Isengard v. N.M. Pub. Educ. Dep't

• Decision Date: 30 September 2009
• Docket Number: No. CIV 08-0300 JB/RLP.,CIV 08-0300 JB/RLP.
• Citation: 708 F.Supp.2d 1190
• Parties: Chris ISENGARD, Plaintiff,v.NEW MEXICO PUBLIC EDUCATION DEPARTMENT, Division of Vocational Rehabilitation, Gary Beene, Celestino Jaramillo, and Gary Cordova, in their individual capacities, Defendants.
• Court: U.S. District Court — District of New Mexico

708 F.Supp.2d 1190

Chris ISENGARD, Plaintiff,v.NEW MEXICO PUBLIC EDUCATION DEPARTMENT, Division of Vocational Rehabilitation, Gary Beene, Celestino Jaramillo, and Gary Cordova, in their individual capacities, Defendants.

No. CIV 08-0300 JB/RLP.

United States District Court, D. New Mexico.

Sept. 30, 2009.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Maureen A. Sanders, Duff H. Westbrook, Sanders & Westbrook, P.C., Albuquerque, NM, for Plaintiff.

Mark T. Baker, Long Pound & Komer, P.A., Santa Fe, NM, John S. Stiff, Ann L. Keith, John S. Stiff & Associates, LLC, Albuquerque, NM, for Defendants New Mexico Public Education Department, Division of Vocational Rehabilitation, Gary Beene, and Celestino Jaramillo.

John S. Stiff, Ann L. Keith, John S. Stiff & Associates, LLC, Albuquerque, NM, for Defendant Gary Cordova.

MEMORANDUM OPINION AND ORDER

JAMES O. BOWNING, District Judge.

THIS MATTER comes before the Court on Defendant Gary Beene's Motion for Partial Summary Judgment on Qualified Immunity Grounds, filed February 27, 2009 (Doc. 63)(“Motion”). The Court held a hearing on July 16, 2009. The primary issue is whether Defendant Gary Beene is entitled to qualified immunity protection from the Plaintiff Chris Isengard's third claim of violation of his liberty interest alleged in the Complaint. Because Isengard has not met his burden to show that Beene deprived him of a clearly established liberty interest protected by the Fourteenth Amendment to the United States Constitution, the Court will grant Beene's motion and dismiss Isengard's third claim against Beene, as he is entitled to qualified immunity.

FACTUAL BACKGROUND

Isengard was an independent contractor for the New Mexico Public Education Department's Division of Vocational Rehabilitation (“DVR”) from January 1999 to October 2006. See Motion at 1. Pursuant to his contract with the state, he was responsible for providing administrative support for the New Mexico State Independent Living Council (“SILC”) and effectively served as that body's executive director. See State of New Mexico Department of Education Division of Vocational Rehabilitation Professional Services Contract # 05-644-1000-0019 at 1 (dated October 4, 2004), filed October 15, 2008 (Doc. 43-3)(“Contract”). In return, he received payment for his services and reimbursement for expenses that he paid out as the SILC's administrator. See id. at 2.

The SILC oversees the implementation of the State Independent Living Plan, which New Mexico adopts through approval of the Chair of the SILC and the council's two ex officio members. See Affidavit of Gary Beene ¶ 6, at 2 (executed February 27, 2009)(Doc. 63-2)(“Beene Aff.”). The state is required to maintain the SILC as a condition of receiving federal funding. The governor appoints twelve of its members. Isengard describes the SILC as “an independent council of citizens that provided their input to the State on the State's development of policies concerning disabled individuals.” See Statement of Chris Isengard ¶ 5(e) at 8-9 (executed May 28, 2009), filed May 28, 2009 (Doc. 73-2)(“Isengard St.”). When Isengard served as executive director of the SILC under contract with the DVR, he paid the SILC members and would submit reimbursement requests for those expenses to the State of New Mexico. See id. According to SILC's website, it is a “non-governmental, consumer controlled organization which develops, monitors, and evaluates the federally funded State Plan for Independent Living in the state of New Mexico....” See Plaintiff's Response in Opposition to Defendant Beene's Motion for Partial Summary Judgment on Qualified Immunity Grounds at 3, filed May 28, 2009 (“Pl. Response”)(citing nmsilc.org). The Assistant Cabinet Secretary for the DVR and the Director of the New Mexico Commission for the Blind serve as the ex officio members of the SILC. See Affidavit of John S. Stiff, Esq. Exhibit A, Office of Inspector General Audit Report at 5 (dated October 10, 2006)(filed October 15, 2008)(Doc. 43-2)(“OIG Audit”). Beene was the Assistant Cabinet Secretary for the DVR from June 2005 to October 2008. See Beene Aff. ¶ 1, at 1.

Isengard's contract with the DVR provided that either party could terminate it “for any reason whatsoever upon written notice delivered to the other party at least 10 days prior to the intended date of termination.” See DVR's Motion for Partial Judgment on the Pleadings Exhibit A, State of New Mexico Department of Education Division of Vocational Rehabilitation Professional Services Contract at 3 (signed Sept. 10, 2004), filed Jan. 20, 2009 (Doc. 56-2). The DVR notified Isengard by written notice on October 6, 2006 that his contract was terminated effective October 20, 2006. See Motion at 4. Isengard received notice of the termination of his contract by registered mail on October 9, 2006. See Isengard St. ¶ 4, at 2.

On October 10, 2006, the Public Education Department's Office of Inspector General (“OIG”) completed its audit report of Isengard's contract with the DVR. See OIG Audit at 1. Beene made the initial decision to review Isengard's contract and later determined that assistance was needed from the OIG, which led to the actual audit. See Answer to Defendants New Mexico Public Education Department, Division of Vocational Rehabilitation, Gary Beene and Celestino Jaramillo to Plaintiff's First Set of Interrogatories and Responses to Plaintiff's First Set of Requests for Production at 6, filed February 27, 2009 (Doc. 63-2); Pl. Response, Exhibit 3 at 2 (Doc. 73-3). Beene had no input, however, regarding the content or the wording of the OIG's audit report. See Beene Aff. ¶ 3, at 1.

The audit had three objectives: (i) to determine if all the money the DVR paid to Isengard was accounted for; (ii) to determine if Isengard had adequate documentation to support all expenditures under the contract; and (iii) to determine if all of the expenditures for which Isengard was reimbursed were reasonable, allowable, and in compliance with applicable laws and regulations. See OIG Audit at 2. The OIG reported in its audit that, out of $220,500.00 in payments under Isengard's contract, it found “more than $77,000 in unspent funds, expenditures for which [the Plaintiff] did not provide adequate documentation, and questioned costs that appeared not allowable under State and/or Federal laws and regulations.” OIG Audit at 4. Isengard contends that the conclusion was ultimately found to be in error. See Isengard St. ¶ 17 at 16. Based on the OIG's findings, however, the audit recommended that Isengard “either produce documentation required by law to establish the reasonableness and necessity of the amounts claimed, or make a refund payment to the [DVR].” OIG Audit at 4.

Isengard contends that the OIG Audit contains numerous false and stigmatizing statements, including that: (i) he failed to maintain documentation which supported more than $77,000.00 in claims for reimbursement;¹ (ii) the maintenance of such records was an essential part of business practice, that Isengard had an obligation to maintain them and failed to do so, and that he could not provide any documentation for more than $16,000.00 in expenditures; (iii) Isengard violated the Assurances Contract Administration Agreement; (iv) because Isengard had represented to DVR that he was uniquely qualified to provide Administrative support services to the SILC, his failure to maintain adequate accounting records is difficult to explain; (v) Isengard failed to cooperate with the auditor during the course of the audit; (vi) Isengard sought and obtained reimbursements for $46,025.00 in expenditures not allowed by the terms of his contract, by State law, or by federal rules; (vii) Isengard was in violation of the law and delinquent in his responsibility as a steward of public money; (viii) Isengard failed to pay attention to legal requirements; (ix) Isengard improperly sought reimbursement for an excessive charge for New Mexico Gross Receipts Tax; and (x) Isengard may have violated criminal laws. See Pl. Response at 8-9 (internal quotations omitted).

Beene discussed the OIG Audit and/or the reasons for terminating Isengard's contract with: (i) DVR staff; (ii) Gary Haug, who replaced Isengard; (iii) Public Education Department (“PED”) officials; (iv) the individuals from the Office of Inspector General who conducted the audit; (v) the SILC; (vi) his wife, Carla Beene; and (vii) Terry Brigance, a mutual friend Beene shared with Isengard. See Beene Aff. ¶ 5, at 2. Beene's notes show that, on September 14, 2006, he “shared detailed information with Rebecca [Holland] regarding the preliminary findings of the Plaintiff audit.” Pl. Response Exhibit 6 at 5, filed May 28, 2009 (Doc. 73-3). See Pl. Response Exhibit 1 at 3-4 (Doc. 73-2). At that time, Holland served on the executive committee of the SILC.² On October, 4, 2006, Beene “showed [Holland and Vince Montano] the draft of the Isengard's audit [and] went over all 5 findings [and] [r]eviewed some of the items from the spreadsheet.” Pl. Response Exhibit 7 at 6 (Doc. 73-3). See Pl. Response Exhibit 1 at 4. Vince Montano was the head of the SILC at that time. See Pl. Response Exhibit 1 at 4. Beene announced the findings of the OIG Audit at a meeting of the SILC on November 20, 2006. See Pl. Response Exhibit 8, Minutes of the SILC at 7 (Doc. 73-3). In addition to SILC members and DVR staff, two private citizens, Kalee Brown and Tim Carver, both employees of the San Juan Independence Center, as well as two interpreters and a stenographer were present at the meeting. See id.

Isengard also disclosed information about the OIG Audit and his subsequent termination. He sent an electronic-mail transmission to the full membership of SILC on August 2, 2006, indicating that an audit was underway. The electronic-mail transmission did not reveal any of the defamatory statements allegedly contained in the OIG Audit. See Motion Exhibit F, email dated August 2, 2006 at 12-14 (Doc....