Sanchez v. Clayton
| Decision Date | 02 June 1994 |
| Docket Number | No. 21498,21498 |
| Parties | , 129 Lab.Cas. P 57,862, 92 Ed. Law Rep. 1003, 9 IER Cases 1013 Steve SANCHEZ and Donald Sandoval, Plaintiffs-Appellants, v. Carl CLAYTON and Servicemaster West Central Management Services, Inc., Defendants-Appellees. |
| Court | New Mexico Supreme Court |
Steve Sanchez and Donald Sandoval appeal the dismissal with prejudice of their complaint for wrongful discharge from employment. They asserted claims in tort and breach of contract against Carl Clayton and Servicemaster West Central Management Services. The trial court dismissed the case because it believed that, through settlement of the judgment rendered in a federal civil rights suit against New Mexico Highlands University, Sanchez and Sandoval had received full satisfaction of their damages. Because we find that the Plaintiffs stated a cause of action for compensatory and punitive damages that would not constitute a double recovery, we reverse.
Facts and proceedings. Servicemaster provides management services to health care educational, and industrial customers in the areas of physical plant operations and maintenance, housekeeping, food service, laundry and linen care, materials management, and clinical equipment maintenance. Servicemaster enters into contracts with its customers requiring it to provide on-site management personnel who direct, supervise, manage, and train employees of the client institution. In 1987, Servicemaster entered into such a contract with Highlands to manage its physical plant. Clayton was the on-site manager provided by Servicemaster. Sanchez was a locksmith and Sandoval a purchasing agent at the physical plant, and both were coaches for the Highlands wrestling team.
Sanchez and Sandoval complained to the Highlands Board of Regents that Servicemaster was being paid $240,000 per year for the same services that a Highlands employee had previously provided for only $26,000. After signing a petition requesting a formal inquiry into the reasons for the contract, Sanchez and Sandoval were fired from their jobs on the premise that their positions had been reorganized. They filed suit in federal court against the president, vice president, and personnel director of Highlands for violation of their civil rights. Sanchez v. Sanchez, 777 F.Supp. 906 (D.N.M.1991). Sanchez and Sandoval moved to join Clayton and Servicemaster as defendants, but the latter successfully resisted the motion, arguing that because they were not acting under color of state law there was no federal jurisdiction over them in the civil rights case. Clayton testified in the federal suit that, upon instruction by a Highlands attorney, he had signed a false affidavit concerning the alleged reorganization. Sanchez and Sandoval subsequently brought suit against Clayton and Servicemaster in state district court. They alleged civil conspiracy, tortious interference with their employment contract with Highlands, and breach of the contract between Servicemaster and Highlands, of which they were third-party beneficiaries.
The federal jury found that Highlands employees had violated Plaintiffs' First Amendment right of free speech and Fifth Amendment right to due process and awarded a total of $180,000 in compensatory and $400,000 in punitive damages. The jury had been instructed to consider the nature, extent, and duration of any emotional injuries suffered by Plaintiffs and any emotional distress, anxiety, pain and suffering, or mental anguish experienced in the past and reasonably certain to be experienced in the future, as well as the value of lost earnings and the present cash value of earning capacities reasonably certain to be lost in the future (and in Sandoval's case, the present value of his retirement benefits). The court also awarded $170,000 in attorney's fees. Highlands appealed from the judgment and Plaintiffs cross-appealed from the court's denial of prejudgment interest. In June 1992, Highlands, Sanchez, and Sandoval settled the case for $700,000. They executed a release of judgment wherein Sanchez and Sandoval insisted on a clause that stated:
[T]his release ... is not intended to release or absolve Servicemaster ... or Carl Clayton from any liability ... or damages ... arising from the termination of plaintiffs and presently pending in the case of [Sanchez v. Clayton.].
Following the settlement in the federal case, Clayton and Servicemaster moved for and were granted summary judgment in the state case. The trial court concluded that "the judgment obtained by Sanchez and Sandoval in the federal court against the University Defendants was paid" and that dismissal of the complaint with prejudice would be appropriate under the principle against double recovery set forth in Vaca v. Whitaker, 86 N.M. 79, 83, 519 P.2d 315, 319 (Ct.App.1974), which the district court summarized as follows:
A plaintiff is entitled to but one compensation for his loss and satisfaction of his claim prevents its further enforcement. In effect, where payment of the judgment in full is made by the judgment debtor, the plaintiff is barred from further action against another who is liable for the same damages.
Plaintiffs' counsel conceded at oral argument before this Court that, although the theory of recovery is different, the Plaintiffs are seeking the same compensatory damages in the state action as were awarded in the federal action.
Neither McConal nor Vaca resolve the issue in this case. To the extent a judgment for damages is paid by one or more of the judgment debtors, we agree that a claim for the same damages against any other person is extinguished regardless of the theories upon which the respective claims for relief are based. Conversely, a party's liability for proportionate fault is unaffected by the injured party's settlement with others who are severally liable for their own proportionate fault. Wilson v. Galt, 100 N.M. 227, 232, 668 P.2d 1104, 1109 (Ct.App.), cert. denied, 100 N.M. 192, 668 P.2d 308 (1983). Liability for proportionate fault is a liability for a distinct part of the damages and not for the same damages that may be apportioned to others. With respect to tortfeasors who are jointly and severally liable, a settlement with one tortfeasor reduces the claim against other tortfeasors in the amount of the consideration paid or in any greater amount as may be provided in the release. NMSA 1978, Sec. 41-3-4 (Repl.Pamp.1989) (). In Gallegos v. Citizens Insurance Agency, 108 N.M. 722, 730, 779 P.2d 99, 107 (1989), we said,
Regarding joint contract liability, we likewise do not reach or decide here whether we would follow the common law that a release of one joint obligor on a contract operates to release all other obligors or whether we would adopt the modern view that where two or more obligors are jointly liable for breach, a release of one does not necessarily release the other; whether the other is released depends upon the intent of the parties and whether the injured party has received full satisfaction.
Although argued as being pivotal to this case, we believe McConal Aviation v. Commercial Aviation Insurance Co., 110 N.M. 697, 799 P.2d 133 (1990), is inapplicable. The Court in McConal did not apply any of the above-described principles, apparently because the Court determined that an insurance broker making a prejudgment settlement of a negligence claim was neither a joint tortfeasor nor a joint obligor under a contract.
In McConal an insurance broker agreed to obtain a property damage policy for plaintiff's aircraft. Accordingly, an insurance company issued a binder to plaintiff insuring his aircraft for one month and requested that plaintiff fill out and submit an application for insurance before the binder expired. Plaintiff completed the paperwork and forwarded it to the broker. The broker failed to forward the paperwork to the insurance company. The aircraft crashed. The insurance company denied liability to the plaintiff, pointing the finger at the broker. The broker claimed that it was not responsible and that, at least by implication, it had not failed in its duty to procure property damage insurance from the insurer. Id. at 698, 799 P.2d at 137. Plaintiff sued the broker and the insurance company, and before trial he reached a $40,000 settlement agreement with the broker. At trial the jury returned a verdict of $65,000 against the insurance company. The insurance company filed a motion seeking to credit the judgment with the $40,000 settlement with the broker. The trial court denied the insurance company's motion and the insurance company appealed. Id. at 698-99, 799 P.2d at 137-38.
On appeal, a plurality of this Court concluded that had McConal's claim against the broker also gone to the jury it well may have awarded him additional damages. Id. at 699, 799 P.2d at 138. Based on this conclusion, the plurality relied on principles of collateral source and the encouragement of settlements to deny an offset of the broker's settlement from the judgment awarded against the insurer. Id. at 700-01, 799 P.2d at 136-37. In a special concurrence, Justice Montgomery, disagreeing with the plurality's conclusion, stated:
The plurality speculates that, had the claim against [the broker] gone to the jury it might well have awarded McConal additional damages. However, there is no indication that the jury would have done so. McConal sued [the insurance company] for the costs of repairing its airplane, transportation and storage charges, and interest on a loan. The jury's verdict awarded McConal only slightly more than the requested damages. Although McConal...
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