Opinion ID: 891677
Heading Depth: 3
Heading Rank: 2

Heading: The City's Administrative Decision Was Arbitrary and Contrary to Law.

Text: {44} As a threshold matter, the City contends that Cloudview failed to appeal the City's administrative decision within the applicable limitation period because Cloudview failed to file a complaint in state district court within two days of when the federal court dismissed Cloudview's complaint without prejudice. A person aggrieved by a decision of a zoning authority has thirty days to appeal to the district court. See NMSA 1978, § 3-21-9 (1999) (A person aggrieved by a decision of the zoning authority . . . may appeal the decision pursuant to the provisions of Section 39-3-1.1 NMSA 1978.); NMSA 1978, § 39-3-1.1(C) (1999) ([A] person aggrieved by a final [administrative] decision may appeal the decision to district court by filing in district court a notice of appeal within thirty days of the date of filing of the final decision.). {45} In this case, the City's Governing Body issued its final decision on November 10, 2005. Cloudview sought review in federal district court on December 8, 2005, twenty-eight days later. See Cloudview Estates, LLC v. City of Rio Rancho, Civ. No. 05-01283 MV/WPL (D.N.M. Dec. 8, 2005). The filing of the federal action tolled the limitations period. See Gathman-Matotan Architects & Planners, Inc. v. State, Dep't of Fin. & Admin., Prop. Control Div., 109 N.M. 492, 495, 787 P.2d 411, 414 (1990) ([T]he filing of a complaint ordinarily tolls the applicable limitations period. In this respect, New Mexico has adopted an `equitable' or nonstatutory tolling principle alongside the statutory tolling provisions in NMSA 1978, Sections 37-1-14, 37-1-9 and 37-1-12.); see also Bracken v. Yates Petroleum Corp., 107 N.M. 463, 465, 760 P.2d 155, 157 (1988) (When a lawsuit is filed, that filing shows a desire on the part of the plaintiff to begin [the] case and thereby toll whatever statutes of limitation would otherwise apply. The filing itself shows the proper diligence on the part of the plaintiff which such statutes of limitation were intended to insure. (internal quotation marks and citation omitted)), disagreed with on other grounds, Team Bank v. Meridian Oil Inc., 118 N.M. 147, 151, 879 P.2d 779, 783 (1994). {46} While Cloudview's federal action was still pending, the City initiated its suit in state district court. Cloudview had thirty days to file its answer to the complaint and any counterclaims it had against the City. Rules 1-012(A), 1-013 NMRA. Once the federal action was dismissed, Cloudview counterclaimed in state district court for review of the City's administrative decision. A counterclaim is not barred by a statute of limitations if it was not barred at the time the complaint was filed. See, e.g., NMSA 1953, § 37-1-15 (1880); see generally M.A.L., Annotation, Commencement of Action as Suspending Running of Limitation Against Claim Which Is Subject of Setoff, Counterclaim, or Recoupment, 127 A.L.R. 909, 910 (1940) (The rule which is supported by the majority of the cases is that unless otherwise provided by statute, if a counterclaim or setoff is not barred at the commencement of the action in which it is pleaded, it does not become so afterward during the pendency of that action.). Additionally, Cloudview's counterclaim was compulsory; as such, Cloudview could not have raised it separately as it would have been barred by res judicata. See Rule 1-013(A) (A pleading shall state as a counterclaim any claim which at the time of serving the pleading the pleader has against any opposing party, if it arises out of the transaction or occurrence that is the subject matter of the opposing party's claim.); see also City of Sunland Park v. Macias, 2003-NMCA-098, ¶ 18, 134 N.M. 216, 75 P.3d 816 (Res judicata bars not only claims that were raised in the prior proceeding, but also claims that could have been raised.). We conclude that Cloudview's appeal for review in the state district court was timely. {47} Having found that the state district court properly reviewed the City's administrative decision, we will conduct the same review of an administrative order as the district court sitting in its appellate capacity, while at the same time determining whether the district court erred in the first appeal. Rio Grande Chapter of the Sierra Club v. N.M. Mining Comm'n, 2003-NMSC-005, ¶ 16, 133 N.M. 97, 61 P.3d 806. The district court may set aside, reverse, or remand final administrative orders if it finds that (1) the agency acted fraudulently, arbitrarily or capriciously; (2) the decision was not supported by substantial evidence; or (3) the agency did not act in accordance with law. Section 39-3-1.1(D). A ruling by an administrative agency is arbitrary and capricious if it is unreasonable or without a rational basis, when viewed in light of the whole record. Rio Grande, 2003-NMSC-005, ¶ 17, 133 N.M. 97, 61 P.3d 806. {48} In this case, the City declined to vacate the drainage easement in part because the protection of Parcel F as open space provides a valued public use originally made a condition of the development of [VHWU1] that should be continued. Because the City owns only a drainage easement over Parcel F, we conclude that the City's decision to enforce an unrecorded open space easement against the rights of a subsequent good faith purchaser was arbitrary and contrary to law. However, we do not know how the City would have decided Cloudview's application if it had not interposed a perpetual open space easement as a reason not to grant Cloudview's application. Therefore, we vacate the City's administrative decision and remand to the City's Governing Body for further proceedings consistent with this Opinion.