In re Estate of McElveny, 35,349

Background

Edward K. McElveny died intestate in 1991; his grandson Michael Phillips sought informal appointment as personal representative (PR) in 2013 and identified ~ $70,000 held by the New Mexico Department of Taxation and Revenue (the Department) as unclaimed property belonging to the estate.
Phillips obtained a probate-court order appointing him PR and directing the Department to release the funds; he also submitted an uncompleted claim form to the Department with the probate order attached.
The Department returned the filing as "incomplete" for several stated reasons and did not release the funds; Phillips then sought enforcement in district court and obtained an order directing the Department to release the property and a $3,000 sanction.
The Court of Appeals affirmed, holding UPA claim procedures permissive; the Department petitioned for certiorari to the New Mexico Supreme Court to decide whether UPA administrative claim filing is exclusive and whether exhaustion is required.
The Supreme Court held the UPA’s administrative claim procedures are exclusive and exhaustion of administrative remedies is required for unclaimed property claims, but applied two exceptions and ordered the Department to release the funds to Phillips; it vacated the sanction and the appellate attorneys’‑fee award.

Issues

Issue	Plaintiff's Argument (Phillips)	Defendant's Argument (Department)	Held
Are the UPA claim‑filing provisions exclusive/mandatory?	"May file" in §7‑8A‑15(a) is permissive; probate/district courts have jurisdiction under UPC §45‑1‑302(B) to decide property questions.	UPA delegates primary authority to Department; terms and scheme require Department to adjudicate claims first.	UPA administrative process is exclusive and mandatory; Department must decide claims in the first instance.
Must claimants exhaust administrative remedies before seeking judicial relief?	Not required because probate courts/district court jurisdiction permit direct adjudication; permissive nature of UPA filings.	Yes: prudential (non‑jurisdictional) exhaustion required because agency created to decide these matters and judicial efficiency/avoidance of conflicting determinations.	Non‑jurisdictional exhaustion required for prudential reasons; claimants must normally exhaust administrative remedies.
Could the Probate Court and district court enforce a release order directing the Department to deliver unclaimed property?	Probate order appointing PR and directing release is valid and enforceable; district court may enforce under UPC.	Probate courts are limited; informal probate is nonadjudicatory and cannot determine ownership vis‑à‑vis the state as unclaimed‑property custodian.	Probate court lacked authority to adjudicate unclaimed‑property entitlement; its order was nugatory and district court order enforcing it vacated.
Were sanctions and appellate attorneys’ fees appropriate?	Phillips sought sanctions and attorneys’ fees as prevailing party on appeal.	Sanctions improper because Department properly declined to comply with a void probate order; attorneys’ fees inappropriate because no single prevailing party.	$3,000 sanction vacated; appellate fee award vacated because neither party was prevailing on all issues.

Key Cases Cited

State ex rel. Norvell v. Arizona Public Service Co., 85 N.M. 165, 510 P.2d 98 (N.M. 1973) (discussing the application of exhaustion where agency has primary initial jurisdiction)
Lion’s Gate Water v. D’Antonio, 147 N.M. 523, 226 P.3d 622 (N.M. 2009) (factors for determining exclusivity of administrative remedies)
McKart v. United States, 395 U.S. 185 (U.S. 1969) (purposes and policies underlying exhaustion doctrine)
Whitney National Bank in Jefferson Parish v. Bank of New Orleans & Trust Co., 379 U.S. 411 (U.S. 1965) (risk of duplication and conflict when administrative remedies are bypassed)
U.S. Xpress, Inc. v. N.M. Taxation & Revenue Dep’t, 139 N.M. 589, 136 P.3d 999 (N.M. 2006) (statutory exhaustion requirement when legislature clearly mandates administrative path)