Boydston v. New Mexico Taxation ( 1997 )

F I L E D
United States Court of Appeals
Tenth Circuit
UNITED STATES COURT OF APPEALS
OCT 3 1997
FOR THE TENTH CIRCUIT
PATRICK FISHER
Clerk
ROGER D. BOYDSTON and SANDIE
J. BOYDSTON, doing business as JTB
Title and Registration Services,
formerly known as JTB Auto Sales,
No. 96-2234
Plaintiffs-Appellants, (D.C. No. CIV 96-1118-M)
v. (D. N.M.)
NEW MEXICO TAXATION AND
REVENUE DEPARTMENT; MOTOR
VEHICLE DIVISION; JOHN J.
CHAVEZ, in his individual capacity
and official capacity as Secretary of
New Mexico Taxation and Revenue
Department; GARY A. MONTOYA,
in his individual capacity and official
capacity as Director of the Motor
Vehicle Division of the New Mexico
Taxation and Revenue Department;
CHARLES DANIELS, in his
individual capacity and official
capacity as Senior Investigator of
the Motor Vehicle Division of the
New Mexico Taxation and Revenue
Department,
Defendants-Appellees.
ORDER AND JUDGMENT *
*
This order and judgment is not binding precedent, except under the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.
Before ANDERSON, BARRETT, and MURPHY, Circuit Judges.
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. 34.1.9. The case is therefore
ordered submitted without oral argument.
Plaintiffs appeal the district court’s entry of summary judgment in
defendants’ favor on their claims that defendants violated their federal and state
rights when terminating their employment by the State of New Mexico.
We affirm.
Plaintiffs entered into two written contracts, the “agent contract” and the
“inspector contract,” with the Director of the New Mexico Motor Vehicle
Division of the Taxation and Revenue Department, whereby they were authorized
to perform specified services relative to motor vehicle registration, licensing,
and inspection. A third contract, the “data access agreement,” granted plaintiffs
access to computerized motor vehicle records to carry out their duties under the
other two contracts. Following an investigation of plaintiffs’ allegedly improper
automobile licensing practices, defendants notified plaintiffs on July 24, 1995,
that the agent contract and inspector contract were terminated. Defendants also
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informed the computer database operator not to permit plaintiffs to use the
database. A few days later, following plaintiffs’ application for a temporary
restraining order, the parties stipulated to continue all three contracts.
Consequently, plaintiffs continued to operate their business under the same terms
as those provided in the contracts until the district court entered summary
judgment for defendants on August 25, 1996.
On appeal, plaintiffs assert that the district court erred in (1) denying their
constitutional due process claims on the grounds that they did not have a property
interest or a liberty interest in continuing the contractual relationship with
defendants; (2) holding that defendants did not breach the contracts; and
(3) finding that sovereign immunity was not waived under the New Mexico Tort
Claims Act. Plaintiffs also claim that they are entitled to declaratory relief.
Defendants request an award of attorneys’ fees on appeal.
We review de novo the district court’s decision to grant summary judgment
pursuant to Fed. R. Civ. P. 56(c). See Watson v. University of Utah Med. Ctr.,
75 F.3d 569, 574 (10th Cir. 1996). We consider the record in the light most
favorable to the party opposing summary judgment. See id. Summary judgment
is appropriate where there are no genuinely disputed issues of material fact and
one party is entitled to judgment as a matter of law. See id.Constitutional Property and Liberty Interests
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We first address plaintiffs’ claim that they had a protected property interest
in their continued contractual employment relationship with defendants, entitling
them to substantive and procedural due process protections. The Fourteenth
Amendment safeguards interests that a person has acquired in specific benefits as
defined by state law. See Board of Regents v. Roth, 408 U.S. 564, 576-77 (1972).
To have a property interest in continued employment, a person must have
“a legitimate claim of entitlement to it.” Id. at 577; accord Russillo v.
Scarborough, 935 F.2d 1167, 1170 (10th Cir. 1991) (“Under New Mexico law,
a public employee has a protected property interest only if he has an express or
implied right to continued employment.”).
Plaintiffs argue that they were entitled to continue to work pursuant to the
contracts unless the contracts were terminated for good cause. They allege
defendants terminated the contracts without cause, thereby implicating plaintiffs’
due process rights.
Plaintiffs rely on language in the contracts and N.M. Stat. Ann. § 66-2-14,
which states that “[t]he [Motor Vehicle Division of Taxation and Revenue
Department] may terminate the designation of any agent for failure of the agent to
perform to the secretary’s satisfaction the agent’s duties by notifying the agent of
the termination.” The agent contract provides that “[e]ither party hereto may
terminate this agreement at any time, with or without cause, by giving thirty (30)
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days written notice to the other party.” Appellants’ App. at 146. It is undisputed
that defendants gave thirty days’ written notice of cancellation of the agent
contract.
The inspector contract states, “Inspector Agent [plaintiffs] may terminate
this agreement at any time, with or without cause, by giving 30 day[s’] notice to
the Division. The Division may terminate without notice.” Id. at 261. Plaintiffs
argue that the inspector contract permits only them, not defendants, to terminate
“with or without cause,” thereby requiring cause for defendants to terminate it.
We reject such a tortured interpretation, and conclude that the defendants were
not required to show cause for terminating the inspector contract.
The data access agreement provides for cancellation in the event of a
breach for good cause shown. See id. at 165-68. Construing the contracts
together, as plaintiffs request, we recognize that the purpose of the data access
agreement was to implement the other two contracts. Therefore, when the agent
contract and the inspector contract were canceled, it was appropriate to deny
plaintiffs access to the computer data.
We construe the contracts according to their terms, and conclude that the
Division was not required to show cause to terminate the contracts.
Consequently, plaintiffs do not have a constitutional property interest in their
continued contractual employment relationship with defendants.
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We next consider plaintiffs’ claim that the defendants deprived them of
their liberty interest without due process of law. They allege that defendants
damaged their reputation when they falsely stated that they forged documents
and submitted false information to the Motor Vehicle Division.
“When a public employer takes action to terminate an employee based upon
a public statement of unfounded charges of dishonesty or immorality that might
seriously damage the employee’s standing or associations in the community and
foreclose the employee’s freedom to take advantage of future employment
opportunities, a claim for relief is created.” Melton v. City of Okla. City,
928 F.2d 920, 927 (10th Cir. 1991) (en banc). To support the cause of action,
the statements “must impugn the good name, reputation, honor, or integrity of
the employee,” and they must be false. Workman v. Jordan, 32 F.3d 475, 481
(10th Cir. 1994). The statements must also be made during the procedure to
terminate the employee or must foreclose other opportunities for employment.
See id. In addition, the statements must be published. See id.Plaintiffs assert that defendants published false and defamatory statements
when they informed members of the public that plaintiffs had forged official
documents. To support their position, plaintiffs rely on their own statements of
what others told them. That evidence is insufficient because “hearsay testimony
that would be inadmissible at trial may not be included in an affidavit to defeat
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summary judgment.” Thomas v. International Bus. Mach., 48 F.3d 478, 485
(10th Cir. 1995). To the extent plaintiffs rely on defendants’ directive to the
computer database operator to deny them access to the computer database,
plaintiffs do not identify any false statement made to him. Plaintiffs also suggest
that the Motor Vehicle Division file containing false charges against them may be
available to the public. Those claims are too speculative to resist summary
judgment. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249-50 (1986)
(evidence that is “merely colorable” or “not significantly probative” will not
prevent summary judgment). Accordingly, we hold that plaintiffs’ failure to
establish the necessary element of publication forecloses their liberty interest
claim.
Because we conclude plaintiffs failed to establish a property or liberty
interest, we need not address whether defendants were entitled to qualified
immunity. See Harlow v. Fitzgerald, 457 U.S. 800, 818 (1982) (in qualified
immunity inquiry, plaintiff must demonstrate that government official violated a
clearly established constitutional right of which a reasonable person would have
known).
State Law Claims - Breach of Contract and Tort
Plaintiffs assert that defendants breached the contracts when they
terminated them without cause. For the reasons stated above in the discussion of
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plaintiffs’ property interest claim, we conclude that defendants were not required
to have cause to terminate the contracts. Therefore, the district court correctly
granted summary judgment on the breach of contract claim. 1
Plaintiffs also argue that defendant Daniels, the Motor Vehicle Division
official who investigated plaintiffs’ participation in forging an automobile title,
is liable in tort. Generally, a public employee acting within the scope of his
duties is granted immunity from tort liability. See N.M. Stat. Ann. § 41-4-4(A).
N.M. Stat. Ann. § 41-4-12 permits suit against a “law enforcement officer,”
as defined by N.M. Stat. Ann. § 41-4-3(D) (principal duties include “to hold in
custody any person accused of a criminal offense, to maintain public order or to
make arrests for crimes”). N.M. Stat. Ann. § 66-2-12(A)(1)-(2) provides that
officers designated by the Director of the Motor Vehicle Division have the power
to act as “peace officers for the purpose of enforcing the provisions of the [code
and] to make arrests upon view and without warrant for any violation [of the
code].” Therefore, plaintiffs argue, defendant Daniels falls within the definition
of a “law enforcement officer” whose immunity from suit is waived under the
Tort Claims Act.
1
Plaintiffs’ declaratory judgment claim is moot in light of the construction
of the contracts determining that they did not have a constitutional property
interest and that the contracts could be terminated without cause.
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In his deposition, defendant Daniels stated that his duty was to investigate.
Plaintiffs did not rebut that deposition. Accordingly, we conclude that defendant
Daniels was not acting as a full-time law enforcement officer, as contemplated
by section 41-4-3(D), and his immunity from suit was not waived. See Dunn v.
New Mexico ex rel. Taxation & Revenue Dep’t, 859 P.2d 469, 472 (N.M. Ct.
App. 1993).
Defendants’ Request for Attorneys’ Fees on Appeal
Defendants have requested an award of costs and attorneys’ fees on appeal,
pursuant to 42 U.S.C. § 1988, which permits such an award to the prevailing
party. Defendants have proffered no reason for this court to exercise its
discretion to award attorneys’ fees on appeal to defendants. See Hoyt v. Robson
Companies, Inc., 11 F.3d 983, 985 (10th Cir. 1993) (“‘prevailing party’ is not
automatically entitled to an award of appeal-related attorneys’ fees;” appellate
court exercises discretion in awarding attorneys’ fees on appeal). The request for
attorneys’ fees is DENIED. With respect to costs on appeal, defendants may file
with the clerk of this court a bill of costs in accordance with the rules. An award
will be considered based on that bill and any objections by the plaintiffs thereto.
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The judgment of the United States District Court for the District of New
Mexico is AFFIRMED.
Entered for the Court
Michael R. Murphy
Circuit Judge
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