FILED: July 7, 1999
SANDRA K. CLOYD,
Appellant,
v.
LEBANON SCHOOL DISTRICT 16C,
DISTRICT SCHOOL BOARD OF LEBANON
SCHOOL DISTRICT 16C, LEBANON
SCHOOL DISTRICT UH-1 and DISTRICT
SCHOOL BOARD OF LEBANON SCHOOL
DISTRICT UH-1,
Respondents.
Appeal from Circuit Court, Linn County.
Daniel R. Murphy, Judge.
Argued and submitted December 23, 1998.
David Jensen argued the cause for appellant. With him on the briefs was Jensen, Elmore & Stupasky, P.C.
Paul J. Weddle argued the cause for respondents. On the brief was Garrett, Hemann, Robertson, Paulus, Jennings & Comstock, P.C.
Before, Haselton, Presiding Judge, and Linder and Wollheim, Judges.
LINDER, J.
Reversed and remanded.
LINDER, J.
Petitioner appeals a judgment dismissing this case with prejudice. Petitioner assigns error to the dismissal, which was based on the trial court's determination that petitioner's exclusive remedy was by writ of review and that her petition seeking that remedy was filed too late. On appeal, petitioner does not dispute that she waited too long to file her petition for a writ of review. She contends, however, that such a proceeding was not her exclusive remedy and that the trial court therefore erred in dismissing her complaint alleging breach of contract. We reverse and remand.
The trial court granted respondents' motion to dismiss, concluding that it lacked "jurisdiction." We review for errors of law. See Shockey v. City of Portland, 313 Or 414, 418-22, 837 P2d 505 (1992) (applying that standard of review to issues similar to the ones presented here). The parties agree on the pertinent facts, which we take from the allegations in petitioner's pleadings, as well as from certain documents that the parties agreed the trial court could consider in ruling on the motion to dismiss.
Petitioner was employed as the Director of Fiscal Services by both of the
respondent school districts. In January 1991, petitioner and the districts entered into a
"Supplemental Employment Agreement," which extended an earlier 1987 employment
agreement and which provided that petitioner would serve as the districts' Director of
Fiscal Services "to and including June 30, 1993." The 1991 supplemental agreement also
provided that it could "be terminated before the agreed date of expiration under the
following conditions:"
"b. By the Districts if the Director of Fiscal Services, by reason of disability, is
unable to perform her duties * * *.
"c. The District may terminate this employment contract prior to its termination
date with the Director of Fiscal Services' written concurrence provided the district
has good and just cause.
"Good and just casue [sic] for termination shall constitute conduct which is
materially damagining [sic] or prejudicial to the District."(1) The agreement stated that "[t]ermination for just cause" could occur "only
following pre-termination notice of at least 10 days, containing specific charges, and an
opportunity to meet with the Districts." The agreement further provided for the
opportunity for a "due process hearing:"
According to the agreement, the parties also
Neither petitioner nor the districts suggests that there are any pertinent State Board rules,
but the districts cite and rely on one of their own rules, which the trial court considered in
ruling on the motion to dismiss:
The parties agree that petitioner is not subject to the jurisdiction of the Fair Dismissal
Appeals Board. See ORS 342.815 to 342.937 (regarding dismissal of contract teachers
subject to the Board's jurisdiction). They also agree that no collective bargaining
agreement applies.
On April 2, 1991, the districts gave petitioner written notice that they were
considering terminating her employment because she had made certain "budget
adjustments" without board approval. On April 9, 1991, after she had met with the
Assistant Superintendent, the districts gave her written notice that she would be
terminated "for good and just cause," based on the same allegations, "effective April 15,
1991." She then requested and received a hearing. After that hearing and after the
districts' boards decided that she had been terminated for "good and just cause," petitioner
filed a complaint alleging that both districts had breached the "supplemental employment
agreement" by "terminating [her employment] on June 27, 1991 without her written
concurrence" and without "good and just cause," and by "failing to provide [her] with a
due process termination hearing." The districts subsequently moved to dismiss
petitioner's complaint on the basis that her "sole remedy" was by writ of review and that
she had "failed to pursue that remedy." The trial court agreed, concluding that the
hearing held before the districts' boards "had the trappings of a quasi judicial proceeding"
and that writ of review was "the appropriate" remedy. The trial court ordered dismissal of
petitioner's complaint but nevertheless allowed her to file an amended pleading.(2)
Petitioner then filed a petition and later an amended petition for a writ of
review.(3) After a trial to the court, the trial judge concluded that the districts had "good
and just cause" for terminating the employment agreement. The trial court further
concluded, however, that the districts had denied petitioner a "due process hearing"
because board members "were exposed to considerable ex parte contact from persons
attempting to influence [them] in making [their] decision" and because "one or more
members of the boards communicated their inclination to pre-judge th[e] decision prior to
the due process hearing" and improperly shifted the burden of proof onto petitioner.
Subsequently, however, the districts filed a motion to dismiss, contending that the writ-of-review petition was not timely filed. See ORS 34.030 (writ "shall not be allowed
unless the petition therefore is made within 60 days from the date of the decision or
determination sought to be reviewed"). The trial court agreed and dismissed the case.
On appeal, petitioner does not quarrel with the trial court's decision that her
request for the issuance of a writ of review was not timely, but she contends that the court
erred in concluding that a writ of review proceeding was her only remedy. We agree; we
therefore reverse and remand.
ORS 34.020 provides that, with certain exceptions that do not apply here:
(Emphasis added.)(4) In a series of decisions, which the parties cite and whose significance
they debate, both the Oregon Supreme Court and this court have considered whether this
statute precludes a public employee from pursuing an action for breach of contract, as
petitioner first did here. Maddox v. Clac. Co. Sch. Dist. No. 25, 293 Or 27, 643 P2d 1253
(1982); Machunze v. Chemeketa Community College, 106 Or App 707, 709-14, 810 P2d
406 (1991); Cole v. Chemeketa Community College, 58 Or App 77, 647 P2d 935 (1982).
See also Henthorn v. Grand Prairie School Dist., 287 Or 683, 601 P2d 1243 (1979). In
Maddox, the court concluded that a probationary teacher, "whose employment was
terminated one month into his one-year school term," could not pursue a breach-of-contract action because, in his case, the "termination grounds and procedures [were]
governed by a source other than the contract [viz., a statute] and the contract note[d] the
existence and controlling effect of that other source." 293 Or at 29, 33. The court
observed, however, that "[t]hose interests of the parties which exist by virtue of the
contract (e.g., [in that case] compensation) may be protected by contract remedies." 293
Or at 33 (emphasis added). That principle did not apply in Maddox, however, because the
"[p]laintiff's freedom from improper termination * * * [did] not arise from the contract,"
but rather "exist[ed] by virtue of [a] statute." Id. Similarly, in Cole, rights the employee
sought to enforce "existed by reason of" a source outside the contract. Thus, the
employee was limited to a writ of review proceeding and was not entitled to enforce those
rights through a breach of contract action. Cole, 58 Or App at 83. See also Machunze,
106 Or App at 711, 713-14 (holding that the plaintiff could not sue in contract because he
had no contract right to a hearing, but recognizing that, in both Maddox and Cole, the
courts had said that contract rights could be vindicated in an action for breach of
contract).
We distill the following rule from those decisions: Where an action seeks
to enforce rights that arise from the terms of a contract, rather than from an extra-contractual source, such as a statute or an employer rule or handbook, the action may be
brought in contract, even though it might otherwise also be able to be brought in a writ-of-review proceeding. As the court said in Maddox, 293 Or at 33, "[t]hose interests of the
parties which exist by virtue of [a] contract * * * may be protected by contract remedies."
The writ-of-review statutes do not alter that rule or serve to abolish established common
law remedies. See also Shockey, 313 Or at 421-22 (availability of writ of review does not
supplant action for common law tort of wrongful discharge). But, if the rights to be
enforced have their source outside the contract, then writ of review is the sole remedy.(5)
Applying that rule here leads directly to the conclusion that the trial court
erred and that petitioner may pursue her action for breach of contract. Petitioner's
agreement with the districts provided that her employment could be terminated before the
expiration of the employment agreement only with "good and just cause." The agreement
further gave petitioner the right "to a written statement of grounds for [the] proposed
termination and, thereafter, [to] a due process hearing," including the right to be
represented by retained counsel, to confront adverse witnesses, and to a written decision
"describing [the districts'] findings and conclusions." And, finally, the agreement
explicitly stated that the provision for a "due process hearing" did not constitute "a waiver
of any rights" that petitioner or the districts might have "to enforce this employment
contract." The districts do not suggest that any authority, other than the contract, gave
petitioner the right to have her employment terminated only on "her written
concurrence."(6) Moreover, the parties appear to agree that here the only possible statutory
source for the rights either to employment termination based only on "good and just
cause" or for a "due process termination hearing" is former ORS 342.663, renumbered as
ORS 332.544 (1993).(7) This court has held, however, that the hearing provided for by that
statute is only an "informational" one, akin to a legislative hearing, and that, under the
statute's terms, a school board need not decide whether a dismissal was based on cause.
Crampton v. Harmon, 20 Or App 676, 683, 533 P2d 364 (1975). Whatever the precise
nature and scope of the rights secured by the "supplemental employment agreement,"(8)
petitioner had them as a result of the agreement only, not as the result of any statute or
employer rule. It follows that, under Maddox, she could seek to enforce those contractual
rights through an action for the breach of the agreement.
The only other extra-contractual source cited by the districts is one of their
rules providing that "[a]ny employee may be dismissed at any time for cause and through
the provisions of the Oregon Statutes" and permitting employees not subject either to the
jurisdiction of the Fair Dismissal Appeals Board or to a collective bargaining agreement
(neither of which apply in petitioner's case) to "request a hearing" with the board. That
rule adds nothing to petitioner's contract, which protects her from firing in the absence of
not just "cause" but "good and just cause" and which entitles her not only "to request" a
board hearing, but to receive one complete with a panoply of rights, including
representation by counsel, confrontation of adverse witnesses, and the right to a written
decision complete with findings and conclusions.
In sum, the rights petitioner seeks to enforce in this case--the need for her
written concurrence, the requirement that the employment agreement can be terminated
only with good and just cause, and the provision for a "due process termination hearing,"
as that term is defined in the agreement itself--flow from the agreement, and not from an
outside source, such as a statute or an employer rule. For that reason, petitioner properly
could pursue her remedy in contract and the trial court erred in dismissing her complaint
that was based on a breach-of-contract theory.
The districts nevertheless attempt to avoid that conclusion by emphasizing
the contract language that refers to state law and the districts' rules. The reference has
less significance than the districts attribute to it. The employment agreement does not
state that the statutes or rules modify or limit any of the express provisions of the
agreement, but only that the parties agree that "the validity and legal effect of th[e]
agreement is subject to applicable" laws and rules. In any event, as we have noted above,
no statute or rule is the source of the rights petitioner seeks to enforce in her contract
action and none prevents a school district from contracting to provide whatever added
rights the employment agreement provides.
Finally, the districts argue that petitioner "waived" any right she may have
had to enforce her rights in contract when she asked for and received a hearing before the
district boards. The districts rely on Machunze, and on Spada v. Port of Portland, 55 Or
App 148, 637 P2d 229 (1981). Neither of those decisions supports the districts' "waiver"
argument, however. In Machunze, the plaintiff had no contractual right to a hearing. 106
Or App at 711. Therefore, he had no contract right to "waive." In Spada, the plaintiffs
chose first to pursue an administrative remedy; when that failed, they sued for breach of
contract. 55 Or App at 152-53. This court held that, by pursuing the administrative
remedy first, the plaintiff had "elected" that remedy and could not thereafter sue in
contract. Id. at 154. Spada is therefore inapposite. The administrative remedy that the
plaintiffs pursued there was unrelated to their contract and nothing in the contract
permitted or required them to seek such a remedy. Thus, when they sought administrative
review, rather than suing in contract, they had "elected" to pursue a remedy other than a
contractual one. Here, in contrast, and as demonstrated above, petitioner's rights to
concur in the premature termination of the contract, to termination only on "good and just
cause," and to a "due process hearing" (as that term is defined in the agreement), are a
result of the agreement itself. In seeking such a hearing, petitioner did not eschew the
agreement; she followed it. If she "elected" anything here, it was to pursue her
contractual remedies. That choice, of course, is not inconsistent with her subsequent
contract complaint.
Reversed and remanded.
"a. By mutual agreement of the parties to terminate the agreement.
"Prior to termination, the Director of Fiscal Services shall be entitled to a
written statement of grounds for proposed termination and, thereafter, a due
process hearing. At said hearing, the Director of Fiscal Services shall be
entitled to representation by legal counsel, at (his) (her) own expense, the
opportunity to confront witnesses called on behalf of the District and the
right to a written decision describing findings and conclusions of the
District. The burden of proof shall rest upon the District in such
proceeding. This provision does not copnstitute [sic] a waiver of any rights
the District or the Director of Fiscal Services may have to enforce this
employment contract."
"understood and agreed * * * that the validity and legal effect of th[e]
agreement is subject to the applicable laws of the State of Oregon, the duly
adopted rules of the State Board of Education and of the Districts; by this
reference said laws and rules are made a part of this agreement the same as
if fully set forth herein."
"Any employee may be dismissed at any time for cause and through the
provisions of the Oregon Statutes. Permanent employees have the right of
access to and use of the Fair Dismissal Appeals Board; other employees
may request a hearing with the Board, unless otherwise provided in a
collective bargaining agreement."
"Any party to any process or proceeding before or by any inferior
court, officer, or tribunal may have the decision or determination thereof
reviewed for errors, as provided in ORS 34.010 to 34.100 [that is, by writ of
review], and not otherwise. * * *."
1. The agreement uses the terms "District" and "Districts" apparently interchangeably.
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2. The trial court did not enter a judgment after ordering the dismissal of the complaint.
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3. Although petitioner was named as the plaintiff in the breach-of-contract complaint, she was denominated as the petitioner in the writ-of-review pleadings, which bear the same trial court case number as those filed in the contract action. Because she is identified as the petitioner in the judgment, we refer to her by that title in this opinion.
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4. On appeal, the districts contend that the more applicable statute is former ORS 19.230(2), renumbered as ORS 34.102(2) (1997), which provides that, with certain exceptions that are not relevant here, "the decisions of the governing body of a municipal corporation acting in a judicial or quasi-judicial capacity and made in the transaction of municipal corporation business shall be reviewed only as provided in ORS 34.010 to 34.100, and not otherwise." (Emphasis added.) The districts did not cite that statute below, however, so the trial court did not consider it or rely on it in granting the districts' motion to dismiss. In any event, we need not decide which statute is the most applicable one or what the differences, if any, may be between them. Here, our decision is the same under either statute.
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5. The basis for this rule may be less clear than the rule itself. See Ettner v. City of Medford, 155 Or App 435, 963 P2d 149, rev den 328 Or 40 (1998) (considering whether possible availability of writ-of-review procedure bars action for unlawful discharge). It may be that a substantive standard or a procedural remedy available only pursuant to a contractual agreement and not a statute (for example, in this case, petitioner's contractual right to a discharge based on good cause and the right to a "due process" hearing) properly cannot be said to call for the exercise of "judicial or quasi-judicial" authority, as those terms are used in the writ-of-review statutes. See ORS 34.040(1) (writ available in such cases); ORS 34.102(2) (same). Alternatively, it may be that the writ-of-review statutes do not evince a legislative intent to supplant common-law tort and contract remedies. Shockey, 313 Or at 422; Ettner, 155 Or App at 441-42 (De Muniz, P.J., concurring). Were this a case where the source of the right was both a contract and a statute (for example, where the contract, without cross-referencing the statute, independently granted rights to an employee identical to those that were also statutorily secured), the differing possible rationales for the rule might dictate different conclusions about the available forms of action to vindicate the right. This case, however, falls squarely within the situation contemplated by the Supreme Court's decision in Maddox--i.e., a right that has its source only in the contract--and thus can be resolved without more precisely identifying the basis for the rule that Maddox announced.
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6. Indeed, the districts did not concede below that petitioner had any such right, even under the contract. In their answer to petitioner's complaint, the districts sought reformation of that provision in the contract so that it would provide for the termination of the agreement on good and just cause, but "without," rather than "with," her written concurrence. Because it dismissed petitioner's complaint on the districts' motion, the trial court did not reach that issue, and neither do we.
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7. Former ORS 342.663 (1991) provided that for "classified school employees"--including "all employees of a public school district except those for whom a teaching or administrative license is required as a basis for employment in a public school district," and except for those employees "subject to the civil service provisions of ORS chapter 242" (a category which does not include petitioner)--an employee "who has been demoted or dismissed shall be entitled to a hearing before the school board within 15 days of the dismissal or demotion."
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8. We express no opinion as to the merits of petitioner's claims.
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