Sherrill v. Farmers Ins. Exch.

Decision Date22 March 2016
Docket NumberNo. 33,859.,33,859.
Citation374 P.3d 723
Parties Barbara SHERRILL, Plaintiff–Appellant, v. FARMERS INSURANCE EXCHANGE, Defendant–Appellee.
CourtCourt of Appeals of New Mexico

O'Friel and Levy, P.C., Daniel J. O'Friel, Pierre Levy, Aimee Bevan, Santa Fe, NM, for Appellant.

Lewis Roca Rothgerber, LLP, Steven J. Hulsman, Ross L. Crown, Matthew W. Park, Albuquerque, NM, for Appellee.

OPINION

ZAMORA

, Judge.

{1} Plaintiff Barbara Sherrill appeals the district court's grant of summary judgment in favor of Defendant Farmers Insurance Exchange (Farmers) on her claim of retaliatory discharge. The district court determined that neither NMSA 1978, Section 59A–16–20 (1997)

, nor the implied covenant of good faith and fair dealing, constituted clearly mandated public policies that could support Sherrill's claim of retaliatory discharge. The district court further concluded that Sherrill did not demonstrate the necessary causal connection between her protected actions and her discharge. We affirm in part and reverse in part.

I. BACKGROUND

{2} Sherrill was employed by Farmers as a claims adjuster between 2007 and 2010. Sherrill's employment duties included adjusting personal injury and insurance claims in the first and third party contexts. As part of its liability strategy and standards, Farmers requires that adjusters make early contact with claimants. Farmers also requires its adjusters to contact claimants by telephone within twenty-four to forty-eight hours of receiving a claim, and to set up an early face-to-face meeting with the claimants. The practice of requiring claims adjusters to meet with claimants is referred to as the in-person contact program (IPC).

{3} Another component of Farmers' liability strategy and standards is the requirement that a certain percentage of unrepresented bodily injury claims be settled within sixty days for $1,500 or less. This claims settlement practice is referred to as early claims settlement (ECS). Farmers provides adjusters with ECS objectives, advising adjusters that failure to meet those objectives could result in employee discipline. Sherrill expressed concerns regarding the ECS process to at least one of her supervisors. In March 2010 Farmers informed Sherrill that her claims settlement numbers failed to meet the ECS objectives set for her and terminated Sherrill's employment.

{4} After her termination, Sherrill filed suit against Farmers for retaliatory discharge and prima facie tort. Sherrill also sought a declaratory judgment that Farmers violated Section 59A–16–20 of the Trade Practices and Frauds Act (Article 16) of the Insurance Code, and the New Mexico Mandatory Financial Responsibility Act, NMSA 1978, §§ 66–5–201

to –239 (1978, as amended through 2015). Sherrill requested damages under NMSA 1978, Section 59A–16–30 (1990) and punitive damages. The district court granted Farmers' motion to dismiss Sherrill's declaratory judgment claims and claim for damages under Section 59A–16–20, pursuant to Rule 1–012(B)(6) NMRA. The district court also granted Farmers' motion for summary judgment on Sherrill's claim for prima facie tort.

{5} The parties filed competing summary judgment motions on Sherrill's remaining retaliatory discharge claim. Sherrill argued that Farmers terminated her employment in retaliation for her refusal to carry out unfair and illegal claims practices, including ECS and IPC, which Sherrill claimed violated New Mexico law and public policy. Specifically, Sherrill argued that ECS and IPC violated the Release Act, NMSA 1978, §§ 41–1–1

to –2 (1971), Section 59A–16–20, and the implied covenant of good faith and fair dealing. Farmers argued that its claims practices did not violate New Mexico law, nor did they violate any clear mandate of public policy. Farmers further argued that Sherrill had not expressed any objection to IPC specifically, therefore, IPC could not have been the basis for retaliatory discharge.

{6} The district court granted Farmers' motion for summary judgment. The reasoning employed by the district court regarding Sherrill's claim related to the ECS program is best discerned from its statements at the conclusion of the motion hearing it held. Addressing Sherrill's contention that her discharge resulted from her objection to and refusal to participate in the ECS program, in violation of New Mexico public policy, the district court stated:

I can't find that there is a clear mandate of New Mexico public policy found in [Section 59A–16–20

] or in the covenant of good faith and fair dealing that has been violated. Even looking at everything most favorable to the plaintiff ... if everything she's saying is true, [it] really just comes down to the legal question of whether there's a clear mandate in those two policies that would make it actionable and my conclusion is there isn't.

Concerning Sherrill's claim regarding IPC as the basis for retaliatory discharge, the district court stated “I don't see anything, looking at all the evidence in the light most favorable to her, I don't see that she ever complained about IPC[,] so there is no way she could have been fired for that.” The district court entered an order granting summary judgment in favor of Farmers and dismissing the case with prejudice. This appeal followed.

II. DISCUSSION

{7} In this appeal we consider: (1) whether there are clearly mandated public policies embodied in Section 59A–16–20

and the covenant of good faith and fair dealing to support a claim for retaliatory discharge, and (2) whether there are questions of fact precluding summary judgment.

Standard of Review

{8} “An appeal from the grant of a motion for summary judgment presents a question of law and is reviewed de novo.” Montgomery v. Lomos Altos, Inc., 2007–NMSC–002, ¶ 16, 141 N.M. 21, 150 P.3d 971

. “Summary judgment is appropriate where there are no genuine issues of material fact and the movant is entitled to judgment as a matter of law.” Id. (internal quotation marks and citation omitted); see Rule 1–056(C) NMRA. We “view the facts in a light most favorable to the party opposing summary judgment and draw all reasonable inferences in support of a trial on the merits.” Romero v. Philip Morris Inc., 2010–NMSC–035, ¶ 7, 148 N.M. 713, 242 P.3d 280 (internal quotation marks and citation omitted). “When the district court's grant of summary judgment is grounded upon an error of law, however, the case may be remanded so that the issues may be determined under the correct principles of law.” Centex/Worthgroup, LLC v. Worthgroup Architects, L.P., 2016–NMCA–013, ¶ 15, 365 P.3d 37 (alterations, internal quotation marks, and citation omitted).

Retaliatory Discharge

{9} As a general rule, employment at will can be terminated by either the employer or the employee for any reason, or for no reason at all. See Trujillo v. N. Rio Arriba Elec. Coop., Inc., 2002–NMSC–004, ¶ 22, 131 N.M. 607, 41 P.3d 333

. “A retaliatory discharge cause of action [is] recognized in New Mexico as a narrow exception to the terminable at-will rule [.] Silva v. Albuquerque Assembly & Distribution Freeport Warehouse Corp., 1987–NMSC–045, ¶ 13, 106 N.M. 19, 738 P.2d 513. Under this cause of action, an employee must (1) identify a specific expression of public policy which the discharge violated; (2) demonstrate that he or she acted in furtherance of the clearly mandated public policy; and (3) show that he or she was terminated as a result of those acts. See

Lihosit v. I & W, Inc., 1996–NMCA–033, ¶ 7, 121 N.M. 455, 913 P.2d 262 ; Maxwell v. Ross Hyden Motors, Inc., 1986–NMCA–061, ¶ 20, 104 N.M. 470, 722 P.2d 1192 ; Vigil v. Arzola, 1983–NMCA–082, ¶¶ 29–30, 102 N.M. 682, 699 P.2d 613, rev'd in part on other grounds, 1984–NMSC–090, 101 N.M. 687, 687 P.2d 1038, overruled on other grounds by

Chavez v. Manville Prods. Corp., 1989–NMSC–050, ¶ 16, 108 N.M. 643, 777 P.2d 371.

{10} In the present case, Sherrill claims that she was discharged in retaliation for her objection to and her failure to comply with two of Farmers' claims processing practices: ECS, which requires adjusters to settle a percentage of unrepresented bodily injury claims within sixty days for $1,500 or less; and IPC, which requires adjusters to contact claimants by telephone within forty-eight hours of receiving a claim, and to set up early face-to-face meetings with the claimants. Because the district court stated different grounds for its grant of summary judgment on Sherrill's retaliatory discharge claim as it pertained to ECS and IPC, we will address Sherrill's retaliatory discharge claim as it relates to each practice separately.

Retaliatory Discharge Related to ECS

{11} Sherrill contends that the ECS program violated New Mexico's clear public policy requiring insurers to act in good faith and deal fairly with insureds and claimants. Sherrill claims that Farmers' program targeted unrepresented claimants from lower economic areas for early claim resolution and limited the settlement amount to $1,500, thereby promoting premature settlements for vulnerable injured claimants. According to Sherrill, Farmers set unfair and arbitrary ECS quotas, which forced adjusters to coerce claimants to settle prematurely for unreasonably low amounts and to put the financial interests of Farmers above the interests of Farmers' insureds and claimants.

{12} Sherrill claims that she was discharged for objecting to and failing to meet the objectives of Farmers' ECS program, contrary to: (1) Section 59A–16–20(E)

, which defines unfair trade practices to include “not attempting in good faith to effectuate prompt, fair and equitable settlements of an insured's claims in which liability has become reasonably clear”; and (2) the covenant of good faith and fair dealing, which requires that insurance companies “act honestly and in good faith in the performance of the contract” giving “equal consideration to its own interests and the interests of the policyholder.” UJI 13–1701 NMRA. The district court determined, as a matter of law, that neither Section 59A–16–20 nor...

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