Avalos v. Board of Regents

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