Avalos v. Board of Regents ( 2017 )

1 IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO
2 Opinion Number: ___________
3 Filing Date: July 26, 2017
4 NO. 35,251
5 AMY AVALOS, CHELSIE CARTER,
6 SHELBY HUGHES, MARCELLA MADRID,
7 MARGARITA MELENDEZ, FRANCINE
8 SIMMS, JEAN SMITH, and ANGELA
9 CAVENDER, on behalf of themselves and all
10 others similarly situated,
11 Plaintiffs-Appellees,
12 v.
13 THE BOARD OF REGENTS OF NEW MEXICO
14 STATE UNIVERSITY, in its capacity as the body
15 politic for NEW MEXICO STATE UNIVERSITY
16 and DOÑA ANA COMMUNITY COLLEGE,
17 Defendant-Appellant.
18 APPEAL FROM THE DISTRICT COURT OF DOÑA ANA COUNTY
19 Jerry H. Ritter Jr., District Judge
20 Treinen Law Office PC
21 Rob Treinen
22 Albuquerque, NM
23 Almanzar & Youngers PA
24 Joleen K. Youngers
25 Las Cruces, NM
1 The Pickett Law Firm LLC
2 Lawrence M. Pickett
3 Las Cruces, NM
4 for Appellees
5 Miller Stratvert P.A.
6 Cody R. Rogers
7 Luke A. Salganek
8 Las Cruces, NM
9 for Appellant
1 OPINION
2 SUTIN, Judge.
3 {1} Plaintiffs are a group of former students who were enrolled in Doña Ana
4 Community College’s associate’s degree nursing program (the program) in 2012.
5 When Plaintiffs enrolled in the program, written documents provided by the Doña
6 Ana Community College stated that the program was nationally accredited by, among
7 others, the National League of Nursing Accrediting Commission (the Commission).
8 Before the students completed their studies, the Doña Ana Community College lost
9 its Commission accreditation and Plaintiffs sued. They brought an action that
10 included a claim for breach of contract against the Board of Regents of New Mexico
11 State University in its capacity as the body politic for the university and Doña Ana
12 Community College (collectively, Defendant).1 Defendant sought summary judgment
13 as to Plaintiffs’ breach of contract claim, arguing that it was immune under NMSA
14 1978, Section 37-1-23(A) (1976), because Plaintiffs’ claim was not based on a “valid
15 written contract.” The district court denied Defendant’s motion for summary
16 judgment, Defendant filed a petition for writ of error, and this Court granted the
17 petition to review Defendant’s immunity claim. See Handmaker v. Henney, 1999-
1
18 Plaintiffs also filed claims for breach of the covenant of good faith and fair
19 dealing, promissory estoppel, and declaratory and injunctive relief. Those claims were
20 voluntarily abandoned and are not before us.
1 NMSC-043, ¶¶ 14-15, 128 N.M. 328, 992 P.2d 879 (stating that determinations of
2 immunity under Section 37-1-23(A) can, in general, be reviewed by writ of error). We
3 hold that the written documents regarding accreditation relied upon by Plaintiffs do
4 not constitute a valid written contract under Section 37-1-23(A).
5 DISCUSSION
6 {2} Plaintiffs’ breach of contract claim alleged that “[a] written agreement existed
7 between Plaintiffs . . . and [Defendant] . . . whereby [Defendant] agreed that it would
8 provide a nationally accredited education in nursing in exchange for [Plaintiffs’]
9 enrollment and tuition.” Plaintiffs asserted that they entered into a valid written
10 contract with Defendant for a nationally accredited nursing program as evidenced by
11 (1) the offer letter that they received from Defendant that offered admission to the
12 program and required a written response accepting or declining a position in the
13 program; (2) a student handbook that included a statement that information about
14 accreditation of the program could be obtained from the Commission and included
15 a ledger that stated, in relevant part, that the program was accredited by the
16 Commission; and (3) a student handbook acknowledgment form that Plaintiffs were
17 required to sign.
18 {3} Section 37-1-23(A) states that “[g]overnmental entities are granted immunity
19 from actions based on contract, except actions based on a valid written contract.”
2
1 Underlying the Section 37-1-23(A) grant of immunity is an overarching policy to
2 “protect the public purse” by requiring that “parties seeking recovery from the state
3 for benefits conferred on it have valid written contracts[.]” Hydro Conduit Corp. v.
4 Kemble, 1990-NMSC-061, ¶ 23, 110 N.M. 173, 793 P.2d 855 (internal quotation
5 marks omitted). This Court has determined that “[b]y limiting lawsuits to valid
6 written contracts, the [L]egislature placed the risk of loss on a party who transacts
7 business with a governmental entity without a valid written contract.” Campos de
8 Suenos, Ltd. v. Cty. of Bernalillo, 2001-NMCA-043, ¶ 14, 130 N.M. 563, 28 P.3d
9 1104. Our standard of review is de novo. See Univ. of N.M. Police Officer’s Ass’n v.
10 Univ. of N.M., 2005-NMSC-030, ¶ 8, 138 N.M. 360, 120 P.3d 442; see also
11 Ruegsegger v. Bd. of Regents of W. N.M. Univ., 2007-NMCA-030, ¶ 22, 141 N.M.
12 306, 154 P.3d 681 (“We apply a de novo review to the application of Section 37-1-
13 23(A) to the facts[.]”).
14 {4} The parties discuss several cases in which our appellate courts have considered
15 the application of Section 37-1-23(A). We discuss these cases for legal background
16 relating to the issue at hand.
17 {5} In Garcia v. Middle Rio Grande Conservancy District, 1996-NMSC-029, 121
18 N.M. 728, 918 P.2d 7, our Supreme Court considered whether a personnel policy that
19 set forth “certain rights, expectations, obligations, and other promises between the
3
1 [employer] and its employees” constituted a valid written contract such that the
2 plaintiff’s governmental employer could be held liable for breach of an employment
3 contract. Id. ¶¶ 1, 3. The plaintiff sued for breach of an employment contract after he
4 was demoted, which resulted in a reduction in pay. Id. ¶¶ 1-2. In analyzing the case,
5 our Supreme Court first noted that although an employment contract for an indefinite
6 period of time is terminable at will, New Mexico recognizes implied contracts as an
7 exception to the at-will rule. Id. ¶ 10. The Court determined that the employer’s
8 personnel policy contained “provisions relating to most every aspect of an
9 employment relationship, including job description, compensation (including salary
10 on promotion, demotion, or transfer), overtime, compensatory time, time clock
11 violations, tardiness, sick leave and annual leave, and holidays.” Id. ¶ 12. And the
12 Court recognized that the policy was part of an implied employment contract because
13 “it controlled the employer-employee relationship and [the plaintiff] could reasonably
14 expect [the] employer to conform to the procedures it outline[d].” Id. ¶¶ 11-13
15 (internal quotation marks and citation omitted). The Court then held that, under the
16 particular facts of Garcia, the implied employment contract, which was based on
17 terms set forth in a personnel policy, constituted a “valid written contract[,]” and thus
18 immunity was waived for such claims under Section 37-1-23(A). Garcia, 1996-
19 NMSC-029, ¶¶ 14, 20 (internal quotation marks omitted).
4
1 {6} In Espinoza v. Town of Taos, 1995-NMSC-070, ¶ 1, 120 N.M. 680, 905 P.2d
2 718, the plaintiffs sued the defendant for breach of contract after the plaintiffs’ child
3 was injured at the defendant’s day camp. Our Supreme Court considered whether the
4 breach of contract claim based on the plaintiffs’ written application to the day camp
5 was a valid written contract that waived governmental immunity under Section 37-1-
6 23(A). Espinoza, 1995-NMSC-070, ¶¶ 1, 15. Ultimately, the Court rejected the claim,
7 stating that the town “did not undertake a contractual obligation for liability in the
8 event of injury to a child attending its . . . day camp[,]” and “[a]t most, the terms of
9 the application merely ensured that space would be provided in the day camp program
10 for children who registered and paid the applicable fee.” Id. ¶ 15.
11 {7} In Ruegsegger, 2007-NMCA-030, ¶¶ 4, 17, 21-22, this Court considered
12 whether athletic scholarship agreements and a student handbook created a valid
13 written contract under Section 37-1-23(A) between the defendants and the plaintiff.
14 In Ruegsegger, the plaintiff filed a breach of contract claim against the defendants
15 after she was allegedly raped by two school-affiliated athletes. 2007-NMCA-030, ¶ 2.
16 According to the plaintiff, the defendants “breached their contractual obligations by
17 deliberately failing to follow . . . policies and procedures in investigating the sexual
18 attack, failing to provide a school free from harassment and hostility, and failing to
19 provide reasonable support for [the plaintiff] following the assault.” Id. The plaintiff
5
1 was a student athlete and claimed that her athletic scholarship agreements constituted
2 an enforceable, written contract and that she had an implied contract based on the
3 student handbook. Id. ¶ 4. Specifically, the plaintiff highlighted the defendants’
4 failure to assemble a crisis intervention team as required by the student handbook and
5 alleged that the defendants subjected the plaintiff “to humiliation and unfair treatment
6 by deliberately failing to follow . . . policies and procedures after the rape” and failed
7 to “provide reasonable support following the assault.” Id. ¶ 14 (internal quotation
8 marks omitted).
9 {8} In Ruegsegger, this Court first analyzed the scholarship agreements and held
10 that the scholarship agreements required the plaintiff to maintain acceptable academic
11 performance, play basketball, and comply with university regulations, and in
12 exchange, the university was obligated to provide the plaintiff with scholarship
13 assistance for her education. Id. ¶ 19. According to this Court, the scholarship
14 agreements made “no reference to any duty on the part of [the university] to comply
15 with any . . . regulations or to investigate claims of harassment, sexual assaults, or any
16 other misbehavior by other students[,]” and thus, the agreements could not form the
17 basis for the plaintiff’s breach of contract claim. Id. ¶¶ 18-20.
18 {9} The Ruegsegger Court next analyzed the provisions in the student handbook
19 to determine whether there was a claim for breach of implied contract. Id. ¶¶ 21-37.
6
1 In analyzing the handbook, this Court assumed without deciding that Section 37-1-
2 23(A) did not bar the plaintiff’s claim and ultimately held that the plaintiff “failed to
3 state a valid claim for breach of contract based upon the language of the [s]tudent
4 [h]andbook.” Ruegsegger, 2007-NMCA-030, ¶ 22. We noted that “[t]o establish a
5 claim for breach of implied contract based upon the terms of the [s]tudent
6 [h]andbook, [the p]laintiff was required to demonstrate that those terms created a
7 reasonable expectation of contractual rights. The reasonableness of the [plaintiff’s]
8 expectation is measured by the definiteness, specificity, or explicit nature of the
9 representation at issue.” Id. ¶ 24 (citation omitted).
10 {10} The handbook in Ruegsegger contained:
11 (1) a student code of conduct and sanctions that [could] be imposed
12 against a student who violate[d] the code, (2) a description of academic
13 standards and procedures that [would] be used when considering the
14 imposition of sanctions for poor academic performance and appeal of
15 those sanctions, (3) a provision for a disciplinary committee that [would]
16 hear[] cases involving student discipline without specifying the type of
17 hearings that should be conducted except to recognize a student’s right
18 to due process, (4) a drug and alcohol policy with specified procedures
19 for any student who violate[d] the policy, and (5) a general
20 nondiscrimination policy.
21 Id. ¶ 25. It also contained a section regarding the student appeals committee, a sexual
22 harassment policy, and a section titled “response to an alleged sexual assault,” which
23 outlined a procedure for the university regarding its response to sexual assault
24 allegations. Id. ¶¶ 26-28.
7
1 {11} The Ruegsegger Court held that the provisions in the handbook did not
2 contractually guarantee rights to specific types of investigations, support, and
3 sanctions in the event of a sexual assault, but rather provided guidelines. Id. ¶¶ 30,
4 33. The Court acknowledged that the plaintiff had cited to a number of cases in which
5 courts across the country have held that the relationship between students and post-
6 secondary educational institutions is contractual, but differentiated those cases from
7 Ruegsegger on the ground that those cases involved claims by students that the
8 institution had “breached promises relat[ed] to academic matters or access to
9 educational programs.” Id. ¶ 32. This Court stated that “[n]one of the cases cited by
10 [the p]laintiff support[ed] her conclusion that, merely because there is a contractual
11 relationship between a university and a student, the university is contractually bound
12 to honor every provision found in a student handbook.” Id. ¶ 33. In dismissing the
13 plaintiff’s breach of contract claim on the basis that it was unreasonable for the
14 plaintiff to expect that the university had promised services, this Court rejected the
15 plaintiff’s claim that dismissal entitled students to less contractual protection and
16 stated that “dismissal only indicate[d] that students’ contractual protections, absent
17 explicit language to the contrary, will be confined to the scope of their academic
18 relationship with an educational facility.” Id. ¶¶ 33, 36.
8
1 {12} In Campos de Suenos, 2001-NMCA-043, ¶ 1, this Court considered whether
2 to expand the analytical framework of Garcia, which allowed implied-in-fact
3 contracts to be considered valid written contracts, outside of the employment context.
4 In Campos de Suenos, the plaintiff began negotiating with the defendant for the sale
5 of a ballpark. Id. ¶¶ 2-3. At a public meeting, members of the defendant’s commission
6 voted in favor of purchasing the ballpark. Id. ¶ 3. However, in the months following
7 that meeting, the parties were unable to negotiate a proposed sales agreement and no
8 written contract was ever executed by the parties. Id. Eventually the defendant
9 decided not to move forward with the purchase. Id. Although the parties never
10 entered into an express written contract for the sale of the complex, the plaintiff
11 offered “a slew of partial writings as evidence of its contract with the [defendant].”
12 Id. ¶¶ 18, 20. Specifically, the plaintiff pointed to “transcripts of meetings, staff
13 summaries, and the like[.]” Id. ¶ 23. This Court held that allowing the plaintiff to
14 “cobble together a contract in such a manner undermine[d] the purpose of having a
15 comprehensive document,” i.e., “a valid written contract” as required in Section 37-1-
16 23(A). Campos de Suenos, 2001-NMCA-043, ¶ 18. We expressed “grave reservations
17 with the proposition that Garcia allows implied-in-fact contracts outside of the
18 employment context to override governmental immunity.” Campos de Suenos, 2001-
19 NMCA-043, ¶ 26. Accordingly, we stated, “Given the particular nature of
9
1 employment law, we decline to expand the Supreme Court’s holding in Garcia,
2 beyond the employment arena.” Campos de Suenos, 2001-NMCA-043, ¶ 28.
3 {13} In the case now before us, Plaintiffs recognize that “[o]rdinarily, to be legally
4 enforceable, a contract must be factually supported by an offer, an acceptance,
5 consideration, and mutual assent.” Garcia, 1996-NMSC-029, ¶ 9 (internal quotation
6 marks and citation omitted). They argue that a contractual offer and acceptance is
7 evidenced by the offer letter and the representation that the education provided would
8 be a nationally accredited nursing education as evidenced by statements in the
9 handbook and supported by the handbook acknowledgment form. Plaintiffs assert that
10 whether the statement in the handbook regarding accreditation is sufficient to allow
11 a breach of contract claim does not impact contract formation but rather impacts only
12 breach of contract and contract interpretation, and therefore Section 37-1-23(A)
13 immunity is not implicated. Plaintiffs also argue that Defendant’s representation of
14 accreditation in the handbook is definite, specific, or explicit as required by
15 Ruegsegger. See 2007-NMCA-030, ¶ 24. According to Plaintiffs, the facts in this case
16 are distinguishable from Ruegsegger because national accreditation is a “core
17 academic matter[,]” and thus “[i]t is entirely within students’ and higher education
18 institutions’ objectively reasonable expectations to believe that when an institution
10
1 says its program is nationally accredited, it will deliver a nationally accredited
2 education.”
3 {14} We begin by noting our disagreement with Plaintiffs’ assertion that
4 Defendant’s Section 37-1-23 arguments implicate breach of contract and contract
5 interpretation rather than contract formation and therefore should be considered by
6 a jury. We are asked to determine whether there was a valid written contract that
7 contractually obligated Defendant to provide a nationally accredited education to
8 Plaintiffs, an issue that squarely involves contract formation and requires this Court
9 to determine, as a matter of law, whether immunity is waived. See Univ. of N.M.
10 Police Officer’s Ass’n, 2005-NMSC-030, ¶ 8 (stating that “[i]n analyzing the
11 application of [Section 37-1-23(A)] to the facts . . . , [the appellate courts] are faced
12 with a question of law”); Ruegsegger, 2007-NMCA-030, ¶ 22 (analyzing, as a matter
13 of law, “the application of Section 37-1-23(A) to the facts”).
14 {15} We hold that the offer letter, the handbook, and the handbook acknowledgment
15 form do not constitute a valid written contract under Section 37-1-23(A) that
16 contractually obligated Defendant to provide a nationally accredited education to
17 Plaintiffs. We address the documents in turn.
18 {16} The offer letter—which Plaintiffs argue evidences offer and acceptance—does
19 not mention accreditation, the handbook, or the handbook acknowledgment form. The
11
1 offer letter is similar to the application to the day camp in Espinoza and the
2 scholarship agreements in Ruegsegger. In both cases, the appellate courts rejected the
3 plaintiffs’ respective breach of contract claims because the writings, at best, created
4 contracts that were not implicated by the plaintiffs’ particular breach of contract
5 claim. See Espinoza, 1995-NMSC-070, ¶ 15 (holding that the defendant “did not
6 undertake contractual obligation for liability” for damages by virtue of the plaintiffs’
7 day camp application because the language in the application simply ensured space
8 in the program); Ruegsegger, 2007-NMCA-030, ¶¶ 18-20 (holding that the
9 scholarship agreements could not form the basis of the plaintiff’s breach of contract
10 claim because those agreements did not obligate the defendants to investigate sexual
11 assault claims but rather simply required the plaintiff to maintain acceptable academic
12 performance, play basketball, and comply with regulations, and in exchange, the
13 defendants were obligated to provide the plaintiff with scholarship assistance). Here,
14 the offer letter, at best, evidences an agreement that Plaintiffs would or intended to
15 enroll in the program. It does not, however, evidence an agreement to provide a
16 nationally accredited education.
17 {17} We also reject Plaintiffs’ argument that there exists a contract sufficient to
18 waive immunity because it was reasonable for Plaintiffs to expect contractual rights
19 based on the handbook and the handbook acknowledgment form. See id. ¶ 24.
12
1 Although Plaintiffs argue that “nothing need be implied to show there exists a written
2 contract that the education to be provided will be a nationally accredited education[,]”
3 this “reasonableness” argument is an implied contract argument similar to the
4 argument made in Ruegsegger. See id. ¶¶ 4, 22 (construing the plaintiff’s breach of
5 contract argument based on the student handbook as an implied contract argument).2
6 As noted earlier, in Ruegsegger, we held that, based on the language in the student
7 handbook, the plaintiff could not reasonably expect that the defendants would be
8 obligated to perform a comprehensive investigation and provide her with more
9 support after she disclosed the alleged assault to officials. 2007-NMCA-030, ¶¶ 24,
10 30. And although we suggested that the outcome of the implied contract analysis in
11 Ruegsegger might be different in cases involving academic matters, we noted that the
12 inquiry would center on what was reasonable. Id. ¶¶ 32-33.3
2
13 In Ruegsegger, this Court did not outright reject the proposition that an
14 implied contract based on a student handbook could meet the requirements of Section
15 37-1-23(A); however, we also did not explicitly expand our Supreme Court’s holding
16 in Garcia such that implied contracts may always constitute valid written contracts
17 beyond the employment arena. See Ruegsegger, 2007-NMCA-030, ¶ 22 (assuming
18 without deciding that Section 37-1-23(A) did not bar the plaintiff’s claim).
3
19 Ruegsegger did not clarify whether it is appropriate to construe an implied
20 contract as a valid written contract as contemplated by Section 37-1-23(A) outside of
21 the employment arena. In Campos de Suenos, 2001-NMCA-043, ¶¶ 18, 26, this Court
22 expressed “grave reservations” with expanding our Supreme Court’s holding in
23 Garcia to non-employment cases and with allowing a plaintiff to “cobble together a
24 contract” in an attempt to satisfy the requirements of Section 37-1-23(A).
13
1 {18} In this case, as in Ruegsegger, we are not persuaded that an implied contract
2 exists based on the handbook or other writings that would waive immunity under
3 Section 37-1-23(A). Implied contract claims require proof that the promise or
4 representation must be definite, specific, or explicit so that there is “a reasonable
5 expectation of contractual rights.” Ruegsegger, 2007-NMCA-030, ¶ 24; see
6 Hartbarger v. Frank Paxton Co., 1993-NMSC-029, ¶ 14, 115 N.M. 665, 857 P.2d
7 776 (same). In this case, there is no representation or promissory language in any of
8 the writings that Defendant “promise[s] it will be accredited” or is obligated to obtain
9 or maintain national accreditation. The general, non-promissory accreditation
10 language here is insufficiently definite, specific, or explicit to give rise to a
11 reasonable expectation of contractual rights regarding national accreditation. See
12 Ruegsegger, 2007-NMCA-030, ¶¶ 30, 33 (holding that the provisions in the student
13 handbook provided guidelines rather than contractually guaranteeing a right, that it
14 was unreasonable for the plaintiff to expect that the defendants promised support
15 following a sexual assault, and that the provisions in the handbook did not constitute
16 the terms of an implied contract); see also Sanchez v. The New Mexican, 1987-
17 NMSC-059, ¶ 12, 106 N.M. 76, 738 P.2d 1321 (affirming the dismissal of an implied
18 contract claim on grounds that “the handbook lacked specific contractual terms which
19 might evidence the intent to form a contract” and that “[t]he language is of a
14
1 non-promissory nature and merely a declaration of [the] defendant’s general
2 approach”); Stieber v. Journal Publ’g Co., 1995-NMCA-068, ¶ 13, 120 N.M. 270,
3 901 P.2d 201 (“General policy statements of a non-promissory nature contained in an
4 employee handbook are insufficient to create an implied contract.”). As in
5 Ruegsegger, Plaintiffs have not demonstrated that the terms in the handbook or other
6 writings created a reasonable expectation of contractual rights in continued
7 accreditation, even though accreditation may be academic in nature. Therefore, we
8 hold that there is no implied contract sufficient to waive immunity pursuant to
9 Section 37-1-23(A).
10 {19} Plaintiffs’ assertion that the offer letter can and should be read in tandem with
11 the handbook and the handbook acknowledgment form does not alter our holding. As
12 stated earlier, the documents are insufficient to create a valid written contract on their
13 own, and our conclusion that there is no valid written contract for Defendant to
14 provide Plaintiffs with a nationally accredited education is not altered merely by
15 reading the multiple, insufficient documents together. Moreover, although a contract
16 can consist of several related writings, see Crow v. Capitol Bankers Life Ins. Co.,
17 1995-NMSC-018, ¶ 29, 119 N.M. 452, 891 P.2d 1206, we reiterate our concern that
18 allowing Plaintiffs to “cobble together a contract in such a manner [would]
19 undermine[] the purpose of having a comprehensive document,” i.e., “a valid written
15
1 contract” as required in Section 37-1-23(A). See Campos de Suenos, 2001-NMCA-
2 043, ¶ 18.
3 CONCLUSION
4 {20} As to Plaintiffs’ contract claims, Defendant is immune under Section 37-1-
5 23(A). We reverse and remand with instructions to enter summary judgment in favor
6 of Defendant.
7 {21} IT IS SO ORDERED.
8 __________________________________
9 JONATHAN B. SUTIN, Judge
10 WE CONCUR:
11 _______________________________
12 LINDA M. VANZI, Chief Judge
13 _______________________________
14 JULIE J. VARGAS, Judge
16