Opinion ID: 2621258
Heading Depth: 2
Heading Rank: 3

Heading: Constitutionality of Section 10-11-4.2(A)

Text: {19} We must next determine whether Section 10-11-4.2(A) is constitutional viewing its effect as applied to overpayments accruing after the date of its enactment. The parties devote a significant portion of their briefs to a discussion of whether Section 10-11-4.2(A) is a constitutional statute of either limitations or repose. The same issue was raised in Montoya, where this Court stated: We fail to discover in this statute ... the earmarks of an ordinary statute of limitations. A statute which merely bars the remedy is one of repose. It forbids the preferring of stale claims as a matter of public policy. But this statute is one of presumption of payment, and directs the county treasurers to make record of actual payment. It does not act prospectively as statutes of limitations do. It acts only retrospectively. It allows no time within which the state may proceed on these old taxes before the bar is to fall, as statutes of limitations must do which are to affect private contract obligations. The plain purpose and necessary effect of this section is to remit and release tax obligations. Montoya, 32 N.M. at 317, 255 P. at 635. Under the reasoning set forth in Montoya, a statute of limitations or repose to be valid under Article IV, Section 32 must, minimally, permit the state some form of recovery against existing obligations or liabilities. {20} Initially, a statute of limitations establishes the time, after a cause of action arises, within which a claim must be filed. Cummings v. X-Ray Assocs., 1996-NMSC-035, ¶ 49, 121 N.M. 821, 918 P.2d 1321. A statute of limitations begins to run when the cause of action accrues, the accrual date usually being the date of discovery. Id. On the other hand, a statute of repose terminates the right to any action after a specific time has elapsed, even though no injury has yet manifested itself. Id. ¶ 50. A statute of repose runs from a statutorily determined triggering event. Id. (observing that a patient's claim for medical malpractice will be barred if they fail to discover their injury within three years of the malpractice, even though the injury may be present but undetected). [T]he purpose of a statute of repose is to put an end to prospective liability for wrongful acts that, after the passage of a period of time, have yet to give rise to a justiciable claim. Garcia ex rel. Garcia v. La Farge, 119 N.M. 532, 537, 893 P.2d 428, 433 (1995); see Duncan v. Campbell, 1997-NMCA-028, ¶ 15, 123 N.M. 181, 936 P.2d 863 (stating that statutes of repose serve purpose of promoting fairness to prospective defendants). Moreover, statutes of limitation or repose may run against the state where the statute expressly includes the state or does so by clear implication. See Bd. of Educ. v. Standhardt, 80 N.M. 543, 549, 458 P.2d 795, 801 (1969); see also State v. Estate of Crocker, 38 Ala.App. 306, 83 So.2d 261, 263-64 (1955) (holding that constitutional provision similar to that of New Mexico prevented extinguishment of claim held by state against decedent's estate for old age benefits illegally claimed during decedent's lifetime, but not to affect power of legislature to provide six-month period of limitation on recovery thereof by state in the interest of repose). [8] {21} In deciding that Section 10-11-4.2(A) is not such a statute, the Court of Appeals stated: Section 10-11-4.2(A) ... does not ground its time prior to repose on the most logical event; that is, at retirement when the error in option selection occurs and PERA's claims become justiciable. Instead it counts backward from date the error is discovered. Lawrence thus proposes a statute of repose which is triggered and measured by discovery of the claim by PERA. Longacre, 2001-NMCA-076, ¶ 24, 131 N.M. 156, 33 P.3d 906. The court concluded that Section 10-11-4.2(A) must be interpreted as a forgiveness of debt rather than a statute of limitations of any kind. Id. ¶ 25. We agree Section 10-11-4.2(A) does not look like a typical statute of repose; we disagree with the Court of Appeals' interpretation of the statute. [9] {22} Section 10-11-4.2(A) is not triggered by PERA's discovery of the error causing any overpayments. It is triggered, or begins to run, upon the making of an overpayment itself. Likewise, Section 10-11-4.2(A) does not act retroactively upon the discovery of the error or omission causing the overpayment to release an obligation or liability owed to the state, but rather, like an ordinary statute of repose, merely bars the right to recover on such obligations or liabilities with the passage of time. For example, if PERA were to make an overpayment of retirement benefits on January 1, 2003, it would be barred under Section 10-11-4.2(A) from collecting the overpayment after December 31, 2003 as long as it had not yet discovered its error by that date. In this sense, Section 10-11-4.2(A) is virtually indistinguishable from the typical statute of repose. See, e.g., NMSA 1978, § 41-5-13 (1976) (claim for malpractice must be filed within three years of act of malpractice irrespective of whether injury had ever been discovered). {23} PERA acknowledges that under an ordinary statute of limitations or repose it would have a pre-determined period of time within which to bring a cause of action for overpayments, but seeks to distinguish Section 10-11-4.2(A) from such a statute on the ground that Section 10-11-4.2(A) acts instead to diminish the debt owed. However, a statute of repose may very well act to prevent a party from recovering the total amount of an obligation or liability owed, without completely eliminating the right to recovery, where, as here, there is a continuing wrong. See Plaatje v. Plaatje, 95 N.M. 789, 790-91, 626 P.2d 1286, 1287-88 (1981) (holding that payment of monthly retirement benefits in action to recover portion thereof by spouse subsequent to divorce was governed by four-year statute of limitation commencing from date each payment comes due); Tull v. City of Albuquerque, 120 N.M. 829, 830-31, 907 P.2d 1010, 1011-12 (Ct.App. 1995) (noting application of continuing wrong theory in cases involving contracts requiring periodic payments). The critical issue in light of Article IV, Section 32 is not whether Section 10-11-4.2(A) may, through its application as a statute of repose, eventually bar the state from collecting on an obligation or liability owed it by the passage of time, but whether it has the absolute effect of altering or extinguishing an obligation, with no opportunity for the state to enforce it. {24} We note that Section 10-11-4.2(A) would violate Article IV, Section 32 if it did actually extinguish an obligation. However, Section 10-11-4.2(A) does not go so far, even though the statute's effect at the moment it bars the remedy of recovery on the obligation is necessarily retroactive. See Britton v. Britton, 100 N.M. 424, 428, 671 P.2d 1135, 1139 (1983) (Application of a statute of limitations merely bars the remedy on a stale claim without determining the underlying validity of that claim or modifying it in any way.). The statute does allow the state to fully recover overpayments, if they are discovered in time. Thus, the prohibitions of Article IV, Section 32 are not triggered by the statute. Lawrence does, however, remain obligated to repay all overpayments made for a period of up to one year prior to the date the error or omission [causing the overpayments] was discovered. [10] Section 10-11-4.2(A). {25} PERA also argues that, under a typical statute of limitations, an action for relief on the grounds of mistake, i.e. an error or omission resulting in an overpayment, would not be deemed to have accrued until the mistake was discovered by the aggrieved party. However, a statute of repose may bar an action without regard to whether a mistake causing injury is discovered. See § 41-5-13. Additionally, one party's mistake does not toll a statute of limitations. City of Carlsbad v. Grace, 1998-NMCA-144, 126 N.M. 95, 966 P.2d 1178. In City of Carlsbad, Grace, an oil company, claimed a right to recoup overpayments of royalties it made to the City as a result of its own accounting error. Id. ¶ 2. In holding that the applicable statute of limitations was not tolled until Grace's discovery of the error resulting in the overpayment, the Court of Appeals stated: [I]t was Grace's responsibility to ensure that it correctly remitted payments to the City. For sixteen years Grace failed to discover its error. Furthermore, as conceded during oral argument by Grace's counsel, the error was discoverable. If Grace had examined its accounting records during the sixteen-year period, Grace could have discovered the miscalculation. Id. ¶ 7. {26} Likewise, in this case, although there are no facts before this Court from which we will infer that PERA made a unilateral mistake resulting in overpayments to Maria during her lifetime, we note that the Public Employees Retirement Act places an affirmative burden on PERA to obtain the consent of a member's spouse to the election of the form of payment before the election is effective. Section 10-11-116(A) (If the member is married, the association shall obtain the consent of the member's spouse to the election of the form of payment ... before the designation is effective.) (emphasis added). Moreover, PERA, not the individual retirement beneficiary, is in a position to conduct regular audits for the purpose of correcting any errors or omissions before they result in substantial overpayments of retirement benefits. Thus, we are not persuaded that the legislature's decision to specifically provide that a cause of action for the recovery of overpaid retirement benefits begins to accrue against PERA upon its making of an overpayment, rather than upon the discovery of the error causing the overpayment, is contrary to well-established precedent or prohibited by our constitution.