STATE EX REL. PERA v. Longacre, 27,135.

• Decision Date: 19 November 2002
• Docket Number: No. 27,135.,27,135.
• Citation: 59 P.3d 500,2002 NMSC 33,133 N.M. 20
• Parties: STATE of New Mexico, ex rel., PUBLIC EMPLOYEES RETIREMENT ASSOCIATION, Plaintiff-Respondent, v. Lawrence LONGACRE, Defendant-Petitioner.
• Court: New Mexico Supreme Court

59 P.3d 500

133 N.M. 20

2002 NMSC 33

STATE of New Mexico, ex rel., PUBLIC EMPLOYEES RETIREMENT ASSOCIATION, Plaintiff-Respondent, v. Lawrence LONGACRE, Defendant-Petitioner.

No. 27,135.

Supreme Court of New Mexico.

November 19, 2002.

George T. Geran, Santa Fe, NM, for Petitioner.

G.T.S. Khalsa, Santa Fe, NM, for Respondent.

OPINION

KENNEDY, Justice.

{1} Defendant Appellant, Lawrence Longacre (Lawrence), appeals from the decision in State ex rel. Public Employees Retirement Ass'n v. Longacre, 2001 NMCA 076, 131 N.M. 156, 33 P.3d 906, in which the Court of Appeals declared NMSA 1978, § 10-11-4.2(A) (1997) unconstitutional. We reverse the Court of Appeals, holding that Section 10-11-4.2(A) is a constitutional statute of repose.

FACTS AND PROCEDURAL HISTORY

{2} The facts in this case are undisputed. Maria Longacre (Maria) was a member of the Public Employees Retirement Association (PERA). She and Lawrence were married at all material times. On August 1, 1992, Maria applied to PERA for disability retirement pension benefits under form of payment "A." Pension benefits available under form of payment "A" "stop upon the death of the retired member" with certain exceptions not at issue here. NMSA 1978, § 10-11-117(A) (1997). PERA is required to obtain the consent of a member's spouse, if any, "to the election of the form of payment... before the election ... is effective." NMSA 1978, § 10-11-116(A) (1991).

{3} PERA paid Maria retirement benefits under form of payment "A" commencing on the date of her application, until her death on January 15, 1997. However, PERA failed to obtain Lawrence's consent to Maria's election of benefits during her lifetime. Maria's attempted election of form of payment "A" was therefore rendered ineffective. As a result, Lawrence became eligible by operation of law, as Maria's surviving spouse, for the payment of survivor benefits under form of payment "C." Section 10-11-116(A)(2).

{4} After learning of the omission, Lawrence filed an administrative claim with PERA asserting that he was entitled to receive benefits under form of payment "B." PERA denied Lawrence's claim, and he appealed PERA's decision to the PERA Board, which held a hearing on the claim on March 30, 1998. During the hearing, PERA claimed that it had overpaid benefits to Maria during her lifetime in an amount equal to the difference between the higher rate of payment of benefits under form of payment "A," which was void, compared to those payable under form of payment "C." These overpayments totaled $7537.90. Further, PERA argued that it was entitled to recoup the entire amount of the overpayments from Lawrence but for Section 10-11-4.2(A), which it claimed unconstitutionally restricted its recovery to one year of overpayments.¹ On October 28, 1998, the PERA Board issued a decision granting Lawrence pension benefits under form of payment "C" and limiting PERA's recovery to only one year of the overpayments it made to Maria.

{5} PERA then filed a complaint for declaratory judgment in district court on November 25, 1998, challenging the constitutionality of Section 10-11-4.2(A) under Article IV, Section 32 of the New Mexico Constitution. The parties filed cross motions for summary judgment. On August 25, 1999, the district court denied PERA's motion for summary judgment and granted Lawrence's cross motion.

{6} PERA appealed to the Court of Appeals, which reversed the district court. Under the Court of Appeals' decision, PERA is entitled to recover from Lawrence the full amount of the overpayments it made to Maria during her lifetime because Section 10-11-4.2(A) is unconstitutional.

DISCUSSION

{7} The only issue presented on appeal is whether Section 10-11-4.2(A) violates Article IV, Section 32 of the New Mexico Constitution. The statute provides:

If an error or omission results in an overpayment to a member or beneficiary of a member, the association shall correct the error or omission and adjust all future payments accordingly. The association shall recover all overpayments made for a period of up to one year prior to the date the error or omission was discovered.

Section 10-11-4.2(A). The Court of Appeals found Section 10-11-4.2(A) unconstitutional based upon its determination that the statute amounts to a legislative "forgiveness of debt," Longacre, 2001-NMCA-076, ¶ 25, 131 N.M. 156, 33 P.3d 906, owed to the state, in violation of Article IV, Section 32 of the Constitution of New Mexico, which provides in pertinent part:

No obligation or liability of any person, association or corporation held or owned by or owing to the state, or any municipal corporation therein, shall ever be exchanged, transferred, remitted, released, postponed or in any way diminished by the legislature, nor shall any such obligation or liability be extinguished except by the payment thereof into the proper treasury, or by proper proceeding in court.

N.M. Const. art. IV, § 32 (as amended 1958).

{8} Specifically, the Court of Appeals stated that "[o]nce an overpayment is discovered, Section 10-11-4.2(A) is applied retroactively to preclude collection of more than one year of overpayments.... Section 10-11-4.2(A) cannot be applied without diminishing an obligation or liability owed to the State and that is why it is in conflict with Article IV, Section 32." Longacre, 2001-NMCA-076, ¶ 18, 131 N.M. 156, 33 P.3d 906. The Court of Appeals went on to conclude, we believe unnecessarily given its interpretation of Section 10-11-4.2(A) as stated above, that Article IV, Section 32 must be read to prohibit the legislature's release or diminishment of even those obligations or liabilities not yet incurred when it enacts a statute purporting to release them. Id. ¶ 19.

{9} Lawrence counters on appeal that Section 10-11-4.2(A) does not offend Article IV, Section 32 because, he claims, New Mexico case law stands for the proposition that the legislature may prospectively limit a state's ability to recover an obligation not yet in existence when the statute purporting to extinguish or diminish it is enacted. Thus, he proposes a bright line rule that would prohibit the legislature's release of only those obligations or liabilities fixed as of the date any such statute is enacted. Additionally, he asserts that Section 10-11-4.2(A) falls within the bounds of the constitution given such a rule because Section 10-11-4.2(A) is a statute of repose that only acts prospectively to bar the remedy of recovery rather than to extinguish or diminish an obligation or liability owed the state. While we decline to adopt Lawrence's proposed bright line rule, we reverse the Court of Appeals because we determine that Section 10-11-4.2(A) is a constitutional statute of repose. Additionally, we issue this opinion to constrain what could be construed as an overly broad interpretation of Article IV, Section 32 by the Court of Appeals.

A. Standard of Review

{10} "When there are no disputed material facts, an appellate court reviews all issues on appeal under a de novo standard of review." City of Albuquerque v. One (1) 1984 White Chevy Ut., 2002-NMSC-014, ¶ 5, 132 N.M. 187, 46 P.3d 94. The "presumption is that the Legislature has performed its duty, and kept within the bounds fixed by the Constitution, and the judiciary will, if possible, give effect to the legislative intent unless it clearly appears to be in conflict with the Constitution." Asplund v. Alarid, 29 N.M. 129, 131-32, 219 P. 786, 787 (1923); see also Ortiz v. Taxation & Revenue Dep't, 1998-NMCA-027, ¶ 5, 124 N.M. 677, 954 P.2d 109. A court must uphold a statute unless satisfied beyond a reasonable doubt that the legislature exceeded the bounds of the constitution in enacting it. City of Farmington v. Fawcett, 114 N.M. 537, 540, 843 P.2d 839, 842 (Ct.App.1992).

B. Scope of Article IV, Section 32

{11} This Court has had several occasions to consider the constitutionality of legislation in light of Article IV, Section 32. In Board of Education v. McRae, 29 N.M. 85, 88, 218 P. 346, 347 (1923), this Court held that the repeal of a law under which a poll tax assessment had already been made could not affect liability for such assessment, because such interpretation would run afoul of Article IV, Section 32. Similarly, in Asplund, 29 N.M. at 138, 219 P. at 789, we held that a property tax once duly assessed was an obligation or liability as could not be released or amended. In State v. Montoya, 32 N.M. 314, 255 P. 634 (1927) we stated:

We hold only that [the statute at issue], in its purpose and effect, is void, in so far as it attempts to prevent recovery by the state of personal judgments for taxes previously assessed, and therefore possessing the quality of obligations or liabilities of a person, association, or corporation held or owned by the state.

Id. at 318, 255 P. at 635; see also Gutierrez v. Gutierrez, 99 N.M. 333, 335, 657 P.2d 1182, 1184 (1983) (holding that Article IV, Section 32 prohibits a public hospital "from accepting payment of less than the full amount of an undisputed legal obligation as a satisfaction."). Thus, Article IV, Section 32 clearly prohibits the release or diminishment, by statute or otherwise, of those obligations or liabilities² already accrued except "by the payment thereof into the proper treasury, or by proper proceeding in court."

{12} The limit of the general rule set forth above was illustrated in a case decided by the Supreme Court of Montana in Jones v. Burns, 138 Mont. 268, 357 P.2d 22 (1960). In Jones, the plaintiff brought a declaratory action to determine the constitutionality of a statute providing for reimbursement by the state to utility companies of seventy-five percent of all costs associated with the relocation of their facilities upon public highways whenever the state commission determined such relocation was necessary. Id. at 25-26. The plaintiff-appellant contended that the statute authorizing reimbursement violated Montana Constitution, Article V,...