Paz v. TijerinaPaz v. Tijerina
{1} The Risk Management Division of the State of New Mexico (RMD) and its acting director, Manuel Tijerina, (together Respondents) appeal from the district court’s order awarding attorney fees and costs to Luis Padilla Paz, M.D. (Petitioner). We reverse the award of attorney fees. We remand on the issue of costs because Petitioner’s application lacked the specificity required by
Factual and Procedural Background
{2} Petitioner is a surgeon who was employed by the University of New Mexico (UNM) Hospital from August 1, 2001, until he resigned on September 24, 2004. On October 28, 2004, UNM filed suit against Petitioner alleging violations of an anti-competition agreement (contract suit).
{3} RMD is responsible for implementing the New Mexico Tort Claims Act (TCA), NMSA 1978, §§ 41^4-1 to-27 (1976, as amended through 2006). See generally
{4} On June 3, 2005, Petitioner filed a petition for writ of mandamus directing Respondents to produce certain records, including the tort claims notice, and to assign defense counsel to him. Petitioner claimed that Respondents had a statutory duty to provide a defense under Section 41-4-4(B) of the TCA, which provides in part that “a governmental entity shall provide a defense, including costs and attorney fees, for any public employee when liability is sought for ... any tort alleged to have been committed by the public employee while acting within the scope of his duty.” He also argued that Respondents were required to disclose records relevant to the claim pursuant to Section 15-7-9(B), which provides that records created or maintained by RMD shall be
{5} The district court issued the writ of mandamus on June 21, 2005. Respondents answered the writ and moved to dismiss it. At the hearing on the writ, the district court recognized that if a lawsuit had been filed pursuant to the tort claim notice, RMD would be required to appoint counsel for Petitioner. It then found that there were compelling reasons in this particular case to enforce the writ by requiring RMD to appoint counsel for Petitioner even though no lawsuit had yet been filed. The court expressed concern that to do otherwise, Petitioner would be disadvantaged in the event a lawsuit was eventually filed because existing public employees would have already had access to RMD’s information. The court also ordered RMD to turn over its entire investigation file to Petitioner.
{6} At the hearing on the writ, Petitioner requested, and the district court awarded, Petitioner’s attorney fees and costs incurred in bringing the mandamus petition. The order enforcing the writ of mandamus, including the provision awarding attorney fees and costs, was entered on September 2, 2005. Respondents did not appeal from that order and provided Petitioner with documents and defense counsel. No lawsuit based on the tort claims notice has ever been filed against Petitioner, and the statute of limitations period for filing such a lawsuit has expired.
{7} On November 17, 2005, Petitioner submitted an application for attorney fees, requesting $21,433 in fees and $845.71 in costs plus gross receipts. Respondents objected to the application. After a hearing, the district court awarded the entire amount of fees and costs requested by Petitioner. Respondents now appeal from that order.
Discussion
Standard of Review
{8} We review an award of attorney fees for an abuse of discretion. N.M. Right to Choose/NARAL v. Johnson (NARAL),
Statutory Authority for Attorney Fees Award
{9} In determining whether an attorney fee award is appropriate, New Mexico follows the American rule which states that, in the absence of statute, court rule, or contractual agreement, the prevailing party will not normally receive attorney fees. See id. ¶ 9; Schroeder v. Mem’l Med. Ctr.,
{10} Petitioner asserts that the attorney fee award is supported by the TCA, which imposes a duty to defend Petitioner upon RMD and embodies a public policy that “public employees should not bear the financial burdens related to tort claims arising from their public duties, including the burden of defending against such claims.” See § 41-4-4(B). It is undisputed that the TCA imposes a duty upon RMD to provide a defense to Petitioner. We assume without deciding that this undisputed duty supports the district court’s decision to enforce the writ compelling Respondents to appoint independent defense counsel to represent Petitioner. However, the issue in this case is not whether RMD had a duty to defend Petitioner, but whether the TCA entitles Petitioner to the attorney fees incurred by Petitioner in compelling Respondents to fulfill that duty. Contrary to Petitioner’s contentions, nothing in the TCA authorizes the award of fees
{11} Likewise, Petitioner is not entitled to attorney fees under the mandamus statute.
{12} Moreover, we are unpersuaded that the analysis in Triplett v. Town of Oxford,
The Insurance Code
{13} Petitioner also claims that he is entitled to attorney fees based upon principles found in the New Mexico Insurance Code. Section 59A-16-30 of the Insurance Code authorizes an award of attorney fees to an insured who is forced to file a lawsuit to compel its insurer to defend a covered lawsuit in certain circumstances. See
{14} Petitioner argues that, despite RMD’s exemption from the Insurance Code, the policies contained therein should still apply by analogy. He then contends that if RMD was subject to the Insurance Code, attorney fees would be available, so attorney fees should be available in this case. We are unpersuaded given that the Insurance Code clearly exempts RMD from its coverage. See
{15} Furthermore, to whatever extent the policies underlying the Insurance Code appear similar to the public policy of the TCA to relieve a public employee from liability for a tort claim, the Legislature did not deem any such similarities sufficiently compelling to include a statutory provision in the TCA entitling a public employee to reimbursement of attorney fees incurred in compelling a defense of a tort claim. We refuse to second guess the Legislature on this issue because if the Legislature wanted employees to be reimbursed for having to compel a defense under the TCA, it could have so provided in the Act. See Roberson,
{16} Finally, for reasons discussed later in this opinion, we are unpersuaded that attorney fees would be recoverable even if RMD were subject to the Insurance Code. There is no evidence that RMD acted in bad faith or willfully denied coverage to Petitioner; it merely disagreed that Petitioner needed independent counsel before a lawsuit had been filed.
Public Policy
{17} Petitioner next asks this Court to recognize a new exception to the American rule based upon reasons of public policy. Petitioner argues that a new exception should be created for eases in which RMD has wrongfully withheld a legal defense and related documents from a current or former employee who is the target of a tort claim and the former employee is in active litigation with another target of the tort claim that RMD has supplied with a defense and documents. Petitioner cites to two of the policies underlying the American rule and then claims that an award of attorney fees in this case would not frustrate either policy. NARAL,
{18} We disagree that allowing an exception to the American rule in this case would not frustrate the policy of equal access to the courts. The “equal access” policy is based upon the underlying rationale that “one should not be penalized for merely defending or prosecuting a lawsuit.” Id. ¶ 12 (internal quotation marks and citation omitted); cf. Dunleavy v. Miller,
{19} In this case, Respondents did not exercise bad faith in opposing the writ given that there are no cases interpreting what is meant by the language in Section 15-7-9(B) that otherwise confidential materials can be disclosed for the “purpose of ... defense” and given that there are no cases addressing RMD’s duty to appoint independent defense counsel before a lawsuit has been filed. If the fee award is affirmed, RMD and other similarly situated defendants will be impermissibly chilled in the future from mounting a defense that is brought in good faith. See NARAL,
{20} Moreover, we disagree that affirming the award in this case would not result in the undue expenditure of judicial resources. See id. ¶ 13. Affirming the award of attorney fees could encourage the filing of a mandamus petition by any public employee who is concerned about a tort claims notice that has been filed even if RMD has properly decided that the claim has no merit. RMD could be compelled to provide former employees with an independent defense in cases where the defense is not yet warranted merely to avoid the possibility of an attorney fees award thus “unduly discouraging the government from mounting a good faith defense ____ [and failing to] promote the goal of conserving judicial resources.” Id. ¶ 31.
{21} Finally, recognition of a new exception would be inconsistent with the policy that any exceptions must be “limited in number and narrow in scope.” Id. ¶ 15. In this case, the court awarded attorney fees because Petitioner had to sue to get the relief requested in the mandamus petition and decided that Petitioner “shouldn’t have to pay to go after what is legally his.” If this was sufficient justification for an exception to the American rule, any plaintiff that prevails in a
Bad Faith
{22} Even if the attorney fee award is not authorized by statute or a new exception to the American rule, Petitioner claims that fees were properly awarded as a sanction for Respondents’ bad faith conduct. See State ex rel. N.M. State Hwy. & Transp. Dep’t v. Baca,
{23} It is well established that courts have the inherent authority “to impose a variety of sanctions on both litigants and attorneys in order to regulate their docket, promote judicial efficiency, and deter frivolous filings.” Id. at 4,
{24} The district court made no findings that Respondents were acting in bad faith or engaging in misrepresentations, and Petitioner concedes that the district court never reached his argument regarding Respondents’ alleged bad faith conduct. He nonetheless urges us to consider this argument and to affirm the fee award under a “right for any reason” analysis. See Sam v. Estate of Sam,
{25} Petitioner relies on the information contained in the supplemental exhibits to support his contention that Respondents acted in bad faith. These documents consist mostly of e-mails, other correspondence, and status reports between Petitioner, Petitioner’s counsel on the contract claim, Respondents, UNM officials, counsel for UNM, and the claims adjuster retained by RMD. Many of the items are duplicate copies of identical e-mails. The supplemental exhibits were produced by RMD pursuant to the order enforcing the writ of mandamus. As the supplemental exhibits were produced pursuant to the order enforcing the writ, they could not have been before the district court at the time it entered that order and awarded attorney fees. Therefore, to whatever extent the documents contain evidence of Respondents’ bad faith, this evidence cannot support the attorney fee award. See Garcia v. Jeantette,
{26} Even if the documents contained in the supplemental exhibits had been before the district court at the time of the attorney fee award, they cannot support the award because they concern communications and other activities that occurred before Petitioner filed his application for the writ of mandamus. Any allegedly bad faith conduct occurring before commencement of a legal proceeding cannot be used to support an attorney fee award that is ostensibly a sanction for the bad faith behavior. See ACLU v.
{27} Even if the district court could have awarded sanctions based upon Respondents’ conduct leading up to the petition for a writ of mandamus, there is nothing in the record or supplemental materials supporting Petitioner’s contention that Respondents acted in bad faith in opposing the writ, refusing to appoint counsel for Petitioner, and refusing to provide discovery to Petitioner.
{28} Petitioner claims that Respondents knew their position was contrary to RMD’s historical practices and that their bad faith is exhibited by the disparity in its treatment of this claim and the treatment of an earlier tort claims notice. We disagree because RMD’s “historical practices” concern RMD’s investigation and treatment of potential defendants who were still public employees at the time of the tort claims notice. In the previous case involving Petitioner, Petitioner was still an employee of UNM at the time of the earlier investigation so the claims investigator and UNM’s counsel could meet with Petitioner and review the patient’s medical records without invoking privacy and privilege concerns. In this case, consistent with its historical practices, RMD hired a claims investigator to investigate the claim on behalf of all potential defendants. However, the pending lawsuit against Petitioner and his status as a former employee rendered the historical practices impractical which gave rise to the confusion as to how Petitioner should be treated.
{29} Moreover, we disagree that Respondents acted in ways contrary to the position they disclosed to Petitioner. Petitioner asserts that Respondents’ entire ease was based on the premise that they were forbidden by law from taking any action on the basis of the tort claims notice. He then claims that RMD’s act of hiring a claims adjuster to investigate the facts giving rise to the tort claims notice is inconsistent with that position.
{30} Our review of the record and exhibits indicates that Respondents never claimed that all actions were forbidden, and, contrary to Petitioner’s contentions, RMD never maintained that it could not hire an investigator or investigate the claim. It only claimed that it was not required to appoint an attorney to represent Petitioner unless and until a lawsuit was actually filed against him and that it was precluded from turning over confidential documents to Petitioner because Petitioner was no longer a public employee.
{31} We also disagree that the supplemental exhibits support a finding of a conspiracy between UNM and RMD to gain a strategic advantage in the employment litigation. Respondents were aware of the lawsuit and aware of UNM’s concerns that Petitioner’s attorney in the contract suit had no right to review the materials in the tort claims matter. However, there is nothing in the supplemental exhibits suggesting that Respondents took any position on the contract litigation or did anything to further UNM’s position in that litigation or even had substantive discussions with UNM about the contract suit. Likewise, UNM’s in-house counsel, who was not the attorney representing UNM on the contract claim, appeared to have no direct connection to the contract suit. She was not seeking information about the contract suit and specifically informed the claims investigator that “[we] do not
{32} We are unpersuaded that Petitioner was excluded from the investigation or deprived of information in order to pressure him in the contract suit. Instead, Respondents’ actions can be explained by Petitioner’s status as an ex-employee with a pending lawsuit against his former employer. The communication between UNM, the claims adjuster and RMD merely indicates that the claims adjuster, while investigating the claim, sought guidance from RMD as to whether independent counsel would be appointed for Petitioner.
{33} Even though it is undisputed that the investigator and RMD communicated with UNM, this is not evidence of conspiracy or bad faith. RMD had a duty to consult with UNM because they were also named in the tort claims notice. As a potential defendant, UNM cooperated in the investigation but was concerned that Petitioner’s lawyer on the contract claim would be improperly given access to information about the tort claim and expressed this concern to RMD. Nothing suggests a conspiracy or that RMD “marshaled its forces” in favor of UNM to the exclusion of Petitioner. Instead, the communications indicate some confusion about the status of the law and the extent of RMD’s obligation to provide Petitioner with counsel and with documentation given the privacy concerns expressed by UNM’s in-house counsel and confidentiality laws.
{34} Likewise, there is no evidence that RMD had commenced a “defense” in favor of UNM that specifically excluded Petitioner. The evidence only suggests an investigation had commenced. The evidence shows that the investigator met with one current UNM employee, Dr. Howdieshell, because it had access to him, not in an effort to exclude Petitioner. Other employees were identified as possible sources of information but apparently were never contacted.
{35} Finally, we turn to Petitioner’s contention that Respondents failed to produce all of the documents compelled by the order enforcing mandamus. Petitioner never informed the district court about this alleged failure to produce. Therefore, we decline to address this issue due to lack of preservation. See Cockrell,
Costs
{36} Based upon our reversal of the attorney fees award, we need not address Respondents’ contention that the award was untimely or not in compliance with court rules. Respondents also challenge the award of costs to Petitioner. We first address the timeliness of Petitioner’s application for costs.
{37} Petitioner was awarded costs in the final judgment on September 2, 2005, but he did not file his application for attorney fees and costs until November 17, 2005.
{38} It appears that Petitioner informally moved for an extension of time in his reply brief. See
{39} Even though Petitioner’s application for costs was not untimely, we nonetheless refuse to affirm it.
CONCLUSION
{40} For these reasons, we reverse the award of attorney fees. We remand for a redetermination of the amount of costs once Petitioner submits the requisite itemized cost bill.
{41} IT IS SO ORDERED.