Court Opinion

ID: 2667710
Source: CourtListenerOpinion
Date Created: 2014-04-04 14:14:23.041627+00
Date Added: 2024-06-11T13:03:25.657376
License: Public Domain

IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO

Opinion Number: _________________

Filing Date: March 31, 2014

Docket No. 32,680

FRANCISCO VALENZUELA and
RACHEL VALENZUELA,

       Plaintiffs-Appellees,

v.

ALLAN D. SNYDER and SHERRY L. SNYDER,

       Defendants-Appellants,

and

STATE OF NEW MEXICO, TAXATION
AND REVENUE DEPARTMENT, PROPERTY
TAX DIVISION,

       Defendant.

APPEAL FROM THE DISTRICT COURT OF ROOSEVELT COUNTY
Drew D. Tatum, District Judge

Eric D. Dixon
Portales, NM

for Appellees

Allan and Sherry Snyder
Greeley, CO

Pro Se Appellants

                                OPINION

FRY, Judge.

                                    1
{1}    Plaintiffs Francisco and Rachel Valenzuela owed delinquent taxes on property in
Portales, New Mexico, which the New Mexico Taxation and Revenue Department (the
Department) sold at auction to Defendants Allan and Sherry Snyder. It is undisputed that
the minimum bid at the sale was established by the Department as $215, and the Snyders,
who were the only bidders at the auction, paid that amount. The Department’s Property Tax
Division (the Division) issued deeds on the property to the Snyders, which the Snyders
recorded.

{2}     The Valenzuelas filed suit seeking an order setting aside the tax sale. They alleged
that because the purchase price was so grossly disproportionate to the property’s fair market
value—alleged to be at least $25,000—it would be inequitable and unconscionable to let the
tax sale stand. The district court granted them summary judgment on the ground that the
Snyders failed to respond to the motion for summary judgment and were deemed to have
admitted the facts alleged by the Valenzuelas. Because our statutes and case law establish
that an inadequate purchase price at a tax sale is not a basis for voiding the sale, we reverse.

BACKGROUND

{3}     The Valenzuelas initially sued only the Department seeking an order setting aside the
tax sale. They later amended their complaint to add the Snyders as Defendants, and the case
proceeded against only the Snyders.

{4}    The Valenzuelas filed a motion for summary judgment in which they alleged several
material facts regarding the value of the property and the disproportionality of the purchase
price. They also alleged, as material facts, the legal conclusion that it would be
unconscionable and inequitable to let the tax sale stand under the circumstances.

{5}     The Snyders, acting pro se, did not directly respond to the motion for summary
judgment. Instead, they filed a motion to stay the proceedings against them until the case
against the Department was resolved. In this motion, the Snyders stated that they “den[ied]
the whole” of the Valenzuelas’ motion for summary judgment. They did not comply with
the provisions of Rule 1-056 NMRA that require a memorandum opposing a motion for
summary judgment to specifically note all disputed facts with supporting citations to the
record. See Rule 1-056(D)(2).

{6}     Due to the Snyders’ failure to properly respond to the motion for summary judgment,
the district court deemed admitted all of the material facts alleged in the Valenzuelas’
motion, including:

•      The property’s fair market value was at least $25,000.

•      The Snyders purchased the property at a tax sale for $215.

•      The price the Snyders paid was “grossly disproportionate to [the property’s] fair

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        market value.”

•       “It is unconscionable to allow the tax sale in which [the Snyders] purchased the
        property to stand.”

The court concluded that “[t]he tax sale in which [the Snyders] purchased the property is
hereby deemed null and void.” This appeal followed.

DISCUSSION

{7}      When this Court calendared this case, we instructed the parties to brief, in addition
to any other issues they were inclined to raise, the following questions: (1) whether a claim
seeking to invalidate a tax sale due to inadequacy of price must be directed at the
governmental entity that sold the property, or whether it may be directed solely at the third-
party purchasers of the property; and (2) whether New Mexico law supports the invalidation
of a tax sale due to inadequacy of price. Because these questions were briefed at our
direction, we decline to address the Valenzuelas’ arguments that the Snyders failed to
preserve these questions in the district court. Indeed, the second question is the legal issue
on which the district court’s summary judgment stands or falls. We address each question
in turn.

The Valenzuelas Could Properly Sue the Snyders for the Relief Requested

{8}        We readily dispose of the first question. The Valenzuelas correctly note that NMSA
1978, Section 44-6-4 (1975) of our Declaratory Judgment Act (the Act), NMSA 1978, §§
44-6-1 to -15 (1975), provides that “[a]ny person interested under a deed . . . or whose rights
. . . are affected by a statute . . . may have determined any question of construction or validity
arising under the instrument [or] statute . . . and obtain a declaration of rights, status[,] or
other legal relations thereunder.” Section 44-6-4. The Valenzuelas seek in this case to have
their rights under the Property Tax Code declared, so they appropriately asserted their claim
under Section 44-6-4. As for the proper defendant(s) in their suit, Section 44-6-12 of the Act
provides that “[w]hen declaratory relief is sought, all persons shall be made parties who have
or claim any interest which would be affected by the declaration.” As purchasers of the
property previously owned by the Valenzuelas, the Snyders clearly fall within this category
and, therefore, the suit against them was permissible.

Inadequacy of the Purchase Price is Not a Valid Basis for Voiding a Tax Sale

{9}     With respect to the second question—whether New Mexico law permits setting aside
a tax sale due to the inadequacy of the purchase price—we review an order granting
summary judgment de novo. Self v. United Parcel Serv., Inc., 1998-NMSC-046, ¶ 6, 126
N.M. 396, 970 P.2d 582. “Summary judgment is appropriate where there are no genuine
issues of material fact and the movant is entitled to judgment as a matter of law.” Id.

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{10} While the Snyders’ response to the Valenzuelas’ motion for summary judgment did
not comply with the requirements of Rule 1-056, this did not automatically entitle the
Valenzuelas to summary judgment. See Junge v. John D. Morgan Constr. Co.,
1994-NMCA-106, ¶ 12, 118 N.M. 457, 882 P.2d 48 (explaining that a movant is “not
automatically entitled to summary judgment on the basis of an allegedly improper
response”). The Valenzuelas had the burden “to show an absence of a genuine issue of fact,
and that [they were] entitled as a matter of law to judgment in [their] favor.” Brown v.
Taylor, 1995-NMSC-050, ¶ 8, 120 N.M. 302, 901 P.2d 720.

{11} Given the Snyders’ non-compliant response to the Valenzuelas’ motion for summary
judgment, it was appropriate under Rule 1-056(E) for the district court to deem admitted the
allegations of fact stated in the motion. See id. (“[A]n adverse party may not rest upon the
mere allegations or denials of his [or her] pleading, but his [or her] response, by affidavits
or as otherwise provided in this rule, must set forth specific facts showing that there is a
genuine issue for trial. If he [or she] does not so respond, summary judgment, if appropriate,
shall be entered against him [or her].”). However, the same does not hold true for
conclusions of law that are presented as allegations of fact. See Vives v. Verzino,
2009-NMCA-083, ¶ 10, 146 N.M. 673, 213 P.3d 823 (explaining that conclusions of law are
not deemed admitted by the opponent’s failure to respond). Of the material “facts” alleged
in the Valenzuelas’ motion and adopted by the district court, one is clearly a conclusion of
law—the statement that “[i]t is unconscionable to allow the tax sale in which [the Snyders]
purchased the property to stand.” This is the legal question we must answer in light of the
facts that were deemed admitted: that the Snyders purchased property worth at least $25,000
for $215 at the tax sale and that this purchase price was “grossly disproportionate” to the
property’s fair market value.1

{12} We conclude that inadequacy of the purchase price or gross disproportionality
between the purchase price and the property’s value are not grounds for setting aside a tax
sale. New Mexico’s Property Tax Code (the Code) and our case law make this clear.

{13} We begin with the Code. NMSA 1978, Section 7-38-48 (2003) provides that, with
certain exceptions not applicable to this case, “taxes on real property are a lien against the
real property from January 1 of the tax year for which the taxes are imposed. . . . The lien
continues until the taxes and any penalty and interest are paid.” In this case, it appears that
at the time of the tax sale, the Valenzuelas owed delinquent taxes for the years 2008, 2009,
2010, and possibly 2011. They do not claim in this appeal that they did not receive notice
that these taxes were due and delinquent or that they were not provided notice of the tax sale.

{14}   The Code states, “If a lien exists . . . , the [D]epartment may collect delinquent taxes

       1
          The “fact” of gross disproportionality is arguably a conclusion of law, given the case
law from Missouri that we discuss below. However, for purposes of this appeal only, we
treat it as an undisputed fact.

                                               4
on real property by selling the real property on which the taxes have become delinquent.”
NMSA 1978, § 7-38-65(A) (2003, amended 2013). The Code requires the sale to be at
public auction, with a minimum purchase price determined by the Department. NMSA
1978, § 7-38-67(C), (E) (2005). “In determining the minimum price, the [D]epartment shall
consider the value of the property owner’s interest in the real property, the amount of all
delinquent taxes, penalties and interest for which it is being sold and the costs. The
minimum price shall not be less than the total of all delinquent taxes, penalties, interest[,]
and costs.” Section 7-38-67(E). Of note here is the direction to the Department to “consider
the value of the property owner’s interest in the real property,” a phrase that has been
interpreted by our case law, as we discuss below. Id.

{15} Once a tax sale has taken place, if the sale was “substantially in accordance with the
. . . Code . . ., the deed conveys all of the former property owner’s interest in the real
property as of the date the state’s lien for real property taxes arose . . ., subject only to
perfected interests in the real property existing before the date the property tax lien arose.”
NMSA 1978, § 7-38-70(B) (1982). Here, the Division issued two such deeds to the Snyders.
These deeds were, in effect, quitclaim deeds.

{16} “In interpreting statutes, we seek to give effect to the Legislature’s intent, and in
determining intent we look to the language used and consider the statute’s history and
background.” Key v. Chrysler Motors Corp., 1996-NMSC-038, ¶ 13, 121 N.M. 764, 918
P.2d 350. In addition, “we should read the entire statute as a whole so that each provision
may be considered in relation to every other part.” Baker v. Hedstrom, 2013-NMSC-043,
¶ 15, 309 P.3d 1047 (internal quotation marks and citation omitted).

{17} We first note that there is nothing in the Code expressly requiring that the price paid
at a tax sale approximate the fair market value of the property. As far as price is concerned,
the Code requires only that “[t]he minimum price shall not be less than the total of all
delinquent taxes, penalties, interest[,] and costs.” Section 7-38-67(E). While the Code
requires the Department to “consider the value of the property owner’s interest,” id., in
determining the minimum sale price, this Court has said that this consideration can be
established “by interesting as many buyers as possible in the sale by setting a low minimum
sale price on the property.” Cochrell v. Mitchell, 2003-NMCA-094, ¶ 28, 134 N.M. 180, 75
P.3d 396. In Cochrell, the minimum bid was set at $4000 on property worth between
$100,000 and $144,000, where the total taxes, penalties, and interest totaled $3914.72. Id.
¶¶ 3, 5, 6. In the present case, the minimum sale price was low—$215 on property worth
$25,000.

{18} Cochrell also established that all that is required of a tax sale is substantial
compliance with the Code. Id. ¶ 16. This is in keeping with the Code’s purpose to permit
the collection of delinquent taxes by selling the property at issue. Id. ¶ 30. “[T]he
[L]egislature does not appear to have required any definite amount representing the owner’s
interest as part of the minimum sale price.” Id. Had the Legislature “wanted to mandate an
element of the sale price to be a certain level, whether the full appraised value or the taxable

                                               5
value or some percentage of either, it could have easily so provided.” Id. ¶ 29.

{19} Earlier New Mexico cases, interpreting a former version of the Code, have held that
“[t]ax sale deeds will not be invalidated because it might appear that the property so sold for
delinquent taxes was not adequately valued for assessment purposes.” Taylor v. Shaw, 1944-
NMSC-046, ¶ 10, 48 N.M. 395, 151 P.2d 743; see Lawson v. McKinney, 1950-NMSC-022,
¶¶ 2-3, 12, 54 N.M. 179, 217 P.2d 258 (reversing judgment in favor of former owner of land
sold at tax sale where judgment was based on the trial court’s adoption of the principle that
“where the consideration in a tax sale is grossly inadequate as compared with the actual
value of the property the deed should be held invalid”).

{20} In Taylor, the former owner of the property sought to invalidate the tax sale in part
because improvements he made to the property were not included in the assessment of its
value. 1944-NMSC-046, ¶ 10. In rejecting this argument, our Supreme Court stated that
permitting a property owner to attack a tax sale on this basis would defeat the purpose of the
law of tax sales, which is “to render these tax sales efficient to collect delinquent taxes and
confer upon the purchaser a substance and not a shadow.” Id. ¶ 16 (internal quotation marks
and citation omitted). Because the former owner failed to pay his property taxes and failed
to complain about the inadequacy of the assessment, the Court would not permit him to
complain about an inadequate valuation. Id. ¶ 18.

{21} Justice Bickley wrote a special concurring opinion in Taylor, in which he
commended a principle adopted in Missouri “that in tax sales the consideration paid may be
so grossly inadequate as of itself to amount to ‘fraud,’ requiring that sale and tax deed be set
aside.” Id. ¶ 20 (Bickley, J., concurring specially). This is the same principle that the
Valenzuelas urge us to adopt in the present case. We decline to establish a similar rule in
New Mexico for two reasons. First, our Supreme Court expressly rejected the Missouri rule
in Lawson, 1950-NMSC-022, ¶¶ 3, 7 (declining to follow Justice Bickley’s recommendation
of the Missouri rule). Second, the applicable statute in Missouri expressly requires tax sales
to be confirmed by a court and that the court receive evidence of the property’s value and
“determine whether an adequate consideration has been paid” for the property sold. Mo.
Ann. Stat. § 141.580(1) (West 2012). The Code in New Mexico has no such requirement.

{22} The Valenzuelas also rely on Armstrong v. Csurilla, which applied a rule similar to
the “shock the conscience” principle established in Missouri. 1991-NMSC-081, ¶¶ 39-40,
112 N.M. 579, 817 P.2d 1221. Armstrong is distinguishable, however, because it involved
foreclosure on a judgment lien, not a tax sale. Id. ¶¶ 2, 6. Judgment liens and mortgages may
be foreclosed upon by way of a judicial proceeding. See NMSA 1978, § 39-4-13 (1933)
(stating that anyone holding a judgment lien on real estate “may subject said real estate to
the payment of his [or her] judgment by a foreclosure suit in any court of competent
jurisdiction, such suit to be instituted and prosecuted in the same manner as ordinary suits
for the foreclosure of mortgages”). Such foreclosure proceedings are subject to their own
requirements and exemptions, including the property owner’s right of redemption. Id.
(stating that a foreclosure of a judgment lien is “subject to the same rights of redemption as

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in sales held under mortgage foreclosure decrees”). In contrast, tax sales are not
accomplished through foreclosure in a court proceeding but may be conducted by the
Department itself, without court participation, and there is no right of redemption for the
taxpayer in a tax sale. See Cochrell, 2003-NMCA-094, ¶ 15 (explaining that the 1973
amendments to the Code “eliminated the right of redemption”). Thus, a judicial sale and a
tax sale are two different creatures, and the principles applicable to one do not apply to the
other.

{23} While it may seem harsh to disregard a large discrepancy between the purchase price
in a tax sale and the property’s value, there are at least three sensible reasons for doing so.
First, it seems less important to protect a property owner’s interest in fair market value where
the owner has not bothered to pay taxes on the property, despite having had at least three
years in which to contemplate doing so before the tax sale. See § 7-38-65(A) (stating that a
tax sale may not occur until “after the expiration of three years from the first date shown on
the tax delinquency list on which the taxes became delinquent”); see also Hickey v. Peck,
23 A.2d 711, 714-15 (Md. App. 1942) (explaining that “where the owner of the property has
not thought it worth while to pay taxes on the property, courts will not look too closely at
the amount of the purchase price in the absence of any other circumstances”). Second, “the
purchaser [at the tax sale] buys, knowing the uncertainty of [the] title which is reflected in
[the purchaser’s] offer.” Id. at 714. In this case, the Snyders, like all purchasers at a tax
sale, received quitclaim deeds, and this circumstance may compel the purchaser to undertake
the cost and time expenditures of a quiet title suit. Allowing property to be sold for the
amount of delinquent taxes, penalties, interest, and costs encourages purchasers and resolves
a delinquency owed the Department. Third, precluding an after-sale challenge on the basis
of an inadequate price “clothe[s] tax titles with a measure of certainty and security.”
Cochrell, 2003-NMCA-094, ¶ 18 (internal quotation marks and citation omitted); see Wine
v. Neal, 1983-NMSC-087, ¶ 17, 100 N.M. 431, 671 P.2d 1142 (stating that “[t]he very
purpose of the curative statute is to stabilize and render tax sales efficient, to collect
delinquent taxes and confer on the purchasers something of substance” (internal quotation
marks and citation omitted)).

{24} We are not persuaded by the out-of-state cases relied on by the Valenzuelas. Those
cases involved the taxpayer’s right of redemption following a tax sale. C.F.P. Prop., Inc.
v. Roleh, Inc., 2009-CA-00391-COA (¶¶ 9, 11-12) (Miss. 56 So. 3d 575, 576-77, Ct. App.
2010) (affirming summary judgment in favor of taxpayer and against purchaser at a tax sale
because there was no affidavit of diligent search and inquiry as to the taxpayer’s
whereabouts, which was a prerequisite for giving the taxpayer notice of the right of
redemption); Priest v. Mareane, 846 N.Y.S.2d 518, 519-20 (N.Y. App. Div. 2007) (mem.)
(affirming dismissal of petition for delivery of a tax sale deed because the taxpayer had
redeemed the property by paying the back taxes and other charges). In New Mexico, there
is no right of redemption.

{25} In summary, the district court erroneously granted summary judgment to the
Valenzuelas. As a matter of law, the purchase price paid by the Snyders, while

                                               7
disproportionate to the market value of the property, cannot be deemed unconscionable and
cannot serve as a basis for setting aside the deeds issued to the Snyders by the Division.

{26}    Given our disposition, we need not address the other issues raised by the Snyders.

CONCLUSION

{27} For the foregoing reason, we reverse the summary judgment in favor of the
Valenzuelas and remand to the district court with instructions to enter judgment in favor of
the Snyders.

{28}    IT IS SO ORDERED.

                                                _____________________________________
                                                CYNTHIA A. FRY, Judge

I CONCUR:

____________________________________
M. MONICA ZAMORA, Judge

JONATHAN B. SUTIN, Judge (specially concurring).

SUTIN, Judge (specially concurring).

{29} I fully concur in Judge Fry’s Opinion. I write separately just to note a few matters.
First, I cannot fault the district court for granting summary judgment when the Snyders,
acting pro se, intentionally, if not flagrantly, disregarded important rules of procedure related
to summary judgment proceedings and discovery. As indicated in Judge Fry’s Opinion,
however, in scrutinizing judgments we need not overlook incorrect application of law,
particularly when to do so can result in bad precedent.

{30} Second, although Plaintiffs’ counsel attempted to make a case that the Valenzuelas
did not understand how the tax delinquency system worked, it appears that the Valenzuelas
received notice of delinquent taxes, failed to prove a valid reason for disregarding the
delinquency, and at no time before or at the sale sought to satisfy the delinquency that
amounted to no more than $215.

{31} Third, although I concurred in Judge Pickard’s opinion in Cochrell, 2003-NMCA-
094, I think that the mandate in Section 7-38-67(E), that the Department “consider the value
of the owner’s interest in the real property” in determining the minimum price for the
property at the sale, requires more than indicated in Cochrell. I tend to doubt that the
Legislature meant that the only care and caution in the Department’s thoughts in that regard
need only go so far as to have some hope or expectation that a competitive bidding process

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will occur and might produce an ultimate purchase price significantly higher than the
minimum price set to cover the delinquency. I think that the “consider the value of the
owner’s interest” phrase is ambiguous and is in need of greater clarification, hopefully
through legislation.

{32} Fourth, it may be time for the Legislature to take another look at the tax sale
provisions to explore whether some balanced approach can exist in tax sales that satisfies the
policies of discouraging delinquencies, encouraging competitive bidding, and taking into
consideration a purchaser’s title risks and any commensurate costs when receiving only a
quitclaim deed, yet guarding against homeowner unconscionable loss and purchaser
windfall.

                                              __________________________________
                                              JONATHAN B. SUTIN, Judge

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