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State, Uninsured Employers' Fund v. Gallegos

Court of Appeals of New Mexico

February 14, 2017

STATE OF NEW MEXICO UNINSURED EMPLOYERS' FUND, Petitioner-Appellant,
v.
GREG GALLEGOS, a/k/a GREG McCOOL, d/b/a MONSTER CONSTRUCTION & ROOFING, Respondent-Appellee.

         APPEAL FROM THE DISTRICT COURT OF BERNALILLO COUNTY Victor S. Lopez, District Judge

          Hector H. Balderas, Attorney General Santa Fe, NM Richard Bustamante, Special Assistant Attorney General Albuquerque, NM for Appellant

          Greg Gallegos Albuquerque, NM Pro Se Appellee

          OPINION

          J. MILES HANISEE, Judge

         {1} The State of New Mexico Uninsured Employers' Fund (the UEF), administered by the Workers' Compensation Administration (WCA), appeals from the district court's refusal to reinstate the UEF's twice-dismissed petition for entry of judgment (the 2006 Petition)[1] against Respondent Greg Gallegos. The 2006 Petition was brought to enforce a supplementary compensation order issued by a Workers' Compensation Judge (WCJ) requiring that Respondent repay the UEF funds expended on Respondent's behalf for benefits owed to his injured employee. Both prior dismissals, the most recent of which was in 2008 (2008 Dismissal), were occasioned by the UEF's failure to diligently prosecute the 2006 Petition. We affirm and take this opportunity to clarify applicable law.

         BACKGROUND

         {2} In 2004 Respondent's employee (Worker) was injured on the job and filed a claim for benefits under the Workers' Compensation Act (the Act). The WCA determined that Worker was eligible for benefits but that Respondent did not have workers' compensation insurance coverage as required by state law. Mediation was held, of which Respondent was notified but failed to attend. Afterward, a recommended resolution was submitted to the WCA by the mediator. In it, the mediator advised that Respondent was in default with respect to Worker's claim and recommended that Worker receive retroactive compensation, as well as continuing medical care. Respondent received the recommended resolution via certified mail on December 28, 2004, yet lodged no objection to its contents.

         {3} Because Respondent lacked workers' compensation insurance coverage, the UEF paid Worker's medical bills and indemnity payments. On February 18, 2005, the UEF sued Respondent, seeking reimbursement of all monies paid by the UEF related to Worker's 2004 claim. Following additional mediation conferences in April and June of 2005, which Respondent again failed to acknowledge or attend, a second recommended resolution was issued that specifically recommended that Respondent be required to reimburse the UEF $16, 222.26.

         {4} In November 2005 a WCJ held a hearing, of which Respondent was personally notified but did not attend. On November 21, 2005, the WCJ issued a supplementary compensation order finding Respondent in default and ordering Respondent to repay the UEF $16, 222.26 in one lump sum by December 22, 2005, after which (and in the absence of payment by Respondent) the UEF was authorized to "proceed to the district court for an enforcement order."

         {5} As authorized by and based on Respondent's failure to comply with the WCJ's order, the UEF filed the 2006 Petition on June 20, 2006. The 2006 Petition was brought under NMSA 1978, Section 52-5-10 (1990) and sought "entry of an executable judgment enforcing the [s]upplementary [c]ompensation [o]rder in the amount of $16, 222.26, interest, attorney[] fees and costs, and . . . any other appropriate sanction[.]" Respondent filed a pro se answer on July 25, 2006, asserting that (1) he "was not notified of hearings . . . and was not able to contest any part of the case[, ]" and (2) "[s]ome facts are questionable[.]"

         {6} On March 13, 2007, the district court, acting sua sponte, dismissed the UEF's 2006 Petition for lack of prosecution because "no significant action [had] been taken in 180 or more days in connection with any and all pending claims[.]" The dismissal was without prejudice and informed the parties that either could move for reinstatement within thirty days. Fifteen days later, the UEF moved to reinstate the 2006 Petition, maintaining that the UEF experienced "some difficulty in finding . . . Respondent, but served him in June, 2006, at home; a copy of the service was sent to the [c]ourt, but apparently [was] lost." The UEF's motion to reinstate reiterated that its action was one "to enforce the judgment of the [WCA.]" The district court reinstated the 2006 Petition on March 29, 2007.

         {7} On April 24, 2008, after another year had passed, in which the case again languished, a newly assigned district court judge once more dismissed the 2006 Petition for lack of prosecution. Again, dismissal was sua sponte, without prejudice, and permitted reinstatement to be sought within thirty days. This time, the UEF did not move to renew its collection effort against Respondent in district court.

         {8} On February 9, 2015-nearly seven years later, and following an internal audit that revealed the UEF had never completed its collection action against Respondent-the UEF filed a motion to reinstate (the 2015 Motion to Reinstate) the 2006 Petition under Rule 1-041(E)(2) NMRA. In the motion, the UEF argued that it could demonstrate "good cause for reinstatement" and asserted that "the UEF is a state government entity which does not have a statute of limitations period by which it must file a reimbursement-related cause of action[.]"

         {9} The UEF concurrently sought to amend the 2006 Petition, enumerating thirteen points that related to the WCA proceedings in 2004 and 2005 and also notifying the district court that Respondent had changed his name. Amendments to the 2006 Petition did not affect its primary mission: "entry of an executable judgment against Respondent[.]" Notably, both 2015 UEF pleadings were filed under the original 2006 docket number.

         {10} Respondent filed a pro se answer to the UEF's 2015 Motion to Reinstate denying entirely any liability to the UEF. In his answer, Respondent stated: "[(1)] this case was dismissed in 2005-6[, ]" and "[(2) Worker] fabricated with the help of his attorney all the substance of [this] case, all to establish employment. [Worker] was not an employee."

         {11} The district court held a hearing on April 22, 2015, at which the UEF and Respondent appeared. That same day, the district court issued an order denying the UEF's 2015 Motion to Reinstate based upon the UEF's "tardiness" and "fail[ure] to comply with Rule 1-041(E)[.]"

         {12} On May 7, 2015, the UEF filed a motion to reconsider pursuant to Rule 1-059(E) NMRA. In it, the UEF argued that: (1) " 'passage of time' [was] not an appropriate basis on which to deny reinstatement" and that " 'good cause' is the only relevant factor to apply"; (2) the district court was obligated to reinstate the UEF's 2006 Petition because Section 52-5-10(B) imposes a mandatory requirement that the district court enter a default judgment against Respondent; and (3) the district court's refusal to reinstate the 2006 Petition would "hinder the UEF's ability to carry forth and enforce the default judgment order of the WCA[, ]" an outcome that would be "contrary to law, an abuse of discretion[, ] and leads to absurd results." On May 13, 2015, again relying on Rule 1-041(E), or in the alternative the district court's "inherent power" to "dismiss a cause of action for failure of a plaintiff or petitioner to timely prosecute the matter[, ]" and additionally because it found that the UEF had "shown no circumstances under Rule 1-060(B) [NMRA] . . . to justify re-opening[, ]" the district court denied the UEF's motion to reconsider. The UEF timely appealed.

         DISCUSSION

         {13} On appeal, the UEF argues that the district court abused its discretion by denying the UEF's 2015 Motion to Reinstate the 2006 Petition. First, it asserts that "good cause" supported reinstatement of the 2006 Petition and that the district court, which denied the UEF's motion based on its "tardiness, " failed to apply the correct standard of review. Second, the UEF relies on the Act's enforcement provision, Section 52-5-10(B), which mandates entry of judgment by the district court upon petition by the WCA director, as well as the absence of an applicable statute of limitations ...


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