LARA v. PRESBYTERIAN HEALTHCARE SERVICES (2026)

OPINION

{1} In the district court, Petitioner Damian Lara, in his official capacity as Bernalillo County Assessor (the Assessor), (1) appealed the final decision of the Bernalillo County Valuation Protests Board (the Board) that Respondent Presbyterian Healthcare Services (the Hospital) qualified for certain tax exemptions for real property under the Hospital Equipment Loan Act (HELA), NMSA 1978, §§ 58-23-1 to -32 (1983, as amended through 2006); and (2) challenged the constitutionality of the tax exemption statutes, which was an issue that the Board had determined it lacked jurisdiction to decide. The district court sua sponte certified to this Court the following question as a matter of substantial public interest: “[D]oes Article VIII, Section 3 of the New Mexico Constitution authorize the Legislature to create the property tax exemptions at Section 58-23-29(B) and [NMSA 1978,] Section 7-36-3(C) [(2019)]?” See NMSA 1978, § 39-3-1.1(F) (1999) (“The district court may certify to the [C]ourt of [A]ppeals a final decision appealed to the district court, but undecided by that court, if the appeal involves an issue of substantial public interest that should be decided by the [C]ourt of [A]ppeals.”); Rule 1-075(S) NMRA (same). The question whether the Hospital qualified for the tax exemption under the statute, decided in the first instance by the Board, arose under the district court's appellate jurisdiction. But the Board did not decide the constitutional question, which was presented to the district court to decide in the exercise of its original jurisdiction. Without a decision from the Board in the first instance, Section 39-3-1.1(F) does not contemplate certification by the district court to this Court. We conclude that we lack jurisdiction and dismiss this appeal.

BACKGROUND

{2} The following facts are undisputed. The Hospital owns a three-story parking garage as part of its medical campus located in Albuquerque, New Mexico. The parking garage was financed with proceeds of bonds issued pursuant to HELA. The Hospital paid property taxes on the property in 2022, but in 2023, the Hospital valued its property at zero dollars and claimed HELA tax exemptions. For that same period, the Assessor valued the property at over ten million dollars.

{3} The Assessor denied the Hospital's claim to the HELA exemptions, and the Hospital appealed the Assessor's decision to the Board. Before the Board, the Assessor argued (1) that the Hospital did not properly apply or qualify for the HELA exemptions; and (2) that the HELA exemptions were unconstitutional. The Board concluded that the Hospital qualified for the property tax exemption under the terms of the statute, but did not address the Assessor's constitutional argument. While the Board acknowledged that the instant protest was similar to previous cases where courts had reviewed “a statutory tax exemption that is not fully congruent with a constitutional basis for [a] tax exemption,” the Board concluded that the “constitutional question [was] beyond its purview.”

{4} The Assessor appealed the Board's decision to the district court. The Assessor argued that the Board erred by finding that the Hospital qualified for the HELA exemptions and also reasserted the argument that the HELA exemptions were unconstitutional under Article VIII, Section 3 of the New Mexico Constitution. After briefing by the parties, the district court (1) exercised its appellate jurisdiction to conclude that the Board's determination that the Hospital qualified for the HELA exemptions was supported by substantial evidence and was neither arbitrary nor capricious; and (2) noted that the constitutional challenge had not been decided by the Board and that the issue arose under the district court's original jurisdiction. The district court did not exercise its original jurisdiction to consider and decide the constitutional question de novo but instead found that the undecided constitutional question “is an issue of substantial public interest” and certified the issue to this Court. See § 39-3-1.1(F); Rule 1-075(S); see also El Castillo Ret. Residences v. Martinez (El Castillo), 2017-NMSC-026, ¶ 23, 401 P.3d 751 (“On appeal to a district court of claims first considered by an agency, where the appeal also asserts constitutional and other claims in the district court that were beyond the scope of the agency's adjudicative authority, the district court should consider each claim according to its appropriate standard of review and maintain the distinction between the court's appellate and original jurisdiction in rendering its decision.” (internal quotation marks and citation omitted)).

DISCUSSION

{5} We requested supplemental briefing from the parties regarding our jurisdiction under Rule 1-075(S) and Section 39-3-1.1(F). See 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 jurisdiction questions sua sponte when the Court notices them.”). Specifically, we asked the parties to brief whether this Court has jurisdiction to address a matter certified by the district court under the certification rules when the certified issue is solely related to a matter arising under the district court's original, rather than appellate, jurisdiction and no decision on the issue was made by the Board. This question, a legal one that we review de novo, see El Castillo, 2017-NMSC-026, ¶ 20, is rooted in the fundamental principles of a district court's jurisdiction in relation to the decisions of administrative agencies, and we therefore begin with those principles.

{6} The district court has two distinct types of jurisdiction over the decisions of agencies: appellate jurisdiction and original jurisdiction. See N.M. Const. Art. VI, § 13 (“The district court shall have original jurisdiction in all matters and causes not excepted in [the C]onstitution, and such jurisdiction of special cases and proceedings as may be conferred by law, and appellate jurisdiction of all cases originating in inferior courts and tribunals in their respective districts as provided by law, and supervisory control over the same.”); VanderVossen v. City of Española, 2001-NMCA-016, ¶¶ 13-14, 130 N.M. 287, 24 P.3d 319 (distinguishing the grants of original and appellate jurisdiction). First, the district court exercises its appellate jurisdiction to review a decision an agency has made. See § 39-3-1.1(C), (D); Rule 1-074(A) NMRA (addressing appeals from administrative agencies when there is a statutory right to review by the district court); Rule 1-075(A) (governing discretionary review by the district courts of administrative agency decisions when there is no statutory right to review); see also Martinez v. N.M. State Eng'r Office, 2000-NMCA-074, ¶ 48, 129 N.M. 413, 9 P.3d 657 (noting “that in administrative appeals the district court is a reviewing court, not a fact-finder”). Second, the district court may exercise its broad original jurisdiction over issues that are related to, but beyond the scope of, the agency's authority to decide. See Maso v. N.M. Tax'n & Revenue Dep't, 2004-NMCA-025, ¶¶ 12-17, 135 N.M. 152, 85 P.3d 276. The district court may exercise both appellate and original jurisdiction in the same case even though the issues involve “the same parties and same general subject matter.” See id. ¶ 17 (internal quotation marks and citation omitted).

{7} Though the district court may wield both aspects of its jurisdiction within the same case, see id., the two types of jurisdiction function distinctly. In its appellate capacity, the district court reviews a decision that was made by an agency, and may only consider the record created in the agency, and the parties may be required to exhaust the remedies available in the agency before turning to the district court. See id. ¶¶ 13, 15-16 (explaining that appellate review is limited to the record below); Summit Properties, Inc. v. Pub. Serv. Co. of N.M., 2005-NMCA-090, ¶ 21, 138 N.M. 208, 118 P.3d 716 (addressing the exhaustion of administrative remedies). In contrast, when exercising original jurisdiction, the district court is “unconstrained by the statutory limits on appellate review” and is not limited by any record created during the agency proceedings. Maso, 2004-NMCA-025, ¶¶ 15-16. No exhaustion of remedies is required if the matter presents a question of law “that would have been futile to pursue through the ․ administrative appeals process.” Smith, 2007-NMSC-055, ¶ 27. Thus, when exercising appellate jurisdiction, the district court reviews what the agency has done, and when exercising original jurisdiction, the district court considers a claim in the first instance.

{8} Although the district court has appellate and original jurisdiction and this Court may review a decision of the district court acting in either capacity,¹ the New Mexico Constitution states that this Court “shall have no original jurisdiction.” See N.M. Const. art. VI, § 29. This Court has only appellate jurisdiction—jurisdiction to review other proceedings—as well as jurisdiction “to issue all writs necessary or appropriate in aid of [our] appellate jurisdiction.” N.M. Const. art. VI, § 29. Despite the limitations on this Court's jurisdiction, the constitutional question was certified to this Court without any decision having been made in the first instance by the Board or the district court, suggesting an invocation of original jurisdiction we simply do not have.

{9} The Assessor reads the Board's decision to decide the constitutional issue in the first instance, but we disagree. The Assessor maintains that in addition to deciding that the constitutional issue was “beyond its purview,” the Board also decided the constitutional issue by incorrectly interpreting El Castillo to create separate statutory and constitutional tax exemptions and evaluating the Hospital's claim as only a statutory exemption. Both aspects of the Board's decision avoid deciding whether the statutes themselves were constitutional—one by disclaiming jurisdiction and one by characterizing the claim as statutory. But neither decided the constitutional issue in the first instance. We therefore agree with the district court that the constitutional issue arose under its original jurisdiction.

{10} When, as in this case, the district court's original jurisdiction is invoked in an administrative appeal, the fundamental jurisdictional principles we have described, together with the language of Rule 1-075(S) and Section 39-3-1.1(F), demonstrate that certification may not be made to this Court. See El Castillo, 2017-NMSC-026, ¶ 25 (“A statute must be interpreted and applied in harmony with constitutionally imposed limitations.”). Section 39-3-1.1(F) and Rule 1-075(S) permit the district court, under some circumstances, to certify” to this Court “a final decision” that a party has appealed to the district court, but that is “undecided by that court,” provided that the matter “involves an issue of substantial public interest that should be decided by the Court of Appeals.” The Board explicitly determined that the constitutional issue was outside its jurisdiction. In these circumstances, there was no Board decision on the constitutional issue that could have been “presented for review to the district court.” See Rule 1-075(S). As a result, there was no Board decision to “certify” to this Court.  ² See § 39-3-1.1(F) (permitting certification of “a final decision” if the “appeal involves an issue of substantial public interest”); Rule 1-075(S) (addressing the certification of a “final decision” if the “matter” or “case involves an issue of substantial public interest”). Instead, there was only a claim for the district court to decide, in the exercise of its original jurisdiction, in the first instance. See Maso, 2004-NMCA-025, ¶ 2. We therefore hold that Rule 1-075(S) and Section 39-3-1.1(F) do not permit certification to this Court of issues that arise under the district court's original jurisdiction. The district court must first exercise its original jurisdiction before this Court has authority to exercise its appellate jurisdiction.

CONCLUSION

{11} Having no jurisdiction, we dismiss the appeal and remand to the district court for determination of the constitutional issue. See Thorton v. Gamble, 1984-NMCA-093, ¶ 15, 101 N.M. 764, 688 P.2d 1268 (“If we do not have jurisdiction, we must dismiss.”).

{12} IT IS SO ORDERED.

FOOTNOTES

1.   This Court's review of a district court's determinations about agency decisions is also impacted by the type of jurisdiction that the district court exercised. On the one hand, after the district court conducts an appellate review of the agency's decision, a party may seek discretionary relief in this Court by petition for writ of certiorari according to the procedures and timelines set forth in Rule 12-505 NMRA. See Wakeland v. N.M. Dep't of Workforce Sols., 2012-NMCA-021, ¶¶ 15, 18, 274 P.3d 766; see also Smith, 2007-NMSC-055, ¶¶ 22-23 (explaining the process to petition for certiorari under Rule 1-075). On the other hand, a party's appeal to this Court from a final order arising from the exercise of original jurisdiction is a constitutional right (provided the appeal conforms to our procedural rules). See Los Chavez Cmty. Ass'n v. Valencia Cnty., 2012-NMCA-044, ¶ 5, 277 P.3d 475 (“In general, the right to appeal is restricted to final judgments and decisions.” (internal quotation marks and citation omitted)); Wakeland, 2012-NMCA-021, ¶ 15; Olguin v. State, 1977-NMSC-034, ¶ 2, 90 N.M. 303, 563 P.2d 97 (holding that the “constitutional right to appeal was not abridged by the dismissal for failure to follow procedural rules”).

2.   Because we determine that the Board made no decision at all, we need not resolve the parties’ dispute about whether the Board's decision was “final.” See § 39-3-1.1(H)(2) (describing a final decision as one that “as a practical matter resolves all issues arising from a dispute within the jurisdiction of the agency”). We also do not decide whether the Board correctly determined whether it had jurisdiction to decide the constitutional question, because the question was not presented by the parties to this appeal and, in any event, we lack jurisdiction to address it. See Schuster v. N.M. Tax'n & Revenue Dep't, 2012-NMSC-025, ¶¶ 11-19, 283 P.3d 288 (concluding that in some circumstances, an agency has jurisdiction to determine constitutionality in order to fulfill its statutory mandate); cf. El Castillo, 2017-NMSC-026, ¶ 7 (noting that the parties in that case “agreed that the [b]oard did not have jurisdiction to address the constitutional issue with regard to the statute itself” (internal quotation marks omitted)).

WRAY, Judge.

WE CONCUR: ZACHARY A. IVES, Judge JANE B. YOHALEM, Judge