United States v. Garcia

F I L E D
United States Court of Appeals
Tenth Circuit
UNITED STATES COURT OF APPEALS
JUL 18 2000
FOR THE TENTH CIRCUIT
PATRICK FISHER
Clerk

UNITED STATES OF AMERICA and
INTERNAL REVENUE SERVICE,

Plaintiffs,
Nos. 99-2201
v. &
99-2212
GAECHTER OUTDOOR (D.C. No. CIV-96-83-LH)
ADVERTISING INC., a New Mexico (D. N.M.)
corporation,

Defendant Cross-
Claimant-Cross-
Defendant-Appellant,

v.

HARRY GARCIA,

Defendant Cross-
Defendant-Appellee.

ORDER AND JUDGMENT *

Before TACHA , EBEL , and BRISCOE , Circuit Judges.

*
This order and judgment is not binding precedent, except under the
doctrines of law of the case, res judicata, and collateral estoppel. The court
generally disfavors the citation of orders and judgments; nevertheless, an order
and judgment may be cited under the terms and conditions of 10th Cir. R. 36.3.
 After examining the briefs and appellate record, this panel has determined

unanimously to grant the parties’ request for a decision on the briefs without oral

argument. See Fed. R. App. P. 34(f); 10th Cir. R. 34.1(G). The cases are

therefore ordered submitted without oral argument.

This case involves claims for rent and ownership of property originally

owned by Harry Garcia that Gaetcher Outdoor Advertising, Inc. (“GOA”) first

leased from Garcia and later purchased at a tax sale from the Internal Revenue

Service. The district court granted summary judgment to GOA on its claim to

ownership of the property, holding that Garcia failed to properly redeem the

property following the tax sale. The court then held a bench trial on Garcia’s

claim that GOA was unjustly enriched by its failure to make rent payments to

Garcia or to the IRS under tax levies against Garcia, and the court awarded

judgment in favor of Garcia. Both parties appeal. As explained below, we reject

most of the parties’ contentions of error. However, we conclude the district court

needs to further consider GOA’s argument that a portion of Garcia’s claim is

barred by the statute of limitations. We also conclude that the court erred in

determining the amount of postjudgment interest to which Garcia is entitled.

The general facts are not disputed. In August and September 1986, GOA

and Garcia entered into two three-year leases for a parcel of property Garcia

owned in Albuquerque on which GOA constructed two advertising billboards of

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differing size. The rent on the lease for the larger billboard was $23,400 per year,

and the rent for the smaller one was $1,800 per year. The leases required

payment of the first and third years’ rents in advance, and GOA made those

payments to Garcia.

Around April 1987, before the second year’s rents were due, GOA received

a notice of levy from the Internal Revenue Service regarding taxes owed by

Garcia. Richard Zanotti, GOA’s general manager, testified that he understood the

levy to require that any rent payments should be made to the IRS, not Garcia, but

that he did not understand the levy to be a demand for payment from the IRS. See

GOA’s App. Vol. 2 at 183-84. Although GOA contends it is disputed whether it

made the 1987 rent payment, it is undisputed that GOA did not make any

payments for use of the property to either Garcia or the IRS from 1989 to 1995,

see id. at 192-94, even though GOA continued to lease the billboards to third

parties, see id. at 199-200, and continued to receive IRS levies, see id. Vol. 1 at

113, throughout this period.

In April 1995, the IRS seized the property because of Garcia’s unpaid

taxes, and GOA purchased it at a tax sale on June 7, 1995. Several days prior to

the end of the 180-day redemption period for tax sales, Garcia deposited funds

with the IRS seeking to redeem the property. In January 1996, the IRS brought

this action as an interpleader. Claiming no interest in or entitlement to the funds,

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the IRS filed this action against Garcia, GOA and Charter Southwest Commercial,

Inc., to determine who was entitled to the funds and to the deed to the property.

(Charter Southwest settled and is not part of this appeal.) GOA answered and

filed a cross-claim asserting that Garcia’s attempt to redeem was procedurally

defective and that it was entitled to the deed to the property. Garcia answered

and asserted that he had successfully redeemed the property. He also filed a

cross-claim against GOA for unjust enrichment because GOA had failed to pay

rent to either the IRS or Garcia.

The district court granted GOA’s motion for summary judgment regarding

ownership of the property following the tax sale. The court held that Garcia’s

attempt to redeem was ineffective because he failed to make his redemption

payment to the purchaser, GOA, within the redemption period, as required by

26 U.S.C. § 6337(b). Following a bench trial on Garcia’s unjust enrichment

claim, the court found in favor of Garcia. It awarded him damages totaling

$184,946.30 for the rental amounts that GOA failed to pay either Garcia or the

IRS for 1987 and 1989 to 1995; prejudgment interest at fifteen percent totaling

$381,968.75, and postjudgment interest also at fifteen percent. Both parties

appeal.

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 I. GOA’s Appeal

A. Statute of Limitations

The district court determined that Garcia’s claim was not barred by the

statute of limitations or other affirmative defenses because of GOA’s

“misrepresentations, misconduct, and concealment of material facts.” GOA’s

App. Vol. 1 at 115. Challenging the court’s ruling, GOA contends that Garcia

failed to prove the elements of fraudulent concealment necessary to toll the

statute, that the applicable limitations period is four years, and that Garcia’s claim

for payments before 1992 is therefore barred.

Though obviously critical to at least part of Garcia’s claim, the statute-of-

limitations issue was not well-developed by the parties. In its proposed findings

of fact and conclusions of law filed before trial, 1
GOA asserted that a four-year

limitations period applied to Garcia’s claim, 2
but it did not assert that any part of

Garcia’s unjust enrichment claim was barred by the statute of limitations. See id.

at 91. In his proposed findings and conclusions, Garcia argued that if any

limitations period applied, it would be the six-year period provided by

1
The parties apparently did not prepare a pretrial order. Before trial, they
each submitted proposed findings of fact and conclusions of law and trial briefs,
though neither party included the trial briefs in the appendices filed on appeal.
2
In relevant part, N.M. Stat. Ann. § 37-1-4 (Michie 1990) provides a four-
year limitations period for actions on unwritten contracts and “all other actions
not herein otherwise provided for.”

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N.M. Stat. Ann. § 37-1-3 (Michie 1990) for actions on written contracts. See

GOA’s App. Vol. 1 at 97. The district court apparently raised the doctrine of

fraudulent concealment as a means for tolling the statute sua sponte at trial. It

subsequently made the following findings of fact relevant to the limitations issue:

6. Following Gaechter’s receipt of the Notice of Levy [around April
1987], Garcia meet [sic] with Richard Zanotti (Zanotti), Gaetcher’s
general manager, and discussed the IRS levy. Thereafter, Garcia and
Gaechter both understood that future lease payments owed by
Gaechter to Garcia were required by law to be paid to the IRS.

7. Garcia reasonably relied upon Gaechter to pay to the IRS the 1987
payments that were due him.

8. Although the initial term of the leases expired in 1989, Garcia and
Gaechter understood that they continued unless either party
terminated them by oral or written communication. Neither Garcia
nor Gaechter ever communicated to the other party such intention to
terminate either lease.

9. Garcia knew that Gaechter continued to receive IRS notices of
levy regarding his unpaid taxes from 1989-1995 and reasonably
relied on Gaechter to pay to the IRS the 1989 through 1995 payments
that were due him.

....

14. Gaechter willfully decided to make no payments for the use of
Garcia’s property to the IRS, made no such payments, and
consciously concealed this fact from Garcia while continuing to use
his property.

15. Garcia lacked knowledge until sometime after March 31, 1995,
that Gaechter had not remitted its obligations owed him to the IRS.

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GOA’s App. Vol. 1 at 112-14. The court then stated its legal conclusion that

“[d]ue to Gaechter’s misrepresentations, misconduct, and concealment of material

facts, Garcia’s claim is not barred by the statute of limitations, waiver, estoppel,

laches, or any other affirmative defenses.” Id. at 115.

Under principles of equitable estoppel, New Mexico law recognizes the

doctrine of fraudulent concealment as a means of tolling a statute of limitations.

See Garcia ex rel. Garcia v. La Farge , 893 P.2d 428, 432 (N.M. 1995); see also

Ballen v. Prudential Bache Sec., Inc. , 23 F.3d 335, 337 (10th Cir. 1994). A party

seeking to toll a statute of limitations through this doctrine must prove that (1) the

other party engaged in conduct amounting to intentional false representation or

concealment of material facts; (2) the injured party reasonably relied on the other

party and the concealment was successful; and (3) the injured party did not know,

and through the exercise of reasonable diligence, could or should not have known

the true facts giving rise to a cause of action. See Continental Potash, Inc. v.

Freeport-McMoran, Inc. , 858 P.2d 66, 74 (N.M. 1993); Kern ex rel. Kern v. St.

Joseph Hosp., Inc. , 697 P.2d 135, 139 (N.M. 1985). 3

3
We note that New Mexico courts use both “could” and “should” with
respect to the discovery aspect of the doctrine. Compare Continental Potash , 858
P.2d at 74 (“could not have known”), with Kern , 697 P.2d at 139 (using term
“should,” but also quoting New Mexico Court of Appeals decision using “could,”
Hardin v. Farris , 530 P.2d 407, 410 (N.M. Ct. App. 1974)). Because the
discovery aspect of the doctrine is further modified by requiring the party to have
(continued...)

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 GOA contends that Garcia failed to prove the first and third elements. 4
It

claims that it did not make any fraudulent representations and that Garcia could

not rely on its silence regarding its failure to make the payments because there

was no fiduciary relationship between the parties. It further argues that Garcia

failed to show that, through exercise of reasonable diligence, he could not have

known about GOA’s nonpayment prior to 1995. In response, Garcia contends that

GOA had a duty to disclose its nonpayment on the basis of either a fiduciary

relationship between the parties or the duty of good faith and fair dealing implied

as part of the leases. He further contends that he is not required to show that he

exercised due diligence in discovering the truth. See Garcia’s Br. at 14.

We agree with Garcia that GOA had a duty to disclose its nonpayment to

him. Because the district court found that the leases were the result of arm’s

length negotiations between the parties, see GOA’s App. Vol. 1 at 112, we

believe the duty is best characterized as arising not from any fiduciary duty GOA

3
(...continued)
exercised reasonable or ordinary diligence, we do not believe the choice of terms
makes a material difference in application of the doctrine.
4
GOA also contends that Garcia should not be allowed to benefit from the
doctrine of fraudulent concealment because he failed to plead it. GOA, however,
did not argue in the district court that Garcia’s failure to plead the doctrine was
fatal to his statute of limitations defense, see GOA’s App. Vol. 1 at 104, and we
therefore decline to consider the argument on appeal. See Sac & Fox Nation of
Missouri v. Pierce , 213 F.3d 566, 575 (10th Cir. 2000) (issues raised but not
argued in the district court ordinarily not considered on appeal).

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owed to Garcia, but rather from the duty of good faith and fair dealing implied as

part of the contracts between them. 5
In Allsup’s Convenience Stores, Inc. v.

North River Ins. Co. , 976 P.2d 1, 14 (N.M. 1998), the court rejected an argument

that implied covenants never require a party to take the affirmative act of

disclosing material information:

The concept of the implied covenant of good faith and fair dealing
requires that neither party do anything that will injure the rights of
the other to receive the benefit of their agreement. We see no reason
in law or logic why this duty should always be a negative one; if
good faith and fair dealing require it, there can be an affirmative duty
to act in order to prevent the denial of the other party’s rights under
the agreement.

Id. (quotation, citation omitted). In Allsup’s , the court upheld a jury finding that

an insurer breached the implied covenant by failing to disclose information

relating to inadequate claims handling that increased the insured’s premiums. See

id. Although the issue in Allsup’s arose in an insurance context, we see no reason

not to extend the principle to this situation. Moreover, like Allsup’s , this is not a

5
Citing cases such as FDIC v. Noel , 177 F.3d 911, 915 (10th Cir. 1999),
cert. denied , 120 S. Ct. 935 (2000), Zinn v. McKune , 143 F.3d 1353, 1360 (10th
Cir. 1998), and Tele-Communications, Inc. v. Commissioner , 12 F.3d 1005, 1007
(10th Cir. 1993), GOA argues that the district court’s decision cannot be affirmed
on the basis of the implied covenant because Garcia failed to raise that issue
below. The waiver rule on which GOA relies applies to appellants’ attempts to
reverse district court decisions, not appellees’ attempts to affirm them. See
Hernandez v. Starbuck , 69 F.3d 1089, 1093-94 (10th Cir. 1995). Moreover, we
have the “free[dom] to affirm a district court decision on any grounds for which
there is a record sufficient to permit conclusions of law, even grounds not relied
upon by the district court.” Id. (quotations, citations omitted).

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situation in which GOA would have had to “bend over backwards” and

“subordinate its legitimate interest,” id. , in the course of disclosing its

nonpayment. In a finding unchallenged on appeal, the district court found that

“Garcia and Gaechter both understood that future lease payments owed by

Gaechter to Garcia were required by law to be paid to the IRS.” GOA’s App.

Vol. 1 at 112. GOA merely had to inform Garcia that it was not complying with

that understanding. And GOA had no legitimate interest in using Garcia’s

property for free.

We disagree, however, with Garcia’s contention that he is somehow

excused from the due diligence requirement. Under New Mexico law, even in

situations involving confidential or fiduciary relationships, the party claiming

fraudulent concealment must show that he could not have discovered the relevant

facts through exercise of reasonable diligence. See, e.g. , Garcia , 893 P.2d at 432;

Hardin v. Farris , 530 P.2d 407, 409-10 (N.M. Ct. App. 1974). Garcia cites no

authority to the contrary to support his contention.

GOA contends that Garcia failed to show he could not have discovered that

it was not making payments to the IRS. Garcia testified that he had been working

with IRS officials to reduce his tax liability since he was audited in 1984 and that

he eventually reduced it from nearly half a million dollars to about $30,000. See

GOA’s App. Vol. 2 at 221-23. He also testified that he knew that had GOA been

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making its payments to the IRS as it was required to do, his tax liability,

including interest and penalties, would have been lower. See id. at 224-25.

During the period from 1987 to 1995, he assumed that GOA was paying the IRS,

but he never checked to make sure. See id. at 225-26. Relying on these facts,

GOA contends that had Garcia exercised reasonable diligence during this period,

he could have discovered that GOA was not making the required payments.

The existence of the grounds justifying a claim of fraudulent concealment,

including whether a party exercised due diligence, is a question of fact. See

Continental Potash , 858 P.2d at 74; Kern , 697 P.2d at 140. We review a district

court’s factual findings for clear error. See Salve Regina College v. Russell , 499

U.S. 225, 233 (1991). The district court did not expressly address the issue of

whether Garcia exercised due diligence. The court did address the related matter

of Garcia’s reliance on GOA to make the payments, and it found that reliance to

be reasonable. Because, as indicated above, GOA had a duty to disclose its

nonpayment to Garcia, this finding is not clearly erroneous. 6
However, while a

finding of reasonable reliance informs the question of the amount of diligence a

party may need to exercise, under New Mexico law, it does not fully replace a due

6
We also note that the district court held that the notices of levy IRS sent to
GOA demanded payment from GOA, see GOA’s App. Vol. 1 at 116, and that
failures to comply with such demands are subject to substantial penalties. See
Kane v. Capital Guardian Trust Co. , 145 F.3d 1218, 1222 (10th Cir. 1998); 26
U.S.C. § 6332(d).

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diligence finding. Cf. Continental Potash , 858 P.2d at 74 (noting that party

asserting estoppel must show both reasonable reliance and lack of means of

discovering truth).

We therefore conclude that the district court erred in applying the doctrine

of fraudulent concealment to toll the statute of limitations without finding that,

through exercise of reasonable diligence, Garcia should not have discovered his

cause of action before the statute ran. GOA asks that we determine as a matter of

law that Garcia should have discovered his cause of action before 1992 because

the information was available from the IRS. It contends that since he did not file

his counterclaim until May 1996, his claim for payments prior to 1992 would be

barred by the four-year statute applicable to unwritten contracts. 7

We decline to make this finding for several reasons. As we noted, the

district court found that GOA received the notices of levy and Garcia reasonably

relied on GOA to make the payments to the IRS from 1987 on. This reasonable

reliance informs the level of diligence Garcia was obligated to exercise and

affects any finding regarding when Garcia should have been on notice that GOA

might not be making the payments. GOA contends that Garcia should have been

able to determine readily from the IRS that it was not making the payments, but

7
GOA contends that because Garcia’s claim involves periodic payments, the
cause of action accrues and the statute runs from the time each payment was due.
See Plaatje v. Plaatje , 626 P.2d 1286, 1287-88 (N.M. 1981).

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the only IRS documents it cites in the record are notices of tax liens that include a

variety of corrections, indicating that discovering the correct information from the

IRS may not have been as simple as GOA supposes. See GOA’s Exhibits, Ex. A.

Finally, the district court never determined what the applicable statute of

limitations is. GOA contends that the four-year statute for unwritten contracts

applies. But the leases were written, and while the district court found that the

initial terms of the leases expired in 1989, it also found that the parties

understood that the leases continued until terminated. Thus, there is some

question whether the six-year statute for written contracts might apply.

We therefore conclude that we must remand the case to the district court

for it to determine when Garcia should have discovered he had a cause of action

and whether any part of it is barred by the applicable statute of limitations.

B. 1987 Lease Payments

GOA challenges the district court’s award of damages for its failure to

make the 1987 lease payments on two grounds. First, it contends that any

damages in this regard would be for breach of contract and Garcia never asserted

a claim for breach of contract. Second, it contends that the evidence does not

support the district court’s finding that GOA did not make these payments.

We decline to consider GOA’s first argument because it failed to properly

present it to the district court and therefore preserve it for appeal. See Sac & Fox

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Nation , 213 F.3d at 575. GOA contends that it raised the issue in its “additional”

proposed findings of fact and conclusions of law filed after the trial. See GOA’s

Opening Br. at 10. In that document, as a proposed finding of fact , GOA asserted

that “Garcia did not allege in his Cross-Claim or raise at any time in the litigation

a claim for breach of contract, pre-judgment interest, post-judgment interest, or a

claim for attorneys fees and costs.” GOA’s App. Vol. 1 at 104. Its proposed

conclusions of law did not explain what effect Garcia’s failure to assert a breach-

of-contract claim might have on Garcia’s damages in general or his recovery for

1987 lease payments, nor, obviously, did it provide the district court with any

legal authority supporting this position. (In fact, it failed to present any legal

authority supporting its position on this issue until its reply brief on appeal.)

Similarly, GOA’s arguments to the court at trial omitted any reference to this

issue, see id. Vol. 2 at 170-74, 250-53, 287-302, as did its motion to alter or

amend the court’s eventual judgment, see id. Vol. 1 at 120-21. 8

8
GOA had earlier filed its original version of its proposed findings of fact
and conclusions of law, see Appellant’s App. Vol. 1 at 79-85, and then an
amended version of that document, see id. at 86-92. In neither of these
documents did it raise the contract-versus-unjust-enrichment argument it now
presents. It did assert, in its proposed conclusions of law, that “[t]he doctrine of
unjust enrichment does not apply because there are/were adequate remedies of law
and one cannot claim equity when there were other causes of action that accrued
and expired through the operation of the statute of limitations and through one’s
failure to assert.” Id. at 84, 91. Even were we to consider these documents, our
conclusion would remain the same.

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 We thus conclude that GOA did not adequately raise in the district court the

legal issue of the effect of Garcia’s failure to assert a breach-of-contract claim on

his ability to recover damages related to rents due in 1987. See Bancamerica

Commercial Corp. v. Mosher Steel of Kan., Inc. , 100 F.3d 792, 798-99 (10th Cir.)

(declining to address issue on appeal presented only in vague, ambiguous way in

district court), modified on other grounds , 103 F.3d 80 (10th Cir. 1996). Though

we have discretion to consider issues on appeal that were not raised in the district

court if “proper resolution is beyond doubt or injustice might otherwise result,”

Sac & Fox Nation , 213 F.3d at 575, neither of these reasons encourages us to

exercise that discretion here.

GOA is correct that Garcia asserted only an unjust enrichment claim. But

New Mexico law does not strictly enforce the general rule on which GOA’s

argument is based, that is, that “one could not sue on a contract and recover on

quantum meruit,” New Mexico ex rel. Gary v. Fireman’s Fund Indem. Co. , 355

P.2d 291, 294-95 (N.M. 1960) (relaxing “strict rule” with respect to pleading

requirements). In a situation somewhat analogous to this one, the court permitted

a plaintiff’s recovery under an unjust enrichment theory despite the existence of

an express contract because “his adversary litigate[d] the issue with him on the

basis of quantum meruit.” Harbison v. Clark , 284 P.2d 219, 222 (N.M. 1955).

Moreover, GOA can hardly claim injustice from the failure to apply the rule,

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since Garcia’s recovery would be the same under either theory. See United States

v. Applied Pharmacy Consultants, Inc. , 182 F.3d 603, 609 (8th Cir. 1999)

(holding in rejecting similar argument for application of “wooden” rule that

“[t]here is no inconsistency whatsoever, in terms of substance, between the

plaintiff’s recovery on a theory of unjust enrichment and what it would have

recovered had the contract theory been pursued”). 9

Turning to GOA’s second argument, that the evidence does not support the

district court’s finding that it did not make the 1987 payment to either Garcia or

the IRS, we review the district court’s factual findings for clear error, giving due

regard to its opportunity to judge the credibility of witnesses. See Salve Regina

College , 499 U.S. at 233 (citing Fed. R. App. P. 52(a)). GOA’s general manager

Zanotti initially stated at trial that he knew GOA did not make the 1987 payments

to Garcia but could not recall whether the payments were made to the IRS. See

GOA’s App. Vol. 2 at 187-88. However, he subsequently testified regarding

these payments as follows:

Q. You made a determination, a willful determination, not to pay
Mr. Garcia the annual rent for those two leases?

9
Even GOA, in its argument regarding the appropriate statute of limitations,
admitted that “[w]hile Garcia labeled his claim as one for ‘unjust enrichment,’” it
is essentially based on “an implied-in-law contract or an implied duty to pay
based upon Gaechter’s continued use of the billboards.” GOA’s Opening Br. at
20-21.

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 A. That’s correct.

Q. And you also made a determination that you had no
obligation to pay the United States government that
money?

A. If you want to call it a determination? I made the
decision, yes.

Q. It wasn’t something that you just forgot to do, it was
something that you actually decided to do?

A. That’s correct.

Id. at 188-89. The court’s finding that GOA did not make the 1987 payments is

not clearly erroneous.

C. 1995 Payment during Redemption Period

GOA next challenges the district court’s determination that Garcia was

entitled to payment for the period between the GOA’s purchase of the property at

the tax sale (June 7, 1995) and the expiration of Garcia’s redemption period 180

days later (December 4, 1995). GOA contends that its purchase of the property at

the tax sale gave it conditional ownership of the property, and that it was entitled

to any income generated by the property during the redemption period. We

conclude the district court correctly found Garcia entitled to payment for this

period.

When the government sells seized property under 26 U.S.C. § 6335, it

provides the purchaser with a certificate of sale. See § 6338(a). “In the case of

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real property, such certificate shall set forth the real property purchased, for

whose taxes the same was sold, the name of the purchaser, and the price paid

therefor.” Id. For real property, the tax sale purchaser can exchange the

certificate of sale for a deed to the property after the 180-day statutory

redemption period has expired. See § 6338(b). Section 6339(b)(2) provides that

the “deed shall be considered and operate as a conveyance of all the right, title,

and interest the party delinquent had in and to the real property thus sold at the

time the lien of the United States attached thereto.” Thus, in Babb v. Frank , 947

F. Supp. 405, 407-09 (W.D. Wisc. 1996), the court rejected arguments, similar to

those made by GOA, that the delinquent taxpayer’s ownership rights in the

property transferred to the purchaser at the tax sale, or even to the government at

the time of levy. Instead, it held that under the plain language of § 6339(b)(2),

“[t]he tax sale purchaser does not receive the delinquent taxpayer’s right, title and

interest to the property until he obtains the deed.” Id. at 407. The district court

here relied on Babb in holding that Garcia was entitled to payment for the

redemption period.

While GOA criticizes Babb for not having “thought through” the

implications of its holding, GOA does not argue that Babb ’s statutory analysis is

incorrect. GOA cites two cases it claims indicates that the tax sale conditionally

transferred title to it and gave it the right of possession. One, United States v.

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Whiting Pools, Inc. , 462 U.S. 198, 211 (1983), involved personal property, which

is governed by different rules from real property. See § 6339(a)(2) (certificate of

sale transfers taxpayer’s right, title and interest in personal property). GOA’s

other case, Roig Commercial Bank v. Dueno , 617 F. Supp. 913, 915 (D. P.R.

1985), is either simply incorrect or, as Babb indicates, based on superceded law,

see Babb , 947 F. Supp. at 408-09. 10

We are more concerned with a case GOA did not cite but should have,

since it is on point and would lead to the result GOA wants. In United Bank of

Denver National Ass’n v. Ferris , 847 P.2d 146, 149-50 (Colo. Ct. App. 1992), the

Colorado Court of Appeals held that state law governs the determination of who

is entitled to income on property during § 6337(b)’s redemption period. In so

holding, the court relied on a case from this court, Crow v. Wyoming Timber

Products Co. , 424 F.2d 93 (10th Cir. 1970), to say that “the state court has

jurisdiction to determine, in accordance with state law, the rights to and arising

from a parcel of real estate redeemed under § 6337(b).” United Bank , 847 P.2d at

149. Though under Colorado law, the redeeming owner is entitled to income from

10
Doig stated that “[a] tax-sale certificate transfers title to the purchaser from
the moment of the sale,” citing S.R.A. v. Minnesota , 327 U.S. 558, 567 (1946),
which in turn relied on Van Brocklin v. Tennessee , 117 U.S. 151, 179 (1886).
Doig , 617 F. Supp. at 915. Section 6339(b)(2), stating that the deed obtained in
exchange for the certificate of sale transfers title, was part of the Internal
Revenue Code of 1954.

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the property during the redemption period, see id. at 150, the opposite result

would obtain under New Mexico law, see N.M. Stat. Ann. 39-5-22 (Michie 1991);

Western Bank v. Malooly , 895 P.2d 265, 273 (N.M. Ct. App. 1995). The question

now becomes whether state law governs this issue.

With all due respect to the Colorado court, we believe it read too much into

Crow . There, we held that state law “rather than federal law determines the

nature and extent of the taxpayer’s interest in property to which a federal tax lien

can attach.” Crow , 424 F.2d at 96. The fact that state law governs a taxpayer’s

substantive property rights does not mean that state law dictates when those rights

are transferred to a purchaser under federal procedures governing tax sales, or

more specifically, what the legal effect is of a certificate of sale issued pursuant

to § 6338 of the Internal Revenue Code.

We admit to being surprised at the absence of case law answering the latter

question. State law gives differing effects to analogous sales. See 4 Richard R.

Powell, Powell on Real Property § 37.46 (Rev. ed. 1997); 30 Am. Jur. 2d

Executions and Enforcement of Judgments § 562, 580 (1994). But we see no

reason to apply state law because we conclude the applicable federal statutes

answer the question. We hold that a certificate of sale for real property gives the

purchaser only the right to receive either the redemption price, see § 6337(b), or a

deed, see § 6338(b), and that only on receipt of the deed does the purchaser obtain

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the taxpayer’s right, title and interest in the property, see § 6339(b). Cf.

Sari-Tech Enters., Ltd. v. Nassau County , 310 N.Y.S. 2d 107, 109 (N.Y. Sup. Ct.

1970) (“[U]ntil the deed is received [under § 6339(b)], a purchaser at the tax sale

has no cognizable interest in the real property, but possesses merely a chose in

action.”). We thus conclude that the district court correctly found Garcia entitled

to the lease payments for the period of redemption.

D. Prejudgment interest

GOA contends that the district court erred in awarding Garcia prejudgment

interest of fifteen percent pursuant to N.M. Stat. Ann. § 56-8-3(B) (Michie 1996),

which provides for a maximum of fifteen percent interest “on money received to

the use of another and retained without the owner’s consent expressed or

implied.” The award of prejudgment interest is a matter of state law. See

Chesapeake Operating, Inc. v. Valence Operating Co. , 193 F.3d 1153, 1156 (10th

Cir. 1999). Under New Mexico law, the award of prejudgment interest is a

matter of right, subject to equitable considerations, when the amount due is fixed

and ascertainable, and a matter of the court’s discretion when it is not. See

Taylor v. Allegretto , 879 P.2d 86, 89 (N.M. 1994); Sunwest Bank of Albuquerque,

N.A. v. Colucci , 872 P.2d 346, 350-51 (N.M. 1994). Finding the amount due here

fixed and ascertainable and no countervailing equities, the district court

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determined that Garcia was entitled to prejudgment interest as a matter of right.

See GOA’s App. Vol. 1 at 126-27.

GOA first contends that the judgment Garcia obtained does not qualify him

for prejudgment interest under the statute because his claim was for GOA’s

failure to pay the IRS, not himself. The district court found this argument

“disingenuous, at best.” Id. at 126. We need say only that it is clearly without

merit. Prejudgment interest under § 56-8-3(B) “constitutes an obligation to pay

damages to compensate a claimant for the lost opportunity to use money owed the

claimant and retained by the obligor between the time the claimant’s claim

accrues and the time of judgment (the loss of earning power of the claimant’s

funds).” Sunwest Bank , 872 P.2d at 350. As the court explained in Taylor , a

judgment based on unjust enrichment or quantum meruit is a valid basis for an

award of prejudgment interest under § 56-8-3(B):

[W]hen a person is found to be liable in quantum meruit the
factfinder has made, in essence, a determination that the person has
received the benefit of money expended, or services or material
provided, by another, and has not paid over that money (or the value
of the services or materials) to the person entitled to reimbursement.
Thus the person has retained the money due and has deprived the
claimant of the opportunity to use the money.

879 P.2d at 89. The district court’s decision was based on its conclusion that

GOA owed money to Garcia that, due to the tax liens, was payable to the IRS. As

the district court explained, Garcia “lost the opportunity of the benefit of having

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these monies timely credited toward the taxes he owed IRS,” Appellant’s App.

Vol. 1 at 126, and thus fell within the purview of the statute. We agree with the

court’s analysis. To the extent GOA contends the court erred because Garcia’s

pleading did not seek prejudgment interest, we note that such specific pleading is

not required. See Taylor , 879 P.2d at 88.

GOA also contends that it was inequitable for the court to award

prejudgment interest sua sponte. GOA was able to address this issue in a

postjudgment motion, and the court considered its arguments. We see no abuse of

discretion in the court’s award of prejudgment interest. See Chesapeake

Operating , 193 F.3d at 1156.

E. Postjudgment interest

The district court computed postjudgment interest pursuant to

N.M. Stat. Ann. § 56-8-4(A) (Michie 1996). GOA contends the district court

erred by awarding postjudgment interest pursuant to state law rather than federal

law. We agree. See Adams-Arapahoe Joint Sch. Dist. No. 28-J v. Continental

Ins. Co. , 891 F.2d 772, 780 (10th Cir. 1989). We therefore vacate the court’s

award of postjudgment interest, and remand for a redetermination pursuant to 28

U.S.C. § 1961.

II. Garcia’s Cross-Appeal

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 Garcia appeals from the district court’s determination, on GOA’s motion

for summary judgment, that Garcia failed to redeem the property in accordance

with 26 U.S.C. § 6337, and that GOA was therefore entitled to the deed to the

property at the end of the redemption period. We review the district court’s grant

of summary judgment de novo, applying the same standards the district court did

under Fed. R. Civ. P. 56. See McKnight v. Kimberly Clark Corp. , 149 F.3d 1125,

1128 (10th Cir. 1998). “Summary judgment is appropriate ‘if the pleadings,

depositions, answers to interrogatories, and admissions on file, together with the

affidavits, if any, show that there is no genuine issue as to any material fact and

that the moving party is entitled to a judgment as a matter of law.’” Id. (quoting

Rule 56(c)).

Section 6337(b)(2) provides that real property sold pursuant to § 6335 may

be redeemed by the original owner, or certain others,

upon payment to the purchaser, or in the case he cannot be found in
the county in which the property to be redeemed is situated, then to
the Secretary, for the use of the purchaser . . . , the amount paid by
such purchaser and interest thereon at the rate of 20 percent per
annum.

The property is located in Albuquerque, which is in Bernalillo County. The

certificate of sale listed the purchaser as “Gaechter Outdoor Advertising, Inc.”

and its address as “P.O. Box 13059, Albuquerque, NM 87192.” GOA’s Suppl.

App. at 25. In response to GOA’s requests for admissions and in its opposition to

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GOA’s summary judgment motion, Garcia admitted that in 1995, GOA’s

“business office was located in Bernalillo County at 3540 Pan American Freeway

NE, Albuquerque, New Mexico 87110,” and that GOA’s registered agent’s office

was also located in Albuquerque. See id. at 1; Appellant’s App. Vol. 1 at 33; id.

Vol. 2 at 147, 149. In attempting to redeem the property, Garcia paid the

apparently correct amount to the Secretary, through the local IRS office, several

days prior to the end of the redemption period. It did not pay GOA, though it

notified GOA by fax that it had paid the IRS. The district court determined that

because GOA could be “found” at the post office box listed on the certificate of

sale, Garcia was required to make his redemption payment to GOA at that

address. It concluded that Garcia’s payment to the IRS was therefore ineffective

to redeem the property.

On appeal, Garcia contends that the district court was wrong in holding that

he was required to send his payment to GOA’s post office box. He concedes,

however, that this issue is not dispositive because the question remains “whether

the district court’s decision was nonetheless correct, albeit for the wrong reasons.

Thus, this Court must decide whether Gaechter could have been ‘found’ in

Bernalillo County for purposes of paying the redemption funds.” Garcia’s Br. at

27. He contends that there was some question as to GOA’s legal status and

address and that GOA failed to respond to his counsel’s telephone calls seeking to

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clarify this information. Relying on Guthrie v. Curnutt , 417 F.2d 764 (10th Cir.

1969), Garcia argues that GOA’s purposeful refusal to return his telephone calls

frustrated his efforts to “find” GOA in the county, and therefore relieved him of

his obligation to pay GOA. See id. at 766 (holding that where purchaser

purposefully avoided owner in effort to prevent redemption, purchaser would be

considered “not found” in county where property was situated).

We begin our analysis by first noting that none of the authority Garcia

cites, see Fitshugh v. Ryles , 517 F. Supp. 1361 (E.D. Ark. 1981); Silver Bell

Indus., Inc. v. United States , No. C-4168, 1974 WL 653 ( D. Colo. July 25, 1974),

supports his contention that a purchaser cannot be “found” under § 6337(b) at a

post office box address. While we have no reason to disagree with the district

court’s conclusion regarding this matter, we note we have not located authority

one way or the other. In any event, we need not address the issue since Garcia

concedes it is not dispositive of the appeal. See Perry v. Woodward , 199 F.3d

1126, 1141 n.13 (10th Cir. 1999) (court of appeals may affirm district court’s

ruling for any reason supported by record).

The dispositive issue is whether GOA could be found in Bernalillo County.

However, we also need not address Garcia’s argument based on Guthrie that GOA

should not be considered “found” in Bernalillo County because of its purposeful

acts to frustrate his effort to verify its status and address. He failed to make this

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argument in the district court. See Sac & Fox Nation , 213 F.3d at 575. In the

district court, Garcia argued that because his counsel was uncertain as to GOA’s

proper legal status and address, it was reasonable for him to “constructively pay”

GOA by making the redemption payment to the IRS. GOA’s App. Vol.1 at 38-42,

id. Vol. 2 at 147-58. Even were we to consider his appellate argument as

pursuing this contention, we would find it unpersuasive. As noted above, Garcia

admitted that GOA could be found at a Bernalillo County address. There being

no disputed issue of fact regarding this issue, we conclude the district court

correctly granted summary judgment to GOA on the redemption issue.

The judgment of the district court is AFFIRMED in part and REVERSED

in part, and the case is REMANDED to the district court for further proceedings

consistent with this order and judgment.

Entered for the Court

David Ebel
Circuit Judge

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