April 01, 2009 – Liza Zarr v. Washington Tru Solutions, LLC, and Darold Haug, No. 27,553

IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO
Opinion Number:
Filing Date: 	April 1, 2009
NO. 27,553
LIZA ZARR,
Plaintiff-Appellant,
v.
WASHINGTON TRU SOLUTIONS, LLC,
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 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 inference; 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

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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

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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). 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,

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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

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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. 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.

6
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

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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

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{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 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

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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

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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 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

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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

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both parties agree Zarr was relieved of her employment duties solely because of
WTS’s request.
{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

13
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

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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.
{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.”);

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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

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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, 253, 620 P.2d 1276, 1278
(1980). As discussed above, because Defendants’ motive must have been solely to

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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