FRANCISCO VALENZUELA and RACHEL VALENZUELA, Plaintiffs-Appellees, v. ALLAN D. SNYDER and SHERRY L. SNYDER, Defendants-Appellants, and STATE OF NEW MEXICO, TAXATION AND REVENUE DEPARTMENT, PROPERTY TAX DIVISION, Defendant.
Docket No. 32,680
IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO
March 31, 2014
Opinion Number: 2014-NMCA-061
Certiorari Granted, May 1, 2014, No. 34,644
APPEAL FROM THE DISTRICT COURT OF ROOSEVELT COUNTY
Drew D. Tatum, District Judge
Portales, NM
for Appellees
Allan and Sherry Snyder
Greeley, CO
Pro Se Appellants
OPINION
FRY, Judge.
{1} Plaintiffs Francisco and Rachel Valenzuela 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 Division) 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 to 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 of
{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 following 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
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., 1998-NMSC-046, ¶ 6, 126 N.M. 396, 970 P.2d 582. “Summary judgment is appropriate where there are no genuine issues of material fact and the movant is entitled to judgment as a matter of law.” Id.
{10} While the Snyders’ response to the Valenzuelas’ motion for summary judgment did not comply with the requirements of
{11} Given the Snyders’ non-compliant response to the Valenzuelas’ motion for summary judgment, it was appropriate under
{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 the Code.
{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.”
{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.”
{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., 1996-NMSC-038, ¶ 13, 121 N.M. 764, 918 P.2d 350. In addition, “we should read the entire statute as a whole so that each provision may be considered in relation to every other part.” Baker v. Hedstrom, 2013-NMSC-043, ¶ 15, 309 P.3d 1047 (internal quotation marks and citation omitted).
{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. As far as price is concerned, the Code requires only that “[t]he minimum price shall not be less than the total of all delinquent taxes, penalties, interest[,] and costs.”
{18} Cochrell 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, 1944-NMSC-046, ¶ 10, 48 N.M. 395, 151 P.2d 743; see Lawson v. McKinney, 1950-NMSC-022, ¶¶ 2-3, 12, 54 N.M. 179, 217 P.2d 258 (reversing judgment in favor of former owner of land sold at tax sale where judgment was based on the trial court’s adoption of the principle that “where the consideration in a tax sale is grossly inadequate as compared with the actual value of the property the deed should be held invalid“).
{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. 1944-NMSC-046, ¶ 10. In rejecting this argument, our Supreme Court stated that permitting a property owner to attack a tax sale on this basis would defeat the purpose of the law of tax sales, which is “to render these tax sales efficient to collect delinquent taxes and confer upon the purchaser a substance and not a shadow.” Id. ¶ 16 (internal quotation marks and citation omitted). Because the former owner failed to pay his property taxes and failed to complain about the inadequacy of the assessment, the Court would not permit him to complain about an inadequate valuation. Id. ¶ 18.
{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 be so grossly inadequate as of itself to amount to ‘fraud,’ requiring that sale and tax deed be set aside.” Id. ¶ 20 (Bickley, J., specially concurring). This is the same principle that the Valenzuelas urge us to adopt in the present case. We decline to establish a similar rule in New Mexico for two reasons. First, our Supreme Court expressly rejected the Missouri rule in Lawson, 1950-NMSC-022, ¶¶ 3, 7 (declining to follow Justice Bickley’s recommendation of the Missouri rule). Second, the applicable statute in Missouri expressly requires tax sales to be confirmed by a court and that the court receive evidence of the property’s value and “determine whether an adequate consideration has been paid” for the property sold.
{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, 112 N.M. 579, 817 P.2d 1221. Armstrong is distinguishable, however, because it involved foreclosure on a judgment lien, not a tax sale. Id. ¶¶ 2, 6. Judgment liens and mortgages may be foreclosed upon by way of a judicial proceeding. See
{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 to contemplate doing so before the tax sale. See
{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. Roleh, Inc., 2009-CA-00391-COA (¶¶ 9, 11-12) (Miss. 56 So. 3d 575, 576-77, Ct. App. 2010) (affirming summary judgment in favor of taxpayer and against purchaser at a tax sale because there was no affidavit of diligent search and inquiry as to the taxpayer’s whereabouts, which was a prerequisite for giving the taxpayer notice of the right of redemption); Priest v. Mareane, 846 N.Y.S.2d 518, 519-20 (N.Y. App. Div. 2007) (mem.) (affirming dismissal of petition for delivery of a tax sale deed because the taxpayer had redeemed the property by paying the back taxes and other charges). In New Mexico, there is no right of redemption.
{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.
CYNTHIA A. FRY, Judge
I CONCUR:
M. MONICA ZAMORA, Judge
JONATHAN B. SUTIN, Judge (specially concurring).
SUTIN, Judge (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 delinquency that amounted to no more than $215.
{31} Third, although I concurred in Judge Pickard’s opinion in Cochrell, 2003-NMCA-094, I think that the mandate in
{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.
JONATHAN B. SUTIN, Judge