BOKF, N.A., Plаintiff, v. THE UNKNOWN HEIRS AND DEVISEES AND LEGATEES OF LINORA P. PACHECO, Deceased, JOSE PACHECO, SANTA FE COMMUNITY HOUSING TRUST, NEW MEXICO MORTGAGE FINANCE AUTHORITY, and OCCUPANTS OF THE PROPERTY, Defendants, and ASHOK KAUSHAL, Appellant-Petitioner/Cross-Respondent, v. SANTA FE COMMUNITY HOUSING TRUST, Appellee-Respondent/Cross-Petitioner.
NO. S-1-SC-40119
IN THE SUPREME COURT OF THE STATE OF NEW MEXICO
Filing Date: April 24, 2025
Bryan Biedscheid, District Judge
Ferrance Law, P.C.
David A. Ferrance
Albuquerque, NM
for Petitioner/Cross-Respondent
VanAmberg, Rogers, Yepa, Abeita, Gomez & Wilkinson LLP
Ronald J. VanAmberg
Santa Fe, NM
for Respondent/Cross-Petitioner
HUDSON, Judge.
{1} Fundamental guarantees of fairness, notice, the opportunity to be heard, and due process undergird both our judicial system and the validity of judgments affecting the rights of parties impacted by those judgments. This case presents an instance where our obligation to protect those guarantees must take precedence ovеr the consideration and decision of the discrete legal issues that bring this case before us. At issue is the established legal principle that “[a] judgment entered absent sufficient service of process upon a defendant violates due process and is void as to the defendant for want of personal jurisdiction.” T.H. McElvain Oil & Gas Ltd. P‘ship v. Grp 1: Benson-Montin-Greer Drilling Corp., 2017-NMSC-004, ¶ 25, 388 P.3d 240.
{2} Upon review of the proceedings in this matter, we conclude that the underlying judgment of foreclosure may be void based on the lack of service of process on the unknown heirs, legatees, and devisees of the original debtor and mortgagor, Linora P. Pacheco (Linora Pacheco), who were named as parties under
I. PROCEDURAL HISTORY
{3} Consideration of the sufficiency of service of process on claimants to the underlying property and the validity of the judgment of foreclosure requires a granular recitation of the procedural history in the district court.
A. The Complaint and Initial Service
{4} Linora Pacheco executed a promissory note and deed of trust in favor of BOKF, N.A. DBA Bank of Albuquerque, a National Banking Association (BOKF). The deed of trust granted BOKF a security interest in Linora Pacheco‘s property in Santa Fe, New Mexico (the Property). After Linora Pacheco defaulted on her obligations under the promissory note, BOKF brought suit seeking judgment against Linora Pacheco on the promissory note and for foreclosure of the Property under the deed of trust.
{5} The Complaint for Foreclosure was filed on December 23, 2014. Thе complaint named Linora Pacheco and John Doe Pacheco and the junior lien holders, Santa Fe Community Housing Trust (the Trust) and New Mexico Mortgage Finance Authority, as the named defendants. ABC Corporations I-X, XYZ Partnerships I-X, John Does I-X, Jane Does I-X, and the Unknown Heirs and Devisees of any of the
{6} At BOKF‘s request, the district court issued a summons on December 29, 2014, for the unnamed Occupants of the Property. Summonses were also issued for Linora Pacheco and John Doe Pacheco for service at the Property but were not returned.
{7} Summons returns showing service on Raymond Pacheco1 and Bryan Pacheco as Occupants of the Property were filed on January 26, 2015.
{8} On March 15, 2015, BOKF filed a Motion for Service by Publication seeking leave to serve Linora Pacheco and John Doe Pacheco by publicаtion. As grounds for the motion, BOKF recited service could not be made on Linora or John Doe Pacheco at the Property because they lived in “Vegas,” and the firm BOKF hired to conduct a skip trace was “unable to locate a good address and phone number” for Linora and John Doe Pacheco. The Motion for Service by Publication included Affidavits of Due Diligence by the process server and the investigation agency. The affidavit by the process server states, in pertinent part:
1/4/2015 12:35 pm [Affiant] attempted service on Linora P. & John Doe Pacheco at [the Property], spoke to Ray Pacheco who stated that him and Bryan Pacheco reside here, they are Linora‘s sons but her and her husband live in Vegas now. . . . [Affiant] served Occupants of the Property at [the Property] by hand delivering the documents to Ray Pacheco.
The affidavit does not indicate whether the affiant asked Raymond for an address for Linora Pacheco. The affidavit by the investigation agency states, in pertinent part:
I, [Affiant], being duly sworn upon oath state that on the 3rd day of February, 2015 at 8:12 am, I:
Located a most current address for the above subject. Details of locate:
Additional Information pertaining to this Service:
2/3/2015 8:12 am [Affiant] is unable to locate a good address or phone number for Linora & John Doe Pacheco.
{9} The district court entered an order to allow service by publication on Linora Pacheco and John Doe Pacheco. Notice was published in the Albuquerque Journal. Notice was not published in a newspaper in any of the following: the cities of Santa Fe (New Mexico) or Las Vegas (New Mexico or Nevada), or the counties of Santa Fe (New Mexico), San Miguel (New Mexico), or Clark (Nevada). The Affidavit of Publication filed by BOKF shows publication dates of May 25, June 1, and June 8,
B. Linora Pacheco‘s Death
{10} Linora Pacheco died on September 16, 2015. On October 15, 2015, the Trust filed a Suggestion of Death indicating “the Defendant Linora P. Pacheco is deceased and died September 2015.” The Suggestion of Death was only served on counsel for BOKF. There is nothing in the record suggesting that the known heirs of Linora Pacheco, her sons Bryan Pacheco and Raymond Pacheco, were served or that any other potential heirs were identified and served pursuant to
Notes
{11} BOKF did not file a motion seeking to substitute the unknown heirs, devisees, or legatees of Linora Pacheco parties under
{12} BOKF filed the Amended Complaint for Foreclosure on June 22, 2016. The Amended Complaint for Foreclosure named “The Unknown Heirs, Devisees and Legatees of Lenora [sic] P. Pacheco, Deceased” as the primary substituted defendants for Linora Pacheco. It also added Jose Pacheco as a defendant as the alleged spouse of Linora Pacheco. It is not clear how BOKF determined that Jose Pacheco was the alleged spouse of Linora Pacheco. Neither Raymond Pacheco nor Bryan Pacheco were named as parties despite knowledge of their identity, relation to Linora Pacheco, and whereabouts.
3. Upon information and belief, Linora P. Pacheco is deceased and there may be heirs of said decedent who are unknown to Plaintiff, but who may claim an interest or right in and to the Property that is the subject matter of this action. Plaintiff has conducted a diligent search to ascertain the names and locations of such persons; however, such information is unknown and cannot be ascertained. Therefore, such unknown heirs have been made Defendants in this cause under the name and style аs follows: Unknown Heirs, Devisees or Legatees of Linora P. Pacheco, Deceased.
(Emphasis added.) This allegation tracks the language of
D. Service of the Amended Complaint and Default Judgment
{14} A summons was issued on June 27, 2016, for the Unknown Heirs, Devisees, and Legatees of Linora Pacheco at the address of the Property. On September 30, 2016, a summons return was filed reflecting service on Jose Pacheco on September 28, 2016, at his address in Chamisal, New Mexico. Jose Pacheco and Linora Pacheco divorced twenty-five years before the promissory note and deed of trust. Jose Pacheco was subsequently dismissed as a party.
{15} On March 2, 2017, a Summons and Return for service on the Unknown Heirs, Devisees, and Legatees of Linora Paсheco was filed reflecting service on Raymond Pacheco “as the Unknown Heir, Devisee and Legatee of Lenora [sic] P. Pacheco on
{16} BOKF filed a Motion for Default Judgment on May 23, 2017. A Certificate as to the State of the Record was filed May 31, 2017, that reflects that the unknown heirs, devisees, or legatees of Linora Pacheco were served in two ways. First, it reflects they were served by publication in the Albuquerque Journal on May 25, June 1, and June 8, 2015. Second, it reflects that they were served by personal service on Raymond Pacheco as “the Unknown Heir, Devisee and Legatee of Linora P. Pacheco.” It is unclear whether the Certificate as to the State of the Record was prepared and submitted by BOKF or prepared by the district court clerk.
{17} A Stipulated and Default Judgment In Rem was entered on June 29, 2017. The Property was sold at foreclosure with BOKF bidding its judgment. An Order Approving Special Master‘s Report and Confirming Foreclosure Sale (No Deficiency) was entered October 24, 2017.
{18} After the foreclosure sale, Kaushal obtained an assignment of redemption rights from Raymond Pacheco and Joseph Pacheco. Kaushal then filed a Petition for Redemption of Real Estate on November 8, 2017. The Trust also sought to exercise redemption rights and filed Santa Fe Community Trust‘s Petition for Redemption on November 27, 2017. Various disputes arose as to the validity of the competing petitions for redemption and the required deposit. After extensive litigation of the competing redemption petitions, the district court entered its Order Granting Santa Fe Community Trust‘s Petition for Redemption аnd Motion for Summary Judgment on July 16, 2018.
{19} Kaushal appealed. The Court of Appeals entered its opinion and the matter was remanded to the district court in Kaushal v. Santa Fe Community Housing Trust, 2021-NMCA-010, ¶ 28, 484 P.3d 1020. After more litigation and disputes, Kaushal again appealed, and the Court of Appeals subsequently entered a memorandum opinion and the matter was remanded to the district court in Kaushal v. Santa Fe Community Housing Trust, A-1-CA-39814, mem. op. ¶ 13 (N.M. Ct. App. May 16, 2023) (nonprecedential).
{20} Both parties sought review by this Court to address issues relating to the nature, scope, and effect of redemption rights and the proper application of the
II. DISCUSSION
A. Discretionary Review of Service of Process Issues to Be Raised by the Court for the First Time on Appeal
{21} Issues relating to the service of process and the validity of the underlying foreclosure judgment have not been previously raised by the parties or the Court of Appeals. Therefore, we must first decide whether we can and should raise the issues for the first time on appeal. We undertake that consideration mindful that, if we determine to raise the issues, we will not reach the issues that bring this matter before us after extensive litigation and appeals by the parties to this appeal over a period of many years.
{22} In making the determination, we are guided by
{24} The fundamental rights of the heirs of Linora Pacheco are also implicated. The heirs of Linora Pacheco, whether known or unknown, held legal title immediately upon her death.
B. Upon the death of a person, the person‘s separate property and the person‘s share of community property devolves:
. . . .
(3) in the absence of testamentary disposition, to the person‘s heirs or to those indicated as substitutes for them in cases involving revocation, lapse, disclaimer or other circumstances pursuant to Chapter 45, Article 2, Parts 3, 4, 10 and 11 NMSA 1978 affecting the devolution of intestate estates.
If anyone is entitled to notice and an opportunity to be heard in legal proceedings affecting rights to property, the owners of the property must stand at the top of the
{25} We reject the argument that the heirs have known about the proceedings and have not sought to intervene so we should not take action to protect their interests. We will not make any assumption of what the heirs knew or did not know. The argument ignores the requirements of service of process and the importance of effective notice of proceedings as the predicate for an opportunity to be heard. The
B. Foreclosure and Service of Process
{26} A plaintiff who holds both a promissory note and a mortgage can pursue remedies under both at the same time or can elect remedies and sue under either theory. A foreclosure proceeding seeking to enforce a lien against the property is a quasi in rem action “affording relief only against the secured property, and a suit on a bond or note is in personam.” Kepler v. Slade, 1995-NMSC-035, ¶ 8, 119 N.M. 802, 896 P.2d 482. A quasi in rem proceeding is generally defined as an action that “affects only the interest of particular persons in the specific property as distinguished from proceedings in rem which determine interests in specific property as against the whole world.” Hill, 1968-NMSC-058, ¶ 4.
{27} In this case, BOKF sued Linora Pacheco to obtain a money judgment based on the promissory note and to foreclose its lien on the Property created by the deed of trust. Specifically, the prayer for relief in the Complaint for Foreclosure requested judgment against Linora Pacheco on the promissory note for the amounts due and also sought foreclosure of its lien under the deed of trust. Therefore, at the inception of this case, it was a proceeding both in personam and quasi in rem.
{29} As early as our territorial days, New Mexico recognized the requirement of proper service in quasi in rem and in rem proceedings. In Robertson v. Mine & Smelter Supply Co., the Court held that a judgment in foreclosure was void where the property owners were not served. 1910-NMSC-053, ¶¶ 2, 5, 15 N.M. 606, 110 P. 1037. Similarly, First Nat‘l Bank v. Julian involved a dispute over the division of proceeds from a foreclosure sale where a counterclaimant did not serve the property owner personally for personal jurisdiction or by publication for in rem jurisdiction. 1981-NMSC-049, ¶¶ 6-7, 96 N.M. 38, 627 P.2d 880. Despite the lack of service of the counterclaim, the Court held that there was jurisdiction under the unique facts of
{30} The Court examined the requirements of service of process in McElvain, 2017-NMSC-004, ¶ 25, an in rem action to quiet title, stating:
The Due Process Clause of the Fourteenth Amendment to the United States Constitution prohibits deprivation of property absent adequate procedural safeguards.
U.S. Const. amend. XIV, § 1 . The right to be heard in a court of law in response to proceedings seeking to deprive one of one‘s own property is a fundamental requirement of due process. ‘The fundamental requisite of due process of law is the opportunity to be heard.’ Mullane v. Cent. Hanover Bank & Tr. Co., 339 U.S. 306, 314 (1950) (internal quotation marks and citation omitted). ‘An elementary and fundamental requirement of due process in any рroceeding which is to be accorded finality is notice reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections.’ Id. (citations omitted). A judgment entered absent sufficient service of process upon a defendant violates due process and is void as to the defendant for want of personal jurisdiction.
The Court went on to note:
To meet the fundamental requirements of due process, a plaintiff must undertake a diligent and good faith effort to locate defendants and serve them personally with notice. But personal service is not always feasible, and in such cases constructive notice may satisfy due process.
Id. ¶ 26 (citation omitted).
{32} Two heirs of Linora Pacheco—Raymond and Bryan Pacheco—were known and should have been individually named as parties and personally served. Neither was named as a party. Raymond Pacheco was served, but purportedly only as an unknown heir.
{33} There is a looming question whether the remaining heirs could have been identified, individually named, and personally served. There is a sufficient basis in
{34} The genesis of all the issues relating to whether there was proper and sufficient service of process on the heirs of Linora Pacheco and whether the Stipulated and Default Judgment In Rem may be void stem from BOKF‘s use of and reliance on
C. Proper Use and Application of Section 39-5-15 to Protect Rights to Notice
{35} “The meaning of the language used in a statute is a question of law that we review de novo.” Cooper v. Chevron U.S.A., Inc., 2002-NMSC-020, ¶ 16, 132 N.M. 382, 49 P.3d 61. “In detеrmining the meaning of a statute, we start with its language.
{36} We begin with the statute itself.
In all actions brought for the foreclosure of any real estate mortgage or deed of trust where the plaintiff alleges in his complaint that any person who is now deceased, during his lifetime, claimed a lien upon the real estate described in said mortgage or trust deed and further alleges either that there has been no administration of such decedent‘s estate, or that the plaintiff is unable to ascertain the names, residences and whereabouts of the heirs, devisees or legatees of such deceased person he may make such unknown heirs, legatees and devisees of any such deceased person parties defendant to said cause under the name, style and designation of ‘unknown heirs, devisees, or legatees, of (here insert name of deceased person), deceased‘; and service of process on and notice of said suit against such defendants shall be made as provided by law and the rules of court.
{37}
{39} With the benefit of
{40} Requiring a diligent and good faith search does not impose a significant burden or require significant costs. In addition to traditional tools historically used to locate persons, simple internet searches will often result in identifying and locating heirs. An internet search for an obituary of the deceased person often leads to an obituary that has either been published in a newspaper or posted by a funeral home on its website.5 Focused internet searches can easily be done on websites for local newspapers and funeral homes in the location where the person died. Once potential heirs are identified, the internet offers a myriad of resources, websites, and applications that can be used to locate persons at little or no cost. There are numerous public websites that are available online to find potential heirs. The availability of
{41} An evidentiary showing of the good faith and diligent effort and the basis for invoking
D. Service on Unknown Heirs, Devisees, or Legatees
{42} In all instances where the unknown heirs, devisees, or legatees are named, service must be made by substituted service by publication. To do so, a plaintiff must file an affidavit under
{43} If there is a request for default judgment against the unknown heirs, devisees, or legatees, a mere allegation in a complaint that is not supported by an affidavit is insufficient to establish that an adequate search has been completed and that there is a proper basis to name the unknown heirs, devisеes, or legatees under
{44} In this case, the allegations by BOKF in paragraph 3 of the Amended Complaint for Foreclosure that the names and locations of the heirs were unknown and could not be ascertained are simply incorrect and contrary to the affidavit submitted by BOKF in seeking to serve Linora Pacheco by publication. In fact, BOKF had actual knowledge of the names and whereabouts of two heirs, Raymond Pacheco and Bryan Pacheco, who were living at the Property. The fact that Kaushal and the Trust were able to identify and locate the other heirs suggests that BOKF‘s allegation of a diligent search to ascertain the names and locations of Linora Pacheco‘s heirs, as well as thе assertion that information regarding the heirs was
{45} Legal title to the Property of Linora Pacheco passed automatically upon her death to her heirs.
{46} In sum, the Amended Complaint for Foreclosure may be impermissibly flawed in two respects. It fails to name individual known owners of the Property and heirs of Linora Pacheco. Perhaps more importantly, the allegation used as the basis for naming the unknown heirs, devisees, or legatees is simply incorrect and contrary to the affidavit of the process server that BOKF previously submitted. As a result, the unknown heirs, devisees, or legatees may not have been properly named under
{47} We now return to the analysis of service of process on the unknown heirs, devisees, or legatees of Linora Pacheco in light of the procedural history. Simply
{48} There was never a motion filed to serve the unknown heirs, devisees, or legatees of Linora Pacheco by publication and no service by publication occurred. BOKF‘s motion for default judgment was predicated on the Certificate as to the State of the Record. The service by publication referred to in the Certificate as to the State of the Record was the attempted service by publication on Linora Pacheco prior to her death, not any service by publication on the unknown heirs, devisees, or legatees of Linora Pacheco as required by
{49} The Certificate as to the State of the Record also refers to service on Raymond Pacheco. Service on Raymond Pacheco, a known heir of Linora Pacheco, cannot be construed as service on all the unknown heirs, devisees, or legatees of Linora Pacheco. Even if service on Raymond Pacheco, a known heir, can somehow be construed as service on him as аn unknown heir, the remaining known and the unknown heirs, devisees, or legatees of Linora Pacheco were never served as required by
The motion for substitution may be made by any party or by the successors or representatives of the deceased party and, together with the notice of hearing, shall be served on the parties as provided in Rule 1-005 NMRA and upon persons not parties in the manner provided in Rule 1-004 NMRA for the service of a summons.
Where parties are to be substituted, they must be served with the motion. However, that did not happen. There is nothing in the record to show service of the motion was made on known non-parties under
{51} Generally, “the determination of whether personal jurisdiction exists is a question of law, which an appellate court reviews de novo when the relevant facts are undisputed.” Caba Ltd. Liab. Co. v. Mustang Software, Inc., 1999-NMCA-089, ¶ 9, 127 N.M. 556, 984 P.2d 803. We conclude that there are issues of fact that must be determined by the district court for that determination to be made. For example, the district court should determine the basis for the allegations that the heirs of
E. Service by Publication on Linora Pacheco
{52} Because the district court may also have to address the service by publication on Linora Pacheco as a basis for jurisdiction supporting the judgment, we undertake to examine it.
{53} We start with the premise that “[p]rocess shall be served in a manner reasonably calculated, under all the circumstances, to apprise the defendant of the existence and pendency of the action and to afford a reasonable opportunity to aрpear and defend.”
Notice of court proceedings cannot just be a mere gesture, else it will not pass constitutional muster--‘[t]he means employed must be such as one desirous of actually informing the absentee might reasonably adopt to accomplish it. The reasonableness and hence the constitutional validity of any chosen method may be defended on the ground that it is in itself reasonably certain to inform those affected.’
McElvain, 2017-NMSC-004, ¶ 27 (quoting Mullane v. Cent. Hanover Bank & Tr., 339 U.S. 306, 315 (1950)).
{54} We now turn to the facts of this case. Service by publication was based on affidavits submitted with the motion for service by publication. The affidavit of the рrocess server established only that Linora Pacheco lived in “Vegas.” “Vegas” could refer to either Las Vegas, New Mexico, in San Miguel County or Las Vegas, Nevada in Clark County. The affidavit of the investigation agency was ostensibly submitted to establish that the whereabouts of Linora Pacheco could not reasonably be ascertained after a diligent search. A review of the affidavit leaves one to question what, if any, diligent search was conducted. See McElvain, 2017-NMSC-004, ¶ 1 (“Only when a party‘s whereabouts are not reasonably ascertainable following diligent search and inquiry can constructive notice substitute for personal notice of suit.“). The affidavit is terse, arguably inconsistent, and wholly lacking in necessary supportive information. It amounts to nothing more than a declaratory statement.
{55} The notice was published in the Albuquerque Journal based on the district court‘s finding in the Order for Service by Publication that “The court further finds that the newspaper of general circulation in the county that is most likely to give Defendant notice of pendency of the action is The Albuquerque Journal.” We do not question that finding. However,
Unless a newspaper of general circulation in the county where the action is pending is the newspaper most likely to give the defendant notice of the pendency of the action, the court shall also order that a notice of pendency of the action be published in a newspaper of general circulation in the county which reasonably appears is most likely to give the defendant notice of the action.
F. Court of Appeals Published Opinion and Memorandum Opinion
{56} The district court‘s determination on remand whether the Stipulated and Default Judgment In Rem is void could materially affect whether the Court of Appeals prior rulings are valid precedent. If the Stipulated and Default Judgment In
{57} Kaushal, 2021-NMCA-010, shall be vacated and unpublished, and Kaushal, A-1-CA-39814, mem. op., shall be vacated.
III. CONCLUSION
{58} Following the death of Linora Pacheco, BOKF sought to enforce its rights under the promissory note and deed of trust by naming her unknown heirs, devisees, or legatees. For the reasons we have discussed, the Stipulated and Default Judgment In Rem may be void for lack of proper service of process on her unknown heirs, legatees, and devisees who were named as parties under
{59} We conclude that this matter must be remanded to the district court for further fact-finding and a determination of the validity of the Stipulated and Default Judgment In Rem. As a matter of necessity to avoid future undue reliance on the Court of Appeals rulings if the judgment is void, Kaushal, 2021-NMCA-010, shall
{60} Therefore, this case is remanded to the district court for further proceedings consistent with this opinion.
{61} IT IS SO ORDERED.
JAMES M. HUDSON, Judge Sitting by designation
WE CONCUR:
MICHAEL E. VIGIL, Justice
C. SHANNON BACON, Justice
BRIANA H. ZAMORA, Justice
CURTIS R. GURLEY, Judge Sitting by designation