to be concluded before any property tax could be assessed, imposed, and collected, Petitioners sought a writ of mandamus from the district court to compel the Department to conclude the pending protests of valuations for the Hess line that commenced in 2012 and to issue the annual notices of valuation for the Hess line before 2012 and for the Whiting line beginning in 2013. The district court first issued an alternative writ of mandamus according to NMSA 1978, Section 44-2-7 (1884) ("When the right to require the performance of the act is clear, and it is apparent that no valid excuse can be given for not performing it, a peremptory mandamus may be allowed in the first instance; in all other cases the alternative writ shall be first issued."), that

command[ed] that [the Department] forthwith discharge [its] lawful duty ... in conformance with the terms of NMSA [1978, Section] 7-36-29 [ (1975, amended 2016) ] for all years in which the properties have been situate in Harding County ... [or] Show Cause, if any [it has], ... why [the Department has] not performed the lawful duties so required of [it].

{15} The Department responded and admitted that "[a]ssigning a value to certain property for taxation purposes is a mandatory duty."...