February 28, 2020- Daniela Bowman v. John Manforte, No. A-1-CA-37874

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Odyssey.
IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO	1
DANIELA BOWMAN,	2
Plaintiff-Appellant,	3
v. 	NO. A-1-CA-37874	4
JOHN MANFORTE, in his capacity	5
as Acting Secretary of the NEW	6
MEXICO TAXATION AND	7
REVENUE DEPARTMENT,	8
Defendant-Appellee.	9
APPEAL FROM THE DISTRICT COURT OF SANTA FE COUNTY	10
Raymond Z. Ortiz, District Judge	11
Daniela Bowman	12
Santa Fe, NM	13
Pro Se Appellant	14
Cordelia Anna Friedman	15
Santa Fe, NM	16
for Appellee	17
MEMORANDUM OPINION	18
VANZI, Judge.	19
{1} 	Plaintiff appeals, pro se, from a district court order dismissing her complaint for	20
refund of taxes. We issued a calendar notice proposing to affirm. Plaintiff has	21
responded with a memorandum in opposition. We affirm.	22
Court of Appeals of New Mexico
Filed 2/28/2020 8:50 AM

2
{2} 	The dismissal of Plaintiff’s complaint was based on the refusal to comply with	1
discovery orders. [RP 384] She continues to argue that the requested information was	2
privileged 	and 	not 	subject 	to 	discovery. 	We 	are 	unpersuaded 	by 	Plaintiff’s	3
memorandum in opposition.	4
{3} 	Our Supreme Court has held that, even where a party violates a court order,	5
conduct which, in addition to a discovery violation, constitutes contempt of court,	6
“such discovery sanctions[, i.e., dismissal with prejudice or default judgment,] are to	7
be imposed only in extreme cases and only upon a clear showing of willfulness or bad	8
faith. That principle is well-established in this jurisdiction; it is universally recognized	9
in American jurisprudence; and it is fundamental to the constitutional right of due	10
process.” United Nuclear Corp. v. Gen. Atomic Co., 1980-NMSC-094, ¶ 396, 96 N.M.	11
155, 629 P.2d 231; see Rule 1-037(B)(2)(d) NMRA (providing that, in addition to any	12
other discovery sanctions, a district court may treat the failure to comply with an order	13
providing for the production of discovery as contempt of court). “A finding of	14
willfulness may be based upon either a willful, intentional, and bad faith attempt to	15
conceal evidence or gross indifference to discovery obligations.” Medina v. Found.	16
Reserve Ins. Co., 1994-NMSC-016, ¶ 6, 117 N.M. 163, 870 P.2d 125.	17
{4} 	Here, Plaintiff filed a complaint for a tax refund from the Taxation and Revenue	18
Department [Department] based on her claim that she was an employee, and not an	19
independent business, and therefore not required to pay gross receipts taxes. [RP 1]	20

3
See NMSA 1978, § 7-9-17 (1969) (exempting employee wages from gross receipt	1
taxes). The Department filed a motion to compel discovery, seeking a copy of	2
Defendant’s federal tax return on the ground that her alleged employer issued Plaintiff	3
a 1099 form; the Department suspected that the federal return might show that she	4
took deductions consistent with having business income rather than wage income. [RP	5
88-89] The district court twice ordered Plaintiff to provide the Department with a copy	6
of the federal return, but she refused, resulting in the dismissal of her complaint. [RP	7
116, 188, 384]	8
{5} 	Plaintiff has asserted below, and now on appeal, that her federal returns were	9
privileged under Rule 11-502 NMRA and NMSA 1978, Section 7-1-4.2 (2017). Rule	10
11-502(A) shields reports from discovery requests where there is a statutory privilege.	11
Plaintiff claims that the applicable privilege is found in Section 7-1-4.2, which	12
provides “the right to have the taxpayer’s tax information kept confidential unless	13
otherwise specified by law, in accordance with [NMSA 1978,] Sections 7-1-8 through	14
7-1-8.11 [(1965, as amended through 2019).]” It is plainly apparent reading these	15
statutory 	provisions 	together 	that 	these 	rights 	and 	exceptions 	relate 	to 	the	16
Department’s ability to release information in its possession. For example, Section 7-	17
1-8.4 permits the Department to release tax information to a court if the proceeding	18
involves a tax protest. The orders compelling production here do not relate to the	19
Department’s obligations with respect to information it has in its possession. Instead,	20

4
Plaintiff’s complaint has placed her federal returns at issue, because she appears to be	1
claiming inconsistent status in her state and federal returns. See Stohr v. N.M. Bureau	2
of Revenue, 1976-NMCA-118, ¶ 8, 90 N.M. 43, 559 P.2d 420 (“The taxpayer must not	3
attempt to show one scheme for federal tax purposes, and a nontaxable event for	4
purposes of state gross receipts tax.”). We also reject Plaintiff’s complaint that the	5
Department was subject to any limitations period that would govern an audit. [DS 11]	6
Plaintiff initiated this lawsuit, and the very nature of the complaint has made her	7
federal return information a relevant and non-privileged matter for purposes of	8
discovery. See Rule 1-026(B)(1) NMRA (providing that “[p]arties may obtain	9
discovery of any information, not privileged, which is relevant to the subject matter	10
involved in the pending action.”).	11
{6} 	In her memorandum in opposition, Plaintiff relies on Breen v. New Mexico	12
Taxation & Revenue Dep’t, 2012-NMCA-101, 287 P.3d 379, for the proposition that	13
taxpayer’s information is privileged and not subject to discovery. However, Breen	14
involved a non-party to the lawsuit, and it was specifically observed that such	15
information is not privileged where a party is involved in a taxation dispute with the	16
Department. Id. ¶ 27.	17
{7} 	In light of Plaintiff’s willful and repeated refusals to comply with the district	18
court’s orders, we affirm.	19

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{8} 	IT IS SO ORDERED.	1
__________________________________	2
LINDA M. VANZI, Judge	3
WE CONCUR:	4
_________________________________	5
JENNIFER L. ATTREP, Judge	6
_________________________________	7
JACQUELINE R. MEDINA, Judge	8