                                                                        F I L E D
                                                                 United States Court of Appeals
                                                                         Tenth Circuit
                       UNITED STATES COURT OF APPEALS
                                                                         OCT 3 1997
                              FOR THE TENTH CIRCUIT
                                                                    PATRICK FISHER
                                                                             Clerk

    ROGER D. BOYDSTON and SANDIE
    J. BOYDSTON, doing business as JTB
    Title and Registration Services,
    formerly known as JTB Auto Sales,
                                                       No. 96-2234
                Plaintiffs-Appellants,          (D.C. No. CIV 96-1118-M)
    v.                                                  (D. N.M.)

    NEW MEXICO TAXATION AND
    REVENUE DEPARTMENT; MOTOR
    VEHICLE DIVISION; JOHN J.
    CHAVEZ, in his individual capacity
    and official capacity as Secretary of
    New Mexico Taxation and Revenue
    Department; GARY A. MONTOYA,
    in his individual capacity and official
    capacity as Director of the Motor
    Vehicle Division of the New Mexico
    Taxation and Revenue Department;
    CHARLES DANIELS, in his
    individual capacity and official
    capacity as Senior Investigator of
    the Motor Vehicle Division of the
    New Mexico Taxation and Revenue
    Department,

                Defendants-Appellees.


                              ORDER AND JUDGMENT *


*
      This order and judgment is not binding precedent, except under the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.
Before ANDERSON, BARRETT, and MURPHY, 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.

      Plaintiffs appeal the district court’s entry of summary judgment in

defendants’ favor on their claims that defendants violated their federal and state

rights when terminating their employment by the State of New Mexico.

We affirm.

      Plaintiffs entered into two written contracts, the “agent contract” and the

“inspector contract,” with the Director of the New Mexico Motor Vehicle

Division of the Taxation and Revenue Department, whereby they were authorized

to perform specified services relative to motor vehicle registration, licensing,

and inspection. A third contract, the “data access agreement,” granted plaintiffs

access to computerized motor vehicle records to carry out their duties under the

other two contracts. Following an investigation of plaintiffs’ allegedly improper

automobile licensing practices, defendants notified plaintiffs on July 24, 1995,

that the agent contract and inspector contract were terminated. Defendants also


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informed the computer database operator not to permit plaintiffs to use the

database. A few days later, following plaintiffs’ application for a temporary

restraining order, the parties stipulated to continue all three contracts.

Consequently, plaintiffs continued to operate their business under the same terms

as those provided in the contracts until the district court entered summary

judgment for defendants on August 25, 1996.

      On appeal, plaintiffs assert that the district court erred in (1) denying their

constitutional due process claims on the grounds that they did not have a property

interest or a liberty interest in continuing the contractual relationship with

defendants; (2) holding that defendants did not breach the contracts; and

(3) finding that sovereign immunity was not waived under the New Mexico Tort

Claims Act. Plaintiffs also claim that they are entitled to declaratory relief.

Defendants request an award of attorneys’ fees on appeal.

      We review de novo the district court’s decision to grant summary judgment

pursuant to Fed. R. Civ. P. 56(c). See Watson v. University of Utah Med. Ctr.,

75 F.3d 569, 574 (10th Cir. 1996). We consider the record in the light most

favorable to the party opposing summary judgment. See id. Summary judgment

is appropriate where there are no genuinely disputed issues of material fact and

one party is entitled to judgment as a matter of law. See id.


                    Constitutional Property and Liberty Interests

                                          -3-
      We first address plaintiffs’ claim that they had a protected property interest

in their continued contractual employment relationship with defendants, entitling

them to substantive and procedural due process protections. The Fourteenth

Amendment safeguards interests that a person has acquired in specific benefits as

defined by state law. See Board of Regents v. Roth, 408 U.S. 564, 576-77 (1972).

To have a property interest in continued employment, a person must have

“a legitimate claim of entitlement to it.” Id. at 577; accord Russillo v.

Scarborough, 935 F.2d 1167, 1170 (10th Cir. 1991) (“Under New Mexico law,

a public employee has a protected property interest only if he has an express or

implied right to continued employment.”).

      Plaintiffs argue that they were entitled to continue to work pursuant to the

contracts unless the contracts were terminated for good cause. They allege

defendants terminated the contracts without cause, thereby implicating plaintiffs’

due process rights.

      Plaintiffs rely on language in the contracts and N.M. Stat. Ann. § 66-2-14,

which states that “[t]he [Motor Vehicle Division of Taxation and Revenue

Department] may terminate the designation of any agent for failure of the agent to

perform to the secretary’s satisfaction the agent’s duties by notifying the agent of

the termination.” The agent contract provides that “[e]ither party hereto may

terminate this agreement at any time, with or without cause, by giving thirty (30)


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days written notice to the other party.” Appellants’ App. at 146. It is undisputed

that defendants gave thirty days’ written notice of cancellation of the agent

contract.

      The inspector contract states, “Inspector Agent [plaintiffs] may terminate

this agreement at any time, with or without cause, by giving 30 day[s’] notice to

the Division. The Division may terminate without notice.” Id. at 261. Plaintiffs

argue that the inspector contract permits only them, not defendants, to terminate

“with or without cause,” thereby requiring cause for defendants to terminate it.

We reject such a tortured interpretation, and conclude that the defendants were

not required to show cause for terminating the inspector contract.

      The data access agreement provides for cancellation in the event of a

breach for good cause shown. See id. at 165-68. Construing the contracts

together, as plaintiffs request, we recognize that the purpose of the data access

agreement was to implement the other two contracts. Therefore, when the agent

contract and the inspector contract were canceled, it was appropriate to deny

plaintiffs access to the computer data.

      We construe the contracts according to their terms, and conclude that the

Division was not required to show cause to terminate the contracts.

Consequently, plaintiffs do not have a constitutional property interest in their

continued contractual employment relationship with defendants.


                                          -5-
      We next consider plaintiffs’ claim that the defendants deprived them of

their liberty interest without due process of law. They allege that defendants

damaged their reputation when they falsely stated that they forged documents

and submitted false information to the Motor Vehicle Division.

      “When a public employer takes action to terminate an employee based upon

a public statement of unfounded charges of dishonesty or immorality that might

seriously damage the employee’s standing or associations in the community and

foreclose the employee’s freedom to take advantage of future employment

opportunities, a claim for relief is created.” Melton v. City of Okla. City,

928 F.2d 920, 927 (10th Cir. 1991) (en banc). To support the cause of action,

the statements “must impugn the good name, reputation, honor, or integrity of

the employee,” and they must be false. Workman v. Jordan, 32 F.3d 475, 481

(10th Cir. 1994). The statements must also be made during the procedure to

terminate the employee or must foreclose other opportunities for employment.

See id. In addition, the statements must be published. See id.

      Plaintiffs assert that defendants published false and defamatory statements

when they informed members of the public that plaintiffs had forged official

documents. To support their position, plaintiffs rely on their own statements of

what others told them. That evidence is insufficient because “hearsay testimony

that would be inadmissible at trial may not be included in an affidavit to defeat


                                         -6-
summary judgment.” Thomas v. International Bus. Mach., 48 F.3d 478, 485

(10th Cir. 1995). To the extent plaintiffs rely on defendants’ directive to the

computer database operator to deny them access to the computer database,

plaintiffs do not identify any false statement made to him. Plaintiffs also suggest

that the Motor Vehicle Division file containing false charges against them may be

available to the public. Those claims are too speculative to resist summary

judgment. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249-50 (1986)

(evidence that is “merely colorable” or “not significantly probative” will not

prevent summary judgment). Accordingly, we hold that plaintiffs’ failure to

establish the necessary element of publication forecloses their liberty interest

claim.

         Because we conclude plaintiffs failed to establish a property or liberty

interest, we need not address whether defendants were entitled to qualified

immunity. See Harlow v. Fitzgerald, 457 U.S. 800, 818 (1982) (in qualified

immunity inquiry, plaintiff must demonstrate that government official violated a

clearly established constitutional right of which a reasonable person would have

known).


                    State Law Claims - Breach of Contract and Tort

         Plaintiffs assert that defendants breached the contracts when they

terminated them without cause. For the reasons stated above in the discussion of

                                           -7-
plaintiffs’ property interest claim, we conclude that defendants were not required

to have cause to terminate the contracts. Therefore, the district court correctly

granted summary judgment on the breach of contract claim. 1

      Plaintiffs also argue that defendant Daniels, the Motor Vehicle Division

official who investigated plaintiffs’ participation in forging an automobile title,

is liable in tort. Generally, a public employee acting within the scope of his

duties is granted immunity from tort liability. See N.M. Stat. Ann. § 41-4-4(A).

N.M. Stat. Ann. § 41-4-12 permits suit against a “law enforcement officer,”

as defined by N.M. Stat. Ann. § 41-4-3(D) (principal duties include “to hold in

custody any person accused of a criminal offense, to maintain public order or to

make arrests for crimes”). N.M. Stat. Ann. § 66-2-12(A)(1)-(2) provides that

officers designated by the Director of the Motor Vehicle Division have the power

to act as “peace officers for the purpose of enforcing the provisions of the [code

and] to make arrests upon view and without warrant for any violation [of the

code].” Therefore, plaintiffs argue, defendant Daniels falls within the definition

of a “law enforcement officer” whose immunity from suit is waived under the

Tort Claims Act.




1
       Plaintiffs’ declaratory judgment claim is moot in light of the construction
of the contracts determining that they did not have a constitutional property
interest and that the contracts could be terminated without cause.

                                         -8-
      In his deposition, defendant Daniels stated that his duty was to investigate.

Plaintiffs did not rebut that deposition. Accordingly, we conclude that defendant

Daniels was not acting as a full-time law enforcement officer, as contemplated

by section 41-4-3(D), and his immunity from suit was not waived. See Dunn v.

New Mexico ex rel. Taxation & Revenue Dep’t, 859 P.2d 469, 472 (N.M. Ct.

App. 1993).


                Defendants’ Request for Attorneys’ Fees on Appeal

      Defendants have requested an award of costs and attorneys’ fees on appeal,

pursuant to 42 U.S.C. § 1988, which permits such an award to the prevailing

party. Defendants have proffered no reason for this court to exercise its

discretion to award attorneys’ fees on appeal to defendants. See Hoyt v. Robson

Companies, Inc., 11 F.3d 983, 985 (10th Cir. 1993) (“‘prevailing party’ is not

automatically entitled to an award of appeal-related attorneys’ fees;” appellate

court exercises discretion in awarding attorneys’ fees on appeal). The request for

attorneys’ fees is DENIED. With respect to costs on appeal, defendants may file

with the clerk of this court a bill of costs in accordance with the rules. An award

will be considered based on that bill and any objections by the plaintiffs thereto.




                                         -9-
     The judgment of the United States District Court for the District of New

Mexico is AFFIRMED.



                                                 Entered for the Court



                                                 Michael R. Murphy
                                                 Circuit Judge




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