Case Information
*1
IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO
Opinion Number:
Filing Date: February 23, 2012
Docket No. 30,315
Consolidated with
Docket No. 30,445
THE ESTATE OF PETER NAUERT,
Petitioner-Appellant,
v.
MELISSA MORGAN-NAUERT,
Respondent-Appellee. APPEAL FROM THE DISTRICT COURT OF SANTA FE COUNTY Barbara J. Vigil, District Judge
Modrall, Sperling, Roehl, Harris & Sisk, P.A.
Marjorie A. Rogers
Emil J. Kiehne
Albuquerque, NM
Walther Family Law
David L. Walther
Santa Fe, NM
for Appellant
Gerber & Bateman, P.A.
Paul D. Gerber
Julie S. Rivers
Santa Fe, NM
for Appellee
OPINION
WECHSLER, Judge.
{1} This appeal raises the issue of whether the Probate Code’s creditors’ claims classification provision, NMSA 1978, § 45-3-805(A) (1995), applies to lump-sum spousal support and attorney fee awards to a surviving spouse in a divorce proceeding continued after the death of the other spouse under the domestic affairs anti-abatement statute, NMSA 1978, § 40-4-20(B) (1993). The district court in the divorce action (the Divorce Court) ordered that the decedent’s estate (the Estate) pay the spousal support and attorney fee awards immediately, as a priority, before the district court in the probate proceedings (the Probate Court) assumed jurisdiction over the assets to address the Estate’s creditors’ claims. The Estate argues that (1) the Divorce Court did not have jurisdiction to classify the spousal support and attorney fee awards as Class One claims under Section 45-3-805(A); (2) the Divorce Court improperly interpreted Section 40-4-20(B) as providing the Divorce Court with authority to order the immediate payment of the awards before the Probate Court assumed jurisdiction over the assets; (3) the Divorce Court’s order violated the Federal Insolvency Act, 31 U.S.C. § 3713(a)(1)(B) (1982); and (4) the Divorce Court’s order is barred by res judicata because of the Probate Court’s earlier classification of the claims. We also address Appellee’s argument that she is entitled to attorney fees because the Estate pursued this litigation in bad faith. We hold that the Divorce Court did not err by ordering the immediate payment of the spousal support and attorney fee awards under Section 40-4- 20(B), the Divorce Court’s action did not violate the Federal Insolvency Act, and the Estate failed to preserve the res judicata claim which, we nevertheless conclude, fails. We also deny Appellee attorney fees. Accordingly, we affirm.
BACKGROUND Peter Nauert (Peter) began this case by filing a petition for dissolution of marriage
(the divorce action) from Melissa Morgan-Nauert (Melissa) in the Divorce Court in March 2006. Peter died while the divorce action was pending, and the Divorce Court continued the proceeding pursuant to the domestic relations anti-abatement statute, Section 40-4-20(B), with Peter’s Estate as a substitute party. On September 4, 2007, Michael Owens Jr., as personal representative of the Estate (the personal representative), initiated an informal probate action in the Probate Court for the administration of the Estate. On November 14, 2007, Melissa filed a motion for interim spousal support, attorney
fees, and costs in the Divorce Court. At a subsequent status conference held before the Divorce Court ruled on the motion, the Estate argued that any spousal support, attorney fees, or costs awarded would be Class Six claims in the probate proceedings under the Probate Code’s creditors’ claims classification provision, Section 45-3-805(A), and informed the Divorce Court that the Estate was not certain that there would be sufficient assets in the Estate to pay the Class One through Class Five claims. The Divorce Court set a hearing, and the parties submitted briefs, concerning the amount of spousal support and attorney fees to which Melissa was entitled and the proper classification of the awards under the Probate Code. At the hearing, the Divorce Court orally awarded Melissa monthly spousal support *3 beginning September 1, 2007 and attorney fees, and determined that the attorney fees were a Class One claim under the Probate Code.
{4} Subsequently, on May 21, 2009, the Divorce Court entered an interlocutory order awarding Melissa monthly spousal support and attorney fees beginning September 1, 2007, ordering that both awards shall be treated as Class One claims under the Probate Code, and requiring the Estate to pay the awards immediately. The Estate did not pay the awards immediately and instead filed a petition for extraordinary writ in the New Mexico Supreme Court, arguing that the Divorce Court’s classification of the spousal support and attorney fee awards usurped the authority of the Probate Court provided by the Probate Code. Our Supreme Court denied the writ without comment on the merits. After denial of the petition for extraordinary writ, the Estate filed a petition in the
Probate Court for guidance on the classification of the spousal support and attorney fee awards under the Probate Code. The Estate also released funds to Melissa in order to avoid being held in contempt for refusing to pay the spousal support and attorney fee awards immediately as required by the May 21, 2009 order in the Divorce Court. On August 13, 2009, the Probate Court acted on the Estate’s petition and entered an order determining that the spousal support and attorney fee awards were not Class One claims but rather Class Six claims under the Probate Code. Meanwhile, the Divorce Court held the property division hearing in the divorce
action on November 30 through December 4, 2009. Melissa continued to argue that the Estate was required to pay the spousal support and attorney fees immediately, and the Estate continued to argue that the awards were Class Six claims. The Divorce Court entered its findings of fact and conclusions of law on February 1, 2010. It required the Estate to pay immediately a lump-sum spousal support award based on a monthly amount for the period of August 19, 2007 through August 19, 2010 and all of Melissa’s attorney fees in the divorce action. The Divorce Court reasoned that Section 40-4-20(B) required it to determine all financial issues relating to the divorce action, including spousal support and attorney fees, before the “remaining assets can be treated as the probate estate” and that the Divorce Court must “order distribution and payments as a priority ” before the remainder of the Estate’s assets pass to the jurisdiction of the Probate Court. Therefore, although the Divorce Court’s findings of fact stated that the spousal support and attorney fee awards are Class One claims under the Probate Code, the Divorce Court held that the awards are not part of the probate estate and therefore out of the jurisdiction of the Probate Court by operation of Section 40-4- 20(B). The Divorce Court entered a final judgment on March 24, 2010. Melissa
subsequently filed a motion detailing the amount of attorney fees in the divorce action. The Divorce Court awarded Melissa attorney fees on May 10, 2010, and the Estate filed a timely appeal on May 12, 2010.
ARGUMENTS AND STANDARD OF REVIEW
*4
On appeal, the Estate argues that (1) the Divorce Court did not have jurisdiction to
classify the spousal support and attorney fee awards as Class One claims under the Probate
Code’s creditors’ claims classification provision, Section 45-3-805(A); (2) the Divorce Court
improperly interpreted Section 40-4-20(B) as providing the Divorce Court with authority to
order the immediate payment of the awards; (3) the Divorce Court’s order violated the
Federal Insolvency Act, 31 U.S.C. § 3713(a)(1)(B); and (4) the Divorce Court’s order is
barred by res judicata. The first three issues require statutory construction, an issue of law
that we review de novo.
See N.M. Indus. Energy Consumers v. N.M. Pub. Regulation
Comm’n
,
DIVORCE COURT’S CLASSIFICATION OF CLAIMS The Estate first argues that the Divorce Court did not have jurisdiction to classify the spousal support and attorney fee awards as Class One claims under the Probate Code’s creditors’ claims classification scheme, Section 45-3-805(A). The Estate argues that in enacting Section 45-3-805(A), the Legislature “committed” the jurisdiction to classify claims “solely to district courts sitting in probate.” However, the record reveals that the Divorce Court did not order the immediate
payment of the spousal support and attorney fee awards based on classifying the awards as
Class One claims under the Probate Code. Initially, in awarding interim support and
attorney fees on May 21, 2009, the Divorce Court did classify the awards as Class One
claims and ordered the immediate payment of the awards. However, the Estate did not pay
either award and instead filed a petition for an extraordinary writ in the New Mexico
Supreme Court and, after the Supreme Court denied the writ, the Estate filed a petition in the
Probate Court for guidance on the classification of the awards. Ultimately, in the Divorce
Court’s findings of fact and conclusions of law, the Divorce Court relied exclusively on
Section 40-4-20(B) in concluding that it “must determine all financial issues and order . . .
payment of [spousal] support and attorney[] fees so that the remaining assets can be treated
as the probate estate and the Probate Court can then proceed.” In its final judgment, the
Divorce Court echoed this conclusion and ordered the immediate payment of the awards
“before the assets are returned to the jurisdiction of the Probate Court.” The Divorce Court
essentially determined that the assets awarded as spousal support and attorney fees are not
part of the probate estate by operation of Section 40-4-20(B). The Divorce Court’s
classification did not contribute to its conclusion requiring the Estate to pay the spousal
support and attorney fee awards immediately, and the classification, if error, is not grounds
for reversal.
See Downs v. Garay
,
SECTION 40-4-20(B)
{11} We therefore turn to the Estate’s argument that the Divorce Court misinterpreted Section 40-4-20(B) as providing it with authority to order the immediate payment of the spousal support and attorney fee awards without forcing Melissa to comply with the Probate Code’s creditors’ claims classification provision, Section 45-3-805(A), as a priority before the Probate Court assumed jurisdiction over the Estate’s assets. On the other hand, Melissa argues that the Divorce Court did not err because the spousal support and attorney fee awards “were outside the Estate” by operation of Section 40-4-20(B) and, therefore, not subject to Section 45-3-805(A). This issue requires statutory construction of Section 40-4- 20(B), Section 45-3-805(A), and related provisions in both the domestic affairs statutes and Probate Code.
{12}
When engaging in statutory construction, our guiding principle is to give effect to the
intent of the Legislature.
Att’y Gen. v. N.M. Pub. Regulation Comm’n
,
[w]hen construing statutes related to the same subject matter, the provisions of a statute must be read together with other statutes in pari materia under the presumption that the [L]egislature acted with full knowledge of relevant statutory and common law. Thus, two statutes covering the same subject matter should be harmonized and construed together when possible, in a way that facilitates their operation and the achievement of their goals.
Id. (internal quotation marks and citation omitted). We begin by examining the scope of the relevant sections of the Probate Code,
including Section 45-3-805(A). Chapter eight of the Probate Code, entitled “creditors’ claims,” provides the procedures for the payment of creditors’ claims against an estate. See generally NMSA 1978, §§ 45-3-801 to -816 (1975, as amended through 2011). Section 45- 3-805(A) provides the priority scheme for payments when the assets in an estate are insufficient to pay all of the estate’s creditors’ claims. It divides creditors’ claims against an estate into six classes and provides the priority for payment of each class. As Melissa points out, Section 45-3-805(A) only applies “[i]f the applicable assets of the estate are insufficient to pay all claims in full[.]” (Emphasis added.) She argues that the spousal support and attorney fee awards are not paid from Estate assets and therefore Section 45-3- 805(A) does not apply. However, whether the awards are paid from Estate assets depends on whether the Legislature, when enacting Section 40-4-20(B), intended that the awards be “claims” under the Probate Code, or whether the Legislature intended the awards to be paid before the probate proceedings. The Probate Code defines “claims” as “includ[ing] liabilities of the decedent or
protected person, whether arising in contract, in tort or otherwise and liabilities of the estate *6 that arise at or after the death of the decedent or after the appointment of a conservator, including funeral expenses and expenses of administration.” NMSA 1978, § 45-1-201(A)(7) (2011). Generally, a judgment obtained in another court against a personal representative is considered an allowed claim against an estate, and the recipient may not execute on the judgment without complying with the Probate Code’s creditors’ claims provision. See § 45- 3-806(D); § 45-3-812. We must therefore determine whether the Legislature intended a judgment for spousal support and attorney fees in a divorce action continued after the death of a party pursuant to Section 40-4-20(B) to follow this general scheme or whether Section 40-4-20(B) requires payment before the subsequent probate proceedings.
{15}
Under the common law rule of abatement, the death of either party during the
pendency of a marriage dissolution proceeding before the entry of a final decree divested the
court of jurisdiction.
Trinosky v. Johnstone
,
Upon the filing and service of a petition for dissolution of marriage, separation, annulment, division of property or debts, spousal support, child support or determination of paternity . . . if a party to the action dies during the pendency of the action, but prior to the entry of a decree granting dissolution of marriage, separation, annulment or determination of paternity, the proceedings for the determination, division and distribution of marital property rights and debts, distribution of spousal or child support or determination of paternity shall not abate. The court shall conclude the proceedings as if both parties had survived. We first address Section 40-4-20(B) as applied to the spousal support award and
conclude that, by the plain language of Section 40-4-20(B), the Legislature intended spousal support awards against an estate to be paid before the probate proceedings. First, Section 40-4-20(B) expressly provides that upon the filing of a petition for spousal support, the “ distribution of spousal . . . support . . . shall not abate.” (Emphasis added.) “Distribute” is defined as “to divide among several or many: deal out: apportion” or to “dispense, administer.” Webster’s Third New Int’l Dictionary 660 (Unabridged 1993). Based on this definition, by using the term “distribution,” the Legislature intended that a district court in a domestic relations proceeding have more authority than simply awarding a judgment for spousal support. The Legislature intended that the court may issue the judgment and conclude the enforcement, or actual dispensing, of the award. Second, Section 40-4-20(B) directs the court to “conclude the proceedings as if both
parties had survived.” Although a final judgment with an award of spousal support may
“conclude” a proceeding in some cases, a district court maintains jurisdiction to enforce the
final judgment.
See Trinosky
,
support.
See Att’y Gen.
,
Section 40-4-20(B) and case law regarding the nature of lump-sum spousal support awards.
In
Oldham v. Oldham
,
{20}
The spousal support award in this case was a lump-sum spousal support award even
though the district court based the award on accrued monthly sums over a specific period of
time.
See Deeds v. Deeds
, 115 N.M. 192, 194, 848 P.2d 1119, 1121 (Ct. App. 1993)
(“Lump-sum alimony has been defined as the award of a definite sum of money[.]” (internal
quotation marks and citation omitted));
see also Michaluk v. Burke
,
specifically mention attorney fees. Further, some of the rationale we relied upon in determining that the Legislature did not intend spousal support awards to be considered “claims” under the Probate Code do not readily apply to the attorney fee award, including the plain language meaning of “distribution” and the immediate vesting of lump-sum spousal support awards as a property interest in the recipient. However, Section 40-4-20(B) states that “the proceedings . . . shall not abate” and
that the “court shall conclude the
proceedings
as if both parties had survived.” (Emphasis
added.) Attorney fees in domestic relations cases are authorized by Section 40-4-7(A),
which states that “[i]n any
proceeding
for the dissolution of marriage, division of property,
disposition of children or spousal support . . . [t]he court may make an order, relative to the
expenses of the proceeding, as will ensure either party an efficient preparation and
presentation of his case.” (Emphasis added.) Construing Section 40-4-7(A) and Section 40-
4-20(B) together, the Divorce Court awarded the attorney fees as part of the “proceedings”
covered by Section 40-4-20(B) that the Divorce Court is mandated to “conclude . . . as if
both parties had survived.” As we have determined, a district court maintains jurisdiction
*9
to enforce the final judgment.
See Hall
,
{24} The Estate also makes several other arguments: (1) that when the Legislature intended that a payment for a claim be made against other creditors of an estate, it has expressly done so, (2) that the Divorce Court ordering the immediate payment injures other claimants and deprives them of due process, and (3) that by ordering the immediate payment of the awards, the Divorce Court potentially subjects the personal representative to personal liability or conflicting obligations. However, these arguments presume that the spousal support and attorney fee awards are claims against the Estate that will be paid from Estate assets. As we have determined, the awards are not claims against the Estate.
FEDERAL INSOLVENCY ACT The Estate next argues that the Divorce Court’s order requiring the Estate
immediately pay the spousal support and attorney fee awards to Melissa violates the Federal Insolvency Act, particularly 31 U.S.C. § 3713(a)(1)(B). Further, the Estate argues that immediate payment of the awards subjects the personal representative to personal liability under 31 U.S.C. § 3713(b). These arguments require statutory construction of 31 U.S.C. § 3713(a)(1)(B), and (b). 31 U.S.C. § 3713(a)(1)(B) provides that “[a] claim of the United States Government
shall be paid first when . . . the estate of a deceased debtor, in the custody of the executor or administrator, is not enough to pay all debts of the debtor.” (Emphasis added.) 31 U.S.C. § 3713(b) provides that “representative of . . . an estate . . . paying any part of a debt of the . . . estate before paying a claim of the Government is liable to the extent of the payment for unpaid claims of the Government.” Again, the Estate premises its argument on the assumption that the spousal support and attorney fee awards is an allowed claim and therefore payable from Estate assets. As we have determined, the awards are not claims *10 against the Estate, and, therefore, the Federal Insolvency Act does not apply.
RES JUDICATA The Estate also argues that the Probate Court’s August 13, 2009 order declaring that
the spousal support and attorney fee awards are Class Six claims under the Probate Code was a final order for purposes of appeal, and, therefore, the Divorce Court erred by failing to give res judicata effect to the order. However, the Estate failed to show that it preserved the issue in the Divorce Court.
{28}
“To preserve a question for review it must appear that a ruling or decision by the
district court was fairly invoked[.]” Rule 12-216(A) NMRA. In order “[t]o preserve error
for review, a party must fairly invoke a ruling of the district court on the same grounds
argued in this Court.”
Crutchfield v. N.M. Dep’t of Taxation & Revenue
,
do not apply. Res judicata requires that (1) the parties are the same; (2) the cause of action
is the same; (3) there has been a final decision in the first suit; and (4) the first decision was
on the merits.
Kirby v. Guardian Life Ins. Co. of Am.
,
ATTORNEY FEES ON APPEAL Melissa argues that she is entitled to attorney fees and costs for this appeal because
the Estate’s “quest in this litigation was not in good faith.” In arguing bad faith, Melissa
relies on findings from the district court that the Estate “undertook an over-vigorous attack”
during the district court proceedings. Further, Melissa appears to argue that she is entitled
to attorney fees because the Estate’s position in this case is unsupported by law.
New Mexico recognizes “a bad-faith exception to the American [r]ule under which
parties typically pay their own fees.”
ERICA, Inc. v. N.M. Regulation & Licensing Dep’t
,
CONCLUSION
{33} In a divorce proceeding continued after the death of a party pursuant to Section 40-4- 20(B) in which the court awards lump-sum spousal support and attorney fees, the final judgment is not a “claim” against an estate for purposes of the Probate Code’s creditors’ claims provision. Therefore, in this case, the Divorce Court did not err in ordering that the Estate pay the spousal support and attorney fee awards immediately, before the probate proceedings. As a result, we affirm. IT IS SO ORDERED.
_____________________________________ JAMES J. WECHSLER, Judge WE CONCUR:
____________________________________
MICHAEL D. BUSTAMANTE, Judge
____________________________________
LINDA M. VANZI, Judge
Topic Index for Estate of Nauert v. Morgan-Nauert , Nos. 30,315/30,445 *12 AE APPEAL AND ERROR
AE-PA Preservation of Issues for Appeal
AE-SR Standard of Review
CP CIVIL PROCEDURE
CP-RJ Res Judicata
DR DOMESTIC RELATIONS
DR-AF Attorney Fees
DR-DM Dissolution of Marriage
DR-SS Spousal Support
ST STATUTES
ST-IP Interpretation
ST-LI Legislative Intent
WL WILLS, TRUSTS AND PROBATE WL-AE Administration of Estate
WL-CE Claims Against Estate