Lead Opinion
{1} Plaintiffs Francisco and Rachel V alenzuela owed delinquent taxes on property in Portales, New Mexico, which the New Mexico Taxation and Revenue Department (the Department) sold at auction to Defendants Allan and Sherry Snyder, It is undisputed that the minimum bid at the sale was established by the Department as $215, and the Snyders, who were the only bidders at the auction, paid that amount. The Department’s Property Tax Division (the Divisiоn) issued deeds on the property to the Snyders, which the Snyders recorded.
{2} The Valenzuelas filed suit seeking an order setting aside the tax sale. They alleged that because the purchase price was so grossly disproportionate to the property’s fair market value — alleged to be at least $25,000 — it would be inequitable and unconscionable to let the tax sale stand. The district court granted them summary judgment on the ground that the Snyders failed to respond to the motion for summary judgment and were deemed to have admitted the facts alleged by the Valenzuelas. Because our statutes and case law establish that an inadequate purchase price at a tax sale is not a basis for voiding the sale, we reverse.
BACKGROUND
{3} The Valenzuelas initially sued only the Department seeking an order setting aside the tax sale. They later amended their complaint to add the Snyders as Defendants, and the case proceeded against only the Snyders.
{4} The Valenzuelas filed a motion for summary judgment in which they alleged several material facts regarding the value of the property and the disproportionality of the purchase price. They also alleged, as material facts, the legal conclusion that it would be unconscionable and inequitable tо let the tax sale stand under the circumstances.
{5} The Snyders, acting pro se, did not directly respond to the motion for summary judgment. Instead, they filed a motion to stay the proceedings against them until the case against the Department was resolved. In this motion, the Snyders stated that they “den[ied] the whole” of the Valenzuelas’ motion for summary judgment. They did not comply with the provisions ofRule 1-056 NMRA that require a memorandum opposing a motion for summary judgment to specifically note all disputed facts with supporting citations to the record. See Rule 1-056(D)(2).
{6} Due to the Snyders’ failure to properly respond to the motion for summary judgment, the district court deemed admitted all of the material facts alleged in the Valenzuelas’ motion, including:
• The property’s fair market value was at least $25,000.
• The Snyders purchased the property at a tax sale for $215.
• The price the Snyders paid was “grossly disproportionate to [the property’s] fair market value.”
• “It is unconscionable to allow the tax sale in which [the Snyders] purchased the property to stand.”
The court concluded that “[t]he tax sale in which [the Snyders] purchased the property is hereby deemed null and void.” This appeal followed.
DISCUSSION
{7} When this Court calendared this case, we instructed the parties to brief, in addition to any other issues they were inclined to raise, the follоwing questions: (1) whether a claim seeking to invalidate a tax sale due to inadequacy of price must be directed at the
The Valenzuelas Could Properly Sue the Snyders for the Relief Requested
{8} We readily dispose of the first question. The Valenzuelas correctly note that NMSA 1978, Section 44-6-4 (1975) of our Declаratory Judgment Act (the Act), NMSA 1978, §§ 44-6-1 to -15 (1975), provides that “[a]ny person interested under a deed ... or whose rights ... are affected by a statute . . . may have determined any question of construction or validity arising under the instrument [or] statute . . . and obtain a declaration of rights, status[,] or other legal relations thereunder.” Section 44-6-4. The Valenzuelas seek in this case to have their rights under the Property Tax Code declared, so they apprоpriately asserted their claim under Section 44-6-4. As for the proper defendant(s) in their suit, Section 44-6-12 of the Act provides that “[w]hen declaratory relief is sought, all persons shall be made parties who have or claim any interest which would be affected by the declaration.” As purchasers of the property previously owned by the Valenzuelas, the Snyders clearly fall within this category and, therefore, the suit against thеm was permissible.
Inadequacy of the Purchase Price is Not a Valid Basis for Voiding a Tax Sale
{9} With respect to the second question — whether New Mexico law permits setting aside a tax sale due to the inadequacy of the purchase price — we review an order granting summary judgment de novo. Self v. United Parcel Serv., Inc.,
{10} While the Snyders’ response to the Valenzuelas’ motion for summary judgment did not comply with the requirements of Rule 1-056, this did not automatically entitle the Valenzuelas to summary judgment. See Junge v. John D. Morgan Constr. Co.,
{11} Given the Snyders’ non-compliant response to the Valenzuelas’ motion for summary judgment, it was appropriate under Rule 1-056(E) for the district court to deem admitted the allegations of fact stated in the motion. See id. (“[A]n adverse party may not rest upon the mere allegations or denials of his [or her] pleading, but his [or hеr] response, by affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial. If he [or she] does not so respond, summary judgment, if appropriate, shall be entered against him [or her].”). However, the same does not hold true for conclusions of law that are presented as allegations of fact. See Vives v. Verzino,
{12} We conclude that inadequacy of the purchase price or gross disproportionality between the purchase price and the property’s value are not grounds for setting aside a tax sale. New Mexico’s Property Tax Code (the Code) and our case law make this clear.
{13} We begin with thе Code. NMSA 1978, Section 7-38-48 (2003) provides that, with certain exceptions not applicable to this case, “taxes on real property are a lien against the real property from January 1 of the tax year for which the taxes are imposed.... The lien continues until the taxes and any penalty and interest are paid.” In this case, it appears that at the time of the tax sale, the Valenzuelas owed delinquеnt taxes for the years 2008, 2009, 2010, and possibly 2011. They do not claim in this appeal that they did not receive notice that these taxes were due and delinquent or that they were not provided notice of the tax sale.
{14} The Code states, “If a lien exists ..., the [D] epartment may collect delinquent taxes on real property by selling the real property on which the taxes have become delinquent.” NMSA 1978, § 7-38-65(A) (2003, amended 2013). The Code requires the sale to be at public auction, with a minimum purchase price determined by the Department. NMSA 1978, § 7-38-67(C), (E) (2005). “In determining the minimum price, the [Department shall consider the value of the property owner’s interest in the real property, the amount of all delinquent taxes, penalties and interest for which it is being sold and the costs. The minimum price shall not be less than the total of all delinquent taxes, penalties, interest[,] and costs.” Section 7-38-67(E). Of note here is the direction to the Department to “consider the value of the property owner’s interest in the real property,” a phrase that has been interpreted by our case law, as we discuss below. Id.
{15} Once a tax sale has taken place, if the sale was “substantially in accordance with the . . . Code . . . , the deed conveys all of the former property owner’s interest in the real property as of the date the state’s lien for real property taxes arose . . . , subject only to perfected interests in the real property existing before the date the property tax lien arose.” NMSA 1978, § 7-38-70(B) (1982). Here, the Division issued two such deeds to the Snyders. These deeds were, in effect, quitclaim deeds.
{16} “In interpreting statutes, we seek to give effect to the Legislature’s intent, and in determining intent we look to the language used and consider the statute’s history and background.” Key v. Chrysler Motors Corp.,
{17} We first note that there is nothing in the Code expressly requiring that the price paid at a tax sale approximate the fair market value of the property. A§ far as price is сoncerned, the Code requires only that “[t]he minimum price shall not be less than the total of all delinquent taxes, penalties, interest],] and costs.” Section 7-38-67(E). While the Code requires the Department to “consider the value of the property owner’s interest,” id., in determining the minimum sale price, this Court has said that this consideration can be established “by interesting as many buyers as possible in the sale by setting a low minimum sale price on thе property.” Cochrell v. Mitchell,
{18} Cockrell also established that all that is required of a tax sale is substantial compliance with the Code. Id. ¶ 16. This is in keeping with the Code’s purpose to permit
{19} Earlier New Mexico cases, interpreting a former version of the Code, have held that “[t]ax sale deeds will not be invalidated because it might appear that the property so sold for delinquent taxes was not adequately valued for assessment purposes.” Taylor v. Shaw,
{20} In Taylor, the former owner of the property sought to invalidate the tax sale in part because improvements he made to the property were not included in the assessment of its value.
{21} Justice Bickley wrote a special concurring opinion in Taylor, in which he commended a principle adopted in Missouri “that in tax sales the consideration paid may beso grossly inadequate as of itself to amount to ‘fraud,’ requiring that sale and tax deed be set aside.” Id. ¶ 20 (Bicklеy, J., specially concurring). This is the same principle that the Valenzuelas urge us to adopt in the present case. W e decline to establish a similar rule in New Mexico for two reasons. First, our Supreme Court expressly rejected the Missouri rule inLawson,
{22} The Valenzuelas also rely on Armstrong v. Csurilla, which applied a rule similar to the “shock the conscience” principle established in Missouri. 1991 -NMSC-081, ¶¶ 39-40,
{23} While it may seem harsh to disregard a large discrepancy between the purchase price in a tax sale and the property’s value, there are at least three sensible reasons for doing so. First, it seems less important to protect a property owner’s interest in fair market value where the owner has not bothered to pay taxes on the property, despite having had at least three years in which tо contemplate doing so before the tax sale. See § 7-38-65(A) (stating that a tax sale may not occur until “after the expiration of three years from the first date shown on the tax delinquency list on which the taxes became delinquent”); see also Hickey v. Peck,
{24} We are not persuaded by the out-of-state cases relied on by the Valenzuelas. Those cases involved the taxpayer’s right of redemption following a tax sale. C.F.P. Prop., Inc. v. Rоleh, Inc., 2009-CA-00391-COA (¶¶ 9,11-12) (Miss.
{25} In summary, the district court erroneously granted summary judgment to the Valenzuelas. As a matter of law, the purchase price paid by the Snyders, while disproportionate to the market value of the property, cannot be deemed unconscionable and cannot serve as a basis for setting aside the deeds issued to the Snyders by the Division.
{26} Given our disposition, we need not address the other issues raised by the Snyders.
CONCLUSION
{27} For the foregoing reason, we reverse the summary judgment in favor of the Valenzuelas and remand to the district court with instructions to enter judgment in favor of the Snyders.
{28} IT IS SO ORDERED.
Notes
The “fact” of gross disproportionality is arguably a conclusion of law, given the case law from Missouri that we discuss below. However, for purposes of this appeal only, we treat it as an undisputed fact.
Concurrence Opinion
(specially concurring).
{29} I fully concur in Judge Fry’s Opinion. I write separately just to note a few matters. First, I cannot fault the district court for granting summary judgment when the Snyders, acting pro se, intentionally, if not flagrantly, disregarded important rules of procedure related to summary judgment proceedings and discovery. As indicated in Judge Fry’s Opinion, however, in scrutinizing judgments we need not overlook incorrect
{30} Second, although Plaintiffs’ counsel attempted to make a case that the Valenzuelas did not understand how the tax delinquency system worked, it appears that the Valenzuelas received notice of delinquent taxes, failed to prove a valid reason for disregarding the delinquency, and at no time before or at the sale sought to satisfy the dеlinquency that amounted to no more than $215.
{31} Third, although I concurred in Judge Pickard’s opinion in Cochrell,
{32} Fourth, it may be time for the Legislature to take another look at the tax sale provisions to explore whether some balanced approach can exist in tax sales that satisfies the policies of discouraging delinquencies, encouraging competitive bidding, and taking into consideration a purchaser’s title risks and any commensurate costs when receiving only a quitclaim deed, yet guarding against homeowner unconscionable loss and purchaser windfall.