In the Matter of the Estate of Edward K. McElveny, Deceased, MICHAEL PHILLIPS, as Personal Representative of the Estate of Edward K. McElveny, Petitioner-Respondent, v. STATE OF NEW MEXICO, ex rel. DEPARTMENT OF TAXATION AND REVENUE, Respondent-Petitioner.
No. S-1-SC-35349
IN THE SUPREME COURT OF THE STATE OF NEW MEXICO
June 30, 2017
Opinion Number: 2017-NMSC-024
ORIGINAL PROCEEDING ON CERTIORARI, Raymond Z. Ortiz, District Judge
Carmela Starace
Albuquerque, NM
Law Office of Cristy J. Carbon-Gual
Cristy J. Carbon-Gual
Albuquerque, NM
for Petitioner
Hector H. Balderas, Attorney General
Peter Breen, Special Assistant Attorney General
Santa Fe, NM
for
OPINION
NAKAMURA, Chief Justice.
{1} We hold that the administrative claim filing provisions of the Uniform Unclaimed Property Act (UPA),
I. BACKGROUND
{2} Edward K. McElveny (McElveny) died intestate in 1991. In April 2013, Phillips, McElveny‘s grandson, filed an application with the Santa Fe County Probate Court (Probate Court) to be informally appointed personal representative (PR) of McElveny‘s estate (Estate). In his application, Phillips noted that the Department had custody of approximately $70,000 (the Property) that belonged to McElveny and which the Department held as unclaimed property. Phillips asked the Probate Court to order the Department to release the Property to him as PR. The Probate Court granted Phillips’ request, appointed him PR, and ordered the Department to release the Property to him. Phillips then filed an unclaimed property claim with the Department. Phillips left the claim form blank and attached to the blank claim form a copy of the Probate Court‘s order. In re Estate of McElveny, 2015-NMCA-080, ¶ 3, 355 P.3d 75.
{3} In June 2013, the Department wrote to Phillips, acknowledged receipt of his claim, but informed Phillips that it was “incomplete.” Phillips responded by letter, protested that he had submitted all documentation the Department required to process and approve his claim, asserted that the Department was “bound” by the Probate Court‘s order, and requested confirmation that the Property would be released to him no later than July 28, 2013. The Department did not reply and did not release the Property to Phillips.
{4} In August 2013, the Probate Court determined that it no longer had jurisdiction over the probate proceedings as there was “a dispute concerning the distribution of the [E]state.” The Probate Court transferred the case to the First Judicial District Court.
{5} In September 2013, Phillips filed a motion with the district court asking it to enforce the Probate Court‘s order and to issue sanctions against the Department. The Department moved to dismiss the proceedings and argued that the district court lacked subject matter jurisdiction because Phillips failed to exhaust administrative remedies. Phillips responded and claimed that the exhaustion doctrine was inapplicable because he was ”not suing the Department, i.e.[,] not attempting to obtain subject matter jurisdiction over the Department for the purpose of stating a claim.” He denied ever having filed an “administrative claim[;]” asserted that he attempted to “handle the Decedent‘s [E]state through probate court[;]” argued that, as PR of the Estate, he was “simply trying to fulfill his statutory duties to gather the [E]state assets . . . [;]” and pointed out that
{6} In February 2014, the district court entered an order in which it concluded that it had, as Phillips argued, exclusive jurisdiction under
{7} In a subsequent order filed in March 2014, the court issued a $3,000 sanction against the Department for refusing to comply with the Probate Court‘s order to release the Property to Phillips. And in a still later order filed in April 2014 (but entered nunc pro tunc to the February 2014 order) the court issued the following additional findings and conclusions: Phillips “did not make an administrative claim to the Department and
{8} The Department argued again in the Court of Appeals that the district court did not have jurisdiction to intervene and order the Department to release the Property to Phillips because Phillips failed to exhaust his administrative remedies. The Court was not persuaded and concluded that the claim filing provisions of the UPA were not exclusive and mandatory but merely “permissive.” In re McElveny, 2015-NMCA-080, ¶¶ 11-13. Having concluded that the UPA‘s claim filing provisions are not exclusive, the Court determined that Phillips was not required to exhaust administrative remedies under the UPA. Id. ¶ 17. The Court affirmed the district court‘s order directing the Department to release the Property to Phillips. Id. ¶ 19. After the Court of Appeals issued its opinion, Phillips filed a motion for attorneys’ fees as prevailing party under
{9} The Department filed a petition for a writ of certiorari with this Court. We granted the petition, exercising our jurisdiction under Article VI, Section 3 of the New Mexico Constitution and
II. DISCUSSION
A. Standard of Review
{10} Whether the claim filing provisions of the UPA are exclusive and whether individuals seeking unclaimed property must exhaust administrative remedies are both questions of statutory interpretation. See Lion‘s Gate Water v. D‘Antonio, 2009-NMSC-057, ¶ 24, 147 N.M. 523, 226 P.3d 622 (“The exclusivity of any statutory administrative remedy turns on legislative intent.” (internal quotation marks and citation omitted)); see also Patsy v. Bd. of Regents of State of Fla., 457 U.S. 496, 501 (1982) (“[T]he initial question whether exhaustion is required should be answered by reference to congressional intent . . . .“). “The meaning of 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.
B. Exclusivity
{11} To determine whether the administrative procedures of the UPA are exclusive, we must examine “the comprehensiveness of the administrative scheme, the availability of judicial review, and the completeness of the administrative remedies afforded.” Lion‘s Gate Water, 2009-NMSC-057, ¶ 24 (internal quotation marks and citation omitted). “An exclusive and comprehensive administrative process is one that provides a plain, adequate, and complete means of resolution through the administrative process to the courts.” Id. (internal quotation marks and citations omitted).
{12} The Court of Appeals concluded that the administrative procedures of the UPA are not exclusive and reached this conclusion by focusing on
{13} The primary objective in statutory construction is to determine and give effect to legislative intent. Bradbury & Stamm Constr. Co. v. Bureau of Revenue, 1962-NMSC-078, ¶ 10, 70 N.M. 226, 372 P.2d 808 (“[A]ll rules of statutory construction are but aids in arriving at the true legislative intent.” (citation omitted)). “The question whether a statutory requirement is mandatory or merely directory is answered by looking to the intent of the statute.” Stokes v. Tatman, 1990-NMSC-113, ¶ 10, 111 N.M. 188, 803 P.2d 673. The Court of Appeals arrived at its conclusion regarding legislative intent by focusing narrowly on the words “may” and “shall.” Our focus is broader; we must construe the entire statute as a whole so that all of its provisions are considered in relation to one another and so that all parts are given effect. Regents of Univ. of N.M. v. N.M. Fed‘n of Teachers, 1998-NMSC-020, ¶ 28, 125 N.M. 401, 962 P.2d 1236; State v. Herrera, 1974-NMSC-037, ¶ 8, 86 N.M. 224, 522 P.2d 76 (“We attempt to construe statutes so that meaning and effect will be given to every part thereof.“). Looking to the statute as a whole points us towards a conclusion diametrically different than that reached by the Court of Appeals.
{14}
{15}
{16}
{17}
{18} Our review of these provisions leads us to conclude that our Legislature intended the UPA‘s administrative process to be exclusive and mandatory. The administrative process the varying provisions of the UPA establishes is plain, adequate, and complete. That process includes mechanisms that permit claim filing, identifies the entity responsible for deciding claims, and specifies how appeals to district court shall occur.
{19} Phillips was not acting in accordance with his statutory obligations under the UPC when he sought and obtained an order from the Probate Court directing the Department to release the Property to him. Contra In re McElveny, 2015-NMCA-080, ¶ 9. Phillips could not simply take control of the Property upon his appointment as PR as the Department had custody of the Property as unclaimed property. Phillips could, of course, procure the Property by filing a claim with the Department and by establishing
{20} Probate courts are creatures of statute and their powers are entirely derived from statute. In re Hickok‘s Will, 1956-NMSC-035, ¶ 30, 61 N.M. 204, 297 P.2d 866; Curtis Hillyer, Bancroft‘s Probate Practice § 16-17, at 38-39 (2d ed. 1950) (observing that probate proceedings are “statutory” and that “such courts are creatures of the law and limited in their jurisdiction“); cf. Caron v. Old Reliable Gold Min. Co., 1904-NMSC-016, ¶ 9, 12 N.M. 211, 78 P. 63 (same). The authority of New Mexico‘s probate courts derives from the UPC. In re Estate of Harrington, 2000-NMCA-058, ¶ 15, 129 N.M. 266, 5 P.3d 1070. Under the UPC, probate courts may preside over and may act only in informal probate proceedings.
{21} While
C. Exhaustion
{22} “The doctrine of administrative exhaustion arose as a way to coordinate the roles of the administrative and judicial branches, both of which are charged with regulatory duties.” Lobato v. State Env‘t Dep‘t, 2012-NMSC-002, ¶ 12, 267 P.3d 65. The requirement that administrative remedies must be exhausted originates from two different sources: statutes and the common law. U.S. Xpress, Inc. v. N.M. Taxation & Revenue Dep‘t, 2006-NMSC-017, ¶ 12, 139 N.M. 589, 136 P.3d 999. The contours and rigidity of the requirement differ greatly depending upon which of these two sources the exhaustion requirement flows and, therefore, exhaustion is best thought as “two distinct legal concepts.” Avocados Plus Inc. v. Veneman, 370 F.3d 1243, 1247 (D.C. Cir. 2004).
{23} “If a statute explicitly requires a party to exhaust particular remedies as a prerequisite to judicial review . . . the statutorily mandated exhaustion requirements are jurisdictional. A court cannot excuse a petitioner from complying with an explicit and detailed statutory duty to exhaust administrative remedies.” II Richard J. Pierce, Jr., Administrative Law Treatise, § 15.2, at 1219-20; cf. Am. Fed‘n of State v. Bd. of Cty. Comm‘rs of Bernalillo Cty., 2016-NMSC-017, ¶ 14, 373 P.3d 989 (“If a statute creates a right and provides that only a specific class of persons may petition for judicial review of an alleged
{24} “A mere reference to the duty to exhaust administrative remedies conferred in an agency organic act is not enough to create a statutory duty to exhaust particular remedies.” II Pierce, supra, § 15.3, at 1245. “A statute creates an independent duty to exhaust only when it contains ‘sweeping and direct’ statutory language indicating that there is no . . . jurisdiction prior to exhaustion . . . .” Id.; see, e.g., U.S. Xpress, 2006-NMSC-017, ¶¶ 6-15 (concluding that statutory exhaustion applicable in light of the fact that the Legislature clearly expressed its intent “to require that tax refund claims proceed according to the requirements of the Tax Administration Act.“). There is no direct and unequivocal statement in the UPA requiring exhaustion of administrative remedies. Nevertheless, we conclude that non-jurisdictional exhaustion is required for prudential reasons.
{25} The reasons for applying “the exhaustion doctrine in cases where the statutory requirement of exclusivity is not so explicit, are not difficult to understand.” McKart, 395 U.S. at 193. First, “[t]he agency, like a trial court, is created for the purpose of applying a statute in the first instance.” Id. at 193-94. As we have already shown, our Legislature intended for the Department to decide unclaimed property matters in the first instance. Second, “[c]ertain very practical notions of judicial efficiency come into play as well.” Id. at 195. Because the Department is required to keep records of last known owners, it is best positioned to determine who is entitled to unclaimed property and who is not. If exhaustion were not required and if a claimant could proceed initially before some tribunal other than the Department, time and effort might be expended unnecessarily attempting to resolve questions the Department is uniquely situated to address. Third, “it is generally more efficient for the administrative process to go forward without interruption than it is to permit the parties to seek aid from the courts at various intermediate stages.” Id. at 194. The Department‘s initial reticence to Phillips’ claim might have dissipated had he simply submitted a completed claim form. This thought must remain speculation, however, because Phillips declined to pursue the administrative process with the Department to its end. Fourth, “frequent and deliberate flouting of administrative processes could weaken the effectiveness of an agency by encouraging people to ignore its procedures.” Id. at 195. Phillips accused the Department of a pattern and practice of needlessly withholding unclaimed property from rightful owners. We make no judgment about the merits of this accusation and make note of it only to illuminate that there are claimants who would prefer not to proceed before the Department. If the preferences of claimants governed, the Legislature‘s statutory scheme and the autonomy of the Department could be undermined. Lastly, unnecessary duplication and conflicts may arise if exhaustion is not mandated. Whitney Nat‘l Bank in Jefferson Par. v. Bank of New Orleans & Trust Co., 379 U.S. 411, 422 (1965). The Department declined to relinquish the Property to Phillips and that decision was never appealed. Instead, Phillips asked the district court to decide the very issue that he initiated administrative proceedings to resolve. In effect, two tribunals came to conflicting conclusions in independent proceedings about the same matter. This is problematic, but this difficulty is easily remedied by requiring exhaustion. For these reasons, we conclude that Phillips was required to exhaust administrative remedies with the Department. But this conclusion in no way precluded Phillips from simultaneously initiating probate proceedings
{26} When—as in the present case—an individual seeks to be appointed PR of an estate and then seeks to procure estate assets existing as unclaimed property for purposes of estate settlement and distribution, two lines of inquiry are opened. First, should this individual be appointed PR? Second, does the unclaimed property belong to the estate the PR represents? These are distinct and independent questions. The first must be resolved by the probate and district courts in probate proceedings under the provisions of the UPC. The second must be addressed by the Department under the provisions of the UPA. The probate proceedings and unclaimed property proceedings may proceed simultaneously and in parallel. Each adjudicative body is responsible for discrete determinations essential to one goal—the settlement and distribution of the estate. Explaining how these general principles apply in this case will aid comprehension of our conclusion.
{27} Phillips correctly initiated proceedings under the UPC to be appointed PR and correctly initiated administrative proceedings under the UPA by filing a claim with the Department as PR of the Estate. The district court‘s determinations that Phillips did not file a claim with the Department and that the Department did not deny a claim submitted by Phillips are not supported by substantial evidence. See Getz v. Equitable Life Assurance Soc‘y of U. S., 1977-NMSC-018, ¶ 14, 90 N.M. 195, 561 P.2d 468 (findings not supported by substantial evidence cannot be sustained on appeal). There is no genuine dispute that Phillips filed a claim with the Department and that the Department rejected that claim. In re McElveny, 2015-NMCA-080, ¶ 3. Phillips went awry when he asked the Probate Court to order the Department to release the money to him and when he asked the district court sitting in probate to enforce the Probate Court‘s order. These requests irreparably entangled two distinct proceedings. If Phillips was dissatisfied with the Department‘s decision in the UPA proceedings, he was obligated to exhaust administrative remedies and appeal that decision under the applicable appellate provision of the UPA. He did not.
D. Exceptions to Exhaustion
{28} If the UPA contained an express and unequivocal exhaustion requirement, we would be required to remand this matter to the Department so that the administrative proceedings could be brought to their conclusion. See I.N.S. v. Orlando Ventura, 537 U.S. 12, 16 (2002) (“Generally speaking, a [reviewing court] should remand a case to an agency for decision of a matter that statutes place primarily in agency hands.“). But because exhaustion is required in this case not for statutory, jurisdictional reasons but for prudential, non-jurisdictional reasons, we have discretion. See Rodrigues v. Donovan, 769 F.2d 1344, 1348 (9th Cir. 1985) (“The judicially-created exhaustion doctrine does not limit jurisdiction; rather, it permits courts to decide whether to exercise jurisdiction.“); see also Lobato, 2012-NMSC-002, ¶ 12 (“A rigid adherence to administrative exhaustion is not required in circumstances where the doctrine is inappropriate.“).
{29} The Department rejected Phillips’ claim because it was “incomplete,” and offered three justifications for this conclusion: (1) Phillips failed to submit documentation “showing that the [P]roperty . . . would devolve to [him] alone under the applicable law of heirship[;]” (2) a “[q]uitclaim [d]eed” Phillips submitted was illegible; and (3) “the application should be made directly to [the Department] as unclaimed property custodian rather than probate.” Because the Department cited these specific grounds as the basis for its decision, we need not remand this particular matter for further administrative proceedings. Two exceptions to the exhaustion requirement apply in this case.
{30} “A party to administrative proceedings need not exhaust administrative remedies when the agency has clearly acted in excess of its statutory authority.” 5 Jacob A. Stein et al., Administrative Law § 49.02[3], at 49-107 (2015). The Department‘s first justification is not legally valid as it constitutes action beyond the scope of the
{31} A litigant‘s failure to exhaust administrative remedies can be excused if exhaustion would be futile. Lobato, 2012-NMSC-002, ¶ 12; II Pierce, supra, § 15.2, at 1229-30. Futility, as an exception to exhaustion requirements, applies where “the agency has deliberately placed an impediment in the path of a party, making an attempt at exhaustion a useless endeavor.” 5 Stein, supra, § 49.02[4], at 49-116 to 49-118. The futility exception to exhaustion applies in light of the second and third justifications offered by the Department for its decision.
{32} We cannot see how the second justification offered by the Department—a quitclaim deed Phillips submitted was illegible—can have any bearing on whether Phillips is the lawfully appointed PR of the Estate and whether the Property, a sum of money, is Estate property. See Deed, Black‘s Law Dictionary (10th ed. 2014) (defining “quitclaim deed” as “[a] deed that conveys a grantor‘s complete interest or claim in certain real property but that neither warrants nor professes that the title is valid.“). The third justification offered by the Department is not entirely clear. We understand the Department to be asserting that Phillips wrongly assumed that he could submit the Probate Court order directing the Department to release the Property to him in place of a completed unclaimed property claim form. While we agree with the Department that a claimant seeking unclaimed property must complete the claim form “prescribed” by the Department,
{33} It is unnecessary to remand this matter for further administrative proceedings. The Department shall release the Property to Phillips.
E. Sanctions and Attorneys’ Fees
{34} The district court imposed a $3,000 sanction on the Department because it
{35} The Court of Appeals awarded Phillips attorneys’ fees as prevailing party on appeal. See
III. CONCLUSION
{36} We reach the same conclusion as the Court of Appeals, but arrive at this end by a different course. The Court of Appeals’ opinion is reversed to the extent that its analysis and conclusions diverge from ours. The sanctions imposed upon the Department by the district court are vacated as is the award of attorneys’ fees granted by the Court of Appeals in favor of Phillips. The Department shall release the Property to Phillips without delay, and we remand this matter to the Department for this sole purpose.
{37} IT IS SO ORDERED.
JUDITH K. NAKAMURA, Chief Justice
WE CONCUR:
PETRA JIMENEZ MAES, Justice
EDWARD L. CHÁVEZ, Justice
CHARLES W. DANIELS, Justice
BARBARA J. VIGIL, Justice