Opinion ID: 173042
Heading Depth: 1
Heading Rank: 3

Heading: Mr. Ruiz's Solicitation of Charitable Contributions in Lieu of Fines Violated New Mexico Law

Text: All but one of Mr. Ruiz's claims on appeal are based on his primary contention that the New Mexico insurance code authorized his solicitation of charitable contributions in lieu of fines. Implicitly, Mr. Ruiz claims he cannot be convicted under federal criminal statutes for conduct that was authorized by state law. We recognize that the courts of appeals currently disagree whether the federal honest services fraud statute, under which Mr. Ruiz was convicted, requires a predicate state law violation, and we are mindful that the Supreme Court will soon resolve this conflict. See United States v. Brumley, 116 F.3d 728, 734 (5th Cir.1997) (adopting a state-law limiting principle to the federal honest services fraud statute under which a federal prosecutor must prove that conduct of a state official breached a duty respecting the provision of services owed... under state law); United States v. Murphy, 323 F.3d 102, 116 (3d Cir.2003) (stating [w]e thus endorse ... the decisions of other Courts of Appeals that have... required a state law limiting principle for honest services fraud). But see United States v. Weyhrauch, 548 F.3d 1237, 1244 (9th Cir.2008) (stating [t]he majority of circuits ... have held that the meaning of `honest services' is governed by a uniform federal standard inherent in [the statute], although they have not uniformly defined the contours of that standard), cert granted, ___ U.S. ___, 129 S.Ct. 2863, 174 L.Ed.2d 575 (2009). This case does not require us to address this precise issue, however, because even if a predicate state law violation is required for a federal honest services fraud conviction, Mr. Ruiz's conduct clearly violated New Mexico law. [2] [S]tate courts are the final arbiters of state law. United States v. DeGasso, 369 F.3d 1139, 1145 (10th Cir.2004). When the highest court in a state has not interpreted a particular state statutory provision, however, a federal court must examine state appellate court opinions and other authorities to predict how the [highest] court would interpret [that particular provision]. Id. In doing so, a federal court must follow state rules of statutory construction. Id. at 1145-46. In New Mexico, words of a statute ... [are] given their ordinary meaning unless such a construction would render the statute's application absurd, unreasonable, or unjust. State v. Rowell, 121 N.M. 111, 908 P.2d 1379, 1382 (1995). The New Mexico insurance code requires that all adjusters operating within the state obtain a license, but the code does not provide a specific statutory penalty for operating without a license. See N.M. Stat. Ann. § 59A-11-1. Section 59A-1-18, however, provides, [w]here other monetary penalty is not expressly provided for, an administrative penalty may be assessed for violations of the Insurance Code. Id. § 59A-1-18(B). That section further requires that [e]very administrative penalty shall be imposed by written order of the superintendent made after [a] hearing. Id. Presumably to ensure transparency and a smooth transition of administrations, the insurance code also specifically imposes a duty upon the superintendent to maintain all records relating to the business of the department and to make those records open to public inspection. Id. § 59A-2-12. Finally, and particularly important to the resolution of this case, the insurance code requires that [a]ll money received by the [insurance] division for fees, licenses, penalties and taxes shall be paid daily by the superintendent to the state treasurer. Id. § 59A-6-5(A). Mr. Ruiz claims the insurance superintendent has unfettered authority to impose fines, settle claims, or forgive violations under § 59A-1-18. Mr. Ruiz argues that Mr. Serna, pursuant to this broad authority, directed him to forgive licensing violations if companies made voluntary donations directly to Con Alma or SAI. Finally, and most important, Mr. Ruiz claims these charitable donations were not fines or penalties under § 59A-6-5 because they were never actually received by the insurance division. Therefore, in Mr. Ruiz's view, the charitable contributions were not required to be paid to the state treasurer and no documentation of them was required to be created or kept by the insurance division. Mr. Ruiz's literal interpretation of § 59A-6-5, which focuses on the phrase received by the insurance department, is untenable and would produce absurd results. Indeed, under his construction, the superintendent could seemingly negotiate deals with insurers that would allow them to avoid monetary penalties if they would deposit money into the superintendent's spouse's bank account, and because that money would not actually be received by the insurance department, it would not have to be paid to the state treasurer. Such a system in which regulated entities could legally avoid monetary penalties owed to the state by paying off regulators cannot be what the New Mexico Legislature intended when it drafted § 59A-6-5. Furthermore, although no New Mexico court has interpreted § 59A-6-5, the New Mexico Court of Appeals has held that a district court may not order a defendant to contribute money to a sheriff's department fund in lieu of paying a fine. State v. Dominguez, 115 N.M. 445, 853 P.2d 147, 158-59 (1993). In Dominguez, the New Mexico Court of Appeals recognized that as an alternative to paying fines or penalties owed to the state, charitable contributions unauthorized by statute have not been upheld. Id. at 159. Accordingly, the absurd results that Mr. Ruiz's proffered construction of the insurance code would produce and the New Mexico Court of Appeals' statement generally disfavoring charitable contributions that are not specifically authorized by statute support our conclusion that Mr. Ruiz's conduct was not authorized by New Mexico law. Furthermore, because all but one of Mr. Ruiz's insufficiency of the evidence claims depend on his flawed interpretation of New Mexico law, we reject each of those claims.