IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO
Opinion Number: 2009-NMCA-050
Filing Date: April 1, 2009
Docket No. 27,553
LIZA ZARR,
Plaintiff-Appellant,
v.
WASHINGTON TRU SOLUTIONS, L.L.C.,
and DAROLD HAUG,
Defendants-Appellees.
APPEAL FROM THE DISTRICT COURT OF BERNALILLO COUNTY
Linda M. Vanzi, District Judge
Steven Granberg Attorney at Law, P.A.
Laurel Nesbitt
Albuquerque, NM
for Appellant
Sheehan, Sheehan & Stelzner, P.A.
Luis G. Stelzner
Kim A. Griffith
Albuquerque, NM
for Appellees
OPINION
BUSTAMANTE, Judge.
{1} Following termination from her employment with NCI Information Systems, Inc.
(NCI), Appellant Liza Zarr (Zarr) sued NCI, Washington Tru Solutions, LLC (WTS),
Washington Group International, Inc., Darold Haug (Haug), and Farok Sharif (Sharif),
alleging, among other things, intentional interference with a contractual relationship. The
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only claims contested on appeal are against WTS and Haug (collectively, Defendants).
{2} The district court granted Defendants’ motion for summary judgment and dismissed
Zarr’s claims with prejudice. Zarr argues on appeal that the district court wrongly applied
a sole-motive test to the improper-means prong of her claim of intentional interference;
wrongly applied a sole-motive test to the improper-motive prong of her claim of intentional
interference; and if the sole-motive test was proper, overlooked material issues of fact that
Defendants acted solely to harm her.
{3} We reverse the district court’s use of the sole-intent-to-harm standard as applied to
the improper-means ground for an intentional-interference-with-contractual-relations claim
and remand to the district court with instructions to reconsider Defendants’ motion for
summary judgment in light of the correct test. We affirm the district court’s use of the sole-
motive standard as applied to the improper-motive ground for intentional interference.
FACTUAL BACKGROUND
{4} WTS is a contractor for the United States Department of Energy (DOE). WTS
subcontracted with NCI to perform the information technology (IT) functions of WTS’s
DOE project. Zarr was employed by NCI to head the IT project for WTS, and her
responsibilities included oversight of expenditures and forecasting NCI’s annual budget.
Zarr’s position required interaction with Haug, WTS’s chief executive at the DOE project
site.
{5} NCI was satisfied with Zarr’s work performance during her employment. Haug,
however, apparently experienced difficulties with Zarr throughout her involvement on the
project. Areas of contention between Zarr and Haug included NCI’s budget projections and
personality-based friction. The situation culminated in August 2003 when Zarr took her
concern about a WTS proposal directly to DOE personnel without first going through WTS.
Haug was angry that Zarr had not gone through the proper channels and requested that Zarr
be removed from the project. At the time, no other positions within NCI were available to
Zarr, although she was offered a consulting contract. On August 19, pursuant to WTS’s
request, Zarr was released from her position at NCI. Zarr filed a complaint against NCI,
WTS, and two individual employees of WTS in April 2004.
DISCUSSION
{6} New Mexico has recognized the tort of interference with contractual relations as a
valid cause of action for at least fifty years. Wolf v. Perry, 65 N.M. 457, 461, 339 P.2d 679,
681 (1959) (noting that it is the “general rule . . . that one who, without justification or
privilege to do so, induces a third person not to perform a contract with another” is liable for
the harm caused by his action). Wolf involved an existing contract. The first case in New
Mexico applying the tort to a factual setting involving a prospective contractual relationship
is M & M Rental Tools, Inc. v. Milchem, Inc., 94 N.M. 449, 612 P.2d 241 (Ct. App. 1980).
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In M & M Rental Tools, Inc., this Court asserted that “[t]he tort of interference with
prospective contractual relations is well recognized.” Id. at 452, 612 P.2d at 244. M & M
Rental Tools, Inc. adopted the description of the tort found in the Restatement (Second) of
Torts § 766B (1979) and then distilled it to its essence: “Whether the tort is described as
improper interference or without privilege, either an improper motive (solely to harm
plaintiff), or an improper means is required for liability.” M & M Rental Tools, Inc., 94
N.M. at 454, 612 P.2d at 246. Use of the disjunctive “or” in M & M Rental Tools, Inc. is
meaningful. As this Court observed in Kelly v. St. Vincent Hospital, 102 N.M. 201, 207, 692
P.2d 1350, 1356 (Ct. App. 1984), the tort can be accomplished by either of two methods:
improper motive solely to harm the plaintiff or improper means. If proven, either basis
standing alone will support liability.
{7} Recently, our Supreme Court made clear that the “sole motive” test should only be
applied in cases of prospective contracts. Fikes v. Furst, 2003-NMSC-033, ¶¶ 21-23, 134
N.M. 602, 81 P.3d 545. See also Anderson v. Dairyland Ins. Co., 97 N.M. 155, 158, 637
P.2d 837, 840 (1981) (noting the courts are not as protective of prospective contractual
relations as of existing contracts).
{8} The pure legal arguments of the parties revolve around their view of the basic
contours of the tort. Zarr asserts that the improper means test has been improperly—perhaps
inadvertently—made more stringent by recent case law from this Court; Defendants argue
that the test was properly applied. Zarr also argues that requiring proof in prospective
contract cases that a defendant’s motive is solely to harm is more stringent than required by
the Restatement formulation of the tort and should be changed to match the rule for existing
contracts. We discuss each argument, along with related sub-issues, in turn.
{9} The standard of review for summary judgment is de novo. Barncastle v. Am. Nat’l
Prop. & Cas. Cos., 2000-NMCA-095, ¶ 5, 129 N.M. 672, 11 P.3d 1234. When considering
an appeal of summary judgment, we determine “whether there are genuine issues of material
fact relative to [a] plaintiff[’s] claims and whether defendants were entitled to summary
judgment as a matter of law.” Barreras v. N.M. Corr. Dep’t, 114 N.M. 366, 368, 838 P.2d
983, 985 (1992). The facts are considered in the light most favorable to the party opposing
summary judgment. Barbeau v. Hoppenrath, 2001-NMCA-077, ¶ 2, 131 N.M. 124, 33 P.3d
675.
A. Correct Standard for Improper Means: Sole Motive to Harm Not Required
{10} Zarr contends the district court improperly granted summary judgment in favor of
Defendants by requiring Zarr to show Defendants used improper means with the sole
intention of harming her. Zarr asserts the district court erroneously relied upon a case which
inadvertently overstated the improper-means prong of the interference- with-contractual-
relations test. We agree.
{11} In assessing Zarr’s claim, the district court followed Los Alamos National Bank v.
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Martinez Surveying Services, LLC, 2006-NMCA-081, ¶ 13, 140 N.M. 41, 139 P.3d 201,
which required the plaintiff to show, as an alternative to improper motive, that the defendant
used improper means with the sole intention of harming the plaintiff by interfering with a
prospective business advantage. The court in Los Alamos National Bank cited Silverman v.
Progressive Broadcasting, Inc., 1998-NMCA-107, 125 N.M. 500, 964 P.2d 61, to support
its position. The cause of action as described by Silverman requires the plaintiff to “prove
that the defendant used improper means or acted with an improper motive intended solely
to harm the plaintiff.” Id. ¶ 28. Previous cases, including Kelly and M & M Rental Tools,
Inc., are clear that the sole intention to harm the plaintiff relates only to the improper-motive
ground for the tort and not the improper-means ground. We see nothing in our prior cases
supporting the different formulation of the improper-means ground stated in Los Alamos
National Bank. Given the lack of any explanation in Los Alamos National Bank, for its
departure from precedent, we conclude the statement in paragraph 13 of the opinion was
inadvertent. Los Alamos National Bank simply overstated the test. Defendant argues that
we should retain the Los Alamos National Bank formula in recognition of the lesser
protection our cases afford prospective contractual relations. We see no reason to do so. We
perceive no need to further reduce the reach of the tort. The improper means ground for
liability is sufficiently governed by the nature of the conduct required to be shown. What
may qualify as “improper means” depends to some degree on context and can include, but
is not limited to predatory behavior, violence, threats or intimidation, deceit or
misrepresentation, bribery, economic pressure, unfounded litigation, defamation, unlawful
conduct, and perhaps violation of business ethics and customs. M & M Rental Tools, Inc.,
94 N.M. at 454, 612 P.2d at 246; Restatement (Second) of Torts § 767 cmt. c (1979).
Requiring proof of this type of conduct is sufficient to winnow out unworthy cases without
the veneer placed by the opinion in Los Alamos National Bank. To the extent that Los
Alamos National Bank extends the test to require a showing that the defendant used improper
means solely to harm the plaintiff, Los Alamos National Bank is overruled. We reverse the
order for summary judgment and remand to the district court to determine if a material issue
of fact exists as to whether, in requesting that Zarr be removed from the project, Defendants
acted with improper means.
B. Correct Standard for Improper Motive: Sole Motive to Harm Required
{12} Zarr argues the district court improperly granted summary judgment to Defendants
when it applied the sole-motive test to the improper-motive basis of her claim of intentional
interference with contractual relations. Zarr makes two points. First, she asserts that “New
Mexico cases have rooted the rule governing intentional interference with prospective
contractual relations in a misreading of the Restatement.” Second, she asserts she was not
an at-will employee, and thus her claim should be treated as involving an existing contract.
1. Sole Motive to Harm
{13} Zarr’s argument is straightforward. She points out that Section 766B of the
Restatement on which M & M Rental Tools, Inc. relied in recognizing the tort contains no
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requirement that the defendant’s sole motive be to harm the plaintiff. That much is accurate.
However, Zarr does not adequately acknowledge the fact that courts are not bound by the
Restatement and may depart from Restatement formulations as they see fit. M & M Rental
Tools, Inc. did so, for example, when it declined to consider all of the factors listed in
Section 767 of the Restatement to determine whether particular conduct is actionable. M &
M Rental Tools, Inc. limited the specific factors to improper motive and improper means.
See M & M Rental Tools, Inc., 94 N.M. 453-54, 612 P.2d at 245-46.
{14} Further, Zarr’s argument fails to take into account the contextual nature of the tort.
The issue in each case is whether the interference is improper or not under
the circumstances; whether, upon a consideration of the relative significance
of the factors involved, the conduct should be permitted without liability,
despite its effect of harm to another. The decision therefore depends upon
a judgment and choice of values in each situation.
Restatement (Second) of Torts § 767 cmt. b.
{15} New Mexico’s cases have consistently recognized that existing contractual relations
merit more protection than prospective contracts and that, as a result, a different analysis is
appropriate for the two situations. Fikes, 2003-NMSC-033, ¶¶ 21-23. This kind of
differentiation is an appropriate recognition of the effect of context on the contours of the
tort.
{16} Finally, the sole-motive-to-harm-requirement is now enshrined in our Supreme Court
authority. Id. As an intermediate court of appeals we are powerless to change the rule. See
Alexander v. Delgado, 84 N.M. 717, 718, 507 P.2d 778, 779 (1973).
2. Zarr Was an At-Will Employee
{17} It is necessary to assess whether Zarr’s employment relationship with NCI was at-
will or if she had an implied employment contract that restricted NCI’s ability to terminate
her employment at any time. When an employment relationship is at-will, any claim of
intentional interference with that relationship is treated as interference with a prospective
employment relationship. Silverman, 1998-NMCA-107, ¶ 28; Kelly, 102 N.M. at 207, 692
P.2d at 1356. If Zarr’s relationship with NCI was at-will, then the sole-motive test was the
correct standard to apply to the improper-motive ground. Zarr claims that because her
employment relationship with NCI limited NCI’s right to terminate her employment, she was
entitled to the greater protection offered to existing contracts. We disagree.
{18} “New Mexico follows the general rule that employment is terminable at will by either
the employee or the employer, absent an express contract to the contrary.” Gormley v. Coca-
Cola Enters., 2004-NMCA-021, ¶ 20, 135 N.M. 128, 85 P.3d 252 (filed 2003), opinion
superseded by 2005-NMSC-003, 137 N.M. 192, 109 P.3d 280. “An exception to the general
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rule is the existence of an implied contract that limits an employer’s authority to discharge.”
Id.
This Court has upheld findings of an implied employment contract
provision that restricted the employer’s power to discharge where the facts
showed that the employer either has made a direct or indirect reference that
termination would be only for just cause or has established procedures for
termination that include elements such as a probationary period, warnings for
proscribed conduct, or procedures for employees to air grievances.
Hartbarger v. Frank Paxton Co., 115 N.M. 665, 668, 857 P.2d 776, 779 (1993). An implied
contract may be found in written or oral representations, in the conduct of the parties, or in
a combination of representations and conduct. See Newberry v. Allied Stores, Inc., 108 N.M.
424, 427, 773 P.2d 1231, 1234 (1989) (upholding a finding of implied contract based upon
employee manual, words, and conduct of parties). Our Supreme Court has upheld findings
that there was no implied contract where the alleged promise by the employer was not
sufficiently explicit. See Shull v. N.M. Potash Corp., 111 N.M. 132, 134-35, 802 P.2d 641,
643-44 (1990) (affirming summary judgment in favor of employer where employee had no
bargained-for expectations and employee handbook did nothing to alter at-will relationship).
{19} The district court found, based upon numerous undisputed facts, that Zarr was an at-
will employee for NCI. Zarr argues the district court overlooked issues of material fact in
making its finding. Specifically, Zarr contends that although she was informed at the time
she applied for the position and at hiring that her employment was terminable at-will at any
time by either party, although she signed receipts for an employee handbook and a policies
and procedures manual acknowledging that her employment was terminable at-will at any
time, and although no provisions were to be construed as an employment contract, NCI’s
practices nevertheless altered the relationship so she could only be fired with good cause
after progressive discipline.
In examining implied employment contract cases, we always have
required that the promise that is claimed to have altered the presumed at-will
term be sufficiently explicit to give rise to reasonable expectations of
termination for good cause only. . . . An employer creates expectations by
establishing policies or making promises. An implied contract is created
only where an employer creates a reasonable expectation. The
reasonableness of expectations is measured by just how definite, specific, or
explicit has been the representation or conduct relied upon.
Hartbarger, 115 N.M. at 672, 857 P.2d at 783 (citations omitted). Zarr does not claim
anyone told her at any time during her employment that her position was not terminable at-
will. Zarr also does not assert NCI was at any time displeased with her work performance
in a way that would have required progressive discipline. In fact both parties agree Zarr was
relieved of her employment duties solely because of WTS’s request.
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{20} Zarr’s belief that she had an implied employment contract stems from two occasions
when she was required, as a supervisor, to administer discipline to subordinates. In doing
so, she consulted human resources personnel who instructed her to take steps short of
terminating the employment of her subordinates (in one case by verbally disciplining and
placing a report in the file of an employee who insulted another; and in one case by moving
an employee complaining of discrimination to another department). Zarr argues that through
these interactions with human resources, and because she was given management training
in how to administer progressive discipline, NCI established an implied employment
contract that negated NCI’s express statements that her employment was terminable at any
time by either party. Zarr testified that although she was aware that NCI’s policies and
procedures provided for immediate termination she had concluded that termination could
occur for good cause only.
{21} Defendants do not dispute Zarr’s assertions that she disciplined subordinates. Rather,
they argue NCI never provided an explicit promise that would alter the at-will relationship
or give rise to a reasonable expectation that her employment could not be terminated at any
time. Defendants also argue that Zarr admitted NCI expressly informed her that her
employment was at-will, and no one ever told her anything to the contrary. Zarr does not
cite to any specific provisions of NCI’s policies and procedures that restrict NCI’s ability
to terminate employment at any time.
{22} Based upon the uncontested evidence that Zarr was an at-will employee, even
viewing all evidence in the light most favorable to Zarr, we cannot say that two instances
where employees were disciplined instead of terminated give rise to an implied employment
contract that limited NCI’s authority to discharge Zarr. We adhere to our Supreme Court’s
statement in Hartbarger: “As a matter of policy, this Court will not consider evidence that
a company does not usually fire employees without a good reason as by itself establishing
that the company does not maintain an at-will employment policy.” Id. at 674, 857 P.2d at
785. An employer’s practice of normally firing employees only for good cause is not
evidence that the employer does not maintain an at-will employment policy. Id. As Zarr has
not met her burden of raising a material issue of fact, we affirm the district court’s holding
that Zarr’s employment was at-will, terminable at any time by either party.
{23} Accordingly, we hold the sole-motive test was the proper test to apply to Zarr’s claim
of intentional interference with a prospective contract. Therefore, we must establish whether
a material issue of fact existed as to whether Defendants acted with sole motive to harm Zarr.
C. NO MATERIAL ISSUE OF FACT ON SOLE MOTIVE
{24} Zarr argues that the district court overlooked a genuine issue of material fact that
Defendants acted with the sole motive to harm her. Zarr argues that Defendants’ statements
that they requested her removal from the project for legitimate business reasons were entirely
pretextual, and the reasons Defendants asked NCI to remove her were improper.
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{25} New Mexico courts have adopted a view that where a defendant is accused of
interfering with a plaintiff’s opportunity to enter into prospective contracts, a strong showing
must be made that the defendant acted not for legitimate business reasons but from some
motive such as personal vengeance or spite. Anderson, 97 N.M. at 158, 637 P.2d at 840. If
the accused can show a legitimate business reason for the action, even if there also may have
been a motive to harm the plaintiff, no material issue of fact exists. See Kelly, 102 N.M. at
207, 692 P.2d at 1356 (“Because the record is replete with evidence that [the defendant] had
legitimate business purposes for adopting the requirement, even if [the defendant]
additionally had a motive to harm [the] plaintiffs, there is no material issue of fact.
Summary judgment was proper.”); see also Clough v. Adventist Health Sys., Inc., 108 N.M.
801, 806, 780 P.2d 627, 632 (1989) (“[E]ven if [the plaintiff] had produced evidence of
improper motives, [because] legitimate health care and financial reasons existed for
suspending [the plaintiff’s] privileges[,] we conclude that no material issue of fact exists to
support [the plaintiff’s] claim of tortious interference.”).
{26} Defendants contend they requested Zarr’s removal from the WTS project because of
ongoing problems with the budget forecast and because Zarr did not follow procedure when
she took her concerns about an expenditure directly to DOE instead of going through WTS.
Zarr argues that Defendants’ stated reasons for firing her were entirely pretextual. In support
of her position, Zarr points to the timing of her release from employment, her lack of any
disciplinary record regarding the budget issues, and the fact that another employee involved
in budgeting was retained and given additional responsibilities.
{27} The timing of Zarr’s release from employment supports both her own argument and
Defendants’ argument that she was released because in going to DOE with her concerns, she
chose a different chain of command at WTS than was acceptable to Haug, which Zarr herself
apparently acknowledges in her deposition testimony. Further, the record shows WTS had
previously expressed concerns about Zarr resolving issues directly with DOE instead of
going through WTS. Although Zarr did not have a record of discipline with regard to the
budget forecast issues, all parties agree NCI’s estimates were over budget due to labor costs,
the estimates fluctuated from month to month, and confusion existed about which party was
responsible for various expenditures. That one of Zarr’s subordinates was retained and given
additional responsibilities, although he too worked on the budget, is not a convincing
argument that Zarr’s dismissal was due to an improper motive because Zarr was the person
ultimately responsible for providing budget forecasts.
{28} WTS or Haug may have had improper motives in requesting Zarr’s removal, but the
record also shows substantial evidence of legitimate business reasons for the request. See
Silverman, 1998-NMCA-107, ¶ 30 (holding that summary judgment against the plaintiff was
proper when the defendants acted at least in part for legitimate business purposes). Zarr
alleges WTS’s reasons were pretextual but both parties generally agree on the events which
took place prior to Zarr’s removal from NCI. Zarr’s allegations raise some factual issues,
but it is not enough that there are some factual issues because the factual issues must be
material; immaterial facts create no triable issue. See Oschwald v. Christie, 95 N.M. 251,
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253, 620 P.2d 1276, 1278 (1980). As discussed above, because Defendants’ motive must
have been solely to harm Zarr, and the record shows Defendants acted at least in part for
legitimate business reasons, no material issue of fact exists. The district court did not err in
granting summary judgment in favor of Defendants.
CONCLUSION
{29} We reverse the district court’s holding with regard to the improper-means ground for
intentional interference with contractual relations, affirm the district court’s finding of
summary judgment in favor of Defendants based upon the improper-motive standard, and
remand to the district court with instructions to apply the appropriate standard to the question
of whether Defendants acted with improper means.
{30} IT IS SO ORDERED.
MICHAEL D. BUSTAMANTE, Judge
WE CONCUR:
JAMES J. WECHSLER, Judge
JONATHAN B. SUTIN, Judge
Topic Index for Zarr v. Washington Tru Solutions, LLC, No. 27,553
CN CONTRACTS
CN-IF Interference with Contract
CP CIVIL PROCEDURE
CP-SJ Summary Judgment
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