Phillips v. State ex rel. Dep't of Taxation & Revenue (In re Estate of McElveny)

• Decision Date: 30 June 2017
• Docket Number: NO. S-1-SC-35349,S-1-SC-35349
• Citation: 399 P.3d 919
• Parties: In the MATTER OF the ESTATE OF Edward K. MCELVENY, Deceased, Michael Phillips, as Personal Representative of the Estate of Edward K. McElveny, Petitioner-Respondent, v. State of New Mexico, ex rel. Department of Taxation and Revenue, Respondent-Petitioner.
• Court: New Mexico Supreme Court

399 P.3d 919

In the MATTER OF the ESTATE OF Edward K. MCELVENY, Deceased,Michael Phillips, as Personal Representative of the Estate of Edward K. McElveny, Petitioner-Respondent,

v.State of New Mexico, ex rel. Department of Taxation and Revenue, Respondent-Petitioner.

NO. S-1-SC-35349

Supreme Court of New Mexico.

Filing Date: June 30, 2017

Carmela Starace, Albuquerque, NM, Law Office of Cristy J. Carbon-Gual, Cristy J. Carbon-Gual, Albuquerque, NM, for Petitioner.

Hector H. Balderas, Attorney General, Peter Breen, Special Assistant Attorney General, Santa Fe, NM, for Respondent.

OPINION

JUDITH K. NAKAMURA, Chief Justice

{1} We hold that the administrative claim filing provisions of the Uniform Unclaimed Property Act (UPA), NMSA 1978, §§ 7-8A-1 to -31 (1997, as amended through 2007), are exclusive and mandatory and that individuals who wish to procure unclaimed property must exhaust the administrative remedies afforded them by the UPA. Consequently, estate representatives like Petitioner, Michael Phillips (Phillips), who seek to claim estate assets held as unclaimed property by Respondent, the New Mexico Department of Taxation and Revenue (Department), cannot circumvent the UPA's claim filing provisions by invoking provisions of the Uniform Probate Code (UPC), NMSA 1978, §§ 45-1-101 to -404 (1975, as amended through 2016). Although Phillips did not exhaust administrative remedies under the UPA, it is unnecessary to remand for further administrative proceedings. Two exceptions to the exhaustion requirement apply. The Department shall release to Phillips the unclaimed property it has in its custody that belongs to the estate Phillips represents.

I. BACKGROUND

{2} Edward K. McElveny (McElveny) died intestate in 1991. In April 2013, Phillips, McElveny's grandson, filed an application with the Santa Fe County Probate Court (Probate Court) to be informally appointed personal representative (PR) of McElveny's estate (Estate). In his application, Phillips noted that the Department had custody of approximately $70,000 (the Property) that belonged to McElveny and which the Department held as unclaimed property. Phillips asked the Probate Court to order the Department to release the Property to him as PR. The Probate Court granted Phillips' request, appointed him PR, and ordered the Department to release the Property to him. Phillips then filed an unclaimed property claim with the Department. Phillips left the claim form blank and attached to the blank claim form a copy of the Probate Court's order. In re Estate of McElveny , 2015–NMCA–080, ¶ 3, 355 P.3d 75.

{3} In June 2013, the Department wrote to Phillips, acknowledged receipt of his claim, but informed Phillips that it was "incomplete." Phillips responded by letter, protested that he had submitted all documentation the Department required to process and approve his claim, asserted that the Department was "bound" by the Probate Court's order, and requested confirmation that the Property would be released to him no later than July 28, 2013. The Department did not reply and did not release the Property to Phillips.

{4} In August 2013, the Probate Court determined that it no longer had jurisdiction over the probate proceedings as there was "a dispute concerning the distribution of the [E]state." The Probate Court transferred the case to the First Judicial District Court.

{5} In September 2013, Phillips filed a motion with the district court asking it to enforce the Probate Court's order and to issue sanctions against the Department. The Department moved to dismiss the proceedings and argued that the district court lacked subject matter jurisdiction because Phillips failed to exhaust administrative remedies. Phillips responded and claimed that the exhaustion doctrine was inapplicable because he was "not suing the Department, i.e.[,] not attempting to obtain subject matter jurisdiction over the Department for the purpose of stating a claim." He denied ever having filed an "administrative claim[;]" asserted that he attempted to "handle the Decedent's [E]state through probate court[;]" argued that, as PR of the Estate, he was "simply trying to fulfill his statutory duties to gather the [E]state assets ... [;]" and pointed out that Section 45-1-302(B) of the UPC gives the district court exclusive jurisdiction to make determinations regarding a decedent's property as between the estate and any interested party.

{6} In February 2014, the district court entered an order in which it concluded that it had, as Phillips argued, exclusive jurisdiction under Section 45-1-302 of the UPC "to make determinations regarding a decedent's property as between [an] estate and any interested party." The court concluded that the Probate Court's order should "be given full effect" and ordered the Department to release the Property to Phillips.

{7} In a subsequent order filed in March 2014, the court issued a $3,000 sanction against the Department for refusing to comply with the Probate Court's order to release the Property to Phillips. And in a still later order filed in April 2014 (but entered nunc pro tunc to the February 2014 order) the court issued the following additional findings and conclusions: Phillips "did not make an administrative claim to the Department and the Department never denied an administrative claim"; Phillips merely used the Department's claim form to deliver the Probate Court's order; and exhaustion of administrative remedies is not required where a litigant is merely trying to enforce an existing probate court order in district court. The Department appealed.

{8} The Department argued again in the Court of Appeals that the district court did not have jurisdiction to intervene and order the Department to release the Property to Phillips because Phillips failed to exhaust his administrative remedies. The Court was not persuaded and concluded that the claim filing provisions of the UPA were not exclusive and mandatory but merely "permissive." In re McElveny , 2015–NMCA–080, ¶¶ 11-13, 355 P.3d 75. Having concluded that the UPA's claim filing provisions are not exclusive, the Court determined that Phillips was not required to exhaust administrative remedies under the UPA. Id. ¶ 17. The Court affirmed the district court's order directing the Department to release the Property to Phillips. Id. ¶ 19. After the Court of Appeals issued its opinion, Phillips filed a motion for attorneys' fees as prevailing party under Rule 12-403 NMRA in which he requested approximately $12,500. The Court of Appeals granted his motion.

{9} The Department filed a petition for a writ of certiorari with this Court. We granted the petition, exercising our jurisdiction under Article VI, Section 3 of the New Mexico Constitution and NMSA 1978, § 34-5-14(B) (1972) to determine whether a litigant seeking unclaimed property must exhaust administrative remedies with the Department. To resolve this issue, we must first address whether the claim filing provisions of the UPA are exclusive. See State ex rel. Norvell v. Ariz. Pub. Serv. Co. , 1973–NMSC–051, ¶ 31, 85 N.M. 165, 510 P.2d 98 (" ‘Exhaustion’ applies where a claim is cognizable in the first instance by an administrative agency alone; judicial interference is withheld until the administrative process has run its course." (internal quotation marks and citations omitted)).

II. DISCUSSION

A. Standard of Review

{10} Whether the claim filing provisions of the UPA are exclusive and whether individuals seeking unclaimed property must exhaust administrative remedies are both questions of statutory interpretation. See Lion's Gate Water v. D'Antonio , 2009–NMSC–057, ¶ 24, 147 N.M. 523, 226 P.3d 622 ("The exclusivity of any statutory administrative remedy turns on legislative intent." (internal quotation marks and citation omitted)); see also Patsy v. Bd. of Regents of State of Fla. , 457 U.S. 496, 501, 102 S.Ct. 2557, 73 L.Ed.2d 172 (1982) ("[T]he initial question whether exhaustion is required should be answered by reference to congressional intent...."). "The meaning of language used in a statute is a question of law that we review de novo." Cooper v. Chevron U.S.A., Inc. , 2002–NMSC–020, ¶ 16, 132 N.M. 382, 49 P.3d 61.

B. Exclusivity

{11} To determine whether the administrative procedures of the UPA are exclusive, we must examine "the comprehensiveness of the administrative scheme, the availability of judicial review, and the completeness of the administrative remedies afforded." Lion's Gate Water , 2009–NMSC–057, ¶ 24, 226 P.3d 622 (internal quotation marks and citation omitted). "An exclusive and comprehensive administrative process is one that provides for a plain, adequate, and complete means of resolution through the administrative process to the courts." Id. (internal quotation marks and citations omitted).

{12} The Court of Appeals concluded that the administrative procedures of the UPA are not exclusive and reached this conclusion by focusing on Section 7-8 A-15. In re McElveny , 2015–NMCA–080, ¶¶ 10-13, 355 P.3d 75. The Court noted that Section 7-8A-15(a) provides that "[a] person ... claiming property paid or delivered to the administrator may file a claim on a form prescribed by the administrator and verified by the claimant[,]" and observed that "may" is ordinarily understood as permissive.

In re McElveny , 2015–NMCA–080, ¶¶ 10-11, 355 P.3d 75. The Court then noted that the word "shall," a mandatory term, appears in Section 7-8A-15(b), In re McElveny , 2015–NMCA–080, ¶ 12, 355 P.3d 75, and deduced that the juxtaposition of "may" and "shall" suggests that "may" must be understood as permissive in light of the fact that it appears in close proximity to a mandatory term. Id. ¶¶ 11-12 ; see also Thriftway Mktg. Corp. v. State , 1992–NMCA–092, ¶ 9, 114 N.M. 578, 844 P.2d 828 ("Where the terms ‘shall’ and ‘may’ have been juxtaposed in the same statute, ordinarily it must be concluded that the legislature was aware of and intended different meanings." (citation...