                                                                          F I L E D
                                                                   United States Court of Appeals
                                                                           Tenth Circuit
                      UNITED STATES COURT OF APPEALS
                                                                           FEB 4 1998
                             FOR THE TENTH CIRCUIT
                                                                      PATRICK FISHER
                                                                               Clerk

    BILL LEMKEN and LINDA
    LEMKEN,

                Plaintiffs-Appellants,
                                                         No. 97-2151
    v.                                           (D.C. No. CIV-95-797-WWD)
                                                           (D. N.M.)
    INTEL CORPORATION,

                Defendant-Appellee.




                            ORDER AND JUDGMENT *



Before PORFILIO, KELLY, and HENRY, Circuit Judges.




         After examining the briefs and appellate record, this panel has determined

unanimously to grant the parties’ request for a decision on the briefs without oral

argument. See Fed. R. App. P. 34(f); 10th Cir. R. 34.1.9. The case is therefore

ordered submitted without oral argument.



*
      This order and judgment is not binding precedent, except under the
doctrines of law of the case, res judicata, and collateral estoppel. The court
generally disfavors the citation of orders and judgments; nevertheless, an order
and judgment may be cited under the terms and conditions of 10th Cir. R. 36.3.
      Plaintiffs commenced this action alleging that defendant unlawfully

terminated their employment, contending their employment agreements

guaranteed termination only for misconduct and provided for progressive

discipline prior to termination for misconduct. Defendant moved for summary

judgment on the ground that plaintiffs were at-will employees and, thus, there

were no implied contracts of employment. The district court rejected this

argument, but nonetheless granted summary judgment for defendant. Based on

company policy and representations made by defendant’s management, the district

court determined as a matter of law that the contracts were implied employment

contracts. The district court further determined as a matter of law that the

implied employment contracts had not been breached because defendant

contractually retained its right to terminate an employee without progressive

discipline for the type of activity for which plaintiffs were terminated.

      Thereafter, plaintiffs filed a motion pursuant to Fed. R. Civ. P. 59(e)

to set aside the summary judgment ruling. Plaintiffs argued the district court

granted summary judgment on a ground not raised in the motion for summary

judgment: whether their terminations breached their implied contracts of

employment. The district court denied relief. Plaintiffs appealed.

      “We review the grant . . . of summary judgment de novo applying the

same legal standard used by the district court pursuant to Fed. R. Civ. P. 56(c).”


                                         -2-
Kaul v. Stephan, 83 F.3d 1208, 1212 (10th Cir. 1996). Summary judgment is

appropriate if the pleadings and evidence in the record show that there is no

genuine issue of material fact and that the movant is entitled to judgment as a

matter of law. See id. We also review the district court’s determinations of state

law de novo. See Salve Regina College v. Russell, 499 U.S. 225, 231 (1991).

      On appeal, plaintiffs first argue that the district court erred in granting

summary judgment on a ground not raised in the motion for summary judgment

and to which they had had no opportunity to respond. Plaintiffs maintain that

defendant argued only that there were no implied employment contracts, not that

the terms of the agreements permitted terminations under the circumstances.

      A district court may enter summary judgment sua sponte where the losing

party is on notice to come forward with relevant evidence. See Celotex Corp. v.

Catrett, 477 U.S. 317, 326 (1986). Here, the district court ruled as a matter of

law that pursuant to defendant’s policy manual defendant retained the right to

terminate plaintiffs’ employment without progressive discipline for conduct that

defendant determined to be unacceptable. No evidence other than that before the

district court was necessary to determine whether the implied employment

contracts had been breached. Thus, we conclude that, under the circumstances,

the district court did not err in sua sponte granting summary judgment as a matter

of law on whether the implied employment contracts had been breached.


                                          -3-
      Although plaintiffs recognized in their complaint that certain types of

misconduct justified immediate termination, they argue the district court erred

in deciding they engaged in misconduct of the type warranting immediate

termination. Plaintiffs misconstrue the district court’s holding. The district court

did not make a factual determination that plaintiffs engaged in the misconduct.

Rather, based on the policy manual, the court decided that defendant retained

a contractual right to immediately terminate plaintiffs for conduct defendant

deemed seriously detrimental to the company. We agree, for substantially the

reasons stated in the district court’s orders of January 14, 1997 and April 8, 1997,

with the district court’s determination that there was no breach of the implied

employment contracts. 1

      Alternatively, plaintiffs argue defendant engaged in bad faith in terminating

plaintiffs for doing what they had been instructed to do, hire security contractors,

and that defendant waived its right to terminate plaintiffs or is estopped from

terminating plaintiffs because defendant approved of the hiring of plaintiffs’

friends. These arguments are without merit. Because defendant did not breach

the implied employment contracts, they necessarily did not breach the duty of



1
      Defendant argues that the district court erroneously determined there were
implied employment contracts. We disagree and affirm the district court’s
determination that plaintiffs were not at-will employees for substantially the
reasons set forth by the district court in its January 14, 1997 order.

                                         -4-
good faith and fair dealing. See Bourgeous v. Horizon Healthcare Corp.,

872 P.2d 852, 856-57 (N.M. 1994) (holding good faith and fair dealing focuses

on contract and what parties agreed to and implied covenant of good faith and fair

dealing will not override express contract provisions). Furthermore, plaintiffs

presented no evidence that defendants acted in bad faith. Nothing indicates

defendant waived its right to terminate plaintiffs. See McCurry v. McCurry,

874 P.2d 25, 28 (N.M. Ct. App. 1994). Likewise, nothing indicates estoppel

should apply. See Shaeffer v. Kelton, 619 P.2d 1226, 1230 (N.M. 1980).

      The judgment of the United States District Court for the District of

New Mexico is AFFIRMED. Defendant’s request for costs is GRANTED.

See Fed. R. App. P. 39(a).



                                                   Entered for the Court



                                                   Robert H. Henry
                                                   Circuit Judge




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