September 08, 2011 – Wells Fargo Bank, N.A., as Indenture Trustee; Delaware Trust Company, N.A., as Owner Trustee of the ACLC Business Loan Receivable Trust 1998-2, acting through Amresco Commercial Finance, LLLC, as Servicing Agent; and ACFI 1998-2, LLC, an Idaho limited liability company v. City of Gallup and Hans J. Pircher, Individually; Grand Gal, Inc.; and Taxation and Revenue Department of the State of New Mexico, No. 29,198

IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO
Opinion Number: ___________
Filing Date: 	September 8, 2011
NO. 29,198
WELLS FARGO BANK, N.A. as Indenture
Trustee; DELAWARE TRUST COMPANY,
N.A., as Owner Trustee of the ACLC BUSINESS
LOAN RECEIVABLE TRUST 1998-2, acting
through AMRESCO COMMERCIAL
FINANCE, LLC, as Servicing Agent; and
ACFI 1998-2, LLC, an Idaho limited
liability company,
Plaintiffs-Appellants,
v.
CITY OF GALLUP,
Defendant-Appellee,
and
HANS J. PIRCHER, Individually; GRAND
GAL, INC.; and TAXATION AND REVENUE
DEPARTMENT OF THE STATE OF
NEW MEXICO,
Defendants.
APPEAL FROM THE DISTRICT COURT OF McKINLEY COUNTY
Louis E. DePauli, Jr., District Judge

Holland & Hart, LLP
Mark F. Sheridan
Jacqueline E. Davis
Santa Fe, NM
for Appellants
Jane B. Yohalem
Santa Fe, NM
R. David Pederson
Gallup, NM
for Appellee

OPINION
VIGIL, Judge.
{1} 	District courts have discretion under Rule 1-060(B) NMRA to grant relief from
final judgments. In this foreclosure action, the district court exercised this discretion
to address an issue of first impression: whether a lodger’s tax lien under Section 3-38-
18.1 of the Lodgers’ Tax Act, NMSA 1978, §§ 3-38-13 to -24 (1969, as amended
through 2000), has statutory priority over a previously filed deed of trust lien (deed
of trust). We hold that the district court did not abuse its discretion, and we agree with
its legal conclusion that the lodger’s tax lien has a statutory priority over the deed of
trust. In addition, the district court concluded that a utility lien filed by the City was
entitled to priority over the Bank’s deed of trust lien. 	As to this issue, the Bank
concedes that under the operative statutes the City’s utility lien is entitled to priority.
However, it argues that since the City did not assert its priority before the final
judgment was filed and that there are no grounds which justified reopening the
judgment under Rule 1-060(B), that we should reverse as to this issue as well. We
reject this argument because the district court did not abuse its discretion in granting
relief from the final judgment under Rule 1-060(B). We therefore affirm.
BACKGROUND
{2} 	This appeal arises out of an action brought by the Bank to foreclose on a

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promissory note secured by a deed of trust on a motel located in Gallup, New Mexico.
The City was named as a defendant because it had recorded liens on the property for
delinquent lodger’s taxes and utility service charges. 	The City not only did not
dispute that its liens were junior and inferior to the Bank’s deed of trust, but
affirmatively stated that it was “informed and believes [that the liens] are junior and
inferior to the [d]eed of [t]rust.” The Bank filed an unopposed motion for summary
judgment seeking foreclosure judgment and a declaration that its rights to the property
were superior to those of the City. 	The Bank prepared a foreclosure judgment,
approved by the City, which ordered that the property be sold to satisfy the Bank’s
judgment and further declared that the City’s liens were junior and inferior to the
Bank’s deed of trust. The foreclosure judgment, being approved by all the parties,
was filed by the district court.
{3} 	The parties then stipulated to the entry of an amended foreclosure judgment
(final judgment), which was again approved by the City as to form. 	The final
judgment was also approved by all the parties and was filed by the district court. The
final judgment ordered that the judicial sale of the property would be postponed so
that a sale to the Navajo Nation could be pursued, and it corrected the amount owed
to the Bank and the redemption rights of the obligor under the note. 	The Navajo
Nation Tribal Council had approved the purchase of the property in a special session,

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but it was subsequently vetoed by the Navajo Nation’s president. If the sale to the
Navajo Nation had taken place, the City claims that it would have resulted in
sufficient funds to pay the claims of all the parties, including the City’s. The final
judgment also reiterated that the City’s liens were junior and inferior to the deed of
trust.
{4} 	Sixty-five days after entry of the final judgment, the City filed a motion under
Rule 1-060(B)(1) and (6), seeking to correct the final judgment. The City asserted
that the final judgment was legally incorrect because its lodger’s tax and utility liens
had statutory priority over the deed of trust pursuant to NMSA 1978, Sections 3-36-1
and -2 (1981), and Section 3-38-18.1(B). 	Moreover, the City stated that it had
inadvertently failed to assert the priority status of the liens because it believed its
claim would be paid in its entirety from the sale of the property to the Navajo Nation.
According to the City, once the sale to the Navajo Nation failed, it became apparent
that a judicial sale would not provide enough money to pay all the claims and that the
City’s priority to payment had become critical. The Bank opposed the motion on
various grounds, which we subsequently discuss.
{5} 	The district court agreed with the City that its liens had statutory priority over
the Bank’s deed of trust, and it ruled that the City’s motion would be granted without
specifying whether the motion was granted under Rule 1-060(B)(1) or (6). A formal

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order was entered that granted the City’s Rule 1-060(B) motion and further ordered
that the City’s lodger’s tax and utility liens had statutory priority over the deed of
trust. The Bank appeals.
DISCUSSION
I. 	The City’s Rule 1-060(B) Motion Was Timely Filed
{6} 	Asserting that the district court granted the City’s motion based on a legal error
pursuant to Rule 1-060(B)(1), the Bank contends that the district court had no
jurisdiction to do so. Assuming this argument presents a question of jurisdiction, we
address the merits. See Rule 12-216(B) NMRA (providing that jurisdiction challenges
may be raised for the first time on appeal); see also Smith v. City of Santa Fe, 2007-
NMSC-055, ¶ 10, 142 N.M. 786, 171 P.3d 300 (“[I]t is incumbent upon the appellate
Court to raise jurisdictional questions sua sponte when the court notices them.”). We
review this issue de novo. Armijo v. Pueblo of Laguna, 2011-NMCA-006, ¶ 9, 149
N.M. 234, 247 P.3d 1119 (stating that the “determination of whether jurisdiction
exists is a question of law which an appellate court reviews de novo”).
{7} 	The Bank argues from language in Resolution Trust Corporation v. Ferri, 120
N.M. 320, 901 P.2d 738 (1995), and Deerman v. Board of County Commissioners,
116 N.M. 501, 864 P.2d 317 (Ct. App. 1993), that all Rule 1-060(B)(1) motions
asserting legal error must be filed within the time permitted for an appeal. Ferri, 120

5
N.M. at 323, 901 P.2d at 741; Deerman, 116 N.M. at 506, 864 P.2d at 322. Since the
City’s motion was filed sixty-five days after the final judgment, the Bank asserts that
it was untimely. See Rule 12-201(A)(2) NMRA (stating that a notice of appeal must
be filed within thirty days after the filing of the final judgment). We disagree.
{8} 	The Bank asks this Court to read Ferri and Deerman as preventing all Rule 1-
060(B)(1) motions after the time permitted for an appeal has lapsed. However, we do
not read Ferri and Deerman so broadly. 	These authorities hold that a Rule 1-
060(B)(1) motion cannot be filed after the period permitted for a direct appeal has
lapsed only when the motion is used as a substitute for a direct appeal or as a means
of circumventing the time period allowed for a direct appeal. See Ferri, 120 N.M. at
323, 901 P.2d at 741 (stating that Rule 1-060(B) should not be used as a substitute for
appeal nor as a means of circumventing the appeals process); Deerman, 116 N.M. at
506, 864 P.2d at 322 (stating that it is well-settled in New Mexico law that Rule 1-
060(B)(1) is not to be used as a substitute for appeal).
{9} 	However, in this case, the City could not have filed a direct appeal of the
amended judgment at the time it was filed by the district court because it was based
upon a stipulation by the parties. The City never asked the district court to rule on the
applicability of Section 3-38-18.1 until it filed the Rule 1-060(B)(1) motion. As a
result, before the motion, the City was unable to appeal the priority issue to this Court.

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See Rule 12-216(A) (stating that to preserve a question for review, a party must “fairly
invoke” a ruling by the district court); Diversey Corp. v. Chem-Source Corp., 1998-
NMCA-112, ¶ 14, 125 N.M. 748, 965 P.2d 332 (stating that this Court will not
address arguments not preserved for review). 	Therefore, the district court’s
consideration of the City’s motion was not used to circumvent the appeals process.
{10} 	Assuming the City’s motion was granted under Rule 1-060(B)(1), we hold that
the City’s motion was timely. See Rule 1-060(B)(6) (stating that motions requesting
relief from a judgment pursuant to Rule 1-060(B)(1) must be filed within one year of
the judgment).
II. 	The District Court Did Not Abuse Its Discretion in Reopening the Case
{11} 	The Bank argues that the district court abused its discretion in granting the
City’s motion because it characterizes the alleged error in the judgment as resulting
from judicial error, which the Bank argues falls outside the ambit of “mistake” under
Rule 1-060(B)(1). 	We are not persuaded. 	See Koppenhaver v. Koppenhaver, 101
N.M. 105, 108, 678 P.2d 1180, 1183 (Ct. App. 1984) (“Precise nomenclature for the
motion seeking relief from the finality of a judgment is not controlling; the court must
look to the substance of the relief sought.”).
{12} 	The ultimate issue before us is whether the district court abused its discretion
in amending the final judgment whether it was granted under either Rule 1-060(B)(1)

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or (6). See Click v. Litho Supply Co., 95 N.M. 419, 420, 622 P.2d 1039, 1040 (1981)
(“Relief under Rule [1-0]60 is discretionary with the trial judge and will be reviewed
only for an abuse of that discretion.”). 	It is well-settled that to reverse the district
court’s ruling on a Rule 1-060(B) motion under the abuse-of-discretion standard, the
district court’s ruling must be “arbitrary, fanciful, or unreasonable.” 	Meiboom v.
Watson, 2000-NMSC-004, ¶ 29, 128 N.M. 536, 994 P.2d 1154 (internal quotation
marks and citation omitted). In considering a motion under Rule 1-060(B), the district
court should “be liberal in determining what constitutes good cause to vacate a
judgment so that the ultimate result will address the true merits and substantial justice
will be done.” 	Phelps Dodge Corp. v. Guerra, 92 N.M. 47, 51, 582 P.2d 819, 823
(1978); see also Kinder Morgan CO2 Co., L.P. v. State Taxation & Revenue Dep’t,
2009-NMCA-019, ¶ 10, 145 N.M. 579, 203 P.3d 110 (same).
{13} 	In this case, there are no reasons for concluding that reopening the priority issue
was “arbitrary, fanciful, or unreasonable.” Meiboom, 2000-NMSC-004, ¶ 29 (internal
quotation marks and citation omitted). The City asserted it initially contemplated that
the sale to the Navajo Nation would result in its liens being paid in full, although its
liens were deemed junior to the Bank’s deed of trust. When the sale to the Navajo
Nation failed, the City claimed it realized for the first time that it had inadvertently
failed to recognize that its lodger’s tax lien might have statutory priority. The City

8
then brought the issue to the attention of the district court and candidly acknowledged
to the district court that it had overlooked the issue, because it initially believed it was
going to be paid. The Bank did not dispute these assertions and never asserted that
the City acted in bad faith in failing to raise the arguments earlier or that the Bank
would suffer any legal prejudice if the district court considered the City’s motion. The
City’s motion raised an issue of first impression, and the parties were given an
opportunity to fully present their arguments. The district court reopened the case and
granted the City’s motion only after carefully considering these circumstances and the
arguments of both parties. For the foregoing reasons, we fail to see how the district
court was arbitrary or unreasonable in deciding to address the merits of the priority
issue, and we conclude that the district court did not abuse its discretion in amending
the final judgment.
{14} 	The Bank also argues that the district court abused its discretion because the
City failed to dispute throughout the case that its lien was inferior. 	We disagree.
Even if we construe the City’s failure to dispute whether its lien was inferior as a
stipulation, a court may refuse to enforce a stipulation for good cause. 	Ballard v.
Miller, 87 N.M. 86, 91, 529 P.2d 752, 757 (1974) (stating that “stipulations will be
encouraged by the courts, and enforced by them, unless good cause is shown to the
contrary” (internal quotation marks and citation omitted)). Good cause for granting

9
relief from the terms of a stipulation is present when the agreement was entered into
as the result of inadvertence, improvidence, or excusable neglect that the party seeking
relief was reasonably diligent in doing so and that the prejudice to the opposing party
is not greater than that to the applicant. Id. As we have already discussed, all these
conditions are present in this case.
III. 	The Plain Language of Section 3-38-18.1(B) Provides First Priority From
Sale Proceeds to the City’s Lodger’s Tax Lien
{15} 	Since issues involving statutory interpretation are questions of law, we review
de novo the question of whether Section 3-38-18.1 provides first priority of payment
from the sale proceeds to the City’s lodger’s tax lien. See Sonic Indus. v. State, 2006-
NMSC-038, ¶ 7, 140 N.M. 212, 141 P.3d 1266 (stating that questions of statutory
interpretation are questions of law that are reviewed de novo).
{16} 	The Lodgers’ Tax Act provides that municipalities or counties may collect taxes
on the rent paid by consumers for certain types of lodgings, such as hotel rooms,
occupied for less than thirty days. See §§ 3-38-14, -15, -16. The Lodgers’ Tax Act
further provides that persons providing the service of furnishing lodgings, called
vendors for purposes of the Act, are responsible for collecting the lodger’s taxes from
consumers and are liable for the payment of delinquent lodger’s taxes plus interest and
penalties. See §§ 3-38-14, -17, -18. Section 3-38-18.1 then governs one way in

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which municipalities or counties may enforce payment of delinquent lodger’s taxes
as against vendors.
{17} 	Section 3-38-18.1(A), (B) provides:
A. 	The occupancy tax imposed by a municipality or county
constitutes a lien in favor of that municipality or county upon the
personal and real property of the vendor providing lodgings in that
municipality or county. 	The lien may be enforced as provided in
Sections 3-36-1 through 3-36-7 NMSA 1978. Priority of the lien shall
be determined from the date of filing.
B. 	Under process or order of court, no person shall sell the
property of any vendor without first ascertaining from the clerk or
treasurer of the municipality or county in which the vendor is located the
amount of any occupancy tax due the municipality or county. 	Any
occupancy tax due the municipality or county shall be paid from the
proceeds of the sale before payment is made to the judgment creditor or
any other person with a claim on the sale proceeds.
(Emphasis added.)
{18} 	The district court determined that Subsection (B) controls in this case, and we
agree. 	When interpreting statutes, our guiding principle is to determine and give
effect to legislative intent. Pub. Serv. Co. of N.M. v. N.M. Pub. Util. Comm’n, 1999-
NMSC-040, ¶ 18, 128 N.M. 309, 992 P.2d 860. 	In ascertaining the intent of the
Legislature, we are assisted by classic canons of statutory construction. Id. The first
of these is that a court is required to give effect to the statute’s language and refrain
from further interpretation when the language is clear and unambiguous. 	Sims v.

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Sims, 1996-NMSC-078, ¶ 17, 122 N.M. 618, 930 P.2d 153; Bd. of Comm’rs of Doña
Ana Cnty. v. Las Cruces Sun-News, 2003-NMCA-102, ¶ 19, 134 N.M. 283, 76 P.3d
36 (noting that where language is clear, appellate courts “give the statute its plain and
ordinary meaning and refrain from further interpretation”).
{19} 	Section 3-38-18.1(A) creates a lodger’s tax lien and prescribes the mechanisms
municipalities or counties may use to enforce the lodger’s tax lien. See NMSA 1978,
§§ 3-36-4 to -5 (1965), -6 (1977) (providing types of foreclosure methods to enforce
municipal liens). Section 3-38-18.1(B) states that it applies to situations where any
person, such as the Bank, attempts to sell the property of a vendor under process or
order of the court. 	Section 3-38-18.1(B) clearly governs judicial sales pursuant to
foreclosure actions initiated by someone other than a municipality or county. In such
circumstances, Section 3-38-18.1(B) further provides that any lodger’s taxes owed
must first be paid to the municipality or county before any of the other parties’ claims
are paid.
{20} 	When read together, Subsections (A) and (B) indicate a legislative intent of
Section 3-38-18.1 that when named as a defendant in a deed of trust foreclosure
action, as in this case, a municipality can choose not to proceed by way of
enforcement through foreclosure as provided in Sections 3-36-1 through -6 together
with Subsection (A)’s priority language, but can rely instead on Subsection (B) for

12
priority of payment from the proceeds of sale. This is the approach the City sought
were it to be given a second chance under Rule 1-060(B). The City was appropriately
given that chance. We therefore hold that when Subsections (A) and (B) are read in
tandem the priority language in Subsection (A) was intended to apply where a
municipality is enforcing a lodger’s tax lien as provided by Sections 3-36-1 through -6
and not to apply when, as here, a municipality chooses to enforce its lien under
Subsection (B)’s first priority on proceeds of sale in a pending deed of trust
foreclosure action. 	Thus, in conformity with the ruling of the district court, the
applicable subsection is Subsection (B) and the City was entitled to payment from the
sale proceeds before the Bank received any proceeds.
{21} 	The Bank argues that this interpretation of Section 3-38-18.1 is contrary to the
“first in time is first in right” doctrine and common law principles that deny municipal
taxes priority over other encumbrances. 	We are unpersuaded because the plain
language of Section 3-38-18.1 controls. See United States v. Atlantic Mun. Corp., 212
F.2d 709, 711 (5th Cir. 1954) (stating that the “first in time is the first in right”
doctrine is widely accepted and applied, absent legislation to the contrary); Sims,
1996-NMSC-078, ¶ 23 (“[W]hen legislation directly and clearly conflicts with the
common law, the legislation will control because it is the most recent statement of the
law.”).

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{22} 	In sum, Section 3-38-18.1(A) involves the enforcement of lodger’s liens by
municipalities, while Section 3-38-18.1(B) controls situations where parties, besides
foreclosing municipalities, are selling a vendor’s property through court order.
Therefore, Subsections (A) and (B) are not in conflict since they govern different
circumstances.
{23} 	The Bank also urges us to follow federal and Maryland cases and to conclude
that the City’s lodger’s tax lien only has priority against unsecured creditors. 	We
decline to do so because those cases are inapplicable. See Brent v. Bank of Wash., 35
U.S. (10 Pet.) 596, 605-09, 615 (1836) (holding that the federal priority statute does
not give the United States a lien but a legal right to payment); Conard v. Atl. Ins. Co.
of N.Y., 26 U.S. (1 Pet.) 386, 444 (1828) (stating that the priority of the United States
to payment from an insolvent’s assets cannot displace a specific and perfected lien
since the “priority is not of itself equivalent to a lien”); Wethered v. Alban Tractor
Co., 168 A.2d 358, 362-63 (Md. 1961) (stating that the Maryland priority statutes “do
no more than establish a priority of payment for unpaid taxes . . . . [however, t]his
does not establish a lien” (citation omitted)). Section 3-38-18.1(A) does not provide
merely a right to payment but explicitly creates a lodger’s tax lien that is entitled to
priority. See 72 Am. Jur. 2d State and Local Taxation § 899 (1974) (providing that
some courts will give priority to state tax liens over other encumbrances when there

14
is a clear statement of legislative intent that such preference be given).
CONCLUSION
{24} 	For the foregoing reasons, we affirm.
{25} 	IT IS SO ORDERED.
__________________________________
MICHAEL E. VIGIL, Judge
WE CONCUR:
__________________________________
JAMES J. WECHSLER, Judge
__________________________________
JONATHAN B. SUTIN, Judge