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    "judges": [
      "JAMES J. WECHSLER, Judge",
      "RODERICK T. KENNEDY, Judge",
      "J. MILES HANISEE, Judge"
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    "parties": [
      "ARNOLD LUCERO, Plaintiff-Appellee, v. BOARD OF REGENTS OF THE UNIVERSITY OF NEW MEXICO, UNIVERSITY OF NEW MEXICO HEALTH SCIENCES CENTER, Defendants-Appellants."
    ],
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      {
        "text": "OPINION\nWECHSLER, Judge.\n{1} Defendants University of New Mexico Board of Regents and University of New Mexico Health Sciences Center (UNMHSC) appeal after a bench trial resulted in a verdict in favor of Plaintiff Arnold Lucero. Defendants argue that the district court erred in denying its motion for summary judgment on Plaintiff\u2019s breach of contract claim because Plaintiff did not exhaust the grievance procedures contained in UNMHSC\u2019s human resources policies and procedures manual (the employee handbook). We hold that Plaintiff must substantially comply with the mandatory internal grievance procedures contained in the employee handbook before filing suit for breach of contract based on an alleged failure of Defendants to follow the employee handbook. Accordingly, we reverse the district court\u2019s denial of Defendants\u2019 motion for summary judgment.\nBACKGROUND\n{2} Defendants employed Plaintiff beginning in 2003 as an assistant director of environmental services, a management position. UNMHSC\u2019s employee handbook governed Plaintiff\u2019s employment. The employee handbook contains a two-step grievance process for \u201cthose questions, issues or concerns which are not resolved through informal discussions with successive levels of supervisors.\u201d Step one of the grievance process requires the employee to submit the grievance. Section 6.1.1 of the handbook states that \u201c[i]f amanager/supervisor is unable to reach an understanding with an immediate supervisor through informal discussions, he/she may submit a grievance in writing to the immediate supervisor or Administrator within ten (10) work days of the occurrence of knowledge of the event causing the grievance.\u201d\n{3} On March 23, 2005, Defendants issued Plaintiff a notice of decision to suspend, imposing a thirty-day suspension. On March 31, 2005, Plaintiffs attorney sent a letter to Melissa Chavez, a senior employee relations specialist for Defendants, advising her that Plaintiff intended to submit a grievance by April 6, 2005. However, Plaintiff did not submit a grievance, and Plaintiffs attorney sent Chavez a letter on April 12, 2005, acknowledging missing the ten-day deadline to file a grievance.\n{4} On September 9, 2005, Defendants issued Plaintiff a notice to terminate. Plaintiff did not submit a grievance and testified that he could not remember why he did not file a grievance challenging the termination. More than seven months after the termination, on April 4, 2006, Plaintiff filed a complaint in district court, alleging a breach of express and implied contracts of employment for the suspension and termination. On February 27, 2007, Plaintiff filed an amended complaint consisting of three claims: (1) breach of implied contract, (2) breach of express contract, and (3) wrongful termination. All three claims allege thatUNMHSC\u2019s employee handbook created a contract and that Defendants breached the contract by failing to abide by the employee handbook\u2019s policies and procedures governing workplace performance, disciplinary action, a harassment-free workplace, employer-employee relations, progressive discipline, and by disciplining Plaintiff without just cause. The employee handbook contains all of the contractual provisions and employment policies that Plaintiff alleges Defendants breached.\n{5} Defendants filed a motion for summary judgment, arguing that Plaintiffs claims were barred because he failed to exhaust the employee handbook\u2019s internal grievance procedures. Plaintiff filed a response admitting all material facts in Defendants\u2019 motion, but he argued that the grievance procedures are not mandatory and he therefore was not required to exhaust the procedures. The district court issued an order granting in part and denying in part Defendants\u2019 motion. The district court granted the motion to the extent that Plaintiff based his claims on an alleged failure of Defendants to follow grievance procedures but denied the motion as to the remaining claims. The district court also denied Defendants\u2019 motion to reconsider the issue. In denying the motion to reconsider, the district court stated that \u201cDefendants\u2019] grievance scheme is ambiguous, and by its own terms does not require Plaintiff to exhaust Defendants\u2019] grievance procedure prior to filing suit in court.\u201d The district court stated that it \u201cis of great significance to this court that within . . . Defendants\u2019] grievance procedure both \u2018may\u2019 and \u2018shall\u2019 are used. The section of the procedure that sets out the steps to be taken by an employee if he disagrees with the contemplated disciplinary action, uses \u2018may\u2019 when discussing the employee\u2019s actions. Thus, the court will presume that the use of the term \u2018may\u2019 was purposeful, and that exhaustion of . . . Defendants\u2019] grievance procedure is not a condition precedent to Plaintiff filing suit in this court.\u201d\n{6} Subsequently, the district court held a four-day bench trial commencing December 8, 2009. On May 17, 2010, the district court entered a final judgment in Plaintiffs favor, concluding that the employee handbook created an implied contract that Defendants violated by suspending and terminating Plaintiff without just cause and without appropriate progressive discipline.\n{7} On appeal, Defendants argue that the district court erred in not granting its motion for summary judgment. Particularly, Defendants argue that (1) an employee cannot pursue a breach of contract claim based on policies in an employee handbook without first exhausting the grievance procedures in the employee handbook, and (2) the use of permissive language in the employee handbook\u2019s grievance procedures did not allow Plaintiff to bypass the grievance process and file a breach of contract claim.\nSTANDARD OF REVIEW\n{8} Defendants\u2019 arguments in this appeal present an issue of law arising out of undisputed facts. Accordingly, we apply a de novo standard of review. See Barreras v. State Corr. Dep\u2019t, 2003-NMCA-027, \u00b6 5, 133 N.M. 313, 62 P.3d 770.\nEXHAUSTION OF REMEDIES\n{9} New Mexico courts recognize the doctrine of exhaustion of administrative remedies. \u201cUnder the exhaustion of administrative remedies doctrine, where relief is available from an administrative agency, the plaintiff is ordinarily required to pursue that avenue of redress before proceeding to the courts; and until that recourse is exhausted, suit is premature and must be dismissed.\u201d Smith v. City of Santa Fe, 2007-NMSC-055, \u00b6 26, 142 N.M. 786, 171 P.3d 300 (alteration, internal quotation marks, and citation omitted). The exhaustion doctrine rests on the principle that the interests of justice are served by allowing an agency with particular expertise to resolve issues before a claim is brought to court. Headen v. D\u2019Antonio, 2011-NMCA-058, \u00b6 13, 149 N.M. 667, 253 P.3d 957.\n{10} Related to the exhaustion of administrative remedies doctrine, our Supreme Court has held that an employee must exhaust grievance procedures in an employee handbook or manual before filing claims against the employer for breach of contract or civil rights violations based on the policies governing employment. In Francis v. Mem\u2019l Gen. Hosp., 104 N.M. 698, 698-99, 726 P.2d 852, 852-53 (1986), a registered nurse sued his employing hospital for breach of contract, due process violations, and wrongful discharge after he voluntarily terminated his employment. The employer had suspended the plaintiff for two days for refusing to comply with hospital policy. Id. Pursuant to the hospital\u2019s employee manual, the plaintiff submitted a grievance, and the hospital scheduled a fact-finding hearing. Id. After the hospital informed the plaintiff, as provided in the employee manual, that his attorney could not attend the hearing, the plaintiff refused to proceed any further with the grievance and voluntarily terminated his employment. Id. Our Supreme Court held that the plaintiff was \u201cestopped from asserting that he suffered a deprivation of either a contractual expectation or a constitutionally protected entitlement\u201d because he failed to exhaust the grievance procedures in the employee manual. Id. at 700, 726 P.2d at 854. The Court reasoned that when an implied contract, in this case an employment manual, creates rights, the rights are \u201climited by the terms of the [employment manual] that gave them birth.\u201d Id.\n{11} Similarly, in McDowell v. Napolitano, 119 N.M. 696, 699, 895 P.2d 218, 221 (1995), the plaintiff, a university professor, sued his employer for breach of contract and civil rights violations after being denied tenure. The defendants argued that the district court did not have jurisdiction over the case because the plaintiff failed to exhaust administrative remedies contained in the faculty handbook. Id. at 700, 895 P.2d at 222. Our Supreme Court framed the issue as whether the plaintiff \u201csubstantially discharged his own contractual obligations so as to be able to complain of a breach by his employer.\u201d Id. at 701, 895 P.2d at 223. The Court held that, because the plaintiff substantially complied with the terms of his employment contract by \u201cproperly following] the appeals process outlined in the Faculty Handbook [and pursuing] the appeals process to the highest authority within the University,\u201d the exhaustion doctrine did not bar litigation of the plaintiffs case. \u25a0 Id.\n{12} From Francis and McDowell, we glean the general rule that an employee must substantially comply with mandatory internal grievance procedures contained in an employee manual or handbook before filing suit for breach of contract claims based on an alleged failure of an employer to follow its employment policies. In applying this general rule to this case, we note that neither Francis nor McDowell mention whether the employee handbook or manual containing the grievance procedures also contained the employment policies the defendants allegedly breached. In this case, Defendants\u2019 argument for applying the exhaustion requirement rests on the strongest factual basis because the employee handbook contained both the grievance procedures that Defendants allege that Plaintiff did not exhaust and the employment policies and procedures that Plaintiff alleges that Defendants did not follow. Applying Francis and McDowell, the district court erred by denying Defendants\u2019 motion for summary judgment because Plaintiff did not exhaust the grievance procedures in the employee handbook. Courts from other jurisdictions have uniformly applied the same rule, regardless of whether the employer is a public entity or a private entity. See, e.g., McGuire v. Cont'l Airlines, Inc., 210 F.3d 1141, 1146-47 (10th Cir. 2000) (upholding summary judgment on exhaustion grounds in favor of employer on employee\u2019s breach of contract claim because employee failed to complete the final two steps of the employee handbook\u2019s four-step grievance process); Orr v. Westminster Vill. N, Inc., 689 N.E.2d 712, 721-22 (Ind. 1997) (stating that even if an employer\u2019s handbook constituted a contract, summary judgment on employee\u2019s breach of contract claim arising out of policies in the employee handbook was appropriate because employee failed to exhaust grievance procedures in the employee handbook); O\u2019Brien v. New England Tel. & Tel. Co., 664 N.E.2d 843, 849 (Mass. 1996) (holding that an employee must exhaust grievance procedures in an employee manual before suing for breach of contract based on a failure of employer to follow rule requiring just cause to discipline an employee in the employee manual).\n{13} In addition, policy reasons support our conclusion that an employee must exhaust internal grievance procedures contained in an employee handbook before filing suit for breach of contract based on an alleged failure of the employer to follow policies in the employee handbook. First, the grievance process allows an employer to redress wrongs without burdening the courts with unnecessary litigation. See Neiman v. Yale Univ., 851 A.2d 1165, 1172 (Conn. 2004) (stating that grievance procedures \u201cmerely ensure that the grievant and the school have an opportunity to resolve the dispute before seeking redress in the courts, thereby conserving judicial resources\u201d). Second, not requiring an employee to exhaust internal grievance procedures allows the employee to choose which employment policies are binding. See, e.g., McGuire, 210 F.3d at 1147 (\u201cAn employee must accept both the benefits and the responsibilities of an employee handbook which creates an implied contract.\u201d). In this case, the employee handbook required that Plaintiff allow Defendants to redress the perceived violation of the right to be disciplined and terminated for \u201cjust cause\u201d stemming from the employee handbook. Once Plaintiff exhausted the grievance procedure, he could have then instituted his lawsuit had he not been satisfied with the result. See McDowell, 119 N.M. at 701, 895 P.2d at 223 (holding that exhaustion requirement did not bar litigation of the plaintiffs claim because he substantially complied with grievance process); see also Neiman, 851 A.2d at 1172 (\u201c[Ijinternal procedures do not preclude access to the courts should the grievant be dissatisfied with the ultimate result.\u201d).\n{14} Plaintiff argues that New Mexico courts \u201chave not adopted a broad, general rule that a plaintiff cannot pursue a breach of contract claim founded in an employee handbook without first exhausting the grievance procedures [and instead] have take[n] a more measured and considered approach in deciding whether exhaustion . . . is a prerequisite to pursuing a breach of implied contract claim in the district courts.\u201d Plaintiff argues that New Mexico courts \u201creview the nature of the grievance procedure in deciding whether exhaustion of the procedure is required.\u201d However, the cases cited by Plaintiff address different issues. Some of the cases address whether a legislative body intended an administrative scheme to be the exclusive remedy for a plaintiffs cause of action. See Barreras, 2003-NMCA-027, \u00b6\u00b6 9, 21 (addressing whether the administrative adjudication in the state personnel act is the exclusive remedy for breach of contract claims arising under the state personnel act); Pan Am. Petroleum Corp. v. El Paso Natural Gas Co., 77 N.M. 481, 484, 424 P.2d 397, 399 (1966) (addressing whether a federal agency had exclusive jurisdiction to determine whether the state legislature could impose a tax); Chavez v. City of Albuquerque, 1998-NMCA-004, \u00b6\u00b6 14-18, 124 N.M. 479, 952 P.2d 474 (determining that a grievance procedure for municipal employees did not provide the exclusive remedy for claims arising from an alleged breach of the municipality\u2019s ordinance governing employment). In cases addressing the exclusivity of an administrative setting, the nature of the proceedings is an important factor to consider because a plaintiff is either barred from court or may appeal to a court under a limited standard of review. In this case, Defendants do not argue that the grievance process provided Plaintiff\u2019s exclusive remedy, only that the process must be exhausted before Plaintiff files an action in district court. See Chavez, 1998-NMCA-004, \u00b6 14 (defining exclusive remedy as \u201cone which provides for a plain, adequate, and complete means of resolution\u201d). Further, one case cited by Plaintiff considers whether a collective bargaining agreement\u2019s administrative proceeding covered the plaintiff\u2019s claims against the labor union. See Callahan v. N.M. Fed\u2019n of Teachers-TVI, 2005-NMCA-011, \u00b6 21, 136 N.M. 731, 104 P.3d 1122, aff\u2019d in part, rev\u2019d in part by 2006-NMSC-010, 139 N.M. 201, 131 P.3d 51. The other case cited by Plaintiff addressed only whether policies and procedures governing the plaintiff\u2019s employment created an implied contract, not whether exhaustion was required. See Whittington v. State Dep\u2019t of Pub. Safety, 2004-NMCA-124, \u00b6 1, 136 N.M. 503, 100 P.3d 209. Plaintiff fails to cite authority supporting his argument that New Mexico law is inconsistent with a broad, general rule requiring exhaustion of grievance proceedings in an employee handbook.\n{15} Plaintiff next argues that the permissive language in the grievance procedure permits an employee to bypass the grievance process and pursue a direct court action. Plaintiff argues that the grievance policy in this case is permissive because it states that the employee \u201cmay,\u201d not \u201cshall,\u201d file a grievance. However, we read the plain language of Section 6.1.1 of the employee handbook, using the term \u201cmay,\u201d to be permissive only to the extent that it provides a potential grievant with two options: (1) file a grievance, thereby exhausting the remedies under the employee handbook and allowing the grievant to then file an action in district court for an alleged breach of the employee handbook, or (2) forego the grievance process and accept the disciplinary decision of Defendants. See Neiman, 851 A.2d at 1173 (rej ecting argument that the use of \u201cmay\u201d in an internal grievance process made the grievance procedure permissive); United Nuclear Corp. v. Allstate Ins. Co., 2011-NMCA-039, \u00b6 11, 149 N.M. 574, 252 P.3d 798 (\u201cWe consider the plain language of the relevant provisions, giving meaning and significance to each word or phrase within the context of the entire contract, as objective evidence of the parties\u2019 mutual expression of assent.\u201d (internal quotation marks and citation omitted)), cert. granted, 2011-NMCERT-005, 150 N.M. 667, 265 P.3d 718 . In other words, the word \u201cmay\u201d relates to whether the employee wishes to challenge the proposed disciplinary action by Defendants, not whether the employee must do so. The grievance procedure in the employee handbook is mandatory if an employee wishes to challenge a disciplinary action.\nCONCLUSION\n{16} An employee must substantially comply with mandatory internal grievance procedures contained in an employee handbook before filing suit for breach of contract based on an alleged failure of the employer to follow the employee handbook. Because Plaintiff did not exhaust the grievance procedures in Defendants\u2019 employee handbook, we reverse the district court\u2019s denial of Defendants\u2019 motion for summary judgment.\n{17} IT IS SO ORDERED.\nJAMES J. WECHSLER, Judge\nWE CONCUR:\nRODERICK T. KENNEDY, Judge\nJ. MILES HANISEE, Judge",
        "type": "majority",
        "author": "WECHSLER, Judge."
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    ],
    "attorneys": [
      "Law Offices of Michael E. Mozes, P.C. Michael E. Mozes Albuquerque, NM for Appellee",
      "Sheehan & Sheehan, P.A. Quentin Smith Albuquerque, NM for Appellants"
    ],
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    "head_matter": "Certiorari Denied, April 20, 2012,\nNo. 33,549\nIN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO\nOpinion Number: 2012-NMCA-055\nFiling Date: March 1, 2012\nDocket No. 30,535\nARNOLD LUCERO, Plaintiff-Appellee, v. BOARD OF REGENTS OF THE UNIVERSITY OF NEW MEXICO, UNIVERSITY OF NEW MEXICO HEALTH SCIENCES CENTER, Defendants-Appellants.\nLaw Offices of Michael E. Mozes, P.C. Michael E. Mozes Albuquerque, NM for Appellee\nSheehan & Sheehan, P.A. Quentin Smith Albuquerque, NM for Appellants"
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