State ex rel. Foy v. Austin Capital Management, Ltd.
2013 NMCA 043
N.M. Ct. App.2013Background
- FATA retroactively applies to conduct as far back as 1987 under § 44-9-12(A).
- Plaintiffs (Frank and Suzanne Foy) allege fraud schemes involving SIC/ERB with acts dating to 2003–2007.
- Vanderbilt Capital Advisors matter involves similar factual and procedural issues about retroactivity.
- District court held retroactive application violates Ex Post Facto clauses; severed retroactivity while allowing post‑2007 conduct claims.
- Court grants interlocutory review to assess retroactivity constitutionality and jurisdictional questions.
- Court remands for proceedings consistent with its opinion and notes record is insufficient on jurisdiction.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Ex Post Facto retroactivity validity | Foy: retroactivity penal in effect violates Ex Post Facto. | FATA/State: retroactive remedial scheme permissible. | Retroactive application unconstitutional. |
| Subject matter jurisdiction | Foy challenges jurisdiction under § 44-9-9(B). | Defendants contend lack of jurisdiction/deference to agency records. | Not decided; record inadequate to resolve jurisdiction. |
| Punitive nature of treble damages under Mendoza-Martinez | Treble damages are punitive, undermining remedial purpose. | Treble damages may serve remedial goals within FCA framework. | Treble damages largely punitive; factor favors punitive finding. |
| Severability of retroactivity | If retroactivity invalid, remaining provisions should stand. | Severability should preserve rest of statute. | Retroactivity severable; rest of FATA remains in effect prospectively. |
| New cause of action for retroactivity (qui tam revival) | Hughes Aircraft creates new retroactive qui tam action; improper retroactivity. | Qui tam aspect expands enforcement and constitutional retroactivity applies. | Qui tam creates new cause of action; retroactivity barred. |
Key Cases Cited
- Kennedy v. Mendoza-Martinez, 372 U.S. 144 (U.S. 1963) (seven-factor test for punitive vs remedial purpose)
- City of Albuquerque v. One (1) 1984 White Chevy Ut., 132 N.M. 187 (N.M. 2002) (seven Mendoza-Martinez factors applied to regulatory schemes)
- Nunez v. State, 2000-NMSC-013 (N.M. 2000) (ex post facto applies when penalties outweigh remedial purposes)
- Landgraf v. USI Film Prods., ruled in U.S. Supreme Court context (U.S. 1994) (new provision retroactivity and new cause of action analysis)
- Chandler v. United States ex rel., 538 U.S. 119 (U.S. 2003) (treble damages discussion; remedial vs punitive)
- Texas Industries, Inc. v. Radcliff Materials, Inc., 451 U.S. 630 (U.S. 1981) (treble damages as punitive in some contexts)