Prescott v. Bd. of Educ. of Albuquerque Pub. Schs.

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IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO No. A-1-CA-38986

BETENA PRESCOTT, GEORGIA

DAVIS, ANNIE HILL, BILLIE NEFF, and PATSY STEINER, on behalf of themselves and others similarly situated,

Plaintiffs-Appellants, v.

BOARD OF EDUCATION OF

ALBUQUERQUE PUBLIC SCHOOLS,

Defendant-Appellee.

APPEAL FROM THE DISTRICT COURT OF BERNALILLO COUNTY

Nancy J. Franchini, District Judge

Youtz & Valdez, P.C.

Shane C. Youtz

Stephen Curtice

James A. Montalbano

Albuquerque, NM for Appellants

Modrall, Sperling, Roehl, Harris & Sisk, P.A.

Arthur D. Melendres

Zachary L. McCormick

Dominic A. Martinez

Albuquerque, NM for Appellee

MEMORANDUM OPINION

HANISEE, Chief Judge. {1} Plaintiffs, retirees of Albuquerque Public Schools (APS), appeal the district court’s order granting summary judgment in favor of Defendant, the Board of Education of APS. We affirm.

BACKGROUND {2} Plaintiffs filed a class action complaint against Defendant, alleging that Defendant’s termination of life insurance premium subsidy benefits for retirees constituted a breach of contract.1 Defendant filed a motion for summary judgment arguing, in pertinent part, that the Bateman Act (the Act), NMSA 1978, Section 6-6-11 (1968), rendered any implied-in-fact contract between Plaintiffs and Defendant regarding such subsidy benefits void as a matter of law. Under the Act, [i]t is unlawful for any board of county commissioners, municipal governing body or any local school board . . . to become indebted or contract any debts of any kind or nature whatsoever during any current year which, at the end of such current year, is not and cannot then be paid out of the money actually collected and belonging to that current year, and any indebtedness for any current year which is not paid and cannot be paid, as above provided for, is void.

Id. The district court initially denied Defendant’s motion for summary judgment on the basis that Defendant failed to plead the Act as an affirmative defense. Defendant filed a motion for reconsideration in which it demonstrated that it had, in fact, adequately pled the Act as an affirmative defense, and the district court subsequently granted Defendant’s motions for reconsideration and summary judgment.2 Plaintiffs appeal.

DISCUSSION {3} Plaintiffs argue that the district court erroneously granted summary judgment, specifically contending that the Act cannot prohibit the type of indebtedness at issue here—that is, subsidies for retirees’ life insurance premiums paid during the life of each individual retiree—because the existence of a “contingency fund” available to “offset unexpected expenditures” renders the Act inapplicable.3 Defendant answers that the district court properly granted summary judgment in Defendant’s favor, arguing that the Act bars Plaintiffs’ breach of contract claim as a matter of law, and Plaintiffs’ contentions regarding the “contingency fund” are unavailing because the fund in question was neither created for the purpose of, nor identified as available for, funding the subsidized life insurance premiums of retirees. {4} “We review the district court’s grant of summary judgment de novo.” All. Health of Santa Teresa, Inc. v. Nat’l Presto Indus., Inc., 2007-NMCA-157, ¶ 7, 143 N.M. 133, 173 P.3d 55. We likewise review issues of law de novo. Bank of N.Y. Mellon v. Lopes, 2014- NMCA-097, ¶ 6, 336 P.3d 443. “Summary judgment is appropriate where there is no evidence raising a reasonable doubt that a genuine issue of material fact exists.” Beggs v. City of Portales, 2009-NMSC-023, ¶ 10, 146 N.M. 372, 210 P.3d 798. “An issue of fact is material if the existence (or non[]existence) of the fact is of consequence under the substantive rules of law governing the parties’ dispute.” Martin v. Franklin Cap. Corp., 2008-NMCA-152, ¶ 6, 145 N.M. 179, 195 P.3d 24 (internal quotation marks omitted). {5} Under these standards, we examine whether Plaintiffs have demonstrated the existence of any specific evidentiary fact that is of consequence under the substantive rules of law governing this appeal. While Plaintiffs do not explicitly frame their assertions regarding the existence of the “contingency” fund as creating a genuine issue of material fact warranting reversal, whether such a fund exists—and, crucially, whether the fund was created for the purpose of, or identified as available for, funding the subsidy benefits—are the only discernible disputed facts in this case that could be of consequence under the Act, which is the substantive law governing this appeal. See id. In its order granting Defendant’s motion for summary judgment, the district court concluded that Plaintiffs did not raise “a genuine issue of material fact with regard to creation of a special fund in the present matter” and did not “provide . . . authority for the proposition that [the Act] could be waived [due to an agreement between the parties].” We must, therefore, determine whether the existence of a general “contingency” fund available to Defendant as argued by Plaintiffs is of consequence under the Act. Further, to the extent Plaintiffs’ arguments implicitly challenge the broader applicability of the Act to the subsidy benefits at issue, we examine whether Plaintiffs persuade this Court of error in the district court’s conclusions regarding the Act’s applicability. 4 {6} “The purpose of [the Act] is to prevent counties and municipalities from contracting debts that they are not able to pay.” Treloar v. Cnty. of Chaves, 2001- NMCA-074, ¶ 23, 130 N.M. 794, 32 P.3d 803. Plainly, the Act requires that if a school board, such as Defendant, contracts a debt greater than what can “be paid out of the money actually collected and belonging to that current year,” then that debt is void. Section 6-6-11. This Court has previously held that “when a special fund for a purpose is created, [the Act] is not applicable.” Treloar, 2001-NMCA-074, ¶ 25. Plaintiffs, however, argue that under Treloar a fund need not be created or identified as available for the specific purpose of funding a particular future cost in order to render the Act inapplicable to an agreement creating a debt, and there existed a general “contingency” fund that rendered the Act inapplicable. Plaintiffs’ reading of Treloar, however, goes beyond what that case holds. {7} In Treloar, this Court rejected application of the Act to a county’s debt owed to a physician by virtue of the termination of his employment contract, concluding that the debt could have been paid from a fund created from the proceeds of the sale of a hospital in anticipation of the specific need to eventually pay for termination or severance packages. Id. ¶¶ 6, 24-25. In contrast, here there is no indication in the record that the “contingency” fund identified by Plaintiffs was similarly created with the intention of funding a specific anticipated need. Indeed, the record contains an affidavit of Tami Coleman, the Chief Financial Officer for APS, in which Ms. Coleman stated that “[t]here has never been a special fund created by APS for payment of . . . Plaintiffs’ subsidized life insurance premiums.” Following our own thorough review of the record, we remain unpersuaded by Plaintiffs’ contention that the “contingency” fund in the instant case functions in the same way as the special fund in Treloar to render the Act inapplicable.5 Because the existence of a general contingency fund has no bearing on the substantive law at issue in this case, such is an immaterial fact and Plaintiffs’ assertion thereof does not demonstrate a genuine issue of material fact sufficient to compel our reversal of the district court’s grant of summary judgment. See Martin, 2008-

4While Plaintiffs refer in their briefing to the subsidy benefits as a “pension system,” “pension benefits,” and a “pension arrangement,” we note that the subsidy benefits at issue here are distinct from the statutory pension systems available to those retiring as employees under the Educational Retirement Act, NMSA 1978, § 22-11-1 to -55 (1967, as amended 2022).

5To the extent Plaintiffs assert that City of Hobbs v. State ex rel. Reynolds, 1970-NMSC-133, ¶¶ 7-9, 82 N.M. 102, 476 P.2d 500, supports the proposition that the “contingency” fund here could function as an implied special fund in order to render the Act inapplicable to incurred municipal debt, we note that our Supreme Court in Hobbs explicitly did not rule on the basis of the Act and we decline to extend its holding to the instant case in the manner sought by Plaintiffs.

NMCA-152, ¶ 6. Moreover, Plaintiffs fail to demonstrate that the district court otherwise erred in its conclusions regarding the Act’s applicability to the subsidy benefits here.

CONCLUSION {8} For the reasons stated above, we affirm. {9} IT IS SO ORDERED.

J. MILES HANISEE, Chief Judge

WE CONCUR:

JENNIFER L. ATTREP, JUDGE

SHAMMARA H. HENDERSON, JUDGE