Melnick v. State Farm Mut. Auto. Ins. Co.

• Decision Date: 02 February 1988
• Docket Number: No. 16840,16840
• Citation: 749 P.2d 1105,106 N.M. 726,1988 NMSC 12
• Parties: , 3 Indiv.Empl.Rts.Cas. (BNA) 730 Mitchell MELNICK, Plaintiff-Appellant, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, State Farm Life Insurance Company, State Farm Fire and Casualty Company, State Farm General Insurance Company and Robert C. Degeer, Defendants-Appellees.
• Court: New Mexico Supreme Court

Page 1105

749 P.2d 1105

106 N.M. 726, 3 Indiv.Empl.Rts.Cas. (BNA) 730

Mitchell MELNICK, Plaintiff-Appellant, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, State Farm Life Insurance Company, State Farm Fire and Casualty Company, State Farm General Insurance Company and Robert C Degeer, Defendants-Appellees.

No. 16840.

Supreme Court of New Mexico.

Feb. 2, 1988.

Rehearing Denied Feb. 26, 1988.

[106 NM 727] Klecan & Santillanes, Eugene E. Klecan, Janet Santillanes, Albuquerque, for plaintiff-appellant.

Miller, Stratvert, Torgerson & Schlenker, Alan Konrad, Albuquerque, for defendants-appellees.

OPINION

WALTERS, Justice.

Plaintiff Melnick began a State Farm Insurance Agency in Los Alamos in 1946. On May 13, 1980, State Farm Mutual Insurance Company terminated Melnick's insurance agency contract and ordered him to cease operation of his agency. Melnick requested a termination review hearing, and State Farm impaneled a review committee which recommended that Melnick's termination be upheld. The president of State Farm reviewed the committee's findings and adopted its recommendation. Melnick subsequently filed actions against State Farm and requested a jury trial.

Evidently, Melnick at one time advanced two arguments in the district court: (1) State Farm breached the agency contract in terminating the insurance agency without a showing of good cause; and (2) State Farm breached an implied covenant of good faith and fair dealing when it terminated the insurance agency. At trial, however, Melnick expressly abandoned the breach of express contract argument, and that claim is not before us. At the close of plaintiff's evidence, State Farm moved for a directed verdict on the implied covenant issue, and the trial court denied the motion. The next morning, however, the judge did direct a verdict for State Farm, entering a judgment which recited that a duty of good faith attaches to the performance of every contract, including contracts terminable-at-will, but that State Farm did not terminate Melnick's agency in bad faith. Melnick moved for a new trial; the court denied the motion, and Melnick appeals.

Melnick claims that the trial judge's reversal of her interlocutory ruling on directed verdict constituted reversible error, arguing that when she initially denied State Farm's motion, she necessarily found that reasonable minds could differ as to whether State Farm was liable for terminating in bad faith his insurance agency. Without citation to any authority, Melnick claims the trial judge could not thereafter take that issue from the jury by entering a directed verdict in favor of State Farm.

State Farm responds that no covenant of good faith and fair dealing exists or can be implied in an at-will employment relationship of indefinite duration that is defined by a wholly integrated, written contract. In the alternative, State Farm claims that even if a covenant of good faith and fair dealing is implied in an at-will employment contract, it did not terminate Melnick in bad faith. It is State Farm's position that because it was entitled to judgment as a matter of law, the trial court did not err in directing a verdict in its favor.

Denial of a motion for a directed verdict at the close of a plaintiff's evidence is interlocutory because it leaves the case in the trial court for further proceedings. But the trial court may revise or rescind an interlocutory order at any time before entry of a judgment that concludes the litigation. See Barker v. Barker, 94 N.M. 162, 165, 608 P.2d 138, 141 (1980); State v. Doe, 99 N.M. 460, 463, 659 P.2d 912, 915 (Ct.App.1983). A trial court may reconsider the denial of any motion for directed verdict based on legal issues raised by the motion. Kinetics, Inc. v. El Paso Products Co., 99 N.M. 22, 24, 653 P.2d 522, 524 (Ct.App.1982) (upholding grant of directed verdict subsequent to jury deadlock and after twice denying such motion); cf. Becker v. Hidalgo, 89 N.M. 627, 629, 556 P.2d 35, 36-37 (1976) (trial court may grant summary judgment despite previous entry of pretrial order listing contested issues of fact). It was not reversible error, therefore, for the court initially to deny State Farm's directed verdict motion and then later grant it. A trial court has the inherent authority to reconsider its interlocutory orders, and it is not the duty of the trial court to perpetuate error when it realizes it has mistakenly ruled. The focus, then, is whether a directed verdict was warranted in this case.

Our case law consistently has supported the proposition that if reasonable minds can differ on the conclusion to be reached under the evidence or the permissible inferences to be drawn therefrom, the question is one for the jury and it is error to direct a verdict. E.g., Simon v. Akin, 79 N.M. 689, 690, 448 P.2d 795, 796 (1968). Over the years, however, we have stated in at least three different ways the manner in which a court must consider a motion for a directed verdict. One line of cases has declared that in reviewing a motion for a directed verdict, a court must consider only the nonmoving party's evidence, together with all reasonable inferences which could be deduced therefrom, in a light most favorable to that party. E.g., McGuire v. Pearson, 78 N.M. 357, 358, 431 P.2d 735, 736 (1967).

Second, and similarly, some of our opinions state that courts must accept as true all portions of the nonmoving party's testimony and all reasonable inferences flowing therefrom which tend to prove that party's case and must disregard all conflicts and all evidence which tend to weaken or disprove it. E.g., Simon, 79 N.M. at 690, 448 P.2d at 796; Simon Neustadt Family Center v. Bludworth, 97 N.M. 500, 507, 641 P.2d 531, 538 (Ct.App.1982). This, too, could be construed to mean that courts may view only the nonmovant's evidence.

Third, later New Mexico cases have said that in reviewing a directed verdict judgment, courts must consider all evidence, insofar as the properly admitted evidence is uncontroverted, and all reasonable inferences deducible therefrom in a light most favorable to the party resisting the motion. That rule was stated by us most recently in Skyhook Corp. v. Jasper, 90 N.M. 143, 146, 560 P.2d 934, 937 (1977), and in Strickland v. Roosevelt County Rural Elec. Coop., 94 N.M. 459, 464, 612 P.2d 689, 694 (Ct.App.1980), cert. denied, 99 N.M. 358, 658 P.2d 433 (1983), and 463 U.S. 1209 (1983). Several earlier cases ¹ appear to support this standard of review inasmuch as they reviewed a directed verdict motion granted at the close of all evidence, and in those cases the appellate court said that the trial judge must view "the evidence" in a light most favorable to the nonmoving party.

Oftentimes, when judges consider a directed verdict motion at the close of plaintiff's evidence, only plaintiff's evidence is available to assess. That is not always the case, however; in fact, that is not the case here. State Farm introduced evidence during its cross-examination of Melnick's witnesses. In reconciling the conflict in the scope of review standard announced in our cases, we would think it absurd to ignore uncontradicted testimony, because it may be unfavorable to the nonmovant, in ascertaining whether facts exist which might lead reasonable minds to opposing conclusions. We therefore adopt and reaffirm the better reasoned standard announced in Skyhook, applicable to both trial and appellate courts. Archuleta, 86 N.M. at 95, 519 P.2d at 1176. To the extent that other cases state a contrary standard of review, we overrule those opinions.

Skyhook delineates the correct standard as follows:

Neither the trial court in ruling upon a motion for a directed verdict, nor an appellate court in reviewing the evidence on appeal from a judgment entered pursuant to a directed verdict, is authorized to consider only the evidence most favorable to the party opposing the motion. All the evidence must be reviewed, but, if there be conflicts or contradictions in the evidence, these conflicts must be resolved in favor of the party resisting the motion. Insofar as the properly admitted evidence is uncontroverted, it must be considered. However, if any uncontradicted evidence, including the reasonable inferences deducible therefrom, may reasonably be interpreted in different ways, then the interpretation most favorable to the resisting party must be accepted.

90 N.M. at 146, 560 P.2d at 937. See also Blume, Origin and Development of the Directed Verdict, 48 Mich.L.Rev. 555, 581 (1950) (judge must look at all evidence in considering motion for directed verdict); J. Walden, Civil Procedure in New Mexico Sec. 9c(2)(a), at 225 (1973) (in deciding whether to grant directed verdict, judge may grant motion only after considering all evidence in light most favorable to nonmoving party and arriving at conclusion that evidence as matter of law is insufficient to justify verdict in party's favor). Federal courts have adopted the same standard of review for a directed verdict motion. See 5A J. Moore, Moore's Federal Practice p 50.02, at 50-30 (2d ed. 1987) (federal appellate courts consider all evidence when reviewing directed verdict motion).

To announce a standard of review, however, is far simpler than to apply it. The varying nature of fact situations in each trial prohibits an outline of precise guidelines that would govern the outcome of every directed verdict motion. The principal consideration, however, is recognition that interference with the jury function must be minimized so that erosion of a litigant's right to a trial by jury is not effected. 9 C. Wright & A. Miller, Federal Practice & Procedure Sec. 2524, at 545 (1971). To remove a case from the jury, it should be clear that the nonmoving party has presented no true issues of fact which that party has the right to have decided by his peers. Sanchez, 57 N.M. at 387, 259 P.2d at 348. If the evidence fails to present or support an issue essential...