{ "id": 12166524, "name": "BARBARA SHERRILL, Plaintiff-Appellant, v. FARMERS INSURANCE EXCHANGE, Defendant-Appellee", "name_abbreviation": "Sherrill v. Farmers Insurance Exchange", "decision_date": "2016-03-22", "docket_number": "Docket No. 33,859", "first_page": "41", "last_page": "55", "citations": [ { "type": "official", "cite": "2016-NMCA-056" } ], "court": { "name_abbreviation": "N.M. Ct. App.", "id": 9025, "name": "Court of Appeals of New Mexico" }, "jurisdiction": { "id": 52, "name_long": "New Mexico", "name": "N.M." }, "cites_to": [ { "cite": "117 N.M. 434", "category": "reporters:state", "reporter": "N.M.", "case_ids": [ 1552588 ], "weight": 2, "opinion_index": 0, "case_paths": [ "/nm/117/0434-01" ] }, { "cite": "1994-NMSC-038", "category": "reporters:neutral", "reporter": "NMSC", "pin_cites": [ { "page": "\u00b6 17" } ], "opinion_index": 0 }, { "cite": "2001-NMCA-081", "category": "reporters:neutral", "reporter": "NMCA", "case_ids": [ 183119 ], "weight": 6, "pin_cites": [ { "page": "\u00b6 11" }, { "page": "\u00b6\u00b6 13-14" }, { "page": "\u00b6 14" } ], "opinion_index": 0, "case_paths": [ "/nm/131/0128-01" ] }, { "cite": "106 N.M. 726", "category": "reporters:state", "reporter": "N.M.", "case_ids": [ 707293 ], "weight": 2, "opinion_index": 0, "case_paths": [ "/nm/106/0726-01" ] }, { "cite": "1988-NMSC-012", "category": "reporters:neutral", "reporter": "NMSC", 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Supp. 1403", "category": "reporters:federal", "reporter": "F. Supp.", "case_ids": [ 3839079 ], "year": 1986, "pin_cites": [ { "page": "1409" } ], "opinion_index": 0, "case_paths": [ "/f-supp/629/1403-01" ] }, { "cite": "911 N.E.2d 369", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 2009, "pin_cites": [ { "page": "375", "parenthetical": "internal quotation marks and citations omitted" } ], "opinion_index": 0 }, { "cite": "115 N.M. 293", "category": "reporters:state", "reporter": "N.M.", "case_ids": [ 725469 ], "weight": 2, "opinion_index": 0, "case_paths": [ "/nm/115/0293-01" ] }, { "cite": "1993-NMSC-015", "category": "reporters:neutral", "reporter": "NMSC", "weight": 6, "pin_cites": [ { "page": "\u00b6 33" }, { "page": "\u00b6 25" }, { "page": "\u00b6\u00b6 25, 28" } ], "opinion_index": 0 }, { "cite": "121 N.M. 710", "category": "reporters:state", "reporter": "N.M.", "case_ids": [ 1566666 ], "weight": 2, "opinion_index": 0, "case_paths": [ "/nm/121/0710-01" ] }, { "cite": "1996-NMSC-032", "category": "reporters:neutral", "reporter": "NMSC", "pin_cites": [ { "page": "\u00b6 17" } ], "opinion_index": 0 }, { "cite": "421 N.E.2d 876", "category": "reporters:state_regional", "reporter": "N.E.2d", "weight": 2, "year": 1981, "pin_cites": [ { "page": "878-79", "parenthetical": "citation omitted" } ], "opinion_index": 0 }, { "cite": "2000-NMSC-033", "category": "reporters:neutral", "reporter": "NMSC", "case_ids": [ 1217135 ], "weight": 3, "pin_cites": [ { "page": "\u00b6 6" } ], "opinion_index": 0, "case_paths": [ "/nm/129/0698-01" ] }, { "cite": "108 N.M. 643", "category": "reporters:state", "reporter": "N.M.", "case_ids": [ 1592853 ], "weight": 2, "opinion_index": 0, "case_paths": [ "/nm/108/0643-01" ] }, { "cite": "1989-NMSC-050", "category": "reporters:neutral", "reporter": "NMSC", "weight": 2, "pin_cites": [ { "page": "\u00b6 16" }, { "page": "\u00b6 16" } ], "opinion_index": 0 }, { "cite": "101 N.M. 687", "category": "reporters:state", "reporter": "N.M.", "case_ids": [ 1586479 ], "weight": 2, 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"cardinality": 1573, "char_count": 46888, "ocr_confidence": 0.789, "pagerank": { "raw": 4.5330875625009783e-08, "percentile": 0.2844555802288087 }, "sha256": "49f90142fbe792e031cf473f4018e6dedc84a9a2c34c72ca93fdc22efb66a0d9", "simhash": "1:df3ef1b48dd1ff43", "word_count": 7412 }, "last_updated": "2023-07-14T21:58:07.326433+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [ "Sheri A. Raphaelson, District Judge", "M. MONICA ZAMORA, Judge", "MICHAEL D. BUSTAMANTE, Judge", "J. MILES HANISEE, Judge" ], "parties": [ "BARBARA SHERRILL, Plaintiff-Appellant, v. FARMERS INSURANCE EXCHANGE, Defendant-Appellee." ], "opinions": [ { "text": "OPINION\nZAMORA, Judge.\n{1} Plaintiff Barbara Sherrill appeals the district court\u2019s grant of summary judgment in favor of Defendant Farmers Insurance Exchange (Farmers) on her claim of retaliatory discharge. The district court determined that neither NMSA 1978, Section 59A-16-20 (1997), nor the implied covenant of good faith and fair dealing, constituted clearly mandated public policies that could support Sherrill\u2019s claim of retaliatory discharge. The district court further concluded that Sherrill did not demonstrate the necessary causal connection between her protected actions and her discharge. We affirm in part and reverse in part.\nI. BACKGROUND\n{2} Sherrill was employed by Farmers as a claims adjuster between 2007 and 2010. Sherrill\u2019s employment duties included adjusting personal injury and insurance claims in the first and third party contexts. As part of its liability strategy and standards, Farmers requires that adjusters make early contact with claimants. Farmers also requires its adjusters to contact claimants by telephone within twenty-four to forty-eight hours of receiving a claim, and to set up an early face-to-face meeting with the claimants. The practice of requiring claims adjusters to meet with claimants is referred to as the in-person contact program (IPC).\n{3} Another component of Farmers\u2019 liability strategy and standards is the requirement that a certain percentage of unrepresented bodily injury claims be settled within sixty days for $1,500 or less. This claims settlement practice is referred to as early claims settlement (ECS). Farmers provides adjusters with ECS objectives, advising adjusters that failure to meet those objectives could result in employee discipline. Sherrill expressed concerns regarding the ECS process to at least one of her supervisors. In March 2010 Farmers informed Sherrill that her claims settlement numbers failed to meet the ECS objectives set for her and terminated Sherrill\u2019s employment.\n{4} After her termination, Sherrill filed suit against Farmers for retaliatory discharge and prima facie tort. Sherrill also sought a declaratory judgment that Farmers violated Section 59A-16-20 of the Trade Practices and Frauds Act (Article 16) ofthe Insurance Code, and the New Mexico Mandatory Financial Responsibility Act, NMS A 1978, \u00a7\u00a7 66-5-201 to -239 (1978, as amended through 2015). Sherrill requested damages under NMS A 1978, Section 59A-16-30 (1990) and punitive damages. The district court granted Farmers\u2019 motion to dismiss Sherrill\u2019s declaratory judgment claims and claim for damages under Section 59A-16-20, pursuant to Rule 1-012(B)(6) NMRA. The district court also granted Farmers\u2019 motion for summary judgment on Sherrill\u2019s claim for prima facie tort.\n{5} The parties filed competing summary judgment motions on Sherrill\u2019s remaining retaliatory discharge claim. Sherrill argued that Farmers terminated her employment in retaliation for her refusal to carry out unfair and illegal claims practices, including ECS and IPC, which Sherrill claimed violated New Mexico law and public policy. Specifically, Sherrill argued that ECS and IPC violated the Release Act, NMS A 1978, \u00a7\u00a7 41-1-1 to -2 (1971), Section 59A-16-20, and the implied covenant of good faith and fair dealing. Farmers argued that its claims practices did not violate New Mexico law, nor did they violate any clear mandate of public policy. Farmers further argued that Sherrill had not expressed any objection to IPC specifically, therefore, IPC could not have been the basis for retaliatory discharge.\n{6} The district court granted Farmers\u2019 motion for summary judgment. The reasoning employed by the district court regarding Sherrill\u2019s claim related to the ECS program is best discerned from its statements at the conclusion of the motion hearing it held. Addressing Sherrill\u2019s contention that her discharge resulted from her objection to and refusal to participate in the ECS program, in violation of New Mexico public policy, the district court stated:\nI can\u2019t find that there is a clear mandate of New Mexico public policy found in [Section 59A-16-20] or in the covenant of good faith and fair dealing that has been violated. Even looking at everything most favorable to the plaintiff ... if everything she\u2019s saying is true, [it] really just comes down to the legal question of whether there\u2019s a clear mandate in those two policies that would make it actionable and my conclusion is there isn\u2019t.\nConcerning Sherrill\u2019s claim regarding IPC as the basis for retaliatory discharge, the district court stated \u201cI don\u2019t see anything, looking at all the evidence in the light most favorable to her, I don\u2019t see that she ever complained about IPC[,] so there is no way she could have been fired for that.\u201d The district court entered an order granting summary judgment in favor of Farmers and dismissing the case with prejudice. This appeal followed.\nII. DISCUSSION\n{7} In this appeal we consider: (1) whether there are clearly mandated public policies embodied in Section 59A-16-20 and the covenant of good faith and fair dealing to support a claim for retaliatory discharge, and (2) whether there are questions of fact precluding summary judgment.\nStandard of Review\n{8} \u201cAn appeal from the grant of a motion for summary judgment presents a question of law and is reviewed de novo.\u201d Montgomery v. Lomos Altos, Inc., 2007-NMSC-002, \u00b6 16, 141 N.M. 21, 150 P.3d 971. \u201cSummary judgment is appropriate where there are no genuine issues of material fact and the movant is entitled to judgment as a matter of law.\u201d Id. (internal quotation marks and citation omitted); see Rule 1-056(C) NMRA. We \u201cview the facts in a light most favorable to the party opposing summary judgment and draw all reasonable inferences in support of a trial on the merits.\u201d Romero v. Philip Morris Inc., 2010-NMSC-035, \u00b6 7, 148 N.M. 713, 242 P.3d 280 (internal quotation marks and citation omitted). \u201cWhen the district court\u2019s grant of summary judgment is grounded upon an error of law, however, the case may be remanded so that the issues may be determined under the correct principles of law.\u201d Centex/Worthgroup, LLC v. Worthgroup Architects, L.P., 2016-NMCA-013, \u00b6 15, 365 P.3d 037 (alterations, internal quotation marks, and citation omitted).\nRetaliatory Discharge\n{9} As a general rule, employment at will can be terminated by either the employer or the employee for any reason, or for no reason at all. See Trujillo v. N. Rio Arriba Elec. Coop., Inc., 2002-NMSC-004, \u00b6 22, 131 N.M. 607, 41 P.3d 333. \u201cA retaliatory discharge cause of action [is] recognized in New Mexico as a narrow exception to the terminable at-will rule[.]\u201d Silva v. Albuquerque Assembly & Distribution Freeport Warehouse Corp., 1987-NMSC-045, \u00b6 13, 106 N.M. 19, 738 P.2d 513. Under this cause of action, an employee must (1) identify a specific expression of public policy which the discharge violated; (2) demonstrate that he or she acted in furtherance of the clearly mandated public policy; and (3) show that he or she was terminated as a result of those acts. See Lihosit v. I & W, Inc., 1996-NMCA-033, \u00b6 7, 121 N.M. 455, 913 P.2d 262; Maxwell v. Ross Hyden Motors, Inc., 1986-NMCA-061, \u00b6 20, 104 N.M. 470, 722 P.2d 1192; Vigil v. Arzola, 1983-NMCA-082, \u00b6\u00b6 29-30, 102 N.M. 682, 699 P.2d 613, rev\u2019d in part on other grounds, 1984-NMSC-090, 101 N.M. 687, 687 P.2d 1038, overruled on other grounds by Chavez v. Manville Prods. Corp., 1989-NMSC-050, \u00b6 16, 108 N.M. 643, 777 P.2d 371.\n{10} In the present case, Sherrill claims that she was discharged in retaliation for her objection to and her failure to comply with two of Farmers\u2019 claims processing practices: ECS, which requires adjusters to settle a percentage of unrepresented bodily injury claims within sixty days for $1,500 or less; and IPC, which requires adjusters to contact claimants by telephone within forty-eight hours of receiving a claim, and to set up early face-to-face meetings with the claimants. Because the district court stated different grounds for its grant of summary judgment on Sherrill\u2019s retaliatory discharge claim as it pertained to ECS and IPC, we will address Sherrill\u2019s retaliatory discharge claim as it relates to each practice separately.\nRetaliatory Discharge Related to ECS\n{11} \u25a0 Sherrill contends that the ECS program violated New Mexico\u2019s clear public policy requiring insurers to act in good faith and deal fairly with insureds and claimants. Sherrill claims thatFarmers\u2019 program targeted unrepresented claimants from lower economic areas for early claim resolution and limited the settlement amount to $1,500, thereby promoting premature settlements for vulnerable injured claimants. According to Sherrill, Farmers set unfair and arbitrary ECS quotas, which forced adjusters to coerce claimants to settle prematurely for unreasonably low amounts and to put the financial interests of Farmers above the interests of Farmers\u2019 insureds and claimants.\n{12} Sherrill claims that she was discharged for objecting to and failing to meet the objectives of Farmers\u2019 ECS program, contrary to: (1) Section 59A-16-20(E), which defines unfair trade practices to include \u201cnot attempting in good faith to effectuate prompt, fair and equitable settlements of an insured\u2019s claims in which liability has become reasonably clear\u201d; and (2) the covenant of good faith and fair dealing, which requires that insurance companies \u201cact honestly and in good faith in the performance of the contract\u201d giving \u201cequal consideration to its own interests and the interests of the policyholder.\u201d UJI 13-1701 NMRA. The district court determined, as a matter of law, that neither Section 59A-16-20 nor the implied covenant of good faith and fair dealing embodied a clear mandate of public policy on which Sherrill could base her claim for retaliatory discharge. We disagree.\n{13} Whether a clear mandate of public policy exists is a question of law, which we review de novo. See Ponder v. State Farm Mut. Auto. Ins. Co., 2000-NMSC-033, \u00b6 6, 129 N.M. 698, 12 P.3d 960 (\u201c[T]he legal consequences flowing from the historical facts will be subject to de novo review if the question involves matters of public policy with broad precedential value beyond the confines of the particular case.\u201d (internal quotation marks and citation omitted)).\n{14} In adopting the retaliatory discharge cause of action, New Mexico has \u201cfollowed the theoretical approach of cases such as Palmateer v. International Harvester Co., [421 N.E.2d 876 (1981)].\u201d Lihosit, 1996-NMCA-033, 121 N.M. at 463, 913 P.2d at 270 (Bustamante, J., dissenting); see Vigil, 1983-NMCA-082, \u00b6\u00b6 19, 25-27; see also Garrity v. Overland Sheepskin Co. of Taos, 1996-NMSC-032, \u00b6 17, 121 N.M. 710, 917 P.2d 1382; Shovelin v. Cent. N.M. Elec. Co-op., Inc., 1993-NMSC-015, \u00b6 33, 115 N.M. 293, 850 P.2d 996. In Palmateer, the Illinois Supreme Court discussed the meaning of \u201cclearly mandated public policy\u201d:\nThere is no precise definition of the term. In general, it can be said that public policy concerns what is right and just and what affects the citizens of the [s]tate collectively. . . . Although there is no precise line of demarcation dividing matters that are the subject of public policies from matters purely personal, a survey of cases in other [sjtates involving retaliatory discharges shows that a matter must strike at the heart of a citizen\u2019s social rights, duties, and responsibilities before the tort will be allowed.\n421 N.E.2d at 878-79 (citation omitted); accord Black\u2019s Law Dictionary 1426 (lOthed. 2014) (defining \u201cpublic policy\u201d as \u201c[t]he collective rules, principles, or approaches to problems that affect the commonwealth or [especially] promote the general good; [specifically], principles and standards regarded by the [Legislature or by the courts as being of fundamental concern to the state and the whole of society\u201d).\n{15} \u201cA clear mandate of public policy sufficient to support a claim of retaliatory discharge may be gleaned from the enactments of the [L]egislature and the decisions of the courts and may fall into one of several categories.\u201d Shovelin, 1993-NMSC-015, \u00b6 25. A statute may: (1) provide both that an employer may not terminate employees on particular grounds and a remedy in the event of such termination, (2) prohibit an employer from firing an employee on specified grounds without providing a specific remedy for an employee who has been so terminated, or (3) define a public policy that governs the employee\u2019s conduct, but does not provide the employee with either a right not to be terminated in violation of that policy, or a remedy for such termination in which case the employee must seek judicial recognition of both the right and the remedy. Spe id. Where no legislative enactment directly addresses the employee\u2019s conduct, the judiciary may determine that, based on other relevant statutes or an implicit public policy, both a right and a remedy should be recognized. See id.\n{16} In the absence of a clearly mandated public policy, the employer retains the right to terminate workers at will. See Vigil, 1983-NMCA-082, \u00b6 29. The Illinois Supreme Court discussed the importance of requiring retaliatory discharge claims to rest on well-recognized and clear public policies:\nAny effort to evaluate the public policy exception with generalized concepts of fairness and justice will result in an elimination of the at-will doctrine itself. Further, generalized expressions of public policy fail to provide essential notice to employers. The phrase \u2018clearly mandated public policy\u2019 implies that the policy will be recognizable simply because it is clear. An employer should not be exposed to liability where a public policy standard is too general to provide any specific guidance or is so vague that it is subject to different interpretations.\nTurner v. Mem\u2019l Med. Ctr., 911 N.E.2d 369, 375 (2009) (internal quotation marks and citations omitted). Similarly, in New Mexico, when an employee is discharged, contrary to a clear mandate of public policy, that employee has a cause of action for retaliatory discharge. Chavez, 1989-NMSC-050, \u00b6 16; Vigil, 1983-NMCA-082, \u00b6 27.\n{17} In order to succeed on a retaliatory discharge claim in New Mexico, the plaintiff \u201cmust identify a specific expression of public policy which the discharge violated.\u201d Maxwell, 1986-NMCA-061, \u00b6 20; see Vigil, 1983-NMCA-082, \u00b6 35 (\u201cA general allegation that the discharge contravened public policy is insufficient; to state a cause of action for retaliatory or abusive discharge the employee must identify a specific expression of public policy.\u201d). Where the asserted public policy is too amorphous, the employee fails to state a claim of retaliatory discharge. See, e.g., Salazar v. Furr\u2019s, Inc., 629 F. Supp. 1403, 1409 (D.N.M. 1986) (holding that the employee\u2019s claim that she was terminated in violation of \u201cthe public policies underlying ERISA\u201d was specific enough to state a claim for retaliatory discharge, whereas her claim that her termination violated \u201cthe public policy that encourages \u2018family unity and the maintenance of family discipline\u2019 \u201d was not).\n{18} In sum, when evaluating whether an expression of public policy constitutes a \u201cclear mandate of public policy\u201d for purposes of a retaliatory discharge claim, we consider: (1) the specificity with which the employee has identified the policy; (2) whether the identified policy promotes the general good and reflects the principles and standards regarded by our Legislature and our courts as being of fundamental importance to the citizens of the state; and (3) whether the policy is well-recognized and clear in the sense that it provides specific guidance and is not overly vague or ambiguous.\n{19} Sherrill has identified two specific expressions of public policy, which form the bases for her retaliatory discharge claim: (1) Section 59A-16-20(E), which defines unfair trade practices to include \u201cnot attempting in good faith to effectuate prompt, fair and equitable settlements of an insured\u2019s claims in which liability has become reasonably clear\u201d; and (2) the covenant of good faith and fair dealing, which requires that insurance companies \u201cact honestly and in good faith in the performance of the contract\u201d giving \u201cequal consideration to its own interests and the interests of the policyholder.\u201d UJI 13-1701. Farmers does not dispute that Sherrill has 1 identified these policies with enough specificity to state a claim of retaliatory discharge. Instead, Farmers contends that the policies themselves are too generalized and do not provide guidance as to prohibited conduct. We disagree.\nSection 59A-16-20 and the Implied Covenant of Good Faith and Fair Dealing Embody Clear Mandates of Public Policy\nSection 59A-16-20\n{20} The current version of Section 59A-16-20 is part of the Trade Practices and Frauds Act (Article 16) of the Insurance Code. NMSA 1978, \u00a7\u00a7 59A-16-1 to -30 (1984, as amended through 2013). The Insurance Code as a whole is a \u201ccomprehensive and public-spirited\u201d legislative effort intended \u201cto protect anyone injured by unfair insurance practices.\u201d Hovet v. Allstate Ins. Co., 2004-NMSC-010, \u00b6\u00b6 18, 19, 135 N.M. 397, 89 P.3d 69. The purpose of Article 16 is \u201cto regulate trade practices in the insurance business\u201d to further the public interest. Section 59A-16-2; see 15 U.S.C. \u00a7 1011 (1945).\n{21} The insurers\u2019 statutory duty of good faith is codified in Section 59A-16-20. The insurers\u2019 statutory duty of good faith reflects principles and standards regarded by our Legislature and our courts as being of fundamental importance to the citizens of the state and promotes the general welfare. In adopting the current version of the Insurance Code in 1984, the Legislature created a private right of action against insurers that commit the unfair claims practices defined in Article 16. See \u00a7 59A-16-30 (\u201cAny person covered by [Article 16 ] who has suffered damages as a result of a violation of that article by an insurer or agent is granted a right to bring an action in district court to recover actual damages.\u201d).\n{22} Section 59A-16-20(E) also defines unfair insurance claims practices to include \u201cnot attempting in good faith to effectuate prompt, fair and equitable settlements of an insured\u2019s claims in which liability has become reasonably clear[,]\u201d where the insurer does so \u201cknowingly [and] with such frequency as to indicate a general business practice.\u201d This language has been included in the New Mexico Insurance Code since 1975; however, prior versions of the statute did not provide a private right of action for insurers\u2019 bad faith. See NMSA 1978, \u00a7 59-11-13(1) (1973) (repealedin 1984);NMSA 1953, \u00a7 58-9-25(1) (1973) (Vol. 8, Repl., Part 2, 1975 Pocket Supp.).\n{23} In Russell v. Protective Insurance Co., 1988-NMSC-025, \u00b6 22, 107 N.M. 9, 751 P.2d 693, superseded by statute as stated in Meyers v. Western Auto, 2002-NMCA-089, 132 N.M. 675, 54 P.3d 79, and Hovet, 2004-NMSC-010, \u00b6 14, our Supreme Court held that Article 16 should be broadly construed to allow third-party claimants to bring a private action against an insurer for Article 16 violations, including unfair practices and bad faith. In Russell, the Court considered whether Section 59A-16-30 allows a private cause of action \u201cagainst workers\u2019 compensation insurers for bad faith refusal to pay compensation benefits to workers.\u201d Russell, 1988-NMSC-025, \u00b6 1. The Court rejected the insurer\u2019s argument that only the employer, as the first party insured, could bring a private right of action under Section 59A-16-30, and concluded that the language of the Legislature intended to expand the notion of insured to \u201cparties other than those who may have signed a written contract of insurance beneath a blank reading \u2018insured.\u2019\u201d Russell, 1988-NMSC-025, \u00b6 14.\n{24} In Hovet, the Court considered whether an automobile accident victim had a cause of action against an automobile liability insurer for unfair claims practices under Article 16. Hovet, 2004-NMSC-010, \u00b6 9. The Court stated that \u201cthe general policy of the Insurance Code [is] to protect anyone injured by unfair insurance practices.\u201d Id. \u00b6 19. The Court outright rejected the insurer\u2019s argument that a third-party claimant with a direct interest in fair settlement practices may not sue under Article 16. See id. \u00b6 18 (\u201cWe decline to ascribe such a sterile intent to a legislative effort as comprehensive and public-spirited as the Insurance Code. Therefore, we conclude that the Legislature intended both the insured and the third-party claimant to be protected under Section 59A-16-20.\u201d). The Court explained, \u201c[i]n creating a separate statutory action [for those injured by an insurer\u2019s unfair claims practices], the Legislature had a remedial purpose in mind: to encourage ethical claims practices within the insurance industry.\u201d Hovet, 2004-NMSC-010, \u00b6 14. \u201cA private right of action for third-party claimants enforces [this] policy.\u201dId. \u00b6 17. The Court concluded that the intention of the Legislature was to protect both the insured and the third-party claimant. Id. \u00b6 18.\n{25} In 2001, the Legislature broadened the definition of \u201cinsurer,\u201d for purposes of the unfair trade practices section, \u201cto include entities and individuals that are not within the definition of [the] insurer elsewhere in the Insurance Code.\u201d Martinez v. Cornejo, 2009-NMCA-011, \u00b6 9, 146 N.M. 223, 208 P.3d 443. In Martinez, this Court held that the amendment in effect broadened the scope of the private right of action in Section 59A-16-30, such that individual employees of insurance companies could be held personally liable for violations of the unfair trade practices section. Martinez, 2009-NMCA-011, \u00b6 22. We recognized that the result was \u201centirely consistent with the express purpose and spirit of the [unfair trade practices section], which is to promote ethical settlement practices within the insurance industry.\u201d Id. (internal quotation marks and citation omitted). Just as \u201cthe private right of action is one means toward the end of encouraging ethical claims practices within the insurance industry[, t]he Legislature\u2019s decision to expand the scope of the private right of action by broadening the definition of insurer is just one other means toward that same end.\u201d Id. (alterations, internal quotation marks, and citation omitted).\n{26} Our Supreme Court has provided the following guidance regarding the parameters of an insurers\u2019 duty under Section 59A-16-20:\nWe ... emphasize that the Insurance Code does not impose a duty to settle in all instances, nor does it require insurers to settle cases they reasonably believe to be without merit or overvalued. A violation occurs for \u2018not attempting in good faith to effectuate prompt, fair and equitable settlements of an insured\u2019s claims in which liability has become reasonably clearf.]\u2019 Section 59A-16-20(E). The insurer\u2019s duty is founded upon basic principles of fairness. Any insurer that objectively exercises good faith and fairly attempts to settle its cases on a reasonable basis and in a timely manner need not fear liability under the Code.\nHovet, 2004-NMSC-010, \u00b6 29.\n{27} In the present case, Farmers contends that because the question of whether an insurer has violated Section 59A-16-20 must be determined subjectively on a case-by-case basis, the statute does not express a clear or well-defined public policy. In support of this argument Farmers relies on this Court\u2019s decisions in Maxwell, and Rist v. Design Center at Floor Concepts, 2013-NMCA-109, 314 P.3d 681. Farmers\u2019 reliance on these cases is misplaced. At issue in both Maxwell un\u00e1Rist was the sufficiency of the employees\u2019 complaints to state a claim for retaliatory discharge. See Maxwell, 1986-NMCA-061, \u00b6\u00b6 2-3.\n{28} In Maxwell, the employee\u2019s complaint was pending in the district court when this Court issued its decision in Vigil, recognizing the tort of retaliatory discharge for the first time. See Maxwell, 1986-NMCA-061, \u00b6\u00b6 2-3. We held that Vigil did not apply retrospectively to provide relief for the employee in Maxwell. Maxwell, 1986-NMCA-061, \u00b6 13. We further held that even if the employee could overcome the prospectivity hurdle, the employee was not entitled to relief under retaliatory discharge. Id. \u00b6\u00b6 23-24.\n{29} The employee\u2019s complaint in that case, which was filed one and one-half years prior to the final decision in Vigil, alleged that the employee was terminated \u201cwillfully, wrongfully, maliciously, and in bad faith, without just cause and for no legitimate business reason.\u201d Id. \u00b6\u00b6 1, 6 (internal quotation marks omitted). The employee argued, for the first time on appeal, that the public policy of full employment expressed in New Mexico\u2019s unemployment compensation statute reflected the legislative intent \u201cto limit the ability of an employer to discharge an employee-at-will for no legitimate business reason or without just cause.\u201d Id. \u00b6 27 (internal quotation marks omitted). We rejected that argument, explaining that \u201c[t]he [Ljegislature\u2019s recognition of the problems of unemployment and that body \u2019 s commitment to encouraging employers to provide stable employment does not amount to the specific expression of public policy mandated by Vigil\u201d Maxwell, 1986-NMCA-061, \u00b6 26. We concluded that the complaint, which did not allege any conduct on his part that precipitated his termination and did not identify any expression of public policy, which the termination contravened, was insufficient to state a cause of action for retaliatory discharge. Id. \u00b6\u00b6 23-24.\n{30} Similarly, in Rist, the employees\u2019 complaint did not allege retaliatory discharge. 2013-NMCA-109, \u00b6 1. The employees filed suit under the New Mexico Human Rights Act (NMHRA), NMSA 1978, \u00a7\u00a7 28-1-1 to -15 (1969, as amended through 2007), alleging religious discrimination. Rist, 2013-NMCA-109, \u00b6 1. On appeal, the employees argued that \u201ca violation of the NMHRA is a violation of public policy actionable under Vigil.\" Rist, 2013-NMCA-109, \u00b6 23. This Court held that this general assertion could not be the basis for reading a retaliatory discharge claim into the complaint, where the complaint did not include such a claim. Id. \u00b6\u00b6 22-23. The present case is distinguishable from both Maxwell and Rist, in that the sufficiency of Sherrill\u2019s complaint and the specificity with which she identified specific expressions ofpublic policy were not challenged in the district court and are not challenged on appeal.\n{31} Farmers also cites Shovelin to support its argument that retaliatory discharge claims must be based on an expression of public policy that defines objectively unlawful conduct. However, we do not agree that Shovelin stands for the proposition for which it is cited by Farmers. In Shovelin, our Supreme Court discussed categories of statutes that may support a retaliatory discharge claim. 1993-NMSC-015, \u00b6\u00b6 25, 28. While the potential sources of clearly mandated public policies included statutes that clearly identify unlawful conduct, Shovelin does not limit these sources of public policy to statutes that identify objectively unlawful conduct. Id.\n{32} To the contrary, Shovelin provides examples of several potential sources of clearly mandated public policies, not all of which provide an objective standard for determining prohibited conduct. Our Supreme Court set forth several types of prospective categories from which a sufficiently clear mandate ofpublic policy may be gleaned from enactments of the Legislature and decisions of the courts:\nFirst, legislation may define public policy and provide a remedy for a violation of that policy. Second, legislation may provide protection of an employee without specifying a remedy, in which case an employee would seek an implied remedy. Third, legislation may define a public policy without specifying either a right or a remedy, in which case the employee would seek judicial recognition of both. Finally, there may, in some instances, be no expression of public policy, and here again the judiciary would have to imply a right as well as a remedy.\nId. \u00b6 25 (alteration, internal quotation marks, and citation omitted).\n{33} Although analyzing claims under Section 59A-16-20 may require a subjective case-by-case analysis, the language of the statute and cases applying New Mexico law illustrate that the statute embodies a strong public policy in favor of protecting the public from unfair and deceptive insurance claims practices \u2014 a policy whose parameters are not too vague or ambiguous to provide guidance on prohibited conduct. See Hovet, 2004-NMSC-010, \u00b6 22 (holding that by enacting Sections 59A-16-20 and -30 \u201c[o]urLegislature created both the right and the remedy\u201d for members of the public who \u201care twice made victims, first by actionable negligence of an insured . . . and then by an insurance company\u2019s intransigence\u201d). We conclude that Section 59A-16-20 embodies a clear mandate of the public policy sufficient to support a claim of retaliatory discharge.\nThe Implied Covenant of Good Faith and Fair Dealing\n{34} Under the common law, all insurance contracts include \u201can implied covenant of good faith and fair dealing that the insurer will not injure its policyholder\u2019s right to receive the full benefits of the contract.\u201d Dairyland Ins. Co. v. Herman, 1998-NMSC-005, \u00b6 12, 124 N.M. 624, 954 P.2d 56; Ambassador Ins. Co. v. St. Paul Fire & Marine Ins. Co., 1984-NMSC-107, \u00b6 11, 102 N.M. 28, 690 P.2d 1022. The common law duty of good faith embodied in the implied covenant is distinct from the statutory duty of good faith imposed by Section 59A-16-20. See Martinez, 2009-NMCA-011, \u00b6 38. \u201cThe key principle underlying the covenant of good faith in an insurance contract is that the insurer treat the interests of the insured equally to its own interests.\u201d City of Hobbs v. Hartford Fire Ins. Co., 162 F.3d 576, 582 (10th Cir. 1998).\n{35} Implying a covenant of good faith in an insurance contract serves to enforce the contractual obligation of the insurer to avoid exposing the insured to personal liability. See Martinez, 2009-NMCA-011, \u00b6 40. The implied covenant is aimed at making effective the insurer\u2019s obligation under the insurance contract and cannot be applied to override express provisions addressed by the terms of an integrated, written contract. Azar v. Prudential Ins. Co. of Am., 2003-NMCA-062, \u00b6\u00b6 48-51, 133 N.M. 669, 68 P.3d 909. And \u201c[bjecause the implied covenant of good faith and fair dealing depends upon the existence of an underlying contractual relationship,\u201d plaintiffs may not recover for bad faith occurring prior to the existence of the insurance contract. Id. \u00b6 53.\n{36} New Mexico has long recognized an insurer\u2019s common law duty to deal in good faith with its insured. See Dairyland, 1998-NMSC-005, \u00b6 12; State Farm Gen. Ins. Co. v. Clifton, 1974-NMSC-081, \u00b6 8, 86 N.M. 757, 527 P.2d 798; Modisette v. Found. Reserve Ins. Co., 1967-NMSC-094, \u00b6\u00b6 16-17, 77 N.M. 661, 427 P.2d 21; Chavez v. Chenoweth, 1976-NMCA-076, \u00b6 44, 89 N.M. 423, 553 P.2d 703; Lujan v. Gonzales, 1972-NMCA-098, \u00b6\u00b6 38-39, 84 N.M. 229, 501 P.2d 673. This duty arises from the nature of the insurance relationship, which is characterized by elements of adhesion, public interest, and fiduciary responsibility. See Allsup\u2019s Convenience Stores, Inc. v. N. River Ins. Co., 1999-NMSC-006, \u00b6 37, 127 N.M. 1, 976 P.2d 1; Dellaira v. Farmers Ins. Exch., 2004-NMCA-132, \u00b6 14, 136 N.M. 552, 102 P.3d 111 (stating that the \u201crelationship between insurer and insured\u201d is recognized as special and unique due to \u201cthe inherent lack of balance in and adhesive nature of the relationship, as well as the quasi-public nature of insurance and the potential for the insurer to unscrupulously exert its unequal bargaining power at a time when the insured is particularly vulnerable\u201d (internal quotation marks and citations omitted)). The common law bad faith action sounds in both contract and tort. Sloan v. State Farm Mut. Auto. Ins. Co., 2004-NMSC-004, \u00b6\u00b6 13, 23, 135 N.M. 106, 85 P.3d 230. This reflects New Mexico\u2019s public policy in favor of restoring balance to the contractual relationship between the insurer and the insured, and enforcing insurers\u2019 public obligation.\n{37} New Mexico cases provide guidance concerning the insurers\u2019 duty under the implied covenant of good faith and fair dealing in insurance contracts. For example, in Dairyland, our Supreme Court held that the \u201cimplied obligation of good faith and fair dealing requires the insurer to settle in an appropriate case although the express terms of the policy do not impose such a duty.\u201d Dairyland, 1998-NMSC-005, \u00b6 13 (internal quotation marks and citation omitted). \u201c[W]hen there is a substantial likelihood of recovery in excess of limits, an insurer\u2019s unwarranted refusal to settle is a breach of the implied covenant of good faith and fair dealing.\u201d Id. \u00b6 15. The Court explained that \u201cwhen damages are likely to exceed policy limits, the insurer risks exposing its insured to even greater liability by going to trial rather than settling.\u201d Id. The Court concluded, \u201c[t]he courts of this state will not permit insurers to profit by their own wrongs.\u201d Id. \u201cShould an insurer, in violation of its duty of good faith, refuse to accept a reasonable settlement offer within policy limits, it will be liable for the entire judgment against the insured, including the amount in excess of policy limits.\u201d Id.\n{38} In Ambassador, our Supreme Court considered whether a common law cause of action against insurers for negligent failure to settle is recognized in New Mexico. 1984-NMSC-107, \u00b6 3. The Court determined that negligent failure to settle may evince an insurer\u2019s breach of the implied covenant of good faith under the insurance contract, but is not recognized in New Mexico as an independent cause of action. See id. \u00b6 12. In reaching this conclusion, the Court considered that \u201cthe insurer has, by its insurance contract, taken over the duty to defend a case against the insured.\u201d Id. \u00b6 11.\n{39} The Court stated that an insurer\u2019s exercise of this duty should be \u201caccompanied by considerations of good faith.\u201d Id. (internal quotation marks and citation omitted). When determining whether to settle a claim, the duty of good faith requires that the insurer base its decision \u201cupon a knowledge of the facts and circumstances upon which liability is predicated, and upon a knowledge of the nature and extent of the injuries so far as they reasonably can be ascertained.\u201d Id. (internal quotation marks and citation omitted). Thus, the implied covenant of good faith in an insurance contract requires insurers to properly investigate an insured\u2019s claim. Id. \u00b6 12. In this context, insurer conduct is measured by \u201cbasic standards of competency .. . and the insurer is charged with knowledge of the duty owed to its insured.\u201d Id.\n{40} Our Supreme Court has also held that the covenant of good faith and fair dealing can impose upon the insurer an affirmative duty to act where a failure to act would result in a denial of an insured\u2019s rights under the insurance contract. Allsup\u2019s, 1999-NMSC-006, \u00b6 35. In Allsup\u2019s, the insurer and insured agreed to a retrospective premium plan under which the amount of the premium was to be determined at the end of the policy year based on the actual amount of claims paid. Id. \u00b6 3. The Court determined that since having the premium tied directly to competent claims-handling was a benefit of the contract, the insurer had a duty under the implied covenant of good faith to disclose any mishandling of claims to the insured due to its effect on the insured\u2019s premiums. Id. \u00b6\u00b6 33-36.\n{41} This Court has also recognized that the covenant of good faith and fair dealing imposes upon an insurer \u201c[a] duty of disclosure!, which] is premised on the principle of fundamental fairness.\u201d Salas v. Mountain States Mut. Cas. Co., 2009-NMSC-005, \u00b6 16, 145 N.M. 542, 202 P.3d 801. The good faith duty to disclose \u201cdictates that an insurer must notify a known insured of the scope of available insurance coverage and the terms and conditions governing that coverage.\u201d Id. \u201cAccordingly, if an insurer fails to disclose to its insured the existence of an exclusionary provision contained in the insurance contract, then the covenant of good faith and fair dealing precludes the insurer from relying on the provision to limit or deny the insured\u2019s right to coverage.\u201d Id. \u00b6 13.\n{42} In the present case, Farmers argues ttiat Melnick v. State Farm Mutual Automobile Insurance Co., 1988-NMSC-012, 106 N.M. 726, 749 P.2d 1105, and Kropinak v. ARA Health Services, Inc., 2001-NMCA-081, 131 N.M. 128, 33 P.3d 679, stand for the proposition that the implied covenant of good faith and fair dealing is decidedly not a clear mandate of public policy sufficient to support a claim for retaliatory discharge. Farmers\u2019 reliance on Melnick and Kropinak is misplaced and improperly expands the holdings of those cases beyond their own language.\n{43} In Melnick, our Supreme Court declined to \u201crecognize a cause of action for breach of an implied covenant of good faith and fair dealing in an at-will employment relationship.\u201d 1988-NMSC-012, \u00b6 13. This Court has read Melnick to hold \u201cthat when parties have entered into a clear and unambiguous at-will employment agreement, it is improper to invoke the implied covenant of good faith and fair dealing to vary the at-will termination provision in the written agreement.\u201d Kropinak, 2001-NMCA-081, \u00b6 11. In Kropinak, we reiterated the holding in Melnick, acknowledging that where an employer discharges an employee in violation of a clear mandate of public policy the employee may not assert breach of the employment contract, or breach of the implied covenant of good faith and fair dealing, however, the employee may assert a tort action for retaliatory discharge. See Kropinak, 2001-NMCA-081, \u00b6\u00b6 13-14.\n{44} These cases are inapposite for two reasons. First, the duty of good faith in an employment relationship is not analogous to the special relationship between insurer and insured. See Bourgeous v. Horizon Healthcare Corp., 1994-NMSC-038, \u00b6 17, 117 N.M. 434, 872 P.2d 852 (\u201c[T]he employment relationship is not sufficiently similar to that of insurer and insured to warrant judicial extension of the proposed additional tort remedies in view of the countervailing concerns about economic policy and stability, the traditional separation of tort and contract law, and finally, the numerous protections against improper termination already afforded employees.\u201d (internal quotation marks and citation omitted)). Thus, the public policy served by the implied covenant of good faith and fair dealing in an employment contract differs significantly from the policy furthered by the implied covenant in the insurer/insured context.\n{45} Second, neither Melnick nor Kropinak precluded a retaliatory discharge claim based on the implied covenant of good faith and fair dealing between employer and employee. Rather, it appears from the language in Kropinak that the question of whether the covenant of good faith and fair dealing in an employment contract is a clear mandate of public policy sufficient to support a claim for retaliatory discharge is left unanswered by our law. See 2001-NMCA-081, \u00b6 14 (\u201c[W]hen the termination is based on an express, unambiguous, and clear at-will termination right, such conduct is only actionable to the extent it constitutes the tort of retaliatory discharge}.]\u201d).\n{46} New Mexico cases analyzing the implied covenant of good faith and fair dealing in insurance contracts reflect a strong public policy in favor of enforcing insurers\u2019 public obligation and restoring balance to the contractual relationship between the insurer and the insured. These cases also help define the parameters of the insurers\u2019 duty of good faith under the contract of insurance and provide guidance for insurers. We therefore conclude that the implied covenant of good faith and fair dealing is a clear mandate of public policy sufficient to support a claim of retaliatory discharge.\nQuestions of Fact Preclude Summary Judgment on Retaliatory Discharge Related to ECS\n{47} Farmers contends that Sherrill has not raised a factual issue concerning whether she acted in furtherance of public policy. Specifically, Farmers claims that as a matter of law ECS does not contravene either Section 59A-16-20, or the implied covenant of good faith and fair dealing, therefore, Sherrill\u2019s objection to and failure to meet the objectives of the ECS program did not further either policy. Farmers also denies that Sherrill was terminated because of her objections to the ECS program. However, with regard to both of these elements of retaliatory discharge the evidence presented at summary judgment raises factual questions.\n{48} Attached to her response to Farmers\u2019 motion for summary judgment, Sherrill produced memoranda she received from her Farmers supervisor, which showed that Sherrill was formally reprimanded numerous times between July 2009 and March 2010 for failing to meet ECS quotas. Notes from an October 27, 2009, meeting between Sherrill and a Farmers supervisor indicated that Sherill was \u201cboycotting\u201d required ECS reporting. Sherill was placed on probation on March 5, 2010, in part for her continued failure to meet ECS quotas. The notice of Sherrill\u2019s termination cited her failure to show significant improvement in her ECS quotas as one of the reasons for her termination. This is sufficient to raise a factual issue as to whether Sherrill was terminated as a result of her opposition to the ECS program.\n{49} Memoranda from Farmers to Sherrill indicate that in March 2010 Farmers\u2019 expectation was that forty-eight percent of claims would be settled through the ECS program. In portions of Sherrill\u2019s deposition testimony that were provided with her response to Farmers\u2019 summary judgment motion, Sherrill testified that she did not meet Farmers\u2019 ECS expectations, because to do so would have required her to settle some claims unfairly and in a manner that was not in the best interest of the claimant. Sherrill testified that there were many claims that she was asked to settle under ECS for which the ECS guidelines would have resulted in unfair settlements. She gave one specific example of a claim that she was instructed to settle through ECS for which she believed ECS would have resulted in a premature, undervalued settlement.\n{50} Sherrill provided an affidavit of a former Farmers claims supervisor, who worked for Farmers from July 2007 through June 2010. In that affidavit, the former Farmers claims supervisor stated that she worked under the same conditions as Sherrill; when she left Farmers the ECS expectation was to settle fifty-four percent of the claims through ECS. According to the former supervisor, the ECS requirement forces claims adjusters to try to settle claims prematurely.\n{51} Sherrill also provided an affidavit of an insurance claims consultant. This claims consultant worked for Farmers, as a claims employee, from June 19 8 7 to August 2001. In his affidavit, the insurance consultant stated that setting quotas for claims to be settled under the guidelines of ECS can result in a conflict between the interests of the insurer and the interests of the insured. According to the consultant, claims that are settled prematurely can be hazardous for accident victims. The consultant stated that when adjusters face pressure to settle a percentage of claims early and for a fixed sum, it increases the potential for adjusters to use undue influence over claimants who are typically financially, physically, and/or emotionally vulnerable. We conclude that this evidence is sufficient to raise a factual question with regard to whether Sherrill\u2019s resistance to ECS objectives furthered the policies embodied in Section 59A-16-20, and the implied covenant of good faith and fair dealing.\nQuestions of Fact Do Not Preclude Summary Judgment on Retaliatory Discharge Related to IPC\n{52} To establish the causation element necessary to sustain a claim for retaliatory discharge, the employee must demonstrate the employer had knowledge that the employee engaged in protected activity. See Lihosit, 1996-NMCA-033, \u00b6 17. An employer, \u201c[a]s a matter of logic and of fact,... cannot make an adverse, retaliatory decision based upon information of which [it] is unaware.\u201d Id. (internal quotation marks and citation omitted).\n{53} In the present case, Farmers asserts that Sherrill cannot prove retaliatory discharge based on her opposition to IPC because she did not explicitly complain to Farmers about the IPC program prior to her termination. Sherrill does not dispute Farmers\u2019 contention that she did not directly object to IPC prior to her termination. Rather, she argues that her opposition to the IPC program was implicit in her complaints about the ECS program and her general objection to the unfair and inequitable claims practices that Farmers used to obtain ECS settlements. In other words, Sherrill suggests that her objections concerning Farmers\u2019 ECS requirements were sufficient to put it on notice of her objections to the IPC program. Sherrill points to no evidence indicating that Farmers had actual knowledge of her opposition to the IPC program prior to her termination, and our review of the record discloses none. Id. \u00b6 17. \u201c[T]he employer\u2019s motive is a key element[.]\u201d Id. \u00b6 12. \u201c[A]n employer cannot fire an employee in retaliation for actions of which the employer is unaware.\u201d Id. (internal quotation marks and citation omitted). Because a key consideration in retaliation cases is the employer\u2019s actual knowledge and motive for the termination, constructive notice is insufficient to \u201ccreate actual intent to retaliate.\u201d Id. \u00b6 15 (internal quotation marks and citation omitted). Accordingly, we conclude that there is no factual issue regarding the causal link between Sherrill\u2019s opposition to the IPC program and her termination.\nIII. CONCLUSION\n{54} For the foregoing reasons, we affirm the district court\u2019s determination that Sherrill failed to establish the necessary causal connection between her opposition to the IPC program and her termination. We reverse the district court\u2019s determination that Sherrill failed to identify a clearly mandated public policy sufficient to support a claim of retaliatory discharge and remand for proceedings consistent with this Opinion.\n{55} IT IS SO ORDERED.\nM. MONICA ZAMORA, Judge\nWE CONCUR:\nMICHAEL D. BUSTAMANTE, Judge\nJ. MILES HANISEE, Judge", "type": "majority", "author": "ZAMORA, Judge." } ], "attorneys": [ "O\u2019Friel and Levy, P.C. Daniel J. O\u2019Friel Pierre Levy Aimee Bevan Santa Fe, NM for Appellant", "Lewis Roca Rothgerber, LLP Steven J. Hulsman Ross L. Crown Matthew W. Park Albuquerque, NM for Appellee" ], "corrections": "", "head_matter": "IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO\nOpinion Number: 2016-NMCA-056\nFiling Date: March 22, 2016\nDocket No. 33,859\nBARBARA SHERRILL, Plaintiff-Appellant, v. FARMERS INSURANCE EXCHANGE, Defendant-Appellee.\nSheri A. Raphaelson, District Judge\nO\u2019Friel and Levy, P.C. Daniel J. O\u2019Friel Pierre Levy Aimee Bevan Santa Fe, NM for Appellant\nLewis Roca Rothgerber, LLP Steven J. Hulsman Ross L. Crown Matthew W. Park Albuquerque, NM for Appellee" }, "file_name": "0041-01", "first_page_order": 57, "last_page_order": 71 }