Hartbarger v. Frank Paxton Co.

857 P.2d 776, 115 N.M. 665
CourtNew Mexico Supreme Court
DecidedJune 14, 1993
Docket19913
StatusPublished
Cited by115 cases

This text of 857 P.2d 776 (Hartbarger v. Frank Paxton Co.) is published on Counsel Stack Legal Research, covering New Mexico Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Hartbarger v. Frank Paxton Co., 857 P.2d 776, 115 N.M. 665 (N.M. 1993).

Opinion

OPINION

RANSOM, Chief Justice.

This appeal is taken from a judgment entered on a jury verdict in favor of Bill Hartbarger in his action against his former employer, Frank Paxton Company, and the supervisor who fired him, Alan Crownover, for breach of an implied contract of employment. Hartbarger worked as an outside salesperson and was terminated after refusing to accept a lower rate of commission on his sales. Paxton argued there was no implied contract and, therefore, Hartbarger was an at-will employee and no justification was needed for the firing, or alternatively, if there was an implied contract, sufficient justification existed to fire Hartbarger. The jury found there was an implied contract requiring just cause for termination and that the contract was breached, and awarded Hartbarger $400,-000 in compensatory damages and $100,000 in punitive damages. Paxton raises numerous points on appeal, essentially arguing that a reasonable jury could not have found there was an implied contract of employment, that if there was a contract it was not breached, and that there was no basis for the award of punitive damages. We reverse.

Facts surrounding termination. Hartbarger worked for Paxton for more than twenty years during two periods, the last one beginning in 1977 and ending with his termination in 1987. At the time of his termination, Hartbarger was employed as one of several salespersons working out of Paxton’s Albuquerque operation. Paxton paid its outside sales staff a base salary plus a commission for sales that exceeded a particular amount per month. The commission percentage had varied over the course of Hartbarger’s employment from as high as 4% percent to as low as 2 percent. Hartbarger’s commission had been cut before, once for disciplinary reasons and on another occasion to bring the Albuquerque commission structure more in line with the commissions paid at Paxton’s other locations around the country. Just before his termination, Hartbarger’s commission rate was 2V2 percent, while the commissions of Paxton’s other Albuquerque salespersons were 2 percent. Paxton does not dispute that Hartbarger often had the highest sales of the three Albuquerque-based salespersons and that his sales were the highest in the Albuquerque office at the time of his termination. Hartbarger’s sales volume was one reason why Hartbarger had a higher commission rate than the other Albuquerque-based salespersons.

Crownover testified that in the months before the termination he had become dissatisfied with the quality of Hartbarger’s work effort and recounted several of Hartbarger’s perceived improprieties. In February 1987, Crownover wrote an employee evaluation, which he gave to Hartbarger at a March meeting, along with an oral evaluation. Hartbarger testified that Crown-over told him that he was (1) not putting forth 100 percent effort, (2) not cooperating, (3) not observing company policies, (4) not taking the initiative (had to be forced), and that (5) his dependability was lacking. After Hartbarger signed the evaluation form, Crownover told him that “it’s going to cost you another half percent of your commission.” Hartbarger told Crownover that he could not take a cut like that. (When Hartbarger’s commission rate had been cut to 2 percent before, after a few months he told Crownover that he needed more money, and Crownover responded with an increase to 2lh percent.) Crown-over offered Hartbarger three choices: accept the cut, resign, or be fired. After a pause, Crownover asked what it was going to be. Hartbarger replied that he could not take the first two choices and Crownover said, “Then I guess you’re fired.” The parties agree that Paxton could change the commission rate at any time and did not need the employee’s permission to do so, but Hartbarger argues that implied in the choices presented to him by Crownover was an expectation for productive negotiation and that there was no good cause for an abrupt firing.

Implied employment contracts. The general rule in New Mexico is that an employment contract is for an indefinite period and is terminable at the will of either party unless the contract is supported by consideration beyond the performance of duties and payment of wages or there is an express contractual provision stating otherwise. Melnick v. State Farm Mut. Auto. Ins. Co., 106 N.M. 726, 730, 749 P.2d 1105, 1109, cert. denied, 488 U.S. 822, 109 S.Ct. 67, 102 L.Ed.2d 44 (1988). An at-will employment relationship can be terminated by either party at any time for any reason or no reason, without liability. Id. New Mexico courts have recognized two additional exceptions to the general rule of at-will employment: wrongful discharge in violation of public policy (retaliatory discharge), and an implied contract term that restricts the employer’s power to discharge. Id. The jury below found that there was an implied employment contract between Hartbarger and Paxton permitting termination only for just cause.

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. See Newberry v. Allied Stores, Inc., 108 N.M. 424, 427, 773 P.2d 1231, 1234 (1989) (upholding finding of implied contract based on employee manual, words, and conduct of parties); Kestenbaum v. Pennzoil Co., 108 N.M. 20, 24-26, 766 P.2d 280, 284-86 (1988) (affirming finding of implied contract based on words and conduct of parties), cert. denied, 490 U.S. 1109, 109 S.Ct. 3163, 104 L.Ed.2d 1026 (1989); Lukoski v. Sandia Indian Management Co., 106 N.M. 664, 667, 748 P.2d 507-510 (1988) (upholding finding of oral contract amended by employee handbook); Forrester v. Parker, 93 N.M. 781, 782, 606 P.2d 191, 192 (1980) (holding that, when terminating non-probationary employee, employer is bound by policies established in “personnel policy guide” that control the employer-employee relationship). We have upheld findings that there was no implied contract in cases where the alleged promise by the employer was not sufficiently explicit. See Shull v. New Mexico Potash Corp., 111 N.M. 132, 135, 802 P.2d 641, 644 (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); Sanchez v. The New Mexican, 106 N.M. 76, 79, 738 P.2d 1321, 1324 (1987) (affirming grant of directed verdict in favor of employer where language in employee handbook was of a non-promissory nature and was merely a declaration of employer’s general approach to the subject matter discussed).

Implied employment contract restricting employer’s power to discharge employee is an implied-in-fact contract. The question whether an employment relationship has been modified is a question of fact. Lukoski, 106 N.M.

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Cite This Page — Counsel Stack

Bluebook (online)
857 P.2d 776, 115 N.M. 665, Counsel Stack Legal Research, https://law.counselstack.com/opinion/hartbarger-v-frank-paxton-co-nm-1993.