Phillips v. State ex rel. Dep't of Taxation & Revenue (In re Estate of McElveny)
| Decision Date | 11 May 2015 |
| Docket Number | 33,568.,No. 35,349.,35,349. |
| Citation | 355 P.3d 75 |
| 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–Appellee, v. State of New Mexico, ex rel. Department of Taxation and Revenue, Respondent–Appellant. |
| Court | Court of Appeals of New Mexico |
Law Office of Cristy J. Carbón–Gaul, Cristy J. Carbón–Gaul, Albuquerque, NM, Starace Law, Carmela D. Starace, Albuquerque, NM, for Appellee.
Hector H. Balderas, Attorney General, Peter A. Breen, Special Assistant Attorney General, Santa Fe, NM, for Appellant.
{1} This case presents a question of first impression: whether the district court in a formal proceeding under the Uniform Probate Code (UPC), NMSA 1978, §§ 45–1–101 to –404 (1975, as amended through 2011) has jurisdiction to order the Department of Taxation and Revenue (Department) to deliver estate assets to a personal representative when the assets are in the Department's custody pursuant to the Uniform Unclaimed Property Act (UPA), NMSA 1978, §§ 7–8A–1 to –31 (1975, as amended through 2006). We conclude that the district court has jurisdiction to do so, and affirm the order of the district court.
{2} Edward McElveny (Decedent) died intestate in 1991, and his heirs consist of seven adult grandchildren and one adult great-grandchild. In 2013, Michael Phillips, one of the adult grandsons, filed an application in the Santa Fe probate court to open an informal probate for his grandfather and to be appointed personal representative of Decedent's estate (Estate). The remaining heirs renounced their right to be appointed personal representative and nominated Michael Phillips to be appointed personal representative of the Estate. The application states that Decedent “has property which was transferred to the ... Department as unclaimed property” and that “[a]s part of the probate administration, Applicant will claim the unclaimed property for Decedent's Estate.” It is undisputed that the Department is holding property in the name of Decedent valued at “a little less than $70,000” pursuant to the UPA. The probate court issued an order appointing Mr. Phillips personal representative (PR) of the Estate and ordered the Department to “release the unclaimed property of the Decedent to Applicant as [PR] of the Estate of Decedent.”
{3} The PR attached a copy of the probate court order to a blank claim form used by the Department under the UPA and submitted it to the unclaimed property office of the Department, demanding that the money be released to the PR to be administered under the UPC and distributed to the heirs. The Department rejected the claim as “incomplete” on the grounds that “[w]e do not have appropriate documentation showing that the property in question would devolve to Mr. Phillips alone under the applicable law of heirship” and that “the application should be made directly to [the] Department as unclaimed property custodian rather than probate.” The Estate responded by pointing out that the demand was not made on behalf of Mr. Phillips personally, but in his capacity as PR of the Estate so the money could be distributed to the heirs. In addition, the Estate disputed that the exclusive method for acquiring estate assets in the custody of the Department under the UPA is through the Department's own administrative process rather than the UPC. The Estate therefore contended that the application was “complete” and demanded that the funds be delivered to the PR no later than ninety days after the claim was initially submitted to the Department, or the Estate would return to court and seek enforcement of the probate court order in addition to sanctions.
{4} The Department failed to respond to the Estate's demand, and the probate court thereupon transferred the probate case to the district court “for determination of all disputed issues” subject to being remanded back to the probate court for completion after resolution of the disputed issues. See N.M. Const. art. VI, § 23 (). The Estate then filed a motion in the district court to enforce the probate court order and for sanctions, with notice to the Department. The Department responded by moving to dismiss on the ground that the district court had no jurisdiction to grant the relief requested. First, the Department asserted that the UPA is the “exclusive mode” for disbursing unclaimed property and that a court order issued under the UPC is ineffective. Second, the Department asserted the district court lacked jurisdiction because the Estate failed to exhaust its administrative remedies under the UPA before it obtained the order from the probate court. Finally, the Department asserted that because it was not served with process, the probate court failed to obtain jurisdiction over the Department.
{5} Following a hearing at which the Department appeared, the district court denied the Department's motion to dismiss, enforced the order of the probate court, and ordered the Department to deliver the personal property of Decedent to the PR of the Estate. The Department appeals.
{6} As a prelude to our analysis, we provide a brief overview of the UPA and how it generally operates. Property is “presumed abandoned” if it is “unclaimed” by its apparent owner for a specified period of time. Section 7–8A–2. A “holder” of property that is “presumed abandoned” is required to send written notice to the apparent owner stating that the holder is in possession of property that is subject to the UPA, make a report to the Department that it is in possession of such property and, ultimately, deliver custody of the property to the Department. Sections 7–8A–4; 7–8A–7; 7–8A–8. Upon payment or delivery of property to the Department, “the state assumes custody and responsibility for the safekeeping of the property.” Section 7–8A–10(b). The Department is then required to publish a notice stating in part that “property of the owner is presumed to be abandoned and has been taken into the protective custody of the [Department.]” Section 7–8A–9(a)(3). The notice must also state that “information about the property and its return to the owner is available to a person having a legal or beneficial interest in the property, upon request to the [Department].” Section 7–8A–9(a)(4). The property does not escheat to the State. The Department is required to deposit all money and proceeds from the sale of abandoned property, minus expenses, into the tax administration suspense fund and retain it in an unclaimed property fund containing at least one hundred thousand dollars ($100,000) from which the Department “shall pay claims duly allowed.” Section 7–8A–13.
{7} Against this general background, the Department contends that the order of the district court must be reversed, arguing: (1) the district court had no jurisdiction, apart from the UPA, to order the Department to release the unclaimed property to the Estate; (2) the district court order is void because the Department was not served with process; and (3) for additional reasons, which we address summarily.
{8} Arguments made by the Department require us to engage in statutory interpretation, which requires de novo review. Oldham v. Oldham, 2011–NMSC–007, ¶ 10, 149 N.M. 215, 247 P.3d 736. In addition, whether a district court has subject matter jurisdiction likewise presents a question of law, with de novo review. State v. Chavarria, 2009–NMSC–020, ¶ 11, 146 N.M. 251, 208 P.3d 896. Finally, questions relating to sufficiency of service of process are also reviewed de novo. See Edmonds v. Martinez, 2009–NMCA–072, ¶ 8, 146 N.M. 753, 215 P.3d 62. We now turn to the arguments made by the Department.
{9} We first address whether the district court had jurisdiction, independent of the UPA, to order the Department to deliver the property of Decedent to the PR of the Estate. When the probate case was opened and the PR was appointed for the Estate, the PR was automatically granted certain powers and obligations. The PR acquired “the same power over the title to property of the estate that an absolute owner would have” which could be exercised “without notice, hearing or order of the court.” NMSA 1978, Section 45–3–711 (1975). In addition, the UPC directs that “every personal representative has a right to, and shall take possession or control of, the decedent's property” and the PR “may maintain an action to recover possession of property[.]” NMSA 1978, Section 45–3–709 (1975). Thus, the PR acted in accordance with his statutory obligation in seeking an order from the probate court directing the Department to deliver Decedent's property to the Estate. After the Department refused to honor the order, the case was transferred to the district court for enforcement of the probate court order. When the hearing was held in the district court with notice to the Department, it was a “formal proceeding” under the UPC. Section 45–1–201(A)(19) (). Section 45–1–302(B) then expressly provides:
The district court in formal proceedings shall have jurisdiction to determine title to and value of real or personal property as between the estate and any interested person, including strangers to the estate claiming adversely thereto. The district court has full power to make orders, judgments and decrees and to take all other action necessary and proper to administer justice in matters that come before it.
On its face, Section 45–1–302(B) expressly and unambiguously grants jurisdiction to the district court to do exactly what it did here.
{10} The UPC notwithstanding,...
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