Beggs v. City of Portales

• Decision Date: 20 May 2009
• Docket Number: No. 30,558.,30,558.
• Citation: 2009 NMSC 023,210 P.3d 798
• Parties: Hillrey BEGGS, individually, Melvina Lancaster Crockett, individually, Jose M. Gutierrez, individually, Arly V. Hamner, individually, Pete O. Lucero, individually, Miguel S. Lucero, individually, Betty L. Olson, individually, Peggy Newbanks, individually, Ralph Pellicott, individually, Marcario Saiz, individually, Curtis Wagner, individually, Gary Watkins, individually, Alan Wofford, individually, and Jim Wood, individually, Plaintiffs-Petitioners, v. CITY OF PORTALES, a municipality existing under the laws of the State of New Mexico, Defendant-Respondent.
• Court: New Mexico Supreme Court

210 P.3d 798

2009 NMSC 023

Hillrey BEGGS, individually, Melvina Lancaster Crockett, individually, Jose M. Gutierrez, individually, Arly V. Hamner, individually, Pete O. Lucero, individually, Miguel S. Lucero, individually, Betty L. Olson, individually, Peggy Newbanks, individually, Ralph Pellicott, individually, Marcario Saiz, individually, Curtis Wagner, individually, Gary Watkins, individually, Alan Wofford, individually, and Jim Wood, individually, Plaintiffs-Petitioners, v. CITY OF PORTALES, a municipality existing under the laws of the State of New Mexico, Defendant-Respondent.

No. 30,558.

Supreme Court of New Mexico.

May 20, 2009.

Eric D. Dixon, Attorney and Counselor at Law, P.A., Eric D. Dixon, Portales, NM, for Petitioners.

Doerr & Knudson, P.A., Stephen E. Doerr, Randy J. Knudson, Portales, NM, Hinkle, Hensley, Shanor & Martin, L.L.P., Richard E. Olson, Rebecca N. Johnson, Roswell, NM, for Respondent.

OPINION

DANIELS, Justice.

{1} This case requires us to analyze the legal consequences of a written personnel policy provision enacted by a city ordinance that required the City of Portales ("the city") to offer to its retiring employees the option of continuing their health care coverage under the city's group plan at the active employee premium reimbursement rate. The Petitioners ("Retirees") accepted the city's offers at the time each of them retired, before the city council enacted an ordinance deleting the retirement insurance provision from the city's "Personnel Policy Manual" ("the Manual").

{2} The question before us is whether the city is correct in its position that the later change in the Manual necessarily extinguished any enforceable rights Retirees may continue to have under the terms that were applicable when they retired and accepted the city's offers. We hold that the circumstances of this case present genuine issues of material fact as to whether the city's offers and Retiree's acceptances constituted binding contracts, and we reverse the district court's entry of summary judgment in favor of the city.

I. BACKGROUND

{3} In 1994, the Portales city council enacted an ordinance adopting a comprehensive personnel policy manual governing its relationships with its employees. Section 629 of the Manual, "Retiree Health Care Insurance," provided:

The City of Portales shall offer employees upon their retirement the option of continuing their group health and life insurance coverage through the City's group plan, provided they are enrolled in the group plan at least one year prior to retirement. The cost of the insurance for the retiree shall be the same as the cost for regular employees. If the City is paying 75% of the premium for employees, the City shall pay 75% of the premium for the retiree and shall be budgeted out of the department from which the employee retires. Retirees shall be responsible for paying their portion of the premium on a monthly, timely basis, in order to avoid the lapse of their policy coverage.

Conditions of the policy coverage shall apply in accordance with the retiree's age and circumstances on an individual basis.

Between 1995 and 2000, nine of the fourteen Retirees retired and elected to accept the city's offer to continue receiving health care benefits and reimbursements on the same terms as active employees.

{4} In 2000, the city council adopted an ordinance opting into the New Mexico Retiree Health Care Act, NMSA 1978, §§ 10-7C-1 to -19 (1990) ("NMRHCA"), an act providing an alternative retiree health care benefit program for government employers and employees, which the Portales city council expressly had rejected for its employees in 1990. Even after the city's adoption of NMRHCA, the nine Retirees who had already retired continued receiving health coverage and reimbursements from the city under the Section 629 personnel policy option, which had not yet been repealed. Over the next several years, the remaining five Retirees retired and also accepted the city's still-continuing offers to receive health care coverage under its still-applicable terms.

{5} In 2005, city officials began to reconsider Retirees' rights to the reimbursement rates embodied in Section 629, in light of increasing health care costs and the city council's provision in 2000 of alternative retiree health care benefits through NMRHCA. In March, the city manager and the city's finance and administration committee agreed that Retirees should continue receiving coverage and reimbursements under the terms of Section 629. In May, the city council adopted a new ordinance that modified the Manual by deleting Section 629's health care reimbursement option entirely.

{6} After elimination of the Section 629 policy, Retirees met with the city attorney and others regarding the continuing rights of those who had previously accepted the city's Section 629 health insurance offer. After no consensus was reached, the city attorney submitted a resolution to the city council that would have interpreted its 2000 ordinance opting into NMRHCA as having rescinded Section 629 and as having terminated the rights of any retirees to its health care reimbursement provisions. The city council, in a divided vote, refused to adopt the resolution. Despite the city council's rejection of the resolution, the city manager notified Retirees that the city would discontinue reimbursing their health care insurance premiums on the terms contained in former Section 629 and offered to Retirees at the time of their retirement.

{7} Retirees filed suit in the district court of Roosevelt County to determine and enforce their rights. The district court granted summary judgment against Retirees on the ground that no vested or contractual rights could have been created by the terms of the ordinance adopting the health care policies.

{8} The Court of Appeals affirmed the grant of summary judgment in a divided opinion. Beggs v. City of Portales, 2007-NMCA-125, ¶¶ 32, 34, 142 N.M. 505, 167 P.3d 953. The two-judge majority, as had the district judge, focused on the fact that the retiree health insurance provisions of the Manual had been enacted through an ordinance, and relied on a body of law that rejected implications of enforceable private contractual rights from general governmental policies embodied in statutes. Id. ¶¶ 9-12. The dissenting judge concluded that the city had in fact entered into a specific binding contract with Retirees for provision of health care benefits for the duration of their retirement, and that not only should the grant of summary judgment for the city be reversed, but summary judgment should be entered in favor of Retirees. Id. ¶¶ 35, 48.

{9} This case is now before us on Retirees' petition for writ of certiorari. Beggs v. City of Portales, 2007-NMCERT-009, 142 N.M. 716, 169 P.3d 409.

II. STANDARD OF REVIEW

{10} On appeal, the grant of a motion for summary judgment is a question of law that is reviewed de novo. Tafoya v. Rael, 2008-NMSC-057, ¶ 11, 145 N.M. 4, 193 P.3d 551. Summary judgment is appropriate where there is no evidence raising a reasonable doubt that a genuine issue of material fact exists. Cates v. Regents of N.M. Inst. of Mining Tech., 1998-NMSC-002, ¶ 9, 124 N.M. 633, 954 P.2d 65. On the other hand, where any genuine controversy as to any material fact exists, a motion for summary judgment should be denied and the factual issues should proceed to trial. Gardner-Zemke Co. v. State, 109 N.M. 729, 732, 790 P.2d 1010, 1013 (1990). To that end, "[a] summary judgment motion is not an opportunity to resolve factual issues, but should be employed to determine whether a factual dispute exists." Id.

{11} In employing this test, all reasonable inferences from the record are construed in favor of the non-moving party. Garcia v. Underwriters at Lloyd's, London, 2008-NMSC-018, ¶ 12, 143 N.M. 732, 182 P.3d 113; see State v. Integon Indem. Corp., 105 N.M. 611, 612, 735 P.2d 528, 529 (1987) (stating that courts are "obliged to view the pleadings, affidavits and depositions in the light most favorable to the party opposing the [summary judgment] motion."). "If there are [any] reasonable doubts, summary judgment should be denied." Koenig v. Perez, 104 N.M. 664, 666, 726 P.2d 341, 343 (1986) (internal quotation marks, citation, and emphasis omitted).

III. DISCUSSION

{12} There are two separate lines of authority that have been argued to be applicable to this case, and each leads to different analyses and different potential results. The city relies on a line of authority that rejects finding personal contractual or vested rights in general statutory policies. See Whitely v. New Mexico State Pers. Bd., 115 N.M. 308, 312, 850 P.2d 1011, 1015 (1993) (rejecting a finding of any continuing right to future accruals of annual leave at previous statutory rates, because "[c]ontractual rights are not created by statute unless the language of the statute and the circumstances ... manifest a legislative intent to create private rights of a contractual nature enforceable against the State" (internal quotation marks and citation omitted)); Pierce v. State, 1996-NMSC-001, ¶ 47, 121 N.M. 212, 910 P.2d 288 (finding no private rights of retirees to tax exemptions on retirement income after a prior tax exemption statute was repealed, on the theory that "the principal function of a legislature is not to make contracts, but to make laws that establish the policy of the state" (internal quotation marks and citation omitted)).

{13} Retirees, on the other hand, point to decisions recognizing that government employees can rely on the terms of employment contracts with their governmental employers, including implied-in-fact employment contracts based on provisions in personnel manuals and on other representations and conduct of the parties. See Garcia v. Middle Rio Grande Conservancy Dist., 1996-NMSC-029, ¶ 11, 121 N.M. 728, 918 P.2d 7 ("In New Mexico, a personnel manual gives rise to an implied contract if it...