Autovest v. Agosto

                                                Office of the Director   New Mexico
                                                 09:47:21 2021.11.01     Compilation
                                                               '00'06-   Commission


         IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO

Opinion Number: 

Filing Date: March 31, 2021

Nos. A-1-CA-37459, A-1-CA-37483, A-1-CA-37969
(consolidated for purpose of opinion)

AUTOVEST, L.L.C.,

      Plaintiff-Appellant,

v.

DEBRA M. AGOSTO and DEBBIE M.
AGOSTO,

      Defendants-Appellees.

and

AUTOVEST, L.L.C.,

      Plaintiff-Appellee,

v.

MARIA ESTRADA,

      Defendant-Appellant,

and

FRANK RIVERA, JR.,

      Defendant.

and

AUTOVEST, L.L.C.,

      Plaintiff-Appellant,

v.

DEBRA M. AGOSTO and DEBBIE M.
AGOSTO,
       Defendants-Appellees.

APPEALS FROM THE DISTRICT COURT OF DOÑA ANA COUNTY
Mary W. Rosner, District Judge

Certiorari Granted, October 12, 2021, No. S-1-SC-38834. Released for Publication
November 9, 2021.

Jenkins & Young, P.C.
Jody D. Jenkins
Lubbock, TX

Simmonds & Narita LLP
Michael R. Simmonds
R. Travis Campbell
San Francisco, CA

for Autovest, L.L.C.

Hanratty Law Firm
Kevin J. Hanratty
Artesia, NM

for Appellee Debbie M. Agosto

Kenneth L. Beal
Las Cruces, NM

for Appellee Debra M. Agosto

Law Office of Jane B. Yohalem
Jane B. Yohalem
Santa Fe, NM

for Appellees Agosto

Kevin J. Hanratty
Artesia, NM

Kenneth L. Beal
Las Cruces, NM

Law Office of Jane B. Yohalem
Jane B. Yohalem
Santa Fe, NM

for Appellant Maria Estrada
                                                OPINION

DUFFY, Judge.

{1}     In this opinion we address related appeals arising from two district court cases
involving the same Plaintiff, Autovest LLC, and its pursuit of deficiency actions against
borrowers who defaulted on automobile purchase contracts. 1 A common issue arose in
both cases: whether a partial payment revived the limitations period for a cause of
action under Article 2 of New Mexico’s Uniform Commercial Code (UCC)—NMSA 1978,
Section 55-2-725(1) (1961). The district courts reached conflicting decisions on the
question. In Autovest I, the court concluded that Autovest’s complaint was time-barred
and dismissed the complaint with prejudice, whereas in Autovest II, the court concluded
that a partial payment revived the limitations period and entered judgment in favor of
Autovest. We hold that the partial payment revival statute, NMSA 1978, § 37-1-16
(1957), does not operate to toll the limitations period in Section 55-2-725. Therefore, we
affirm the dismissal of Autovest’s complaint in Autovest I and reverse the judgment in
favor of Autovest in Autovest II.

{2}    Autovest additionally challenges the district court’s attorney fee decisions in
Autovest I. Because we conclude the district court erred in its disposition of both parties’
fee requests, we reverse and remand for further consideration of those matters.

BACKGROUND

I.      Autovest I

{3}     In June 2006, Defendants Debra and Debbie Agosto, mother and daughter
(hereinafter, the Agostos), bought a used Saturn L200 from a dealer pursuant to a sales
contract and purchase money security agreement. The Agostos financed approximately
$14,000 to complete the purchase and agreed to repay this debt in monthly
installments. The dealer assigned its interest in the agreement to Wells Fargo Auto
Finance, Inc., which in turn assigned it to Wells Fargo Bank, N.A. (Wells Fargo). The
Agostos defaulted in 2008. Wells Fargo repossessed and sold the vehicle that winter,
but a deficiency of approximately $9,000 remained. Wells Fargo assigned its interest in
the agreement to Autovest in January 2011.

{4}   Autovest referred the debt to a collection agency, which obtained a payment of
$1,000 from Debra via check dated February 25, 2011. Autovest filed suit for the
remaining deficiency on June 5, 2014. Debbie 2 answered and asserted as an affirmative

1This opinion resolves three appeals: two appeals arose from Dist. Ct. No. D-307-CV-2014-01148—No.
A-1-CA-37459 and No. A-1-CA-37969—and are hereinafter referred to collectively as Autovest I. A third
appeal, No. A-1-CA-37483, arose from Dist. Ct. No. D-307-CV-2013-00164 and is hereinafter referred to
as Autovest II. Because the district court cases involve an identical issue of law, we consolidate these
appeals for decision. See Rule 12-317(B) NMRA.
2Another attorney filed a limited entry of appearance on behalf of Debra. More than a year later, this
attorney filed an answer and counterclaims on behalf of Debra that were similar to Debbie’s answer and
counterclaims. Autovest moved to strike this filing as untimely and the district court granted this motion.
defense that the complaint was barred by the statute of limitations. She also
counterclaimed, alleging that Autovest violated New Mexico’s Unfair Practices Act
(UPA), NMSA 1978, §§ 57-12-1 to -26 (1967, as amended through 2019), and
committed tortious debt collection by “willfully . . . filing time-barred complaints.”

{5}     Autovest moved for summary judgment on Debbie’s counterclaims, arguing,
among other things, that its lawsuit was not barred by the applicable four-year statute of
limitations because Debra’s $1,000 payment revived the limitations period pursuant to
Section 37-1-16, and the complaint was filed within four years of her payment. At the
hearing on the motion, the district court granted Autovest’s motion but also, sua sponte,
dismissed Autovest’s complaint. The district court reasoned that although Section 37-1-
16 is applicable to a claim under Article 2 of the UCC, the statute requires both a partial
payment and a writing to revive the limitations period. According to the court, Autovest
had not provided evidence that Debra’s payment was accompanied by an admission in
writing or a new promise to pay. 3

{6}     Following the district court’s ruling, the Agostos submitted billing statements and
fee affidavits collectively seeking over $115,000 in attorney fees pursuant to NMSA
1978, Section 39-2-2 (1981). The district court awarded attorney fees to the Agostos in
the amount of $39,111.27. Autovest also sought attorney fees of over $143,000 for
successfully defending against Debbie’s UPA counterclaim. The district court declined
to award a monetary judgment in favor of Autovest, saying that “an award of attorneys’
fees to Autovest, LLC is reflected in the [c]ourt’s reduction of the attorneys’ fees sought
by Debra Agosto and Debbie Agosto by two-thirds.” Autovest appeals.

II.     Autovest II

{7}     In August 2007, Defendant Maria Estrada executed a motor vehicle retail
installment contract in the amount of approximately $17,900 for the purchase of a 2006
Nissan Frontier truck. As in Autovest I, the dealer assigned the contract to Wells Fargo
Auto Finance, Inc., which then assigned its interest to Wells Fargo Bank, N.A. Estrada
defaulted in September 2008. Wells Fargo repossessed the truck and sold it in January
2009, but a deficiency of approximately $9,100 remained. Wells Fargo received a
payment in the amount of $999.20 on February 6, 2009, shortly after the truck was sold
at auction. This was the last payment on the account. As with the Agostos’ contract,
Wells Fargo assigned its interest in the Estrada contract to Autovest in January 2011;
Autovest filed suit for the remaining deficiency on January 18, 2013.


3The Agostos acknowledge that the district court’s reading of Section 37-1-16 “conflicts with the decisions
of this Court construing that section” and do not advance the district court’s reasoning on appeal. See
Joslin v. Gregory, 

, 

, 

 (stating that “New Mexico,
unlike some other jurisdictions, permits revival by way of an admission even where the debtor’s
acknowledgment does not constitute a new promise, for example, where the admission is accompanied
by an expression of unwillingness to pay” and affirming that a partial payment may constitute an
admission through non-verbal conduct). However, we “may affirm a district court if it was right for any
reason and affirming on new grounds would not be unfair to the appellant.” Wild Horse Observers Ass’n,
Inc. v. N.M. Livestock Bd., 

, 

.
{8}     Estrada moved for summary judgment, arguing that Autovest’s complaint was
time-barred because it was filed more than four years after the date of default. In
response, Autovest argued that the February 6, 2009, payment revived the statute of
limitations pursuant to Section 37-1-16 such that the complaint, filed within four years of
that payment, was timely. The district court orally denied Estrada’s motion at the
hearing, finding that Section 37-1-16 applied but that disputed issues of material fact
remained as to when and how the final payment was made. After a bench trial later that
year, the district court found that Estrada or her agent had made a voluntary payment of
$999.20 on February 6, 2009, and concluded that the payment had revived the statute
of limitations pursuant to Section 37-1-16. The court entered judgment in favor of
Autovest on its breach of contract claim, awarding $9,153.54 for the deficiency and
$48,650.75 for attorney fees, plus prejudgment and postjudgment interest. Estrada
appeals.

DISCUSSION

I.     Section 37-1-16 Does Not Apply in an Action Governed by Section 55-2-725

{9}     We first address the common question raised in these appeals: whether
Defendants’ partial payments revived the statute of limitations and started the clock
anew from the date of the last payment. Where, as here, “facts relevant to a statute of
limitations issue are not in dispute, the standard of review is whether the district court
correctly applied the law to the undisputed facts.” Haas Enters., Inc. v. Davis, 2003-
NMCA-143, ¶ 9, 

, 

. “We review questions of law de novo.” 

{10} It is undisputed in these cases that an action to recover a deficiency on a motor
vehicle installment contract is governed by Article 2 of the UCC and subject to the four-year statute of limitations set forth in Section 55-2-725:

              (1)    An action for breach of any contract for sale must be
       commenced within four years after the cause of action has accrued. By
       the original agreement the parties may reduce the period of limitation to
       not less than one year but may not extend it.

              (2)    A cause of action accrues when the breach occurs,
       regardless of the aggrieved party’s lack of knowledge of the breach. A
       breach of warranty occurs when tender of delivery is made, except that
       where a warranty explicitly extends to future performance of the goods
       and discovery of the breach must await the time of such performance, the
       cause of action accrues when the breach is or should have been
       discovered.

              (3)     Where an action commenced within the time limited by
       Subsection (1) is so terminated as to leave available a remedy by another
       action for the same breach, such other action may be commenced after
       the expiration of the time limited and within six months after the
        termination of the first action unless the termination resulted from
        voluntary discontinuance or from dismissal for failure or neglect to
        prosecute.

                (4)     This section does not alter the law on tolling of the statute of
        limitations nor does it apply to causes of action which have accrued before
        this act [this chapter] becomes effective.

Id.; see First Nat’l Bank v. Chase, 

, ¶¶ 9, 11, 

, 

 (holding that the four-year statute of limitations in Section 55-2-725 governs a suit
for deficiency following repossession and sale of an automobile). There is also no
dispute that Autovest filed each lawsuit more than four years after the actions accrued—
i.e., four years after each defendant first breached its installment contract by failing to
make an installment payment. See § 55-2-725(2).

{11} Nevertheless, Autovest maintains that its complaints are timely because
Defendants’ partial payments operated to start the running of the statute anew. Autovest
points out that Section 55-2-725(4) incorporates New Mexico’s “law on tolling of the
statute of limitations” for Article 2 claims and argues that such “law on tolling” includes
New Mexico’s revival statute, Section 37-1-16. 4 Section 37-1-16 provides in relevant
part:


4New Mexico courts have referred to Section 37-1-16 as both a “tolling” and a “revival” statute for over a
century. See Citizens Bank of Clovis v. Teel, 

, ¶ 10, 

, 

(considering, as part of its analysis of Section 37-1-16, the principle “that a statute which tolls the statute
of limitations should be liberally construed to reach the merits if possible”); Pugh v. Heating & Plumbing
Fin. Corp., 

, ¶ 30, 

, 

 (“There is no evidence in the case at bar
that [the attorney for the plaintiff] was specifically authorized by the plaintiff to make any admissions that
the judgment was due and unpaid, or authorized to make such admissions as would have the effect to toll
or remove the statute of limitations.”); Joyce-Pruit Co. v. Meadows, 

, ¶ 9, 

,

 (“To say that the admission is ineffective to toll the statute because the statute has already run
and the debtor intends to avail himself of it is to reason in a circle.”); Cleland v. Hostetter, 1905-NMSC-
008, ¶ 12, 

, 

 (“Unlike the statute of James, our statute in terms provides that either a
new promise or an acknowledgment may revive the action; and, not content with leaving no uncertainty or
to diversity of authority the scope of the acknowledgment necessary to toll the statute, it in terms provides
that ‘an admission that the debt is unpaid’ shall have that effect.”); Reymond v. Newcomb, 1900-NMSC-
016, ¶ 2, 

, 

 (“[D]oes a part payment of principal or interest on a promissory note
within the period of the statute of limitations toll the statute?”); Lea Cnty. State Bank v. Markum Ranch
P’ship, 

, ¶ 11 n.1, 

 (noting that “tolling” is one “[o]ther similar term[] for
‘revival’ ” that was used by authorities relied on by the Court in its analysis of Section 37-1-16); Joslin v.
Gregory, 

, 

, 

 (indicating that “the concept that permits a
debtor’s actions to toll the statute of limitations” is important to an analysis of Section 37-1-16). Such
usage is imprecise; our appellate courts have attempted to clarify the difference. Compare Lea Cnty.
State Bank, 

, ¶ 11 (“When a debt is revived, the statute of limitations starts anew.”), with
Schultz ex rel. Schultz v. Pojoaque Tribal Police Dep’t, 

, ___P.3d___ (“Tolling
interrupts the time of a period for the limitations of action under a statute of limitations, effectively adding
on time to commence an action after the moment when the statute would otherwise have barred an
action. Tolling persists as long as the cause of the tolling persists, and when that cause ends, the
calculation of time under the statute commences again.” (omission, internal quotation marks, and citation
               Causes of action founded upon contract shall be revived by the
        making of any partial or installment payment thereon or by an admission
        that the debt is unpaid, as well as by a new promise to pay the same; but
        such admission or new promise must be in writing, signed by the party to
        be charged therewith.

Autovest contends that when measured from the date of the last payment, its
complaints were timely filed within four years. Defendants counter that Section 37-1-16
does not apply to an Article 2 action based on the plain language of its statutory
neighbor, NMSA 1978, Section 37-1-17, (1880), which provides:

               None of the provisions of this chapter shall apply to any action or
        suit which, by any particular statute of this state, is limited to be
        commenced within a different time, nor shall this chapter be construed to
        repeal any existing statute of the state which provides a limitation of any
        action; but in such cases the limitation shall be as provided by such
        statutes.

(Emphasis added.)

{12} This Court has recognized that the emphasized language is unambiguous,
making interpretation unnecessary. See Noriega v. City of Albuquerque, 1974-NMCA-
040, ¶ 8, 

, 

 (stating that NMSA 1953, Section 23-1-17 (1880),
recompiled as Section 37-1-17, “is unambiguous; there is no room for construction”);
see also State ex rel. Helman v. Gallegos, 

, ¶ 24, 

, 

 (stating that “a statute, clear and unambiguous on its face, need not and
cannot be interpreted by a court” (internal quotation marks and citation omitted)).
Applying the plain statutory language, our Supreme Court has observed that Section
37-1-17 applies whenever an action is governed by any particular statute of limitation
outside of NMSA 1978, Sections 37-1-1 to -19 (1880, as amended through 2015). See
Romero v. N.M. Health & Env’t Dep’t, 

, ¶ 14, 

, 

 (construing former compilation and stating that “ ‘any particular statute of this
state,’ to which reference is made in Section [37-1-17], would be a statute outside of
those sections included within Sections [37-1-1 to -19] that were enacted originally
under [1880 N.M. Laws, ch. 5, §§ 1-19]”). Because the actions in the cases before us
are governed by Section 55-2-725, which is outside of Sections 37-1-1 to -19, Section
55-2-725 is a “particular statute of this state” within the meaning of Section 37-1-17.
Section 55-2-725 requires that an action for breach of a sales contract be commenced
within four years rather than the six-year period that is generally applicable to actions on
written contracts under Section 37-1-3(A). Therefore, by its plain terms, Section 37-1-17
renders the tolling provisions of Section 37-1-16 inapplicable to a claim subject to the
limitations period in Section 55-2-725.


omitted)). However, because our courts have not strictly distinguished between “tolling” and “revival” in
past applications of Section 37-1-16, we will not exclude consideration of Section 37-1-16 simply because
it is titled a “revival” provision and not a “tolling” provision.
{13} Precedents applying Section 37-1-17 support this straightforward application of
the plain language of the statute. For example, our courts have consistently held that
when a lawsuit is governed by a particular statute of limitations outside of Sections 37-
1-1 to -19, Section 37-1-17 prohibits application of the savings clause in Section 37-1-
14, which allows a second suit following dismissal of the first to be “deemed a
continuation of the first” under certain circumstances. In Gathman-Matotan Architects &
Planners, Inc. v. Dep’t of Fin. & Admin., 

, ¶¶ 1, 4, 

, 

, our Supreme Court held that 37-1-17 prevented application of Section 37-1-
14 in a contract action against the state governed by NMSA 1978, Section 37-1-23
(1976). The Court reasoned:

       Section 37-1-23(B) provides: “Every claim permitted by this section shall
       be forever barred unless brought within two years from the time of
       accrual.” Therefore, under the express terms of Section 37-1-17, the
       limitations period is that provided in Section 37-1-23(B)—two years.
       Section 37-1-14 does not apply to lengthen this period.

Gathman-Matotan Architects & Planners, Inc., 

, ¶ 4. The Court looked
no further than whether “any particular statute of this state” limited the commencement
of the suit at issue to a different time. 

 (emphasis, internal quotation marks, and
citation omitted). Answering this question in the affirmative was “sufficient to thwart [the]
plaintiff’s attempt to invoke Section 37-1-14.” Id. ¶ 5. Other cases are in accord. See
Estate of Gutierrez ex rel. Haney v. Albuquerque Police Dep’t, 

, ¶ 15,

, 

 (holding that Section 37-1-14 is inapplicable to the Tort
Claims Act), overruled on other grounds by Bracken v. Yates Petroleum Corp., 1988-
NMSC-072, ¶ 12, 

, 

 (holding on public policy grounds that the
filing of a workers’ compensation claim in an improper venue tolls the statute of
limitations); Ortega v. Shube, 

, ¶ 9, 

, 

 (holding
that Section 37-1-17 prohibits Section 37-1-14 from applying in workers’ compensation
and occupational disablement cases because both sets of laws contain specific statutes
of limitations and noting that “[t]he court is powerless to change the plain meaning of the
statutes”), overruled on other grounds by Bracken, 

, ¶ 12; Perry v.
Staver, 

, ¶¶ 8, 13-14, 

, 

 (holding that under a
former compilation, Section 37-1-17 applied to prevent application of Section 37-1-14 to
a wrongful-death suit limited by the Wrongful Death Act), overruled on other grounds by
Estate of Brice v. Toyota Motor Corp., 

, 

(holding that the doctrine of fraudulent concealment may toll the three-year statute of
limitations for wrongful death actions).

{14} Likewise, New Mexico courts have consistently held that Section 37-1-17
prohibits application of the tolling provisions in Section 37-1-10 on the same basis. See
Section 37-1-10 (tolling the limitations period for minors and incapacitated persons “so
that they shall have one year from and after the termination of such incapacity within
which to commence said actions”); see Natseway v. Jojola, 

, ¶¶ 16-17,

, 

 (construing the former compilation and holding that Section
37-1-17 prevented application of Section 37-1-10 to a wrongful death suit and noting
that “the courts cannot provide a saving clause or create an exception where the statute
contains none”), superseded by statute on other grounds as stated in Estate of Brice,

; Lent v. Emp. Sec. Comm’n, 

, ¶ 32, 

, 

 (holding that under Section 37-1-17, Section 37-1-10 does not
apply to a workers’ compensation claim); Noriega, 

, ¶ 6 (construing the
former compilation of Section 37-1-10 and holding that under Section 23-1-17 (now
Section 37-1-17), Section 32-1-10 (now Section 37-1-10) does not apply to a negligence
action against a municipality). Autovest has not directed us to any authority
demonstrating a contrary application of Section 37-1-17, and we found none. In light of
the longstanding, consistent application of Section 37-1-17 by the appellate courts of
New Mexico, we are bound to conclude that Section 37-1-17 renders Section 37-1-16
inapplicable to an action governed by Section 55-2-725.

{15} The two UCC provisions that Autovest relies upon do not alter our analysis. To
the extent that NMSA 1978, Section 55-1-103(b) (2005) (stating that “[u]nless displaced
by the particular provisions of the [UCC], the principles of law and
equity . . . supplement its provisions”), and Section 55-2-725(4) (explaining that “[t]his
section does not alter the law on tolling of the statute of limitations”), can be read to
incorporate the law on tolling set out in Chapter 37, Autovest has not explained why
these UCC provisions would include Section 37-1-16 but not Section 37-1-17, and we
are not aware of any legal authority or any reasonable justification for treating the two
statutes differently.

{16} Incorporating Section 37-1-16 but excluding Section 37-1-17 would be arbitrary,
and it would require us to ignore the history of the statutory provisions at issue. When
the Legislature enacted Section 55-2-725 as part of the UCC in 1961, Sections 37-1-16
and -17 had been in effect for over eighty years, having been enacted by our territorial
legislature in 1880. “The Legislature is presumed to know existing statutory law and to
take that law into consideration when enacting new law.” Gutierrez v. W. Las Vegas
Sch. Dist., 

, 

, 

. In this case, we presume
that the Legislature knew that Section 37-1-17 would preclude the application of Section
37-1-16 to an Article 2 UCC claim, particularly given that our Supreme Court had
construed Section 37-1-17’s effect before the UCC was adopted. See, e.g., Natseway,

, ¶¶ 16-17. Given the statutory landscape, if the Legislature intended
for the revival principles articulated in Section 37-1-16 to apply to Article 2 UCC claims,
it could have said so expressly, as it did when it enacted Section 55-2-725(3), a savings
provision within Article 2 that is similar to Section 37-1-14. Cf. Bd. of Cnty. Comm’rs v.
Bd. of Cnty. Comm’rs, 

, 

 (“The Legislature knows
how to include language in a statute if it so desires.” (internal quotation marks and
citation omitted)).

{17} Finally, while Autovest argues that courts in other states have consistently held
that a partial payment will toll or renew the statute of limitations for an Article 2 claim, we
find such out-of-state authority distinguishable. The primary case Autovest points to,
Hamilton v. Pearce, 

 (Wash. Ct. App. 1976), considered a partial
payment statute similar to Section 37-1-16, but there is no indication that the State of
Washington has a statute similar to New Mexico’s Section 37-1-17. Consequently,
Hamilton does not speak to the dispositive issue in this case.

{18} The remaining cases cited by Autovest addressed partial payment rules
grounded in the common law rather than a statutory partial payment provision. See
Zelby Holdings, Inc. v. Videogenix, Inc., 

, 1069 (Mass. App. Ct. 2017)
(holding that the primary issue on appeal was whether the common law partial payment
rule applies to actions subject to the six-year statute of limitations in Article 3 (negotiable
instruments) of Massachusetts’s UCC); Greer Limestone Co. v. Nestor, 

 (W. Va. 1985) (applying the common law partial payment doctrine to an Article 2
UCC claim); see also Hamilton, 

 (“It should first be noted what the
partial payment statute is. It is substantially a [codification] of the common-law rule.
Most, if not all states, have a similar rule of law, if not by statute then as a part of their
common law.” (citation omitted)). Although New Mexico’s territorial Legislature adopted
the common law as the rule of practice and decision in 1876, Beals v. Ares, 1919-
NMSC-067, ¶ 26, 

, 

, our courts have never addressed the partial
payment doctrine as a matter of common law. It remains an open question whether New
Mexico would recognize or apply the common law partial payment doctrine, particularly
in light of the Legislature’s codification of the rule in Section 37-1-16 in 1957. 5 See Sims
v. Sims, 

, ¶ 23, 

, 

 (discussing the effect of
the common law upon a statutory enactment and vice versa). However, that question is
not before us today and we limit our review to the question of statutory interpretation
presented on appeal.

{19} We conclude that Section 37-1-17 prohibits the application of Section 37-1-16 in
these cases. Accordingly, we hold that the partial payments did not revive the statute of
limitations, that the four-year limitations periods set by Section 55-2-725 expired before
Autovest filed its lawsuits, and Autovest’s claims against Defendants are therefore time-barred.

II.     Attorney Fees

{20} Autovest separately appealed from the district court’s attorney fee decisions in
Autovest I, arguing that the award to the Agostos must be reversed because (1) Section
39-2-2 does not apply and thus there was no basis to award attorney fees to the
Agostos and, alternatively, (2) the district court incorrectly calculated the amount of the
award. Autovest also challenges the district court’s denial of Autovest’s motion for
attorney fees. “We review the court’s award of attorney fees for abuse of discretion, but
when the issue involves misapplication of law to facts, we review the application of the


5As originally enacted in 1880, Section 37-1-16 did not recognize revival by partial payment. See 1880
N.M. Laws, ch. 5, § 13 (“Causes of action founded upon contract shall be revived by an admission that
the debt is unpaid, as well as by a new promise to pay the same; but such admission or new promise
must be in writing, signed by the party to be charged therewith.”). The Legislature added the partial
payment provision in 1957, two years after our Supreme Court’s holding in Gentry v. Gentry, 1955-
NMSC-055, ¶¶ 14-15, 

, 

 (noting that a partial payment was not a written
admission within the meaning of Section 37-1-16 as then in effect).
law to the facts de novo.” J.R. Hale Contracting Co. v. Union Pac. R.R., 2008-NMCA-
037, ¶ 93, 

, 

.

A.     Attorney Fees Awarded to the Agostos

{21} Autovest first contends that Section 39-2-2 does not allow for fee shifting in favor
of the Agostos. We disagree.

{22} Section 39-2-2 provides that “[i]n any civil action involving liability for a deficiency
pursuant to [NMSA 1978,] Section 55-9-504 [(2001)] or [NMSA 1978,] Section 58-19-7
[(2013)], the debtor, if prevailing, may in the discretion of the court be allowed a
reasonable attorney fee set by the court and taxed and collected as costs.” We note
initially that the Legislature’s reference to Section 55-9-504 is apparently out of date;
that section was recompiled as NMSA 1978, Sections 55-9-608 and -610 in 2001, but
Section 39-2-2 has not been amended since its enactment in 1981. In their current form,
Sections 55-9-608 and -610 are part of a statutory scheme governing defaults on
secured transactions under Article 9 of the UCC.

{23} The plain language and purpose of Section 39-2-2 and the statutes it refers to—
Sections 55-9-608 and -610, and Section 58-19-7—indicate that the Legislature
intended for Section 39-2-2 to allow an award of attorney fees in deficiency actions
arising from defaults on automobile purchase contracts. Section 55-9-610 allows the
secured party to sell the collateral in the event of a default, and Section 55-9-608(a)(4)
states that an obligor remains liable for any deficiency following collection or
enforcement. Similarly, Section 58-19-7(M), which is part of the Motor Vehicle Sales
Finance Act, NMSA 1978 §§ 58-19-1 to -14 (1959, as amended through 2019), provides
that “[i]n the event that the seller or the holder of the retail installment contract
repossesses a motor vehicle, the buyer shall be responsible and liable for any
deficiency in accordance with Section 55-9-608[.]” It is evident that a deficiency arising
from the repossession and sale of an automobile is “pursuant to” the statutes
referenced in Section 39-2-2. See Pursuant to, Black’s Law Dictionary (11th ed. 2019)
(defining “pursuant to” as (1) “[i]n compliance with; in accordance with; (2) “[a]s
authorized by; under”; and (3) “[i]n carrying out”). And although Autovest makes much of
our holding in First Nat’l Bank, it makes no practical difference that the deficiency action
is governed by the statute of limitations in Article 2. See 

, ¶ 9 (noting
that an automobile installment purchase contract is a “hybrid involving both sales and
security aspects”). Accordingly, the district court did not err by concluding that Section
39-2-2 permitted it to award attorney fees in Autovest I.

{24} Turning to Autovest’s challenges to the amount of the award, Autovest argues
that the district court abused its discretion by arbitrarily reducing the gross amount of
the Agostos’ requested attorney fees by two-thirds and by failing to segregate
recoverable fees from non-recoverable fees. “While an award of attorney fees is
discretionary, the exercise of that discretion must be reasonable when measured
against objective standards and criteria.” Rio Grande Sun v. Jemez Mountains Pub.
Sch. Dist., 

, 

 (internal quotation marks and citation
omitted). “The lodestar provides an objective basis for valuing the attorney’s services,”
In re N.M. Indirect Purchasers Microsoft Corp., 

, 

,

, and “[i]n statutory fee-shifting cases . . . the lodestar method for
determining attorney fees is generally used because it provides adequate fees to
attorneys who undertake litigation that is socially beneficial, irrespective of the pecuniary
value to the claimant.” Rio Grande Sun, 

 (alteration, internal
quotation marks, and citation omitted).

{25} “A lodestar is determined by multiplying counsel’s total hours reasonably spent
on the case by a reasonable hourly rate.” 

 (internal quotation marks and citation
omitted). “This value serves as a starting point for the calculation”; the fee awarded
must also be reasonable. Atherton v. Gopin, 

, 

. New
Mexico courts traditionally use the factors set forth in Rule 16-105 NMRA of the Rules of
Professional Conduct to examine the reasonableness of attorney fees. In re N.M.
Indirect Purchasers Microsoft Corp., 

. These factors include:

       (1)    the time and labor required, the novelty and difficulty of the
       questions involved, and the skill requisite to perform the legal service
       properly;

       (2)   the likelihood that the acceptance of the particular employment will
       preclude other employment by the lawyer;

       (3)    the fee customarily charged in the locality for similar legal services;

       (4)    the amount involved and the results obtained;

       (5)    the time limitations imposed by the client or by the circumstances;

       (6)    the nature and length of the professional relationship with the client;

       (7)    the experience, reputation, and ability of the lawyer performing the
       services; and

       (8)    whether the fee is fixed or contingent.

 ¶ 77 (citing factors set forth in Rule 16-105(A)). “A court need not consider all factors
or give all the factors equal weight.” Behrens v. Gateway Ct., LLC, 

, 

.

{26} In this case, the amount sought by the Agostos was based on a lodestar
calculation; counsel provided the district court with affidavits and billing records detailing
their hourly rates and the time spent on the case. See 

 The district court found that
counsels’ hourly rates were reasonable, as was the time expended, but reduced the fee
request by 66.6667%, saying:
       [The Agostos] have prevailed on the ultimate issue of law, and are entitled
       to reasonable attorneys’ fees. However, the [c]ourt has elected to award
       net attorneys’ fees to Counsel for [the Agostos], recognizing that
       [Autovest] has prevailed on numerous issues including but not limited to a
       Motion to Compel. A reduction of 2/3rds of the requested fees is
       appropriate.

The court stated that it “considered and applied the factors going into an award of
attorney fees expressed in [Rule] 1-054(D) [NMRA] and [Gavin Maloof & Co. v. Sw.
Distrib. Co., 

, ¶ 9, 

, 

].”

{27} The district court strayed from objective standards when it arbitrarily reduced the
fees award by two thirds. See Rio Grande Sun, 

. This case is
similar to Behrens, where the district court acknowledged the plaintiff’s proposed
lodestar calculation but reduced the fee award in part “because [the d]efendant
successfully defended against [the p]laintiff’s other claims for punitive damages,
emotional distress damages, and civil penalty damages.” 

, ¶ 37.
Though we said the district court may properly reduce the attorney fee calculation to the
extent it includes fees for claims on which the plaintiff had not prevailed, the court must
still “assess the time involved in each claim or defense.” Id.; see also Dean v. Brizuela,

, 

, 

 (“Our Supreme Court has
continued to direct that recoverable fees be segregated from non-recoverable fees to
ensure that only those fees for which there is authority to award attorney fees are in fact
awarded.”). Instead of undertaking that evaluation, however, “the district court awarded
[the p]laintiff an arbitrary fee of $10,000 that was then reduced by $5,000 without any
analysis of the actual factual circumstances and time involved to support these
calculations.” Behrens, 

, ¶ 37. We concluded that the district court had
abused its discretion by failing to “utilize the lodestar method or any objective analysis
of the facts in order to determine [the p]laintiff’s reasonable attorney fees.” Id. ¶ 38.

{28} The law requires the same conclusion here. The district court expressly declined
to use the lodestar method and the record contains no indication that the district court
considered any objective criteria other than the reasonableness of counsels’ hourly
rates. The district court reduced the Agostos’ fee award because Autovest had
prevailed on a number of matters, including the Agostos’ counterclaims, but the
reduction was not grounded in an analysis of the time involved or an effort to segregate
recoverable from non-recoverable fees. See id. ¶ 37. And while the district court
apparently relied on Gavin Maloof Co. for the proposition that it may use its own
knowledge and expertise in determining the value of an attorney’s legal services, Gavin
Maloof Co. does not stand for the proposition that a district court may disregard
objective standards and criteria. See 

, ¶ 9 (“Based upon its knowledge
of the case and the pleadings filed, and without submission of time records and
testimony, the trial court could properly have determined that [the plaintiff’s] counsel
was entitled to $832 as a reasonable fee.”). On the contrary, we recognized that Gavin
Maloof Co. is but one part of the reasonableness analysis, explaining that “[h]istorically,
New Mexico courts have also used the factors now found in Rule 16-105 . . . to examine
the reasonableness of attorney fees.” In re N.M. Indirect Purchasers Microsoft Corp.,

 (emphasis added) (citing Gavin Maloof Co. as one of the
considerations relevant to the reasonableness of an attorney fee award).

{29} Because the district court “failed to utilize the lodestar method or any objective
basis for determining a reasonable award of attorney fees,” we hold that the court
abused its discretion. Rio Grande Sun, 

. We reverse the district
court’s award of attorney fees and remand for recalculation. The district court should
use the lodestar method as a starting point for its calculation and enter findings of fact
and conclusions of law that take into account the factors set forth in Rule 16-105.
Further, because fees are authorized under Section 39-2-2 only for work related to the
defense of the deficiency action, the court should take care “to ensure that only those
fees for which there is authority to award attorney fees are in fact awarded.” Dean,

.

B.      Attorney Fees Requested by Autovest

{30} Autovest also argues the district court abused its discretion in its handling of
Autovest’s motion for attorney fees. About two weeks after the district court entered its
order awarding fees to the Agostos, Autovest filed a motion for attorney fees on the
basis that it had defeated Debbie’s UPA counterclaim. Under the UPA, a party who
successfully defends against a UPA claim is entitled to an award of attorney fees if the
district court “finds that the party complaining of such trade practice brought an action
that was groundless.” Section 57-12-10(C) (emphasis added). The district court
ultimately declined to award Autovest a monetary judgment, writing that the two-thirds
reduction of the Agostos’ award reflected an award of attorney fees to Autovest:

        2.      For the reasons articulated on the record at the [hearing on the
                Agostos’ request for attorney fees], the [c]ourt will not enter a
                monetary judgment in favor of Autovest, LLC based on its fee
                request;

        3.      As explained at the [hearing on the Agostos’ motions], an award of
                attorneys’ fees to Autovest, LLC is reflected in the [c]ourt’s
                reduction of the attorneys’ fees sought by Debra Agosto and
                Debbie Agosto by two-thirds (66.6667%), in the Order & Judgment
                for Attorneys’ Fees, entered June 1, 2018[.] 6


6At the hearing on the Agostos’ motion for attorney fees, the district court stated:
                   [Autovest] may assume that there is an award of attorneys’ fees to you in this
        regard: The attorney fee affidavit I have cut by 66 percent. That gives you some sense of
        the fact that I think that you prevailed, and I recognize that you prevailed on the motion to
        strike and three of the four motions. The only one that you didn’t prevail on was the one
        that was most dispositive, which was the statute of limitations. . . . And I have recognized
        the power and winning position that Autovest took on many issues, including the motion
        to compel, including the motion to strike and three of the four—all of the Unfair Practices
        Act. . . . That’s why [D]efendants’ affidavit for attorneys’ fees has been cut by 66 percent.
{31} Autovest argues that the district court could not have accounted for Autovest’s
fees when it reduced the Agostos’ fees by two-thirds because Autovest had not yet filed
its motion, and there was no evidence in the record as to the amount Autovest incurred
in connection with defending against the counterclaim. We agree and reverse. See
Behrens, 

, ¶ 34.

{32} On remand, the starting point for the district court’s analysis must be to
determine whether Debbie’s UPA counterclaim was “groundless.” See Robey v. Parnell,

, ¶ 44, 

 (“[W]e do not read the statute to authorize an
award of attorney fees to the [counter]defendants merely because they successfully
prevailed against the claims asserted by the [counter]plaintiff.” (alterations, internal
quotation marks, and citation omitted)). “A claim is considered groundless, which we
have held is synonymous with frivolous, when there is no arguable basis in law or fact to
support the cause of action and the claim is not supported by a good-faith argument for
the extension, modification, or reversal of existing law.” 

 (internal quotation marks and
citations omitted); Jones v. Beavers, 

, ¶ 23, 

, 

 (“The party must also establish that, at the time such claim was filed, the claim was
initiated in bad faith or there was no credible evidence to support it.”). While Autovest
urges us to conclude that the district court necessarily found that the UPA claim was
groundless when it decided to reduce the Agostos’ fee award, the district court never
made an explicit finding on this point as required by Section 57-12-10(C). See also
Robey, 

, ¶ 46 (stating that the district court’s “conclusions of law must
be supported by findings of ultimate fact” (alteration, internal quotation marks, and
citation omitted)).

{33} If the district court finds that Debbie’s UPA counterclaim was groundless, it must
then determine Autovest’s reasonable attorney fees. See Behrens, 

,
¶¶ 34, 37. As with the calculation of the Agostos’ attorney fee award, the district court
should use the lodestar method as a starting point for its calculation and enter findings
of fact and conclusions of law that account for the factors set forth in Rule 16-105.
Further, because the UPA claim is the only claim for which Autovest could be awarded
attorney fees, the district court must take care to ensure that the fee award relates
solely to the UPA claim. See Jaramillo v. Gonzales, 

, 

, 

 (“Because the UPA claim was the only claim for which [the p]laintiffs
could be awarded attorney fees, the trial court was obligated to separate the claims and
determine the amount of time spent on each.”); see also Dean, 

(“[I]t has long been the rule in New Mexico that a party is only entitled to those fees
resulting from the cause of action for which there is authority to award attorney fees.”).

{34} Finally, we reject Autovest’s contention that the Agostos have waived any
challenge to the reasonableness of Autovest’s requested attorney fees. See Dean,

 (stating that once the plaintiff made its claim for attorney fees, “it
was left to the discretion of the trial court to make the award based upon [the p]laintiff[’s]
proof of the reasonableness of the fees. The defendant[s] did not have to object to the
time or show that it was separate. It was for the trial court to review the claim made by
[the p]laintiff[] and in its discretion determine what fees to award” (alteration, internal
quotation marks, and citation omitted)).

CONCLUSION

{35} In Autovest I, we affirm the district court’s dismissal of Autovest’s complaint but
reverse the court’s award of attorney fees to the Agostos and remand for recalculation.
We also reverse the district court’s order on Autovest’s motion for attorney fees and
remand for reconsideration. The court must consider the Agostos’ claim separately from
Autovest’s claim.

{36} In Autovest II, we reverse the district court’s judgment in favor of Autovest and
remand with instructions to enter judgment in favor of Estrada.

{37}   IT IS SO ORDERED.

MEGAN P. DUFFY, Judge

WE CONCUR:

ZACHARY A. IVES, Judge

SHAMMARA H. HENDERSON, Judge