May 01, 2012 – Jonathan Madrid v. Village of Chama, No. 30,764

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IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO

Opinion Number:

Filing Date: May 1, 2012

NO. 30,764

JONATHAN MADRID,
Plaintiff-A ppellant,

V.

VILLAGE OF CHAMA,
Defendant-A ppellee.

APPEAL FROM THE DISTRICT COURT OF RIO ARRIBA COUNTY
Sheri A. Raphaelson, District Judge

Serra & Gamity, P.C.

Diane Gamity

Santa Fe, NM

for Appellant

Scheuer, Y ost & Patterson, P.C.
Tony F. Ortiz

Kyvistin L. Davidson

Santa Fe, NM

for Appellee

OPINION
VANZI, Judge.
{1} 	Plaintiff Jonathan Madrid appeals from a district court order granting a motion
to dismiss in favor of Defendant Village of Chama (the Village). 	We address two
issues on appeal: 	(1) whether Madrid was required to appeal the Village’s
administrative decision terminating his employment by petitioning the district court
for a writ of certiorari and (2) whether the district court erred when it concluded that
Madrid failed to state a claim on which relief could be granted because the Village’s
employee handbook, Village of Chama, N.M., Personnel Policies 1999-01 (the
Ordinance), clearly stated that it did not create an implied contract. We reverse. We
hold that Madrid was not required to petition the district court for a writ of certiorari.
Thus, Madrid’s failure to timely appeal the decision pursuant to Rule 1-075(D)
NMRA was not a jurisdictional defect requiring dismissal. We further hold that the
district court erred in granting the Village’s Rule 1-012(B)(6) NMRA motion for
failure to state a claim. Finally, we clarify that our courts should not evaluate motions
to dismiss for failure to state a claim in accordance with the United States Supreme
Court’s interpretation of the Federal Rules of Civil Procedure.

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BACKGROUND
{2} 	Plaintiff was discharged from his employment with the Village on July 15,
2009. Proceeding under Article IX, Section 9.140 of the Ordinance, Madrid filed a
request for a post-termination (appeal) hearing in order to contest the allegations that
led to his termination. 	The appeal hearing was scheduled for July 22, 2009, and
Madrid’s appeal was listed as an agenda item for the meeting. During the meeting,
the Village Council attempted to change the appeal hearing to a pre-termination
hearing. The next day, the Mayor issued a letter stating that Madrid was terminated
at that time even though Madrid had been terminated since July 15, 2009, and had not
received any income from the Village since that date.
{3} 	Madrid timely appealed the July 23, 2009 termination decision and, on
September 8, 2009, the Council conducted a post-termination hearing. After a full
vote by the Village Council with the Mayor present, Madrid was fired from his
position. Pursuant to the Ordinance, the Village was required to inform Madrid of its
final decision in writing within fourteen days. Village of Chama, N.M., Personnel
Policies 1999-01, art. IX, § 9.140(iv). On October 13, 2009, more than a month after
the appeal hearing, the Mayor signed the letter notifying Madrid of the Village’s
decision to terminate his employment.
{4} 	Madrid filed a complaint in district court on December 9, 2009, seeking
damages for breach of implied contract, breach of the covenant of good faith and fair

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dealing, and wrongful discharge. Specifically, Madrid stated that he was fired from
his position with the Village without just cause and that the Village had breached its
contract with him. On January 11, 2010, the Village filed a motion to dismiss the
complaint pursuant to Rules 1-012(B)(6) and 1-075(D), (P)(1). 	The district court
granted the Village’s motion without a hearing and entered its order on March 11,
2010. 	The district court found that Madrid failed to state a claim for which relief
could be granted because the Ordinance did not create an implied contract. Madrid
filed a motion for reconsideration that was also denied by written order without a
hearing. 	Madrid now appeals the dismissal of his claims for breach of implied
contract and breach of the covenant of good faith and fair dealing.
DISCUSSION
{5} 	In this case, the Village based its motion to dismiss Madrid’s complaint in the
district court on Rules 1-075 and 1-012(B)(6). Under Rule 1-075, when appeals arise
out of administrative proceedings, the district court takes up the issues under its
appellate jurisdiction. The proper procedure to appeal such decisions is to petition the
district court for a writ of certiorari within thirty days of the agency’s written decision.
Rule 1-075(D). 	The district court here did not address the Village’s Rule 1-075
argument in its order of dismissal. 	However, whether the Village’s decision was
reviewable only by a writ of certiorari and whether the district court lacked
jurisdiction to hear Madrid’s claims brought in an original complaint are questions we

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must answer in the first instance. We address this issue first because appeals from
courts that lack subject matter jurisdiction will confer no jurisdiction on this Court.
State Human Rights Comm’n v. Accurate Mach. & Tool Co., 2010-NMCA-107, ¶ 4,
149 N.M. 119, 245 P.3d 63, cert. denied, 2010-NMCERT-010, 149 N.M. 64, 243 P.3d
1146. Once we have decided the jurisdictional question, we then consider Madrid’s
argument that the district court erred in granting the Village’s motion to dismiss for
failure to state a claim.
Subject Matter Jurisdiction Pursuant to Rule 1-075
{6} 	Whether the district court possessed jurisdiction over the subject matter of a
case is a question of law that we review de novo. State Human Rights Comm’n, 2010-
NMCA-107, ¶ 4.
{7} 	The Village argued below, as it does here, that the sole procedure available to
Madrid in this case was to appeal his termination decision by petitioning the district
court for a writ of certiorari, that he did not do so within thirty days of the written
notice of termination as required by Rule 1-075(D), and that he therefore failed to
perfect a timely appeal. As a result, the Village contends that the district court lacked
subject matter jurisdiction to consider Madrid’s complaint as a threshold matter. For
the reasons that follow, we disagree.
{8} 	The Village relies on Zamora v. Village of Ruidoso Downs, 120 N.M. 778, 780,
907 P.2d 182, 184 (1995), for the proposition that an agency’s termination decision

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is reviewable at the district court only by writ of certiorari. In that case, the plaintiff
was injured in a non-work-related accident and took a six-month disability leave
without pay. Id. After receiving a partial medical release, the plaintiff requested to
be assigned to light duty, but the mayor refused until the plaintiff received a full
medical release. 	Id. 	The plaintiff did not obtain a full release and was ultimately
terminated. Id. at 780, 781-82, 907 P.2d at 184, 185-86. The board of trustees heard
the plaintiff’s appeal and upheld the mayor’s decision to terminate the plaintiff’s
employment. 	Id. at 781-82, 907 P.2d at 185-86. The plaintiff filed a complaint in
district court for breach of employment contract and wrongful termination, alleging
that the village of Ruidoso’s ordinance required the village to assign him to light-duty
work. 	Id. at 780, 907 P.2d at 184. The New Mexico Supreme Court held that the
district court correctly dismissed the plaintiff’s complaint because the only procedure
available to the plaintiff to appeal the village’s personnel decision was to petition the
district court for a writ of certiorari. Id. at 786, 907 P.2d at 190.
{9} 	We conclude that Zamora is distinguishable from this case. 	In Zamora, the
plaintiff’s complaint asserted that the Village of Ruidoso Downs refused to assign him
to light-duty work in contravention of the ordinance’s requirements. Id. at 780, 907
P.2d at 184. 	Our Supreme Court concluded that the plaintiff’s argument was
essentially an appeal of a question already considered by the board—that the plaintiff
was properly terminated under the ordinance because he had not received a full

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medical release to return to work. Id. at 781-82, 907 P.2d at 185-86. Therefore, the
procedure for the plaintiff to appeal the board’s administrative decision was to petition
the district court for a writ of certiorari. Id. at 786, 907 P.2d at 190. There is nothing
in Zamora that suggests the plaintiff was pursuing only an award of damages. Here,
although Madrid exhausted his administrative remedies, he is not appealing the
Village’s decision, and he is not seeking reinstatement to his position as a street
supervisor for the Village. In our view, this distinction is dispositive because Madrid
filed suit seeking only monetary damages as a result the Village’s alleged wrongful
action. The Village presents no persuasive argument or authority for its contention
that an aggrieved employee, who has exhausted his administrative remedies, is
prohibited from bringing a common law action for damages by filing a complaint in
district court. 	Where a party cites no authority to support an argument, we may
assume no such authority exists. In re Adoption of Doe, 100 N.M. 764, 765, 676 P.2d
1329, 1330 (1984).
{10} 	The Village also cites to Barreras v. State of New Mexico Corrections
Department, 2003-NMCA-027, ¶ 2, 133 N.M. 313, 62 P.3d 770, in which we
considered whether the Legislature intended the State Personnel Act (SPA), NMSA
1978, §§ 10-9-1 to -25 (1961, as amended through 2009), to be the exclusive remedy
for state employees alleging contract claims based on rights created in the SPA. In
that case, the central question before us was whether an aggrieved employee who

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wished to enforce his rights under the SPA could bypass the administrative procedure
and remedies set forth in the SPA and proceed directly to district court on a theory of
implied contract. Barreras, 2003-NMCA-027, ¶ 7. Barreras is also distinguishable.
Here, Madrid did not attempt to bypass the administrative procedure set forth in the
Ordinance altogether. In fact, Madrid timely exhausted all his remedies before the
Village Council prior to filing his complaint in district court.
{11} 	Further, to the extent that the Village relies on Barreras for the proposition that
Madrid was limited to pursuing his remedies under the Ordinance, we are not
persuaded. In Barreras, we determined that the SPA did not contain express language
that its remedies were exclusive and, therefore, we had to “assess several factors in
determining whether the [SPA]’s administrative remedies prevail over a direct civil
action for damages.” Id. ¶ 11. Ultimately, this Court held that the SPA, including the
remedies available, was sufficiently comprehensive to require that appellants proceed
before the state personnel board in lieu of a direct action in district court. Id. ¶¶ 12-13.
Unlike the SPA at issue in 	Barreras, the Ordinance in this case is neither
comprehensive nor specific. 	Although it provides a procedure for review of
termination decisions, the Ordinance does not state what administrative remedies are
afforded to an aggrieved employee, and it contains no express language that the
remedies are or are not exclusive. For example, there is nothing in the Ordinance that
authorizes an aggrieved employee to seek modification of an adverse employment

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action, including reinstatement and back pay, and it does not specifically prohibit a
direct civil action in district court. See id. ¶¶ 14, 19. Also, in contrast to an action in
court in which a successful claimant for breach of implied contract may win
compensatory damages, see id. ¶ 14, the Ordinance here does not empower the Village
to award any damages to an aggrieved employee. 	Accordingly, we conclude that
Madrid cannot be required to appeal a nonexistent remedy in this case, and he is not
foreclosed from bringing a direct action for damages against the Village. We hold that
the district court did not lack subject matter jurisdiction over Madrid’s complaint
under Rule 1-075, and Madrid’s complaint was therefore not untimely. We now turn
to the district court’s ruling on the Village’s motion to dismiss under Rule 1-
012(B)(6).
The District Court Erred in Granting Dismissal Pursuant to Rule 1-012(B)(6)
{12} 	We review motions to dismiss a complaint for failure to state a claim under
Rule 1-012(B)(6) de novo. Healthsource, Inc. v. X-Ray Assocs. of N.M., P.C., 2005-
NMCA-097, ¶ 16, 138 N.M. 70, 116 P.3d 861.
{13} 	In his complaint, Madrid alleged that the personnel policies in the Ordinance,
along with the handbook, memoranda, letters, forms, and other documents constituted
an implied contract that the Village breached. The Village concedes that our Supreme
Court has recognized that an employee handbook can create a implied contract. See
Newberry v. Allied Stores, Inc., 108 N.M. 424, 427, 773 P.2d 1231, 1234 (1989)

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(stating that “[u]nder New Mexico law, a personnel manual gives rise to an implied
contract if it controlled the employer-employee relationship and an employee could
reasonably expect his employer to conform to the procedures it outlined” ). 	The
Village argues, however, that in this case, the Ordinance does not create an implied
contract as a matter of law. Article I, Section 1.100 of the Ordinance states:
The Village’s current employment policies shall not be construed as a
contract, implied or otherwise. The Village reserves the right to amend,
delete, supplement, or rescind any of the provisions of this manual, as
the Village deems necessary and appropriate. These policies shall not be
construed to create contractual rights or any type of promise or guarantee
of specific treatment upon which any employee may rely.
{14} 	Relying on our Supreme Court’s decision in 	Lukoski v. Sandia Indian
Management Co., the Village contends that the Ordinance could not have created an
implied contract because it “‘clearly and conspicuously’ advised employees that the
. . . Ordinance is not a contract.” See 106 N.M. 664, 666, 748 P.2d 507, 509 (1988)
(noting that “[e]mployers are certainly free to issue no personnel manual at all or to
issue a personnel manual that clearly and conspicuously tells their employees that the
manual is not part of the employment contract” (internal quotation marks and citation
omitted)). Therefore, according to the Village, Madrid’s claim must necessarily be
dismissed. The district court agreed and noted that “[n]o matter how much the actions
of the [Village] may [reek] of favoritism, or be based on actions other than reward of
merit and intolerance of the opposite, [Madrid’s] claims are based on breach of

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contract, not a review of the propriety of the process below, and there is no contract.”
We disagree with both the district court and the Village.
{15} 	As Madrid correctly points out, our appellate Courts in Beggs v. City of
Portales, 2009-NMSC-023, ¶ 20, 146 N.M. 372, 210 P.3d 798, and West v.
Washington Tru Solutions, LLC, 2010-NMCA-001, ¶¶ 17-18, 147 N.M. 424, 224 P.3d
651, have held that an implied contract may exist even where a personnel manual
disclaims any intention of forming a contractual obligation. The Village counters that
Beggs and West are distinguishable because they “involve circumstances where an
employer’s repetitious oral representations and conduct, in addition to employment
manuals, induced a reasonable reliance by the employee.” The Village’s assertion
misses the point. 	Those cases were both decided at the summary judgment stage.
Here, we must only decide whether Madrid’s complaint contains sufficient allegations
to give the Village fair notice of the claims asserted so that the Village could
adequately respond to the complaint. Consequently, the notice requirement is met if
Madrid’s complaint informs the Village of the incident giving rise to the claim and of
the claim’s general nature.
{16} 	Before we turn to the specifics of whether Madrid’s complaint failed to state a
claim upon which relief could be granted under Rule 1-012(B)(6), we first address the
Village’s argument that this Court should evaluate its motion in accordance with the
United States Supreme Court’s recently revised dismissal standard under Federal Rule

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of Civil Procedure 12(b)(6), discussed in Ashcroft v. Iqbal, 556 U.S. 662 (2009), and
Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007). Quoting Twombly extensively,
the U.S. Supreme Court in Iqbal defined the federal standard for a motion to dismiss
as follows:
To survive a motion to dismiss, a complaint must contain sufficient
factual matter, accepted as true, to state a claim to relief that is plausible
on its face. 	A claim has facial plausibility when the plaintiff pleads
factual content that allows the court to draw the reasonable inference that
the defendant is liable for the misconduct alleged. 	The plausibility
standard is not akin to a probability requirement, but it asks for more
than a sheer possibility that a defendant has acted unlawfully. Where a
complaint pleads facts that are merely consistent with a defendant’s
liability, it stops short of the line between possibility and plausibility of
entitlement to relief.
Iqbal, 556 U.S. at 678 (internal quotation marks and citations omitted). 	In short,
under Iqbal, courts must first identify those allegations that “are not entitled to the
assumption of truth,” and then they must “consider the factual allegations . . . to
determine if they plausibly suggest an entitlement to relief.” 	Id. at 680-81. 	The
Village encourages this Court to similarly construe New Mexico Rule of Civil
Procedure 1-012(B)(6). We decline to do so.
{17} 	The plausibility standard created by the two U.S. Supreme Court cases adds a
determination of likelihood of success on the merits so that a trial judge can dismiss
a claim, even where the law does provide a remedy, if that judge does not believe it
is plausible the claim will succeed. New Mexico is a notice-pleading state, requiring

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only that the plaintiff allege facts sufficient to put the defendant on notice of his
claims. Rule 1-008(A) NMRA; Schmitz v. Smentowski, 109 N.M. 386, 389-90, 785
P.2d 726, 729-30 (1990). As a result, our appellate courts have never required trial
courts to consider the merits of a plaintiff’s allegations when deciding a motion to
dismiss, and we see no justification for requiring such technical forms of pleadings
now. Moreover, the Village provides no argument or support for its position that New
Mexico should incorporate the new federal standard into our state rules. Accordingly,
we reject any invitation to depart from the following well-established standard for
reviewing a motion to dismiss in state court.
{18} 	In considering a motion to dismiss under the New Mexico Rules of Civil
Procedure, we test “the legal sufficiency of the complaint, not the factual allegations
of the pleadings which, for purposes of ruling on the motion, the court must accept as
true.” Herrera v. Quality Pontiac, 2003-NMSC-018, ¶ 2, 134 N.M. 43, 73 P.3d 181
(internal quotation marks and citation omitted). Dismissal under Rule 1-012(B)(6) is
appropriate only if the non-moving party is “not entitled to recover under any theory
of the facts alleged in their complaint.” Delfino v. Griffo, 2011-NMSC-015, ¶ 12, 150
N.M. 97, 257 P.3d 917 (internal quotation marks and citation omitted). Moreover, on
review, “we accept all well-pleaded factual allegations in the complaint as true and
resolve all doubts in favor of sufficiency of the complaint.” Id. ¶ 9 (internal quotation
marks and citation omitted). The purpose of our rule “is to test the law of the claim,

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not the facts that support it.” Envtl. Improvement Div. v. Aguayo, 99 N.M. 497, 499,
660 P.2d 587, 589 (1983). With this standard, we now turn to Madrid’s complaint to
determine whether the Village has met its burden and shown that Madrid’s complaint
fails to state any set of facts that would entitle him to relief.
{19} 	In this case, Madrid’s fourteen-page complaint provided a detailed account of
the facts leading up to and including his termination. 	Based on those core factual
allegations, count one of the complaint specifically alleged that the Ordinance,
handbook, memoranda, letters, forms, and other documents setting forth reasons for
just cause termination established an implied contract between Madrid and the Village
and that the Village breached that contract by failing to outline the disciplinary
offenses listed in the Ordinance warning employees that discipline could be sought if
the infractions were proved. 	Madrid’s complaint further stated that the Village
breached its contract (1) by failing to conduct an impartial investigation on July 12,
2009; (2) by failing to conduct a pre-termination hearing in accordance with the
Ordinance; (3) by failing to conduct a post-termination hearing in accordance with the
Ordinance; (4) by allowing the Mayor to attend the post-termination hearing; and (5)
by issuing the final termination letter more than 14 days after the post termination
hearing. 	Count two of the complaint asserted that the implied contract between
Madrid and the Village contains an express or implied covenant of good faith and fair
dealing and that Madrid was denied the “right to receive the benefit of [the] implied

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contract with the Village due to the Village’s failure to follow [the O]rdinance.”
Taking these well-pleaded facts as true and construing them in a light most favorable
to Madrid, we conclude that Madrid’s complaint states a claim for breach of implied
contract and breach of the covenant of good faith and fair dealing upon which relief
may be granted. The complaint sets forth detailed factual allegations of the incidents
giving rise to Madrid’s claims and gives the Village adequate notice of the legal
claims asserted against it. 	The district court’s dismissal of the complaint with
prejudice was in error, and its decision is reversed.
CONCLUSION
{20} 	For the reasons set forth above, we hold that Madrid was not required to appeal
his termination pursuant to Rule 1-075(D), and we reverse the decision of the district
court dismissing Madrid’s complaint for failure to state a claim under Rule 1-
012(B)(6).
{21} 	IT IS SO ORDERED.
_______________________________
LINDA M. VANZI, Judge
WE CONCUR:
_________________________________
JAMES J. WECHSLER, Judge

CYNTHIA A. FRY, Judge
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