Zangara v. LSF9 Master Participation Tr.

Office of the
New Mexico
Director Compilation
Commission
2024.10.10
'00'06- 14:48:27
IN THE SUPREME COURT OF THE STATE OF NEW MEXICO

Opinion Number: 2024-NMSC-021

Filing Date: August 1, 2024

No. S-1-SC-39679

KENNETH B. ZANGARA and KATHY
S. ZANGARA, Husband and Wife,

Petitioners-Petitioners,

v.

LSF9 MASTER PARTICIPATION TRUST,

Respondent-Respondent,

and

BANK OF AMERICA, N.A.,

Respondent,

and

LSF9 MASTER PARTICIPATION TRUST,

Plaintiff-Respondent,

v.

KENNETH B. ZANGARA and KATHY S.
ZANGARA, Husband and Wife,

Defendants-Petitioners,

and

HIGH DESERT RESIDENTIAL OWNERS
ASSOCIATION, INC., MAINTENANCE
SERVICE SYSTEM, INC., and MEDIA
WORKS ADVERTISING SPECIALTIES,
INC.,
Defendants.

ORIGINAL PROCEEDING ON CERTIORARI
Daniel E. Ramczyk, District Judge

Kevin A. Zangara, P.A.
Kevin A. Zangara
Taos, NM

for Petitioners

Modrall, Sperling, Roehl, Harris & Sisk, P.A.
Elizabeth A. Martinez
Albuquerque, NM

Perkins Coie, LLP
Brien F. McMahon
San Francisco, CA
Aaron R. Goldstein
Los Angeles, CA

for Respondent

OPINION

ZAMORA, Justice.

{1} In this appeal, we are called upon to review New Mexico’s savings statute. See
NMSA 1978 § 37-1-14 (1880). The savings statute suspends the running of an
otherwise applicable statute of limitations when an action is timely commenced but later
dismissed for any cause except negligence in prosecution. It supports the goal of
judicially resolving controversies based on the substantive questions they present, not
on procedural technicalities. Given the importance of New Mexico’s policy favoring
judicial resolution of disputes, we clarify the meaning of the phrase negligence in its
prosecution in Section 37-1-14. We hold the phrase negligence in its prosecution is the
same as a dismissal for failure to prosecute. We also reject as inconsistent with this
holding any previous extensions of the negligence in prosecution exception to
circumstances beyond a party’s failure to timely take the steps necessary to bring the
first-filed suit to a close. Our holding reaffirms the important purpose of our savings
statute, which is to facilitate resolution of disputes on their merits.

I. BACKGROUND

{2} The parties are Petitioners Kenneth Zangara and Kathy Zangara and
Respondent LSF9 Master Participation Trust. References to non-party Bank of America,
N.A. (BOA) provide context for the dispute. The case revolves around a $2.3 million
loan secured by a mortgage on a home in Albuquerque, New Mexico. The note on the
loan was executed in 2005 by the Zangaras, who are the borrowers. Four years later,
the Zangaras defaulted on the loan. The Zangaras filed for bankruptcy and within a few
months, their personal liability on the loan was discharged in the bankruptcy
proceedings and BOA was authorized to pursue an action for foreclosure on the
property.

{3} In 2011, BOA, the Trust’s predecessor in interest, filed a complaint for
foreclosure of the mortgage securing the promissory note executed by the Zangaras.
BOA’s 2011 filing accelerated the debt and triggered the six-year statute of limitations
for actions founded upon promissory notes. See NMSA 1978, § 37-1-3(A) (1880,
amended 2015). BOA’s action, which is not at issue on appeal, was stayed for several
months while the parties explored loss-mitigation options. It was then dismissed in 2013
without prejudice for lack of prosecution. In 2015, BOA sold the note and assigned the
mortgage to the Trust, which acquired a lost note affidavit and a copy of the note as part
of the sale. But BOA did not specifically assign to the Trust its right to enforce the note.

{4} This appeal concerns the second foreclosure action the Trust filed against the
Zangaras. There is no challenge to the timeliness of the filing of the first foreclosure
action by the Trust. In its first action, the Trust alleged it had been assigned the
mortgage by BOA and that BOA had negotiated the promissory note secured by the
mortgage to the Trust by transferring possession of the note endorsed in blank. Exhibits
to the Trust’s complaint in the first action included a copy of the Affidavit of Lost Note
executed by BOA and an endorsed copy of the Note endorsed in blank as well as a
copy of the Mortgage and Assignment of the Mortgage to the Trust.

{5} The Zangaras moved to dismiss the Trust’s first foreclosure action and on
February 20, 2018, the district court granted the motion and dismissed the action
without prejudice for lack of standing. Shortly after this dismissal, the Zangaras filed a
petition to quiet title against the Trust and BOA. The Trust then filed a new suit for
foreclosure against the Zangaras on August 20, 2018, invoking New Mexico’s six-month
savings statute. See Section 37-1-14.

{6} In its second suit, the Trust again alleged BOA had endorsed the note but did not
repeat its previous allegation that BOA had transferred possession of the note to it.
Instead, the Trust alleged BOA had lost the note and that the Trust had been assigned
all of BOA’s rights to enforce the lost note in an affidavit executed in June 2018, which
was after the Trust’s first foreclosure action was filed and shortly before its second
foreclosure action was filed.

{7} The district court dismissed with prejudice the Trust’s second foreclosure action
based on its interpretation of Section 309 of the New Mexico Uniform Commercial
Code. See NMSA 1978, § 55-3-309 (1992, amended 2023). That interpretation led the
district court to conclude the savings statute did not apply because the Trust’s initial
foreclosure was “a nullity” that “cannot be used to bootstrap the timeliness of the 2018
action.” It did not address the term negligence in its prosecution.
{8} The Trust appealed. 1 Relying on the right for any reason doctrine, the Court of
Appeals focused on whether a dismissal for lack of jurisdiction comes within the
negligence in prosecution exception to the savings statute. Zangara, A-1-CA-38169,
mem. op. ¶ 8. The Court of Appeals resolved the savings statute issue in favor of the
Trust based on its conclusion that the distinction it had drawn in a prior case between
non-waivable and waivable defenses was outcome determinative. Id. ¶ 13. This led to
the Court’s conclusion that “a dismissal for lack of standing does not fall within the
exception for negligence in the prosecution and that the instant action is therefore a
continuation of the action that was dismissed for lack of standing.” Id. In so doing, the
Court of Appeals limited the reach of its prior opinion in Barbeau v. Hoppenrath. 2001-
NMCA-077, 131 N.M. 124, 33 P.3d 675. See Zangara, A-1-CA-38169, mem. op. ¶ 13.
We granted certiorari to address the meaning of the negligence in prosecution
exception to the savings statute.

II. ANALYSIS

{9} The Zangaras argue that the Trust was negligent in the prosecution of their first
action because that action was dismissed for lack of prudential standing and thus, the
savings statute does not apply. The Trust argues the negligence in prosecution
exception is limited to failure to prosecute a suit with reasonable diligence, which is to
say “failure to take the steps necessary to bring the suit to close.” We agree with the
Trust.

{10} We begin our analysis by determining the meaning of the term negligence in its
prosecution in the savings statute. This calls for a de novo review. Nguyen v. Bui, 2023-
NMSC-020, ¶ 14, 536 P.3d 482. In determining the meaning of a statute, we start with
its language. We give statutory language “its ordinary and plain meaning unless the
legislature indicates a different interpretation is necessary.” Cooper v. Chevron U.S.A.,
Inc., 2002-NMSC-020, ¶ 16, 132 N.M. 382, 49 P.3d 61. “Unless ambiguity exists, this
Court must adhere to the plain meaning of the language.” Leger v. Gerety, 2022-NMSC-
007, ¶ 27, 503 P.3d 349 (internal quotation marks and citation omitted). “We will not
depart from the plain language of the statute unless it is necessary to resolve an
ambiguity, correct a mistake or an absurdity that the Legislature could not have
intended, or . . . deal with an irreconcilable conflict among statutory provisions.” Id.
(internal quotation marks and citation omitted). When statutory language is clear and
unambiguous, we give effect to that language. Draper v Mountain States Mut. Cas. Co.,
1994-NMSC-002, ¶ 4, 116 N.M. 775, 867 P.2d 1157. These rules of statutory
construction are consistent with New Mexico’s Uniform Statute and Rule Construction
Act, NMSA 1978, §§ 12-2A-1 to -20 (1997), which states in part: “Unless a word or
phrase is defined in the statute or rule being construed, its meaning is determined by its
context, the rules of grammar and common usage.” Section 12-2A-2. There are cases in

1The Court of Appeals resolved the Section 309 issue in a footnote, relying on a prior precedential
opinion. Zangara v. LSF9 Master Participation Tr., A-1-CA-38169, mem. op. ¶ 1 n.1 (N.M. Ct. App. Nov.
8, 2022 (nonprecedential) (citing CitiMortgage, Inc. v. Garcia, 2023-NMCA-081, 538 P.3d 89)). The
Section 309 issue is not before us.
which our statutory analysis “begins and ends with [the statute’s] plain language.”
Nguyen, 2023-NMSC-020, ¶ 15. This is such a case.

{11} The full text of the savings statute reads:

If, after the commencement of an action, the plaintiff fail therein for any
cause, except negligence in its prosecution, and a new suit be
commenced within six months thereafter, the second suit shall, for the
purposes herein contemplated, be deemed a continuation of the first.

Section 37-1-14 (emphasis added). We begin by reviewing the meaning of any cause
since negligence in prosecution is the only exception to an action which fails for any
other cause. Cause is an ordinary term of common usage which simply means
“[s]omething that produces an effect or result.” Cause, Black’s Law Dictionary (12th ed.
2024). A legal action can fail for many causes, including lack of subject matter
jurisdiction, service of process problems, improper joinder, improper venue, lack of
standing, and even simply a failure to attach requisite documents. See, e.g., Rule 1-
012(H) NMRA (“Waiver or preservation of certain defenses”); cf. Hall v. Northside Med.
Ctr., 2008-Ohio-4725, ¶ 36, 897 N.E.2d 717 (Ohio Ct. App. 7th Dist. 2008) (finding that
failure to file requisite affidavit of merit in medical malpractice was not a “failure on the
merits” so plaintiff could avail itself of savings statute). Because we find no ambiguity in
the word cause as it is used in Section 37-1-14, we adhere to its plain meaning. Leger,
2022-NMSC-007, ¶ 27. We conclude any cause as used in our savings statute means
any disposition without prejudice that “produces” or results in the failure of the first-filed
action. The only exception to any cause is the failure of the first-filed action for
negligence in prosecution.

{12} In the context of our savings statute, we have already equated negligence in
prosecution with dismissal for failure to prosecute. Gathman-Matotan Architects &
Planners, Inc. v. Dep’t of Fin. & Admin. (G-M Architects), 1990-NMSC-013, ¶ 8, 109
N.M. 492, 787 P.2d 411. We are aware of no definitions of the term negligence in its
prosecution in our Supreme Court caselaw or in our statutes that are contrary to
equating the plain language of that phrase with dismissal for failure to prosecute. A
dismissal for failure to prosecute is also referred to as dismissal for want of prosecution.
Dismissal, Black’s Law Dictionary (12th ed. 2024). “Dismissal for want of prosecution”
means a “court's dismissal of a lawsuit because the plaintiff has failed to pursue the
case diligently toward completion.” Id. Similarly, we have long defined the failure to
diligently prosecute a suit with reasonable diligence as the failure to take the steps
necessary to bring the suit to a close. Emmco Ins. Co. v. Walker, 1953-NMSC-074, ¶ 4,
57 N.M. 525, 260 P.2d 712. See also Rule 1-041(E) NMRA (addressing dismissal for
failure to take significant action and reinstatement for good cause shown).

{13} For these reasons, we hold the term negligence in its prosecution in Section 37-
1-14 means dismissal for failure to prosecute. If we were to hold otherwise and
determine the meaning of the phrase negligence in its prosecution hinged only on the
word negligence, there would be no limits on a litigant’s ability to challenge an opposing
party’s reliance on Section 37-1-14. This would render superfluous the language in the
statute that allows a plaintiff to bring a second action within six months of a dismissal
without prejudice of the first action for any cause except that of negligence in
prosecution.

{14} Our plain language analysis does not result in a mistake or absurdity that the
Legislature could not have intended. See Leger, 2022-NMSC-007, ¶ 27. Nor does it
result in an irreconcilable conflict. Id. Mistake or absurdity would ensue only if we
ignored the plain language of the statute and adopted an expansive interpretation of the
negligence in prosecution exception. Were we to do that, our courts would be forced to
confront confounding questions of which suit-ending mistakes were sufficiently negligent
to trigger the exception to the savings clause. We have found no indication our
Legislature intended such an interpretation nor have the Zangaras provided any
authority to support their claim that the availability of the savings statute turns on a
case-by-case determination of whether there was negligence of any sort in the filing of
the first action.

{15} Our prior caselaw is also consistent with our interpretation of what constitutes
negligence in prosecution under the savings statute. We first addressed the savings
statute in Harris v. Singh. 1933-NMSC-091, 38 N.M. 47, 28 P.2d 1. There, the plaintiff in
the first action sued to recover on a promissory note executed by an individual named
Rattn Singh. Harris, 1933-NMSC-091, ¶ 3. In the second action, the plaintiff alleged
instead that Mr. Singh had executed the promissory note on behalf of a partnership,
also named Rattn Singh. Id. The question then was whether the second action was the
same as the first, which would allow the plaintiff the benefit of the savings statute. In
describing the savings statute, we stated:

Here we find leniency in the statute itself. It extends even to one who has
so far failed in his first action as to be under the necessity of commencing
a new suit. In terms it governs every case of failure except negligence in
prosecution. An exception from this broad language, by construction,
should have good reason to support it.

Id. ¶ 15 (emphasis added). In Harris, we explained the leniency in our savings statute
governed every case of failure except one. Noting that the only change in the second
action from the first was the use of Rattn Singh’s name as that of the partnership and
that the new action sought recovery on the same transaction with the same measure of
damages, we held the savings statute applied. Id. ¶ 20.

{16} Our focus on construing our savings statute liberally so that its terms “govern[]
every case of failure except negligence in prosecution,” undergirds our handful of
subsequent decisions addressing the savings statute. Id. ¶ 15. We determined that
when the district court exercises its inherent discretion to dismiss a stale claim for failure
of prosecution and makes complete findings of fact and conclusions of law, the plaintiff
cannot avail themselves of the savings statute. Benally v. Pigman, 1967-NMSC-148, ¶
11, 78 N.M. 189, 429 P.2d 648. By contrast, where dismissal is not based on the
inherent power of the court to dismiss stale claims, and there are no findings and
conclusions that the case was dismissed “by reason of the negligence of plaintiffs in
prosecuting that cause,” the plaintiff can avail themselves of the savings statute. Id. ¶
14.

{17} In Team Bank v. Meridian Oil Inc., we held that the trial court may not transfer
venue of a misfiled suit. 1994-NMSC-083, ¶¶ 11-13, 118 N.M. 147, 879 P.2d 779. We
described our holding as one that “encourages plaintiffs to bring their suits in the proper
venue and discourages ‘forum shopping.’” Id. ¶ 12. But we pointed out our holding did
not infringe on the plaintiff’s “substantive rights” because the plaintiff could avail
themselves of the savings statute after dismissal for lack of venue. Id. We again
commented upon our savings statute when we rejected a claim by third parties that the
trial court could not dismiss their third-party complaint because the statute of limitations
had run. U.S. Fire Ins. Co. v. Aeronautics, Inc. (Aeronautics), 1988-NMSC-051, ¶ 5, 107
N.M. 320, 757 P.2d 790. In rejecting the third parties’ contention that the statute of
limitations had run, we explained the dismissal of their third-party complaint for improper
joinder did not preclude their ability to file a new claim pursuant to the six-month savings
statute. Id.

{18} In G-M Architects, we reiterated that the savings statute applies “except when the
dismissal was based on the plaintiff’s failure to pursue his claim.” 1990-NMSC-013, ¶ 8
(internal quotation marks and citation omitted). We specifically rejected the notion that
the savings statute required the trial court to make specific findings of fact regarding
plaintiff’s negligence and concluded “dismissal for failure to prosecute is functionally the
same as a dismissal for negligence in prosecution.” Id.; cf. King v. Lujan, 1982-NMSC-
063, ¶ 8, 98 N.M. 179, 646 P.2d 1243 (noting that “courts should not distinguish
between a plaintiff who takes no action before the limitations period expires and a
plaintiff who files a complaint before the period expires but who thereafter takes no
action”).

{19} Our steady focus on protecting plaintiffs’ substantive rights is consistent with
“New Mexico’s policy favoring access to judicial resolutions” as embodied in our savings
statute. Foster v. Sun HealthCare Grp., 2012-NMCA-072, ¶ 7, 284 P.3d 389. This
facilitates controversies being decided on their merits instead of on procedural
technicalities. Id. It is the prerogative of the Legislature, not this Court, to extend the
reach of the savings statute beyond the sole exception for negligence in prosecution
that has been the applicable law for almost 150 years. See Cartwright v. Pub. Serv. Co.
of N.M., 1961-NMSC-074, ¶ 8, 68 N.M. 418, 362 P.2d 796 (noting the savings statute
first appears in 1880).

III. BARBEAU AND ITS PROGENY ARE NO LONGER GOOD LAW

{20} The Court of Appeals held that the Trust’s lack of prudential standing in the first
case it filed did not prevent it from availing itself of the savings statute. Zangara, A-1-
CA-38169, mem. op. ¶ 13. We affirm that result but disagree with the Court of Appeals’
analysis. We take this opportunity to reject the analyses previously relied upon by the
Court of Appeals and in so doing, we overrule Barbeau.
{21} The Court of Appeals observed caselaw on the negligence in prosecution
exception to the savings statute “was not a model of clarity.” Zangara, A-1-CA-38169,
mem. op. ¶ 10. It doubted that Barbeau “can be squared with the plain language and
purpose of the Savings Statute.” Id. ¶ 11, n.3. Relying on Amica Mut. Ins. Co. v.
McRostie, 2006-NMCA-046, 139 N.M. 486, 134 P.3d 773, the Court of Appeals
reasoned the distinction “between waivable and nonwaivable defenses dictates the
outcome of this appeal because, unlike subject matter jurisdiction, lack of standing is a
waivable defense.” Zangara, A-1-CA-38169, mem. op. ¶ 13. The Court of Appeals
therefore held “that a dismissal for lack of standing does not fall within the exception for
negligence in the prosecution and that the instant action is therefore a continuation of
the action that was dismissed for lack of standing.” Id. ¶ 13. Under this rationale, only
nonwaivable defenses such as subject matter jurisdiction can fall within the negligence
in prosecution exception to the savings statute. We reject that analysis and any
analyses that “appl[y] the negligent prosecution exception to circumstances in which the
theory of negligence was not based on a failure to timely take the steps necessary to
bring the first-filed lawsuit to a close.” Id. ¶ 11. The confusion appears to have started
with Barbeau.

{22} The Barbeau plaintiffs timely filed a personal injury action in federal district court
in Oregon. Barbeau, 2001-NMCA-077, ¶ 1. Within the six-month window provided by
Section 37-1-14, they then filed a second action in New Mexico state court after the first
action had been dismissed. Id. ¶ 5. The first action was dismissed by the Oregon
federal magistrate for lack of personal and subject matter jurisdiction. Id. ¶ 4. The Court
of Appeals noted that by “alleging that the plaintiffs and one of the defendants were all
citizens of Oregon, Barbeaus defeated diversity and eliminated subject matter
jurisdiction. Therefore, the claim was . . . improperly filed in Oregon federal court.” Id. ¶
3.

{23} Conceding that in G-M Architects we “held that failure to prosecute and
negligence in the prosecution were one in the same for purposes of Section 37-1-14,”
the Court of Appeals nonetheless rejected that reasoning and looked to other
jurisdictions for guidance because “New Mexico case law ha[d] not comprehensively
defined what constitutes ‘negligence in the prosecution.’” Barbeau, 2001-NMCA-077, ¶
12. This led the Barbeau Court to adopt a holding of the Iowa Supreme Court that
“when plaintiffs had knowledge of the facts that would deny them jurisdiction, their
failure to file in the correct forum constituted negligence in prosecution.” Id. ¶ 13
(internal quotation marks omitted) (citing Sautter v. Interstate Power Co., 563 N.W.2d
609, 611 (Iowa 1997)). Contrary to our approach, the Iowa Supreme Court’s
interpretation of their savings statute looks “not on how aggressively” the plaintiff
pressed their first suit, but on “how unreasonable it was for them to bring or pursue it
without a factual basis for its most elementary requirement.” Sautter, 563 N.W.2d at
611. As we did in Harris, we reject the Iowa Supreme Court’s more expansive and fact-
intensive interpretation of its exception to their savings statute and conclude that
Barbeau’s adoption of that interpretation was mistaken.
{24} Barbeau is inconsistent with the plain language and purpose of our savings
statute. It is also inconsistent with our prior analyses of Section 37-1-14, particularly in
Harris, G-M Architects, and Aeronautics. Accordingly, we overrule Barbeau.

{25} We also reject the analyses relied upon by the Court of Appeals in Amica and
Foster, neither of which limited the negligent prosecution exception to circumstances in
which there was a failure to timely take the steps necessary to bring the first-filed suit to
a close. In Amica, the Court of Appeals held that a subrogation action dismissed for
improper venue did not fall within the negligence in prosecution exception to the savings
statute. 2006-NMCA-046, ¶ 1. The Amica Court distanced itself from Barbeau by
explaining the Barbeau reasoning did not “automatically transfer to the facts” before it.
2006-NMCA-046, ¶ 16. It also observed:

While we cannot say that Plaintiff was free of carelessness in its lack of
basis for venue . . . , we are not prepared to extend Barbeau and conclude
that the circumstances in the present case constitute negligent
prosecution.

Id. The Amica Court properly focused on the “policy favoring access to judicial
resolution of disputes, including that embodied in Section 37-1-14.” Id. ¶ 17. To get
around Barbeau, the Court of Appeals in Amica focused its inquiry on whether dismissal
for improper venue was a waivable or nonwaivable defense. Amica, 2006-NMCA- 046,
¶¶ 15-17. We reject this analysis as inconsistent with the language of our savings
statute, the statute’s purpose to facilitate resolution of issues on the merits, and this
Court’s prior caselaw.

{26} In Foster, the Court of Appeals took a different approach than it had in Amica and
relied more directly on Barbeau. Although it acknowledged that New Mexico policy
favors access to judicial resolution, it followed Barbeau’s directive “to look at the
evidence of what the plaintiff knew at the time he commenced his [first] action.” Foster,
2012-NMCA-072, ¶ 24. It then broadly defined due diligence in prosecution and
established a test that required evidence of what the plaintiff knew about the
defendants’ citizenship at the time he filed his initial complaint in federal court. Id. ¶¶ 23-
24. This is a much broader exception than we recognized in Harris and G-M Architects
and is similar to Iowa’s requirement that a party prove the first action did not fail on
account of their negligence. See Sautter, 563 N.W.2d at 611. Accordingly, we reject the
analysis relied upon in Foster.

{27} For the reasons stated above, we overrule Barbeau and reject and overrule prior
opinions of the Court of Appeals which extended the negligence in prosecution
exception to circumstances beyond a party’s failure to timely take the steps necessary
to bring the first-filed suit to a close.

IV. CONCLUSION

{28} We hold the term negligence in its prosecution in Section 37-1-14 is functionally
the same as a dismissal for failure to prosecute and we conclude dismissal of the
Trust’s first foreclosure action for lack of standing was not negligence in prosecution
under Section 37-1-14. We affirm the result the Court of Appeals reached on this issue
below but we reject the analysis the Court of Appeals relied upon to reach that result.
We also overrule and reject any extensions of the negligence in prosecution exception
under Section 37-1-14 in prior Court of Appeals opinions to the extent they are
inconsistent with our holding in this case.

{29} IT IS SO ORDERED.

BRIANA H. ZAMORA, Justice

WE CONCUR:

DAVID K. THOMSON, Chief Justice

MICHAEL E. VIGIL, Justice

JULIE J. VARGAS, Justice

FRANCIS J. MATHEW, Judge
Sitting by designation