Fisher Sand & Gravel, Co. v. Girón

FILED
United States Court of Appeals
UNITED STATES COURT OF APPEALS Tenth Circuit
TENTH CIRCUIT March 6, 2012
Elisabeth A. Shumaker
Clerk of Court
FISHER SAND & GRAVEL, CO., d/b/a
Southwest Asphalt Paving; FISHER
SAND & GRAVEL - NEW MEXICO,
INC.,
Plaintiffs - Appellees,
v. No. 11-2067
(D.C. No. 1:10-CV-00635-RB-SMV)
GARY GIRÓN, individually and as (D. N. Mex.)
former Cabinet Secretary of the New
Mexico Department of Transportation;
MAX VALERIO, individually and as
former Deputy Secretary of the New
Mexico Department of Transportation,
Defendants - Appellants,
and
FNF CONSTRUCTION, INC.; PULICE
CONSTRUCTION, INC.; JED
BILLINGS, Chief Executive Officer of
FNF Construction, Inc.; STEPHEN
BASILA, President of Pulice
Construction, Inc.
Defendants.
ORDER AND JUDGMENT*
Before BRISCOE, Chief Judge, GORSUCH, and MATHESON, Circuit Judges.
MATHESON, Circuit Judge.
Fisher Sand & Gravel-New Mexico (“FSG-NM”) submitted a bid to the New
Mexico Department of Transportation (“NMDOT”) for a contract on the Las Cruces
Highway Construction Project (the “Project” or the “Project Contract”). Although FSG-
NM was the low bidder, NMDOT rejected all bids and eventually awarded the Project
Contract to another company. Plaintiffs-Appellees Fisher Sand & Gravel, Co. and FSG-
NM (collectively, “FSG”) sued Defendants-Appellants Gary Girón and Max Valerio,
secretary and deputy secretary of NMDOT respectively, and other defendants not
involved in this appeal.
Among other things, FSG alleged under 42 U.S.C. § 1983 that Mr. Girón and Mr.
Valerio violated its right to procedural due process when NMDOT refused to award the
Project Contract to FSG-NM. Mr. Girón and Mr. Valerio moved to dismiss this claim
based on qualified immunity and insufficient notice pleading under Fed. R. Civ. P. 8(a).
*This order and judgment is not binding precedent, except under the doctrines of
law of the case, res judicata, and collateral estoppel. It may be cited, however, for its
persuasive value consistent with Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
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The district court denied their motion. Exercising jurisdiction under 28 U.S.C. § 1291,
we reverse and remand with directions to dismiss the §1983 claim brought against Mr.
Girón and Mr. Valerio. We also deny FSG’s motion to dismiss this appeal for lack of
jurisdiction.
I. BACKGROUND
A. Factual Background1
On May 1, 2009, NMDOT advertised the Project and issued Invitations for Bid.
See NMDOT, Standard Specifications for Highway and Bridge Construction (“NMDOT
Sp.”), § 102.1. NMDOT opened the bids on May 29, 2009, and determined that FSG-
NM was the apparent lowest bidder. See NMDOT Sp. § 102.15. On June 18, 2009,
NMDOT recommended to the Federal Highway Association (“FHWA”) that the Project
Contract should be awarded to FSG-NM.2 FHWA responded on June 22, 2009,
informing NMDOT that it would not be able to give final approval for at least 14 days.
Under NMDOT Sp. § 103.2, NMDOT must award a contract to the lowest
responsible bidder within 30 days after it opens the bids, unless it requests additional time
from the bidder. On June 22, 2009, NMDOT contacted FSG-NM and requested
1
Our review of a motion to dismiss takes its facts from the complaint. Cnty. of
Santa Fe, N.M. v. Pub. Serv. Co. of N.M., 311 F.3d 1031, 1035 (10th Cir. 2002) (“In
deciding a Rule 12(b)(6) motion, a federal court may only consider facts alleged within
the complaint.”).
2
NMDOT needed approval from FHWA because funding for the Project came
from federal funds granted by the American Recovery and Reinvestment Act of 2009.
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additional time to award the Project Contract.
Around this time, the second-lowest bidder—FNF Construction (“FNF”)—began
making disparaging comments about FSG-NM to induce NMDOT to award the Project
Contract to FNF. This strategy proved successful. NMDOT changed course and decided
to award the Project Contract to FNF. On July 10, 2009, NMDOT recommended to
FHWA that the Project Contract be awarded to FNF rather than FSG-NM. FHWA
responded on July 13, 2009, and refused to award the contract to FNF because FSG-NM
was the lowest bidder.
In response, NMDOT announced on July 28, 2009, that it was “reject[ing] all of
the bids for the Project under [NMDOT Sp. §] 103.1 . . . as not promoting the best
interests of the public.” Compl. ¶ 115 (quotations omitted). Three days later, NMDOT
readvertised the Project and accepted new bids. On November 25, 2009, NMDOT
awarded the Project Contract to the lowest responsible bidder, which was neither FSG-
NM nor FNF.
B. Procedural Background
FSG filed a complaint against numerous defendants, including Mr. Girón, Mr.
Valerio, and FNF. FSG brought 10 claims, most of which involved an alleged conspiracy
among FNF, another construction company, and members of NMDOT to prevent FSG-
NM from being awarded the Project Contract. FSG also sued Mr. Girón and Mr. Valerio
under 42 U.S.C § 1983, alleging that they violated its procedural and substantive due
process rights by not awarding the Project Contract to FSG-NM after the original bid
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process.
Mr. Girón and Mr. Valerio filed a motion to dismiss the § 1983 claim based on
qualified immunity and improper notice pleading under Fed. R. Civ. P. 8(a). The district
court granted their motion to dismiss in part and denied it in part. It dismissed without
prejudice FSG’s claim against Mr. Girón and Mr. Valerio in their official capacities. It
also granted their motion to dismiss FSG’s substantive due process claim based on
qualified immunity.
The district court denied Mr. Girón and Mr. Valerio’s motion to dismiss FSG’s
procedural due process claim based on qualified immunity. It found that FSG had
alleged sufficient facts to support a plausible claim that FSG-NM and NMDOT reached a
“mutually explicit understanding,” or an “implied contract,” that NMDOT would award
the Project Contract to FSG-NM. See Appx. at 175, 173 (“It would have been helpful if
[FSG] had included more specific allegations in the Complaint; nonetheless, [FSG’s]
allegations are sufficient, if only barely, to survive a Rule 12(b)(6) motion to dismiss.”).
It further held that this “mutually explicit understanding” or “implied contract” was a
clearly established constitutionally protected property interest. The district court also
denied Mr. Girón and Mr. Valerio’s motion to dismiss this claim based on insufficient
notice pleading under Fed. R. Civ. P. 8(a).
Mr. Girón and Mr. Valerio now appeal the district court’s denial of their motion to
dismiss FSG’s procedural due process claim based on qualified immunity and its refusal
to dismiss this claim for insufficient notice pleading.
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II. DISCUSSION
A. Qualified Immunity
1. Jurisdiction
Under 28 U.S.C. § 1291, we “have jurisdiction of appeals from all final decisions
of the district courts” of this circuit. Based on this final judgment rule, “interlocutory
appeals . . . are the exception, not the rule.” Johnson v. Jones, 515 U.S. 304, 309 (1995).
Under the collateral order doctrine exception, an interlocutory order may qualify as a
“final decision[]” under 28 U.S.C. § 1291 even though it is not “the last order possible to
be made in a case.” Mitchell v. Forsyth, 472 U.S. 511, 524 (1985); see also Johnson, 515
U.S. at 310.
The collateral order doctrine permits a party to appeal a district court’s
interlocutory ruling that “fall[s] in [the] small class which finally determine claims of
right separable from, and collateral to, rights asserted in the action, too important to be
denied review and too independent of the cause itself to require that appellate
consideration be deferred until the whole case is adjudicated.” Cohen v. Beneficial Indus.
Loan Corp., 337 U.S. 541, 546 (1949).
“[T]he applicability of [the collateral order] doctrine in the context of qualified-
immunity claims is well established . . . .” Ashcroft v. Iqbal, 129 S. Ct. 1937, 1946
(2009). The doctrine applies to denials of qualified immunity because qualified
immunity “is an immunity from suit rather than a mere defense to liability . . . [and] it is
effectively lost if a case is erroneously permitted to go to trial.” Mitchell, 472 U.S. at
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526; see also Iqbal, 129 S. Ct. at 1945-46 (“[Q]ualified immunity . . . is both a defense to
liability and a limited entitlement not to stand trial or face the other burdens of litigation.”
(quotations omitted)).
The collateral order doctrine applies only when qualified immunity turns on a
purely legal issue. See Brown v. Montoya, 662 F.3d 1152, 1162 (10th Cir. 2011) (“[A]
district court’s denial of a claim of qualified immunity, to the extent that it turns on an
issue of law, is an appealable final decision within the meaning of 28 U.S.C. § 1291.”
(emphasis added) (quotations omitted)); Gann v. Cline, 519 F.3d 1090, 1091 (10th Cir.
2008) (“Our jurisdiction arises under 28 U.S.C. § 1291 and the collateral order doctrine
allowing an interlocutory appeal from the denial of qualified immunity that rests upon
purely legal grounds.” (emphasis added)). A motion to dismiss based on qualified
immunity requires a legal determination. In Iqbal, the Supreme Court explained that
“[e]valuating the sufficiency of a complaint is not a ‘fact-based’ question of law” and the
collateral order doctrine applies to the denial of a motion to dismiss for qualified
immunity, including when qualified immunity turns on whether the “complaint
sufficiently alleges a clearly established violation of law.” 129 S. Ct. at 1947.
After Mr. Girón and Mr. Valerio filed their notice of appeal, FSG moved to
dismiss the appeal for lack of jurisdiction. FSG argues that the district court’s order
denying Mr. Girón and Mr. Valerio’s claim for qualified immunity turns on factual rather
than legal matters and is thus unreviewable. We disagree. The district court’s order was
a Fed. R. Civ. P. 12(b)(6) determination of the legal sufficiency of the complaint
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regarding qualified immunity. Mr. Girón and Mr. Valerio assume for the purposes of this
appeal that FSG has alleged sufficient facts to support a “mutually explicit
understanding” or “implied contract” that NMDOT would award the Project Contract to
FSG-NM. They challenge whether FSG-NM could have a due process property interest
in receiving the Project Contract based on an implied contract with NMDOT—a purely
legal question. Under Iqbal, we have jurisdiction over the qualified immunity issue.
2. Standard of Review
“We review the district court’s denial of a motion to dismiss based on qualified
immunity de novo.” Brown, 662 F.3d at 1162 (quotations omitted). “In reviewing a
motion to dismiss, all well-pleaded factual allegations in the complaint are accepted as
true and viewed in the light most favorable to the nonmoving party.” Id. (quotations
omitted).
“[T]o withstand a motion to dismiss, a complaint must have enough allegations of
fact, taken as true, ‘to state a claim to relief that is plausible on its face.’” Kan. Penn
Gaming, LLC v. Collins, 656 F.3d 1210, 1214 (10th Cir. 2011) (quoting Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 570 (2007)). “‘[O]nly a complaint that states a plausible claim
for relief [will] survive[] a motion to dismiss.’” Id. (quoting Iqbal, 129 S. Ct. 1950).
3. Legal Background
a. The Qualified Immunity Framework
Title 42 U.S.C. § 1983 provides in part that “[e]very person who, under color of
any statute, ordinance, [or] regulation . . . subjects . . . any citizen of the United States . . .
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to the deprivation of any rights, privileges, or immunities secured by the Constitution and
laws, shall be liable to the party injured.” See also Camreta v. Greene, 131 S. Ct. 2020,
2027 (2011) (“[Section 1983] authorizes suits against state officials for violations of
constitutional rights.”).
“[T]o ensure that fear of liability will not unduly inhibit officials in the discharge
of their duties, the officials may claim qualified immunity . . . .” Camreta, 131 S. Ct. at
2030-31 (citation omitted) (quotations omitted). Qualified immunity applies only when
government defendants are sued in their individual capacities. Brown, 662 F.3d at 1164.
Under this principle, “government officials are not subject to damages liability for the
performance of their discretionary functions when their conduct does not violate clearly
established statutory or constitutional rights of which a reasonable person would have
known.” Buckley v. Fitzsimmons, 509 U.S. 259, 268 (1993) (quotations omitted).
“Qualified immunity protects defendants not only from liability but also from suit.”
Watson v. Univ. of Utah Med. Ctr., 75 F.3d 569, 577 (10th Cir. 1996).
We employ a two-part test to evaluate a qualified immunity defense. “In resolving
a motion to dismiss based on qualified immunity, a court must consider [1] ‘whether the
facts that a plaintiff has alleged make out a violation of a constitutional right,’ and [2]
‘whether the right at issue was clearly established at the time of defendant’s alleged
misconduct.’” Leverington v. City of Colorado Springs, 643 F.3d 719, 732 (10th Cir.
2011) (quoting Pearson v. Callahan, 555 U.S. 223, 232 (2009)). The burden is on the
plaintiff to prove both parts of this test. See Dodds v. Richardson, 614 F.3d 1185, 1191
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(10th Cir. 2010). “If the plaintiff fails to satisfy either part of this two-part inquiry, the
court must grant the defendant qualified immunity.” Hesse v. Town of Jackson, Wyo.,
541 F.3d 1240, 1244 (10th Cir. 2008) (quotations omitted).
We have discretion to “decid[e] which of the two prongs of the qualified immunity
analysis should be addressed first in light of the circumstances in the particular case at
hand.” Pearson, 555 U.S. at 236. And “[i]f the court concludes no constitutional right
has been violated, no further inquiry is necessary and the defendant is entitled to qualified
immunity.” Hesse, 541 F.3d at 1244 (quotations omitted).
b. Procedural Due Process
Mr. Girón and Mr. Valerio challenge the district court’s denial of their motion to
dismiss FSG’s procedural due process claim based on qualified immunity.
“Procedural due process imposes constraints on governmental decisions which
deprive individuals of liberty or property interests within the meaning of the Due Process
Clause of the . . . Fourteenth Amendment.” Mathews v. Eldridge, 424 U.S. 319, 332
(1976) (quotations omitted). “The Fourteenth Amendment’s procedural protection of
property is a safeguard of the security of interests that a person has already acquired in
specific benefits.” Bd. of Regents of State Colls. v. Roth, 408 U.S. 564, 576 (1972).
We engage in a two-step assessment of a procedural due process property claim:
“(1) did the individual possess a protected interest such that the due process protections
were applicable; and, if so, then (2) was the individual afforded an appropriate level of
process.” Brown, 662 F.3d at 1167 (quotations omitted). “[I]t is only after the plaintiff
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first demonstrates the existence and deprivation of a protected property interest that the
plaintiff is constitutionally entitled to an appropriate level of process.” Teigen v.
Renfrow, 511 F.3d 1072, 1078 (10th Cir. 2007).
In the procedural due process context, “[p]roperty interests . . . are not created by
the Constitution [but] [r]ather . . . by existing rules or understandings that stem from an
independent source such as state law.” Roth, 408 U.S. at 577. “Thus, constitutionally
protected property interests are created and defined by statute, ordinance, contract,
implied contract and rules and understandings developed by state officials.” Kirkland v.
St. Vrain Valley Sch. Dist. No. Re-1J, 464 F.3d 1182, 1190 (10th Cir. 2006). “Valid
contracts may constitute a property interest for purposes of due process.” S. Disposal,
Inc. v. Tex. Waste Mgmt., 161 F.3d 1259, 1265 (10th Cir. 1998).
4. Application
The threshold issue is whether New Mexico law recognizes a property interest in
an implied contract with a governmental agency. Based on N.M. Stat. Ann. § 37-1-
23(A), Mr. Girón and Mr. Valerio say the answer is no.
a. Forfeiture Issue
FSG argues that we should not consider N.M. Stat. Ann. § 37-1-23(A)’s effect on
the existence of a due process property interest because Mr. Girón and Mr. Valerio did
not raise this argument in the district court. Legal theories raised for the first time on
appeal are either waived or forfeited. Richison v. Ernest Grp., Inc., 634 F.3d 1123, 1127-
28 (10th Cir. 2011). If the theory is waived, meaning the party intentionally relinquished
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or abandoned it in the district court, we refuse to consider it. Id. at 1127. If it is
forfeited, meaning a party’s failure to raise it was unintentional, we may consider it under
a plain error standard of review. Id. at 1128.
Mr. Girón and Mr. Valerio did not waive their argument. On the motion to
dismiss the procedural due process claim, neither party argued the implied contract
theory on which the district court based its decision that FSG-NM possessed a property
interest. In its response to Mr. Girón and Mr. Valerio’s motion to dismiss, FSG argued
that its property interest was based on NMDOT’s implied obligation to follow its own
policies and procedures. The district court rejected this argument. Appx. at 173.
(“Plaintiffs confuse the issue of an implied contract by conflating the two distinct types of
implied contracts—the one giving rise to a constitutionally protected property right and
potential § 1983 claim and the other providing the disappointed bidder with nothing more
than a state cause of action for its costs in preparing the bid.” (citations omitted)).
Although FSG referred briefly to an implied understanding that NMDOT would award
the Project Contract to FSG-NM, it did not develop this argument.
Because the district court based its qualified immunity conclusion on a theory that
neither party developed in the district court, we find it difficult to fault Mr. Girón and Mr.
Valerio for not addressing a theory that first emerged in the district court’s decision. On
appeal, they challenge that decision because N.M. Stat. Ann. § 37-1-23(A) precludes a
property interest based on an implied contract with a governmental entity. They did not
intentionally relinquish or abandon this argument in district court and therefore did not
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waive it.
As for whether Mr. Girón and Mr. Valerio forfeited their argument, we need not
decide that issue because, as explained below, they prevail even under plain error review.
“[W]e will reverse a district court’s judgment on the basis of a forfeited theory only if
failing to do so would entrench a plainly erroneous result.” Richison, 634 F.3d at 1128.
To satisfy this standard, “a party must establish the presence of (1) error, (2) that is plain,
which (3) affects substantial rights, and which (4) seriously affects the fairness, integrity,
or public reputation of judicial proceedings.” Id.3
3
In Richison, we faulted the appellant for not attempting to show on appeal how
his forfeited legal theory satisfied the plain error standard. 634 F.3d at 1130-31 (“[T]he
failure to argue for plain error and its application on appeal . . . surely marks the end of
the road for an argument for reversal not first presented to the district court.”). Here, Mr.
Girón and Mr. Valerio argue that we should consider their argument not only because it is
a purely legal one but also because “failure to consider it would result in a miscarriage of
justice.” Aplt. Reply Br. at 6. They further argue that the district court, once it elected to
rely on an implied contract theory, failed to undertake a proper review of state law,
leading to a clearly improper result. See Aplt. Br. at 9-10, 12-13 (“[U]nder New Mexico
law, it is clear that [FSG] could not enforce an implied contract against NMDOT because
state entities are immune from claims based on implied contract.”).
In Richison, we explained the history and rationale behind applying plain error
review to forfeited arguments:
Long ago, this court held that we will reverse on the basis of a legal theory
not previously presented to the district court when the correct resolution of
that theory is beyond a reasonable doubt and the failure to intervene would
result in a miscarriage of justice. More recently, we have stated this
standard in slightly different terms, requiring a litigant to show the four
elements of plain error. Linguistic packaging aside, the substantive
analysis under either articulation of the standard is similar, and the
litigant’s burden is the same: establishing a clear legal error that
Continued . . .
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b. Plain Error Analysis
Mr. Girón and Mr. Valerio’s argument that N.M. Stat. Ann. § 37-1-23(A)
precludes a property interest based on an implied contract with a governmental entity
warrants reversal of the district court’s judgment under plain error review.
i. Error
The district court erred by concluding that FSG-NM’s implied contract with
NMDOT created a due process property interest.
Although due process property interests may arise out of express or implied
contracts, Pater v. City of Casper, 646 F.3d 1290, 1294 (10th Cir. 2011), such property
interests arise only out of enforceable agreements, see Kirkland, 464 F.3d at 1190-91(“Because the resignation agreement . . . never became an enforceable contract, Kirkland
never gained a property interest in that agreement such that it would be subject to due
______________________________________
Cont.
implicates a miscarriage of justice.
Id. at 1128 (emphasis added) (citations omitted); see also Jordan v. U.S. Dep’t of Justice,
—F.3d—, 2011 WL 6739410, at *9 (10th Cir. 2011) (“When a matter is forfeited, we
may review for plain error, but that review is limited to whether there was a clear legal
error that implicates a miscarriage of justice.” (quotations omitted)) .
Because Mr. Girón and Mr. Valerio show there has been a “clear legal error that
implicates a miscarriage of justice,” we may review their argument under the plain error
standard.
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process protections.” (emphasis added)); see also Stidham v. Tex. Comm’n on Private
Sec., 418 F.3d 486, 492 n.9 (5th Cir. 2005) (“With respect to property rights relating to
contracts, our precedent is clear that there must be an enforceable contract between the
parties.” (emphasis added)); Drake v. Scott, 823 F.2d 239, 242 (8th Cir. 1987) (“[Under
Arkansas law], [t]he promise must be express, or else there is no enforceable contract,
and, hence, no property right for purposes of the Due Process Clause.” (emphasis
added)). In Kirkland, we held that a plaintiff did not have a property interest in an
agreement because that agreement was not enforceable under state law. 464 F.3d at
1190-91. In that case, the agreement required approval from the school board before it
became binding. Id. at 1190. Because the school board never gave such approval, there
was never an enforceable agreement, and therefore no due process property interest. Id.
at 1190-91. We held that the individual defendants were entitled to qualified immunity
on the procedural due process claim. Id. at 1191.
FSG must have an enforceable agreement with NMDOT to have a due process
property interest. N.M. Stat. Ann. § 37-1-23(A) states: “Governmental entities are
granted immunity from actions based on contract, except actions based on a valid written
contract.” Thus, for a contract with a governmental entity to be enforceable, it must be
based on a “valid written contract.”4 See Eaton, Martinez & Hart, P.C. v. Univ. of N.M.
4
In Garcia v. Middle Rio Grande Conservancy District, 918 P.2d 7 (N.M. 1996),
the New Mexico Supreme Court held that N.M. Stat. Ann. § 37-1-23(A) did not foreclose
a suit against a governmental agency arising from an implied employment contract based
Continued . . .
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Hosp., 934 P.2d 270, 272 (N.M. 1997) (“The Legislature has imposed a statutory
requirement that a contract claim must be supported by a writing in order for it to be
enforceable against the State.”).
Other circuits have refused to find a property interest based on a contract that is
unenforceable under state law. 5 See Conner v. Lavaca Hosp. Dist., 267 F.3d 426, 437
(5th Cir. 2001) (holding there was no property interest based on an “implied contract
because a contract that fails the statute of frauds cannot be enforced as such a contract
______________________________________
Cont.
on an employee handbook. Id. at 11-13. The employee handbook provided the “valid
written contract” required by N.M. Stat. Ann. § 37-1-23(A). Id. at 12-13. New Mexico
courts, however, have not extended this exception beyond the employment context. See
Campos de Suenos, Ltd. v. Cnty. of Bernalillo, 28 P.3d 1104, 1111-12 (N.M. Ct. App.
2001); see also Whittington v. State Dep’t of Pub. Safety, 100 P.3d 209, 214-15 (N.M. Ct.
App. 2004) (explaining that Campos de Suenos limited Garcia to the employment
context).
5
In Luttrell v. Montoya, No. 94-2189, 1995 WL 350601 (10th Cir. June 12, 1995)
(unpublished) (cited for persuasive value pursuant to 10th Cir. R. 32.1(A)), we held that,
based on N.M. Stat. Ann. § 37-1-23(A), an employee did not have a property interest in
continued employment because he did not have a written contract for employment. Id. at
*2. Because the “plaintiff had no enforceable contract right to employment under state
law, he had no legitimate claim of entitlement to employment” and no property interest
under state law. Id. (quotations omitted). Therefore, we held that the plaintiff had not
asserted the violation of a constitutional right, and the defendants were entitled to
summary judgment based on qualified immunity. Id. at *3.
Luttrell is distinguishable from Garcia. Unlike Garcia, there is no indication in
Luttrell that there was an employee handbook or any writing that the plaintiff could claim
to support his implied contract. See id. at *1 (“Plaintiff maintains . . . that he had an
implied contract of continued employment, based on representations made to him . . .
[and] that the school district treated him as an employee while he was on leave of absence
by continuing his benefits . . . .”).
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under Texas law”); Woolsey v. Hunt, 932 F.2d 555, 564-65 (6th Cir. 1991) (“We are
compelled to reverse because Tennessee does not recognize the enforcement of an
implied contract against the state and has not done so since 1980. . . . Tennessee had
waived its sovereign immunity only with respect to suits against the state based on an
express contract or breach thereof.”).
FSG-NM’s interest in the Project Contract was not based on a written agreement.
It was based on an implied contract with NMDOT that arose from a mutual
understanding that NMDOT would award the Project Contract to FSG-NM. Because
there was no “valid written contract,” this mutual understanding was not enforceable.
See N.M. Stat. Ann. § 37-1-23(A).
N.M. Stat. Ann. § 37-1-23(A) grants immunity to governmental entities. FSG
brings this claim against Mr. Girón and Mr. Valerio in their individual capacities, but this
does not alter our conclusion.6 The statute determines whether FSG-NM had a property
interest in the Project Contract based on an implied contract with NMDOT. Without
such an interest, FSG-NM had no due process right that the individual defendants could
violate.
Moreover, FSG does not allege that it had an implied contract with Mr. Girón or
6
In Luttrell, the plaintiff brought a § 1983 claim against the defendants in their
individual capacities. Based on N.M. Stat. Ann. § 37-1-23(A), we said “it [was] clear
that plaintiff could not enforce an implied contract against the school district.” 1995 WL
350601, at *2 (emphasis added). We held that the individual defendants were entitled to
qualified immunity. Id. at *3.
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Mr. Valerio. Instead, it alleges only that Mr. Girón and Mr. Valerio violated its
constitutional rights when they determined not to award the Project to FSG-NM. See
Compl. ¶¶ 239-254. Even if Mr. Girón and Mr. Valerio had made representations
creating a “mutual, explicit, understanding that [FSG-NM’s] bid had been accepted . . .
and [FSG-NM] would be awarded the contract . . . ,” Appx. at 173, this understanding
would at most be an implied contract between FSG-NM and NMDOT, not between FSG-
NM and Mr. Girón or Mr. Valerio. And, to repeat, such an implied contract is
unenforceable under New Mexico law.
Because FSG-NM did not have a protected property interest in the Project
Contract, there could be no deprivation of due process. The district court erred by
denying Mr. Girón and Mr. Valerio qualified immunity on FSG’s due process claim.
ii. Plain
“An error is ‘plain’ if it is clear or obvious under current, well-settled law.”
United States v. Weeks, 653 F.3d 1188, 1198 (10th Cir. 2011). “In general, for an error to
be contrary to well-settled law, either the Supreme Court or this court must have
addressed the issue.” United States v. Thornburgh, 645 F.3d 1197, 1208 (10th Cir.
2011), cert. denied, 132 S. Ct. 214 (2011) (quotations omitted). “The absence of such
precedent will not, however, prevent a finding of plain error if the district court’s
interpretation was clearly erroneous.” United States v. Ruiz-Gea, 340 F.3d 1181, 1187
(10th Cir. 2003) (quotations omitted).
Although we have no published case on point, our reasoning in Luttrell, as well as
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the New Mexico cases cited above, clearly establish that N.M. Stat. Ann. § 37-1-23(A)
prevents a party from entering into an enforceable contract with a governmental entity
unless that contract is in writing. We conclude that the district court’s analysis was
clearly erroneous in holding that FSG-NM had a property interest in an implied contract
with NMDOT.
iii. Affecting Substantial Rights
“To satisfy the third prong of plain error review, the appellant must show a
reasonable probability that, but for the error claimed, the result of the proceeding would
have been different.” United States v. Cordery, 656 F.3d 1103, 1108 (10th Cir. 2011)
(quotations omitted). This requirement is easily satisfied in this case. If the district court
had properly considered the effect of N.M. Stat. Ann. § 37-1-23(A), it would have
granted Mr. Girón and Mr. Valerio’s motion to dismiss for qualified immunity. Thus, the
district court’s error affected Mr. Girón’s and Mr. Valerio’s substantial rights.
iv. Seriously Affecting the Fairness, Integrity, or Public
Reputation of Judicial Proceedings
Failure to consider Mr. Girón and Mr. Valerio’s argument and affirming the
district court’s denial of their motion to dismiss for qualified immunity would produce an
outcome contrary to clearly established law. Permitting the district court’s plainly
erroneous ruling to stand would “seriously affect[] the fairness, integrity, or public
reputation of judicial proceedings,” Richison, 634 F.3d at 1128, because N.M. Stat. Ann.
§ 37-1-23(A) requires that Mr. Girón and Mr. Valerio are entitled to qualified immunity.
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See Cordery, 656 F.3d at 1108 (holding that the fourth element of plain error review was
satisfied when the district court’s error would result in a 10 percent longer sentence). We
conclude that the fourth element of plain error is satisfied. Our conclusion comports with
the principle that “qualified immunity . . . is both a defense to liability and a limited
entitlement not to stand trial or face the other burdens of litigation,” Iqbal, 129 S. Ct. at
1945-46 (quotations omitted), and the “importance of resolving immunity questions at the
earliest possible stage in litigation.” Pearson, 555 U.S. at 232 (quotations omitted).
***
For these reasons, the district court committed plain error by concluding that FSG-
NM’s implied contract with NMDOT was a property interest under the due process
clause. Because FSG-NM did not have a protected property interest in the Project
Contract, there could be no deprivation of due process. Mr. Girón and Mr. Valerio are
therefore entitled to qualified immunity on FSG’s procedural due process claim.
B. Sufficiency of the Pleadings Under Fed. R. Civ. P. 8(a)
Mr. Girón and Mr. Valerio also argue that the district court erred in denying their
motion to dismiss based on insufficient notice pleading under Fed. R. Civ. P. 8(a).
Assuming we have jurisdiction over this issue, we need not decide it because we reverse
the district court’s denial of Mr. Girón and Mr. Valerio’s qualified immunity defense.
III. CONCLUSION
We deny FSG’s motion to dismiss this appeal for lack of jurisdiction. We reverse
the district court’s judgment denying Mr. Girón and Mr. Valerio’s motion to dismiss
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FSG’s procedural due process claim based on qualified immunity and remand with
directions to dismiss the §1983 claim brought against Mr. Girón and Mr. Valerio.
Entered for the Court
Scott M. Matheson, Jr.
Circuit Judge
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