State v. Herrera

• Decision Date: 18 November 2013
• Docket Number: Nos. 31,477,31,479.,s. 31,477
• Parties: STATE of New Mexico, Plaintiff–Appellant, v. Donald HERRERA, Defendant–Appellee, State of New Mexico, Plaintiff–Appellant, v. Billy Baca, Defendant–Appellee.
• Court: Court of Appeals of New Mexico

315 P.3d 311

STATE of New Mexico, Plaintiff–Appellant,

v.Donald HERRERA, Defendant–Appellee,State of New Mexico, Plaintiff–Appellant,

v.Billy Baca, Defendant–Appellee.

Nos. 31,477, 31,479.

Court of Appeals of New Mexico.

Oct. 2, 2013.

Certiorari Denied, Nov. 18, 2013,

No. 34,376.

Gary K. King, Attorney General, Nicole Beder, Assistant Attorney General, Santa Fe, NM for Appellant.

Bennett J. Bauer, Acting Chief Public Defender, J.K. Theodosia Johnson, Assistant Appellate Defender, Santa Fe, NM, for Appellees.

OPINION

WECHSLER, Judge.

{1} In this consolidated appeal, the State challenges the dismissal of two indictments for fraud. The indictments allege that Defendants Donald Herrera and Billy Baca fraudulently obtained funds from the United States Department of Veterans Affairs (the VA) in violation of NMSA 1978, Section 30–16–6 (2006). Defendants filed identical dismissal motions, arguing that the district court lacked jurisdiction on the basis of federal preemption, and, following a consolidated hearing on those motions, the district court dismissed both indictments. We hold that the Veterans' Benefits Act neither preempts the State's prosecution nor creates an unavoidable conflict with state law. Accordingly, we reverse and remand for further proceedings.

BACKGROUND

{2} Defendants were each indicted for one count of fraud, statutorily defined as “the intentional misappropriation or taking of anything of value that belongs to another by means of fraudulent conduct, practices[,] or representations.” Section 30–16–6(A). The misappropriated property contemplated in both indictments consists of reimbursements for travel to and from medical appointments, which expenses may be reimbursed by the VA pursuant to 38 U.S.C. § 111 (2006). Defendant Herrera is alleged to have fraudulently obtained travel reimbursements from the VA in an amount exceeding $20,000, a second degree felony. See§ 30–16–6(F). In a separate case, Defendant Baca is alleged to have fraudulently obtained similar reimbursements in an amount between $2,500 and $20,000, a third degree felony. See§ 30–16–6(E).

{3} Defendants' motions to dismiss asserted that the State is without jurisdiction to prosecute these cases because Congress has chosen to “occupy the field” by enacting the Veterans' Benefits Act (the Act), Title 38 of the United States Code (Pub. L. No. 85–857, 72 Stat. 1105). Defendants also asserted that their prosecutions are preempted because, under the facts of this case, New Mexico's fraud statute is in conflict with a provision of the Act that prescribes a punishment for fraud committed against the VA.

{4} The district court held a consolidated hearing on the motions. At the hearing, Defendants presented evidence consisting of photographs of the VA facilities in Albuquerque, New Mexico, where Defendants are alleged to have obtained the travel reimbursements. Those photographs tended to support Defendants' assertion that the VA hospital is owned by the federal government, and several photographs also depicted signs on the VA grounds announcing that possession of firearms at the facility was prohibited by federal law and that traffic violators would be issued federal citations.

{5} At the conclusion of the hearing, the district court stated that subject matter jurisdiction was lacking “because the [VA is] so completely and thoroughly regulated by the [f]ederal [g]overnment[.]” It subsequently entered orders dismissing both cases. Pursuant to NMSA 1978, Section 39–3–3 (1972), the State appeals both orders of dismissal, and this Court consolidated the appeals.

PREEMPTION

{6} Federal preemption results from “the basic structure of our federal system, in which [the s]tates and the [federal g]overnment are separate political communities.” United States v. Wheeler, 435 U.S. 313, 320, 98 S.Ct. 1079, 55 L.Ed.2d 303 (1978), superseded by statute on other grounds as stated in United States v. Lara, 541 U.S. 193, 124 S.Ct. 1628, 158 L.Ed.2d 420 (2004); see Montoya v. Mentor Corp., 1996–NMCA–067, ¶ 6, 122 N.M. 2, 919 P.2d 410. Pursuant to that dual system of governance, “the [s]tates possess sovereignty concurrent with that of the [f]ederal [g]overnment, subject only to limitations imposed by the Supremacy Clause.” Tafflin v. Levitt, 493 U.S. 455, 458, 110 S.Ct. 792, 107 L.Ed.2d 887 (1990). The Supremacy Clause of the United States Constitution gives Congress authority to preempt state law by declaring that “the [l]aws of the United States ... shall be the supreme [l]aw of the [l]and ... any [t]hing in the [c]onstitution or [l]aws of any [s]tate to the [c]ontrary notwithstanding.” U.S. Const. art. VI, cl. 2; Montoya, 1996–NMCA–067, ¶ 6, 122 N.M. 2, 919 P.2d 410.

{7} Because the question of whether state law has been preempted by federal legislation depends upon whether Congress intended such a result, “[t]he purpose of Congress is the ultimate touchstone.” Allis–Chalmers Corp. v. Lueck, 471 U.S. 202, 208, 105 S.Ct. 1904, 85 L.Ed.2d 206 (1985) (internal quotation marks and citation omitted). In discerning that purpose, courts look to whether Congress has expressly preempted state law and, in the absence of express preemption, to whether such a purpose can be implied from the structure and purpose of the federal legislation in question. Gade v. Nat'l Solid Wastes Mgmt. Ass'n, 505 U.S. 88, 96, 98, 112 S.Ct. 2374, 120 L.Ed.2d 73 (1992).

{8} Defendants in these cases acknowledge that no federal provision expressly preempts Section 30–16–6, and the district court rested its decision upon implied preemption. Thus, we limit our analysis to implied preemption.

{9} Courts have recognized two distinct forms of implied preemption: field preemption and conflict preemption. Gade, 505 U.S. at 98, 112 S.Ct. 2374;United Nuclear Corp. v. Gen. Atomic Co., 1980–NMSC–094, ¶ 186, 96 N.M. 155, 629 P.2d 231. Field preemption occurs when “federal law so occupies the field that state courts are prevented from asserting jurisdiction.” State v. McHorse, 1973–NMCA–144, ¶ 16, 85 N.M. 753, 517 P.2d 75. Congressional intent to occupy the field may be found if a “scheme of federal regulation [is] so pervasive as to make reasonable the inference that Congress left no room for the [s]tates to supplement it.” Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230, 67 S.Ct. 1146, 91 L.Ed. 1447 (1947). Conflict preemption arises when there is “an unavoidable conflict between the state law and the federal law, or [where] the state law is an obstacle to the full accomplishment of congressional objectives.” Alliance Health of Santa Teresa, Inc. v. Nat'l Presto Indus., Inc., 2005–NMCA–053, ¶ 31, 137 N.M. 537, 113 P.3d 360 (internal quotation marks and citation omitted). Such a conflict should be found, however, only if “it is impossible to comply with both state and federal requirements, or if state law obstructs the congressional objectives underlying the federal law.” Azar v. Prudential Ins. Co. of Am., 2003–NMCA–062, ¶ 35, 133 N.M. 669, 68 P.3d 909.

{10} There is “a strong presumption against preemption [,]” especially in areas involving “historic police powers of the [s]tates.” Montoya, 1996–NMCA–067, ¶ 7, 122 N.M. 2, 919 P.2d 410 (internal quotation marks and citation omitted). This presumption exists even in cases arising solely under federal law. Gulf Offshore Co. v. Mobil Oil Corp., 453 U.S. 473, 478–79, 101 S.Ct. 2870, 69 L.Ed.2d 784 (1981). When, as in this case, a state's historic police powers are at issue, courts will find federal preemption only when that is “the clear and manifest purpose of Congress.” Montoya, 1996–NMCA–067, ¶ 7, 122 N.M. 2, 919 P.2d 410 (internal quotation marks and citation omitted).

{11} Prosecutions for fraud fall squarely within the “historic police powers” of New Mexico. Id. (internal quotation marks and citation omitted); see also Abbate v. United States, 359 U.S. 187, 195, 79 S.Ct. 666, 3 L.Ed.2d 729 (1959) (noting that “the [s]tates under our federal system have the principal responsibility for defining and prosecuting crimes”). Fraud has been prosecuted as a crime in New Mexico since before the advent of statehood, and the fraud statute at issue in this case can be traced to the first criminal code of the State of New Mexico. See Territory v. Hubbell, 1906–NMSC–033, ¶ 5, 13 N.M. 579, 86 P. 747 (involving indictment for false pretenses and discharge of the defendant); NMSA 1915, § 1551 (1854) (criminalizing “cheats and false pretenses”). Thus, Defendants have the burden of establishing Congress's “clear and manifest” intent to preempt state law. Montoya, 1996–NMCA–067, ¶ 7, 122 N.M. 2, 919 P.2d 410 (internal quotation marks and citation omitted); see Self v. United Parcel Serv., Inc., 1998–NMSC–046, ¶ 7, 126 N.M. 396, 970 P.2d 582 (stating that the burden is on the party claiming preemption occurred).

{12} In order to meet that burden, Defendants claim that the necessary congressional intent can be implied from the comprehensive nature of the Act. In addressing that claim, we must examine the purpose and structure of the federal law establishing and governing the VA. See Gade, 505 U.S. at 96, 112 S.Ct. 2374. This legislative scheme is expansive, comprising the entirety of Title 38 of the United States Code and governing substantially every aspect of the provision of federal benefits to veterans of the armed forces. The VA, which is charged with administering all of the veterans' benefits programs established therein, traces its history to 1930, when the agency was established by executive order. Exec. Order No. 5398. The G.I. Bill of Rights greatly expanded the VA's mission in 1944 in order to “provide [f]ederal [g]overnment aid for the readjustment in civilian life of returning World War II veterans.” G.I. Bill of Rights, Pub. L. No. 78–346, 58 Stat. 284. In 1958, all of the laws governing the administration of federal veterans' benefits were consolidated into Title 38 of the United States Code. See Pub. L. No. 85–857, 72 Stat. 1105.

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