Filed 1/7/15 Fleming v. Capistrano Unif. School Dist. CA4/3
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FOURTH APPELLATE DISTRICT
DIVISION THREE
JAMES A. FLEMING,
Plaintiff and Appellant, G048523
(Consol. with G048771)
v.
(Super. Ct. No. 30-2011-00509686)
CAPISTRANO UNIFIED SCHOOL
DISTRICT, OPINION
Defendant and Respondent.
Appeal from a judgment and postjudgment order of the Superior Court of
Orange County, James Di Cesare, Judge. Affirmed.
Law Office of J. Scott Smith and J. Scott Smith for Plaintiff and Appellant.
Woodruff, Spradlin & Smart, Daniel K. Spradlin and M. Lois Bobak for
Defendant and Respondent.
* * *
INTRODUCTION
James A. Fleming sued Capistrano Unified School District (CUSD) for
breach of contract arising out of his former employment as CUSD superintendent. He
alleged CUSD breached an agreement to provide him a defense to criminal charges and
an agreement to pay him 18 months of salary as severance pay in exchange for his
resignation as superintendent. The trial court granted CUSD’s motion for summary
judgment and motion for attorney fees and costs. Fleming appealed from the judgment
and from the order awarding CUSD attorney fees. We affirm.
Based on the undisputed facts, we conclude CUSD was not contractually
obligated to provide Fleming a defense to the criminal charges or to pay him 18 months
of salary as severance pay. In both situations, the CUSD board of trustees (the CUSD
Board) did not take the official action required by law to contractually bind CUSD. In
addition, Fleming did not timely present a government claim and, therefore, his claim for
severance pay is barred. The trial court did not err by awarding CUSD attorney fees
because substantial evidence supported the court’s finding that Fleming’s claims arose
out of a contract with an attorney fees provision.
FACTS
I.
Fleming’s Employment as Superintendent
Fleming was hired as CUSD superintendent in 1991 for a four-year term
pursuant to a written employment agreement, referred to as the superintendent contract.
Over the years, the superintendent contract was amended and extended several times, and
the final contract had an expiration date of June 30, 2008. Each of the amendments or
extensions to the superintendent contract was negotiated between Fleming and the CUSD
Board’s president. Sometimes Fleming worked with CUSD’s legal counsel to arrive at
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specific terms. Once the terms were worked out, the CUSD Board’s president placed the
amendment or extension on the agenda of a meeting of the CUSD Board, at which the
CUSD Board would discuss the amendment or extension, make changes, or accept the
amendment or extension as presented. Only after the CUSD Board discussed and
approved the amendment or extension would the CUSD Board’s president sign it.
In 2005, a group of residents called for terminating Fleming’s employment
and began circulating petitions to recall the CUSD Board. The Orange County Registrar
of Voters rejected the petitions, an action a panel of this court upheld in Capo for Better
Representation v. Kelley (2008) 158 Cal.App.4th 1455, and the recall effort failed.
Nonetheless, some residents continued their efforts to remove the CUSD Board. Some
appeared at meetings of the CUSD Board and stated the Orange County District Attorney
intended to investigate and indict Fleming.
II.
Amendment No. 11
Fleming told the CUSD Board’s president, Marlene Draper, that he was
considering resigning and wanted an inducement to stay. In response, on July 12, 2006,
the CUSD Board approved amendment No. 11 to the superintendent contract
(Amendment No. 11). It provided, among other things, that the superintendent contract
could be changed or modified only by the mutual written consent of the parties and that
the contract could be terminated only by the parties’ mutual consent or Fleming’s gross
misconduct. Amendment No. 11 provided that if the contract were terminated by mutual
consent, Fleming would be entitled to severance pay equal to one month of salary for
each month remaining on the contract, up to a maximum of 18 months. Finally,
Amendment No. 11 provided, “[i]n the event of any dispute between [Fleming] and the
District with respect to this contract or any benefits provided by this contract, the Board
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will pay legal fees and related costs incurred by [Fleming] to enforce rights under this
contract, unless [Fleming] is convicted of criminal act[s] related to job performance.”
Soon after the CUSD Board approved Amendment No. 11, according to
Fleming, Draper told him the CUSD Board regretted its decision and now wanted him to
leave. Fleming stated he told Draper he had turned down other opportunities in order to
stay at CUSD and intended to “pursue the rights of my contract.” By this time, both
Fleming and Draper were aware the district attorney was conducting an investigation into
whether Fleming was maintaining an unlawful “enemies list.”
Fleming claimed that in a series of conversations in July 2006, Draper told
him that if he resigned quietly, then, pursuant to Amendment No. 11, CUSD would pay
for his defense against the criminal charges and, provided he were not convicted, pay him
18 months of salary as severance pay. Fleming asked, “how we would know if I was
ever going to be convicted or not convicted.” Fleming stated that Draper replied the
CUSD Board planned to hire an independent investigator, and if the investigator
concluded Fleming had not committed an offense, then CUSD would pay him the full 18
months of salary as severance pay.
III.
The CUSD Board’s Acceptance of Fleming’s Retirement
On July 29, 2006, Fleming notified the CUSD Board he intended to retire
effective August 31, 2006. When the CUSD Board met on July 29, some members of the
CUSD Board publicly praised Fleming’s service. Some members of the public also
praised Fleming’s service, while others strongly criticized Fleming and his leadership as
superintendent, and accused him of unethical conduct.
The CUSD Board then recessed into closed session for two and
three-quarter hours to discuss “Public employment, Superintendent, Superintendent
Support Personnel, Public Employee Discipline/Dismissal/Release.” The CUSD Board’s
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minutes reflect that while in closed session, the CUSD Board passed two motions:
(1) “Direct legal counsel to secure the services of an independent investigator to conduct
an investigation into various allegations of wrongdoing by district employees”; and
(2) “Accept the Superintendent’s retirement effective August 31.” The CUSD Board did
not terminate Fleming’s employment for gross misconduct.
IV.
Criminal Investigation and Provision of Defense
In August 2006, the CUSD Board retained retired Orange County Superior
Court Judge Stuart T. Waldrip to independently investigate allegations that current and
former CUSD employees, including Fleming, had engaged in misconduct. On
December 28, 2006, Judge Waldrip presented the CUSD Board with a written report
concluding that, with one possible exception not involving Fleming, no CUSD employee
had engaged in unlawful activity. As to Fleming, Judge Waldrip concluded: “He should
have been more aware of the potential unfavorable impact on the District of his conduct.
But he is gone.” The CUSD Board considered and debated Judge Waldrip’s report at a
public meeting on March 5, 2007.
By mid-August 2006, it was clear the Orange County District Attorney was
conducting an investigation of Fleming. In a letter dated August 31, 2006, Fleming’s
attorney, Ronald G. Brower, requested CUSD to “utilize the discretion permitted in
Education Code Sections 35204 and 35205 as well as Government Code Section 995.8 to
provide for legal defense of your Superintendent” for “matters which may come before
the Grand Jury, the District Attorney and the courts related to actions taken by the
Superintendent in the performance of his duties.” A CUSD staff report recommended
CUSD retain counsel for Fleming through the grand jury proceedings, with the notation
the CUSD Board had the ability at any time to terminate a contract with Fleming’s
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counsel. On September 11, 2006, the CUSD Board accepted the recommendation and
voted to approve a contract for legal services with Brower.
At the public meeting held on March 5, 2007, the CUSD Board voted to
terminate the contract with Brower and to cease paying Fleming’s criminal defense fees.
Fleming was indicted by the Orange County Grand Jury in May 2007. In August 2007,
the CUSD Board denied Fleming’s request that CUSD resume paying the cost of
Fleming’s criminal defense.
V.
Fleming’s Request for Reimbursement of Fees
The Orange County Superior Court dismissed two of the three criminal
charges alleged against Fleming. A panel of this court granted Fleming’s petition for writ
of mandate and directed the superior court to dismiss the remaining charge. (Fleming v.
Superior Court (2010) 191 Cal.App.4th 73.) The California Supreme Court denied the
People’s petition for review.
On June 21, 2011, Fleming’s counsel presented a letter to the CUSD Board,
demanding (1) reimbursement of attorney fees and legal expenses incurred by Fleming in
defending the criminal charges and (2) payment of 18 months of salary as severance pay.
The demand was returned on the ground it had not been presented within the time
required by the Government Claims Act (Gov. Code, § 810 et seq.), and later the CUSD
Board denied Fleming’s application to present a late claim.
PROCEDURAL HISTORY
Fleming filed a complaint against CUSD in September 2011 and an
amended complaint in February 2012. The amended complaint asserted one cause of
action—for breach of contract. Fleming alleged he was contractually entitled to 18
months of salary as severance pay, payment of his criminal defense fees, and payment of
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attorney fees incurred in defending several civil lawsuits against him for actions related
to his employment as CUSD superintendent.
The trial court granted CUSD’s motion for summary judgment. The court
ruled (1) Fleming could not recover severance pay because his claim under the
Government Claims Act was not timely presented; (2) CUSD was not obliged under
Amendment No. 11 or relevant provisions of the Government Code to provide Fleming a
defense to the criminal charges; and (3) CUSD fulfilled whatever obligation it might have
had to provide Fleming a defense in the civil lawsuits. Judgment was entered in April
2013. Fleming timely filed a notice of appeal from the judgment, which appeal was
docketed as case No. G048523.
CUSD moved to recover attorney fees and costs. By order dated July 15,
2013, the trial court granted CUSD’s motion and awarded CUSD $123,233 in attorney
fees and $6,660.10 in costs. Fleming timely filed a notice of appeal from that order,
which appeal was docketed as case No. G048771. We ordered consolidation of case
No. G048523 with case No. G048771.
DISCUSSION: APPEAL FROM THE JUDGMENT
I.
Standard of Review
In case No. G048523, Fleming challenges the judgment entered after the
trial court granted CUSD’s motion for summary judgment. A motion for summary
judgment or summary adjudication is properly granted if the moving papers establish
there is no triable issue of material fact and the moving party is entitled to judgment as a
matter of law. (Code Civ. Proc., § 437c, subd. (c); Aguilar v. Atlantic Richfield Co.
(2001) 25 Cal.4th 826, 843.) “‘Because this case comes before us after the trial court
granted a motion for summary judgment, we take the facts from the record that was
before the trial court when it ruled on that motion. [Citation.] “‘We review the trial
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court’s decision de novo, considering all the evidence set forth in the moving and
opposing papers except that to which objections were made and sustained.’” [Citation.]
We liberally construe the evidence in support of the party opposing summary judgment
and resolve doubts concerning the evidence in favor of that party.’ [Citation.]”
(Hartford Casualty Ins. Co. v. Swift Distribution, Inc. (2014) 59 Cal.4th 277, 286.)
II.
Fleming Cannot Recover on His Claim for Provision of a
Defense to the Criminal Charges.
A. The Issue
The first issue raised by the appeal from the judgment is whether CUSD
breached an agreement to provide Fleming a defense to the criminal charges. Based on
the undisputed facts, and exercising de novo review, we conclude the answer to that
question is no.
At the outset, it is necessary to clarify what is and is not in issue. In
September 2006, the CUSD Board voted to approve payment of Fleming’s criminal
defense legal fees and expenses through the grand jury investigation, and, in March 2007,
voted to cease paying those fees and expenses. The CUSD Board was entitled to retract
its formal decision to provide Fleming a defense. Fleming does not contend otherwise;
instead, he argues on appeal there is a triable issue of fact as to whether CUSD was
required under an implied contract to provide him a defense to the criminal charges. He
argues the CUSD Board “acted in a manner consistent with the promises made by
Ms. Draper, and this, when taken together with the totality of the other circumstances, is
more than ample evidence that the parties had reached a mutual understanding which
gave rise to binding contractual obligations.”
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B. CUSD Never Took Official Action to Provide Fleming a Defense.
A governmental entity may not be held liable under an implied contract if a
statute prescribes the only means by which the governmental entity may enter into a
contract. (Reams v. Cooley (1915) 171 Cal. 150, 154; County of Sonoma v. Santa Rosa
(1894) 102 Cal. 426, 429.) “Where the statute prescribes the only mode by which the
power to contract shall be exercised the mode is the measure of the power. A contract
made otherwise than as so prescribed is not binding or obligatory as a contract and the
doctrine of implied liability has no application in such cases.” (Reams v. Cooley, supra,
at p. 154.) As stated in Strauch v. San Mateo Junior College Dist. (1930) 104 Cal.App.
462, 464-465: “The rule is well settled . . . that when by statute the power of a board or
municipality to make a contract is limited to a certain prescribed method to which there
has been no attempt to conform, a contract attempted to be made is void, and no implied
liability can arise for the benefits received thereunder [citations].”
Several statutes prescribe the means by which CUSD could enter into a
contract with Fleming to provide him a criminal defense. Specific to this issue is
Government Code section 995.8, which states, in relevant part: “A public entity is not
required to provide for the defense of a criminal action or proceeding . . . brought against
an employee or former employee, but a public entity may provide for the defense of a
criminal action or proceeding . . . brought against an employee or former employee if:
[¶] (a) The criminal action or proceeding is brought on account of an act or omission in
the scope of his employment as an employee of the public entity; and [¶] (b) The public
entity determines that such defense would be in the best interests of the public entity and
that the employee or former employee acted, or failed to act, in good faith, without actual
malice and in the apparent interests of the public entity.”
“In contrast to the provisions relating to the mandated defense of public
employees in civil actions, Government Code section 995.8 affirmatively declares that
public entities are not required to provide for the defense of criminal actions brought
9
against their employees, but instead permits the entities to provide defenses in certain
circumstances. [¶] ‘[W]here . . . a criminal action is involved, the entity is given the
right to refuse the employee a defense arbitrarily, with only a permissive right to
compensate him for his attorney’s fees and costs in the instances noted.’ [Citation.]”
(Los Angeles Police Protective League v. City of Los Angeles (1994) 27 Cal.App.4th 168,
176, fn. omitted; see City of Bell v. Superior Court (2013) 220 Cal.App.4th 236, 255
[“[Government Code section 995.8] is restrictive. It indicates that a public entity ‘may
provide’ a defense for a public employee if the two circumstances set forth in the statute
exist; it does not in any way suggest that a public entity may also provide a defense if
those circumstances do not exist.”].)
Under Government Code section 995.8, CUSD was not required to provide
Fleming a defense to the criminal charges and had discretion to do so only if the CUSD
Board would have to take official action and find the two conditions of the statute had
been met. In that regard, Education Code section 35163 states: “Every official action
taken by the governing board of every school district shall be affirmed by a formal vote
of the members of the board, and the governing board of every school district shall keep
minutes of its meetings . . . in which shall be recorded every official act taken.” (See,
e.g., Cloverdale Union H. S. Dist. v. Peters (1928) 88 Cal.App. 731, 736 [board approval
of contract required].)
In addition, to the extent Fleming claimed an implied modification or
amendment to his employment contract to provide him a criminal defense, Government
Code section 53262, subdivision (a) provides that “[a]ll contracts of employment with a
superintendent, deputy superintendent, [or] assistant superintendent . . . shall be ratified
in an open session of the governing body which shall be reflected in the governing body’s
minutes.”
The cited code provisions prescribe the means by and circumstances under
which a government entity may agree to provide a criminal defense for an employee, and
10
the means by which a school district, in particular, may enter into a contract of
employment with the superintendent. Therefore, as a matter of law, CUSD was
contractually obligated to provide Fleming a defense to the criminal charges only if the
CUSD Board acted in the statutorily prescribed manner. Under the undisputed facts, the
only official action taken to provide Fleming a criminal defense was made on
September 11, 2006, when the CUSD Board voted to provide him a defense through the
grand jury proceedings. When the CUSD Board met on July 29, 2006, it did not take
official action to provide Fleming a criminal defense. While in closed session, the CUSD
Board passed only two motions recorded in the minutes—(1) to hire an independent
investigator and (2) to accept Fleming’s retirement. Nowhere do the official minutes of
the CUSD Board’s July 29, 2006, meeting reflect an agreement to provide Fleming a
criminal defense or to amend or modify the superintendent contract.
C. No Implied Contract
Fleming cites Youngman v. Nevada Irrigation Dist. (1969) 70 Cal.2d 240
(Youngman) and Retired Employees Assn. of Orange County, Inc. v. County of Orange
(2011) 52 Cal.4th 1171 (Retired Employees), as supporting his contention CUSD could
be bound under an implied contract.
In Youngman, supra, 70 Cal.2d at page 243, the plaintiffs alleged an
irrigation district was bound by an implied contract to provide its employees with annual
merit pay increases. The California Supreme Court held the trial court erred in sustaining
a demurrer because the complaint sufficiently pleaded facts to support an implied
contract with the irrigation district. (Youngman, supra, at pp. 244, 247.) The court
confirmed the established rule that “[g]overnmental subdivisions may be bound by an
implied contract if there is no statutory prohibition against such arrangements.” (Id. at
p. 246.) The court noted the irrigation district’s contracting authority was found in the
Water Code, and “[t]he Water Code prescribes no formal requirements for the
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consummation of an employment contract by the board.” (Ibid.) Here, in stark contrast,
the Government Code and the Education Code prescribe formal requirements for
agreeing to provide a criminal defense for an employee and for entering into an
employment contract with a superintendent of schools.
In Retired Employees, supra, 52 Cal.4th at page 1176, the California
Supreme Court addressed the following question certified by the Ninth Circuit Court of
Appeals: “‘Whether, as a matter of California law, a California county and its employees
can form an implied contract that confers vested rights to health benefits on retired
county employees.’” Citing Youngman, the court concluded, “a county may be bound by
an implied contract under California law if there is no legislative prohibition against such
arrangements, such as a statute or ordinance.” (Retired Employees, supra, at p. 1176.)
The basis and reasoning of the court’s decision were that “[u]nder California law,
contractual rights may be implied from legislative enactments under limited
circumstances.” (Id. at p. 1185.) The court explained the plaintiff did not seek to recover
“‘under a contract made in violation of the particularly prescribed statutory mode,’” but
instead claimed to have “contractual rights that are implied in resolutions duly approved
by County.” (Id. at p. 1187.)
Retired Employees does not support Fleming because he does not claim to
have contractual rights that are implied in resolutions or acts duly approved by the CUSD
Board. He does not argue that a right to have CUSD provide him a criminal defense can
be implied from Amendment No. 11 or from the CUSD Board’s official action, later
retracted, to provide him a defense through the grand jury proceedings. Instead, he
argues he has the right to recover under an implied contract that was not made in
compliance with the prescribed statutory mode. Under a long line of authority,
culminating in Retired Employees, CUSD cannot be bound under such an implied
contract. (Retired Employees, supra, 52 Cal.4th at p. 1176; Youngman, supra, 70 Cal.2d
at p. 246; Reams v. Cooley, supra, 171 Cal. at p. 154; County of Sonoma v. Santa Rosa,
12
supra, 102 Cal. at p. 429; Strauch v. San Mateo Junior College Dist., supra, 104
Cal.App. at pp. 464-465.)
Although no implied contract can arise, the undisputed facts demonstrate
that both the CUSD Board and Fleming knew and understood the statutory prescriptions
for contracting. Each time Fleming’s contract was amended or extended, the CUSD
Board’s president presented the amendment or extension to the CUSD Board for
discussion and approval. When the CUSD Board decided to provide Fleming a defense
through the grand jury proceedings, it did so by formally passing a motion reflected in the
minutes, after having received a memorandum from staff, addressing the requirements of
Government Code section 995.8.
III.
Fleming Cannot Recover on His Claim for
18 Months of Salary as Severance Pay.
A. Framing the Issue
The second issue raised by the appeal from the judgment is, broadly
speaking, whether Fleming can recover 18 months of salary as severance pay from
CUSD. To better frame the issue, it is important to trace the evolution of Fleming’s
theory for recovery of severance pay. In the amended complaint, Fleming alleged he was
entitled to recover 18 months of salary as severance pay pursuant to the terms of
Amendment No. 11 because he was forced to resign as CUSD superintendent. CUSD, in
its motion for summary judgment, argued Fleming’s claim for severance pay was barred
because Fleming did not submit a government claim within one year after August 31,
2006, the effective date of his retirement, as required by Government Code section 905.
In opposition to the motion for summary judgment, Fleming argued his
right to severance pay arose out of “the parties’ contractually-ratifying Mutual
Agreement and the Superintendent Contract, whereby CUSD expressly promised
13
Fleming that, so long as Fleming was not convicted of, or determined through official
investigation to have committed, a criminal act, CUSD would pay Fleming his
contractual 18-month cash settlement.” This description is a mouthful. It seems to mean
that, during private meetings in July 2006, Fleming and Draper reached an oral
agreement whereby CUSD would pay Fleming the maximum 18 months of salary as
severance pay, if Fleming agreed to resign as superintendent and was not convicted of a
criminal act, and this oral agreement ratified Amendment No. 11.
In the appellant’s opening brief, Fleming further refined this agreement to
mean: “Plaintiff[’]s rights to the 18-month cash settlement were based on the resignation
agreement he negotiated with Ms. Draper, not on the language of Amendment 11 alone.
. . . Amendment 11 does not, in and of itself, give rise to an entitlement to 18 months’
severance pay. Rather by incorporating the terms of Government Code section 53260,
Amendment 11 merely provides that if the parties mutually agreed to terminate the
contract, the maximum cash settlement Plaintiff ‘may’ receive is 18 months’ salary.
Since Amendment 11 does not provide that Plaintiff shall receive 18-months’ salary, but
instead refers to a ‘settlement[’] that he ‘may’ receive, the contract contemplates that
before a mutual agreement to terminate the contract can arise, there will be additional
negotiations as to the terms of any ‘settlement’ of Plaintiff[’]s rights. Plaintiff’s
entitlement to the 18-month cash settlement is thus based on the promises made by
Marlene Draper that Plaintiff would receive the maximum possible cash settlement so
long as he was not convicted of a crime.” Based on this alleged oral agreement with
1
Draper reached in July 2006, Fleming argues his breach of contract cause of action did
not accrue until December 2010, when a panel of this court issued Fleming v. Superior
Court, supra, 191 Cal.App.4th 73.
1
Fleming calls this the “resignation agreement” and, for convenience, so shall we.
14
Fleming no longer pursues the theory he is entitled to severance pay based
on Amendment No. 11 alone: He states in his opening brief that “Amendment 11 does
2
not, in and of itself, give rise to an entitlement to 18 months’ severance pay.” After
briefing was completed, we issued an order inviting the parties to submit supplement
3
briefs addressing two issues. The first issue was “[w]hether appellant’s claim for breach
of contract to pay 18 months of severance pay under the ‘resignation agreement’ is
without merit under Education Code section 35163 and Government Code section 53262,
subdivision (a).” Fleming submitted a supplemental brief in which he argues the CUSD
Board, by voting to accept his resignation, ratified the resignation agreement, and “[t]he
acceptance of an offer of resignation is a form of a contract, and nothing in either statute
prohibits a court from relying on ordinary contract principles to imply additional terms
into that contract where necessary to protect the reasonable expectations of the parties.”
Thus, in the supplemental brief, Fleming posits the theory that the CUSD Board’s
acceptance of his resignation in closed session, which was formally recorded in the
CUSD Board’s meeting minutes, constituted a contract that included, as extrinsic or
implied terms, the resignation agreement he reached with Draper. As consideration,
Fleming argues, the resignation agreement called for payment to him of 18 months of
salary as severance pay in exchange for his immediate resignation as superintendent.
2
The breach of contract cause of action, as alleged in the amended complaint, was
based on Amendment No. 11, which stated that in the event of contract termination, “the
provisions of Government Code Section 53260, et seq. shall apply, which sections limit
the maximum cash settlement that an employee may receive to an amount equal to the
monthly salary of the Superintendent, multiplied by the number of months left on the
unexpired term of the contract, not to exceed eighteen (18) months . . . .” Amendment
No. 11 does not condition payment of severance on Fleming being exonerated of any
criminal charges. Fleming resigned effective August 31, 2006. Thus, were Amendment
No. 11 the sole basis for Fleming’s breach of contract cause of action, it would be barred
for failure to file a government claim within one year of accrual as required by
Government Code section 911.2.
3
By issuing the order, we discharged our duties under Code of Civil Procedure
section 437c, subdivision (m)(2).
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As we shall explain, based on the undisputed facts, Fleming cannot recover
on his claim for severance pay under the other theories he posits—(1) the resignation
agreement as an independent contract ratifying Amendment No. 11, and (2) the CUSD
Board’s action in accepting his retirement as ratifying the resignation agreement. An
alternative ground for affirming summary judgment on the matter of severance pay is
Fleming’s failure to timely file a claim under Government Code section 911.2.
B. The Terms of the Resignation Agreement Are Unenforceable.
1. The Resignation Agreement as an Independent Contract Theory
Under the undisputed facts, the resignation agreement was unenforceable as
an independent contract as a matter of law. In reviewing an order granting summary
judgment, we must liberally construe the evidence in support of the opposing party
(Hartford, supra, 59 Cal.4th at p. 286) and, therefore, we will assume that the evidence
established that in July 2006, Fleming and Draper orally reached the resignation
agreement. But, as we have explained, every official action of a school district must be
affirmed by a formal vote of the school board and recorded in the minutes. (Educ. Code,
§ 35163.) “[M]embers of a school board acting separately as individuals may not legally
bind the district to the obligations of a contract.” (Fleming v. Board of Trustees (1931)
112 Cal.App. 225, 228.)
In addition, all employment contracts with a superintendent must be ratified
in an open session of the governing body and reflected in the governing body’s minutes.
(Gov. Code, § 53262, subd. (a).) The resignation agreement was, in effect, a contract of
employment under Government Code section 53262, subdivision (a), because it directly
related to the terms and conditions of Fleming’s employment with CUSD. As shown by
Amendment No. 11, Fleming and CUSD treated the matter of severance pay as part of
the employment contract, and Fleming has referred to the resignation agreement as
“contractually-ratifying” Amendment No. 11.
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There is no evidence the CUSD Board ever affirmed or ratified, and
recorded in the official minutes, an agreement by which it would pay Fleming 18 months
of salary as severance pay in consideration of his resigning. The CUSD Board’s minutes
for July 29, 2006 reflect only that, in closed session, the CUSD Board accepted
Fleming’s retirement. Neither Draper, nor any other member of the CUSD Board, acting
as an individual, could legally bind CUSD to the obligations of the resignation
agreement.
Because the resignation agreement was not made and approved in the
manner prescribed by statute, it does not exist or is unenforceable. (Reams v. Cooley,
supra, 171 Cal. at p. 154; Strauch v. San Mateo Junior College Dist., supra, 104
Cal.App. at pp. 464-465.) Also, Government Code section 53262, subdivision (b) states
that “[c]opies of any contracts of employment, as well as copies of the settlement
agreements, shall be available to the public upon request.” A member of the public
asking for a copy of the resignation agreement would be turned away emptyhanded.
2. The CUSD Board’s Acceptance of Fleming’s Resignation Theory
In his supplemental brief, Fleming argues, “when the board voted to accept
[his] resignation, it was ratifying the existence of a contract for [his] resignation,” and,
therefore, the court may look to extrinsic evidence to determine CUSD’s obligations.
The terms of the resignation agreement are unenforceable under this theory.
School district boards and other legislative bodies of local governmental
agencies are permitted to meet behind closed doors only in specific, statutorily prescribed
circumstances. (See, e.g., Gov. Code, §§ 54954.5-54957.1, 54957.6. 54957.8, 54957.10.)
Government Code section 54957, subdivision (b)(1) permits closed session meetings to
consider “the appointment, employment, evaluation of performance, discipline, or
dismissal of a public employee . . . .” Such closed session meetings “shall not include
17
discussion or action on proposed compensation except for a reduction of compensation
that results from the imposition of discipline.” (Id., § 54957, subd. (b)(4).)
Government Code section 54957.1, subdivision (a) requires the legislative
body of a local agency to “publicly report any action taken in closed session and the vote
or abstention on that action of every member present” of the listed actions.
Subdivision (a)(5) of section 54957.1 states: “Action taken to appoint, employ, dismiss,
accept the resignation of, or otherwise affect the employment status of a public employee
in closed session pursuant to Section 54957 shall be reported at the public meeting during
which the closed session is held. Any report required by this paragraph shall identify the
title of the position. . . .”
When the CUSD Board met in closed session on July 29, 2006, it accepted
Fleming’s retirement and reported that action in the minutes pursuant to Government
Code section 54957.1, subdivision (a)(5). The minutes do not reflect any other board
action relating to Fleming’s retirement or resignation. We must presume the CUSD
Board performed its governmental duties (American Microsystems, Inc. v. City of Santa
Clara (1982) 137 Cal.App.3d 1037, 1042) and, therefore, the CUSD Board did not
discuss in closed session compensation or terms of a resignation agreement with Fleming.
Fleming argues Retired Employees, supra, 52 Cal.4th 1171, 1176, supports
his position that the CUSD Board’s acceptance of his resignation created a contract that
included the terms of the resignation agreement. We disagree. As we have explained,
the basis and reasoning of the California Supreme Court’s decision in Retired Employees
was that under limited circumstances California law allows contractual rights to be
implied from legislative enactments. (Id. at p. 1185.) The court concluded that, in
general, legislation may be said to create contractual rights “when the statutory language
or circumstances accompanying its passage ‘clearly “. . . evince a legislative intent to
create private rights of a contractual nature enforceable against the [governmental
body].”’” (Id. at p. 1187.) “A contractual right can be implied from legislation in
18
appropriate circumstances. [Citation.] Where, for example, the legislation is itself the
ratification or approval of a contract, the intent to make a contract is clearly shown.”
(Ibid.)
By accepting Fleming’s retirement, the CUSD Board did not evince, and
certainly did not clearly evince, an intent to create contractual rights enforceable against
CUSD. The CUSD Board did not ratify or approve a contract, much less one for
severance pay, and the CUSD Board would not have been legally permitted to discuss
such a contract in closed session. (Gov. Code, § 54957, subd. (b)(4).) The act of
accepting Fleming’s retirement in closed session did not constitute ratification of an
undisclosed resignation agreement granting Fleming the right to collect 18 months of
severance pay from CUSD. Nor could the terms of the resignation agreement be implied
into the CUSD Board’s mere act of accepting Fleming’s retirement.
Enforcing the terms of the resignation agreement against CUSD would
contradict and undermine the protections afforded by the Ralph M. Brown Act,
Government Code section 54950 et seq. (the Brown Act). When enacting the Brown Act,
the Legislature declared: “[T]he Legislature finds and declares that the public
commissions, boards and councils and the other public agencies in this State exist to aid
in the conduct of the people’s business. It is the intent of the law that their actions be
taken openly and that their deliberations be conducted openly. [¶] The people of this
State do not yield their sovereignty to the agencies which serve them. The people, in
delegating authority, do not give their public servants the right to decide what is good for
the people to know and what is not good for them to know. The people insist on
remaining informed so that they may retain control over the instruments they have
created.” (Gov. Code, § 54950.) “‘The Brown Act [citation] . . . is intended to ensure the
public’s right to attend the meetings of public agencies. . . . The Act thus serves to
facilitate public participation in all phases of local government decisionmaking and to
curb misuse of the democratic process by secret legislation of public bodies.’” (McKee v.
19
Orange Unified School Dist. (2003) 110 Cal.App.4th 1310, 1316.) A backroom
agreement to pay a public servant 18 months of salary as severance pay, at a time when
some members of the public criticized his leadership and ethics, is the very kind of
“‘secret legislation’” (ibid.) the Brown Act intended to stop.
C. Fleming’s Claim for Severance Pay Is Time-barred.
1. Fleming Failed to Submit a Timely Government Claim.
In our supplemental briefing order, we invited the parties to address this
issue: “In light of appellant’s deposition testimony found at page 541 of volume 3 of the
appellant’s appendix, whether appellant’s claim for breach of contract to pay 18 months
of severance pay is without merit for failure to present a claim under Government Code
section 911.2 within one year of the date on which Judge Waldrip submitted the report of
his independent investigation.” We conclude that under the undisputed facts, Fleming’s
breach of contract cause of action for severance pay is time-barred.
A party seeking to hold a governmental entity liable for breach of contract
must file a claim under the Government Claims Act within one year after accrual of the
cause of action. (Gov. Code, § 911.2.) The one-year period for filing a government
claim applies to claims for damages based on breach of implied contract. (Voth v. Wasco
Public Util. Dist. (1976) 56 Cal.App.3d 353, 357.) “The purpose of requiring the filing
of claims, and of prescribing limited time frames in which such claims may be filed, is to
give the public entity the opportunity to investigate the facts while the evidence is fresh,
as well as to settle meritorious cases without the need of litigation.” (City of Ontario v.
Superior Court (1993) 12 Cal.App.4th 894, 902.)
Fleming filed his government claim against CUSD on June 21, 2011. His
claim for severance pay was untimely if his breach of contract cause of action accrued
before June 21, 2010. Accrual for purposes of Government Code section 911.2 is the
date on which the cause of action would be deemed to have accrued under the applicable
20
statute of limitations. (Loehr v. Ventura County Community College Dist. (1983) 147
Cal.App.3d 1071, 1078.) “A cause of action for breach of contract ordinarily accrues at
the time of breach, and the statute begins to run at that time regardless whether any
damage is apparent or whether the injured party is aware of his or her right to sue.”
(3 Witkin, Cal. Procedure (5th ed. 2008) Actions, § 520, p. 664.)
The terms of the resignation agreement, through which Fleming made his
claim for severance pay, were shown by his deposition testimony. Fleming testified he
and Draper agreed his right to severance pay would be contingent only on the results of
the independent investigation conducted by Judge Waldrip. Fleming testified as follows:
“Q. Have you told me everything you can recall that was discussed
between the two of you during these meetings?
“A. It’s just—[Draper] promised that both the legal fees and the 18-month
assessment would be forthcoming but constantly came back to the statement in the
contract that says provided you’re not convicted of a criminal violation. [¶] And I asked
her how we would know if I was ever going to be convicted or not convicted. That’s
when she told me about the board’s plan to do an investigation and that there would be
some report forthcoming at some point, and it was—if that report concluded what I hoped
or she hoped it would conclude, that at that point I could expect payment.
“Q. If the report concluded what?
“A. The report concluded that I was not guilty of any criminal violation,
because I was concerned that it was kind of open-ended, ‘unless you’re convicted of a
criminal act.’”
Judge Waldrip presented the report of his independent investigation on
December 28, 2006, and the CUSD Board considered and debated that report at a public
meeting on March 5, 2007. Fleming presented his government claim over four years
later. The claim was therefore untimely.
21
Fleming argues no criminal charges were pending when he resigned and
“the possibility of a criminal indictment was highly speculative at best.” The lack of
pending criminal charges reinforces the conclusion that any oral agreement conditioned
severance pay on the outcome of the independent investigation. Otherwise, as Fleming
himself recognized, the condition would be open-ended, and he would never be entitled
to payment if no criminal charges were ever filed against him. Thus, to the extent the
resignation agreement was intended to ratify or become part of Amendment No. 11,
Fleming’s claim for severance pay accrued at the latest when Judge Waldrip presented
his report.
2. CUSD Is Not Estopped from Asserting an Untimely Government Claim.
Fleming argues CUSD should be estopped from asserting he presented an
untimely government claim. “It is well settled that a public entity may be estopped from
asserting the limitations of the claims statute where its agents or employees have
prevented or deterred the filing of a timely claim by some affirmative act.” (John R. v.
Oakland Unified School Dist. (1989) 48 Cal.3d 438, 445.) “Estoppel most commonly
results from misleading statements about the need for or advisability of a claim; actual
fraud or the intent to mislead is not essential.” (Ibid.) “The required elements for an
equitable estoppel are: (1) the party to be estopped must be apprised of the facts; (2) the
party to be estopped must intend his or her conduct shall be acted upon, or must so act
that the party asserting the estoppel had a right to believe it was so intended; (3) the other
party must be ignorant of the true state of facts; and (4) the other party must rely upon the
conduct to his or her injury.” (Munoz v. State of California (1995) 33 Cal.App.4th 1767,
1785.)
In Ortega v. Pajaro Valley Unified School Dist. (1998) 64 Cal.App.4th
1023, 1044-1045, the court surveyed cases finding an estoppel to invoke the time
limitations of the Government Claims Act and concluded: “These cases have the
22
following in common: In each, the public entity or one of its agents engaged in some
calculated conduct or made some representation or concealed facts which induced the
plaintiff not to file a claim or bring an action within the statutory time; and in each, the
plaintiff acted promptly, almost always within a year, after the public entity’s conduct
which caused the estoppel ceased.” (Ortega v. Pajaro Valley Unified School Dist., supra,
at p. 1047.)
Fleming presented no evidence to show a member of the CUSD Board or
any CUSD agent or employee ever engaged in calculated conduct, made a
misrepresentation, or concealed facts to induce him not to present a government claim
within the statutory time limit. Fleming presented no evidence that anybody said or did
anything to suggest he was not required to present a timely government claim or to deter
him from doing so. In the discussions between Fleming and Draper in July 2006, before
he announced his retirement, Draper did not say anything to Fleming about presenting a
claim. Fleming argues he was entitled to rely on Draper’s representations to him that
CUSD would pay him 18 months of salary as severance pay if he were not convicted of a
crime. As we have explained, the evidence established at most that Draper told Fleming
that payment of the 18 months of salary as severance pay was contingent on the results of
the independent investigation. Fleming did not present his claim to CUSD until more
than four years after the results of Judge Waldrip’s investigation had been submitted.
Fleming cites Ocean Services Corp. v. Ventura Port Dist. (1993) 15
Cal.App.4th 1762, as supporting his estoppel argument. In that case, agents of the
defendant, a governmental entity, gave the plaintiff oral and written assurances that it did
not have to take further action to perfect a claim and the time to file one would be
extended. (Id. at p. 1776.) The Court of Appeal, rejecting the defendant’s argument that
the plaintiff had failed to comply with the claim presentation requirement, concluded,
“[t]he claims statute may not be invoked to penalize a plaintiff who at the behest of a
23
public entity has been induced not to take action.” (Ibid.) In this case, Fleming presented
no evidence CUSD did or said anything to induce him not to present a timely claim.
DISCUSSION: APPEAL FROM THE ORDER AWARDING
ATTORNEY FEES
I.
Standard of Review
In case No. G048771, Fleming challenges the trial court’s postjudgment
order awarding CUSD $123,233 in contract-based attorney fees. “‘On review of an
award of attorney fees after trial, the normal standard of review is abuse of discretion.
However, de novo review of such a trial court order is warranted where the determination
of whether the criteria for an award of attorney fees and costs in this context have been
satisfied amounts to statutory construction and a question of law.’” (Connerly v. State
Personnel Bd. (2006) 37 Cal.4th 1169, 1175.) The determination of the amount of fees
awarded is reviewed for abuse of discretion. (Apex LLC v. Korusfood.com (2013) 222
Cal.App.4th 1010, 1017.)
The normal rules of appellate review apply to an order granting or denying
attorney fees; i.e., the order is presumed correct, all intendments and presumptions are
indulged to support the order, conflicts in the evidence are resolved in favor of the
prevailing party, and the trial court’s resolution of factual disputes is conclusive.
(Christian Research Institute v. Alnor (2008) 165 Cal.App.4th 1315, 1322.) The
reviewing court will infer all findings necessary to support the order. (Apex LLC v.
Korusfood.com, supra, 222 Cal.App.4th at p. 1017.) The trial court’s express or implied
findings of fact are reviewed for substantial evidence, its conclusions of law are reviewed
de novo, and its application of the law to the facts is reversible only if arbitrary and
capricious. (Ibid.; Ellis v. Toshiba America Information Systems, Inc. (2013) 218
Cal.App.4th 853, 882.)
24
II.
The Trial Court Did Not Err in Granting
CUSD’s Motion for Attorney Fees.
In the order granting CUSD’s motion for attorney fees, the trial court found
CUSD was the prevailing party in an action on a written contract, i.e., Amendment
No. 11. The attorney fees provision of Amendment No. 11 states: “In the event of any
dispute between [Fleming] and the District with respect to this contract or any benefits
provided by this contract, the Board will pay legal fees and related costs incurred by
[Fleming] to enforce rights under this contract, unless [Fleming] is convicted of criminal
4
act[s] related to job performance.”
Fleming argues the trial court erred by granting CUSD’s motion for
attorney fees because, for two reasons, the fees provision in Amendment No. 11 was
inapplicable to his claims. First, he makes a reciprocity argument; that is, if he had
sought to recover severance pay while criminal charges against him were pending, he
would not have been entitled to recover attorney fees from CUSD under the terms of
Amendment No. 11. Based on principles of reciprocity, he argues CUSD should not be
able to recover its attorney fees from him. But, as CUSD points out, Amendment No. 11
bars Fleming from recovering attorney fees only if he is “convicted of criminal act[s]
related to job performance.” (Italics added.) Fleming was never convicted of criminal
acts, and, therefore, he would not have been prevented from recovering attorney fees if he
had sued for severance pay under Amendment No. 11, and prevailed, while the criminal
charges were pending against him.
Second, Fleming argues CUSD was not entitled to recover attorney fees
because he sought recovery for severance pay under the resignation agreement, not
4
Although the attorney fees provision is unilateral (it expressly permits only Fleming to
recover attorney fees), the trial court correctly concluded it must be interpreted as
granting reciprocal rights. (Civ. Code, § 1717, subd. (a); Santisas v. Goodin (1998) 17
Cal.4th 599, 611.) Fleming does not contend otherwise.
25
Amendment No. 11. He argues: “Thus, the rights [Fleming] seeks to enforce are not
rights ‘arising under this contract,’ rather they are rights arising under a separate
collateral agreement. Therefore, the fees provision [in Amendment No. 11] is
inapplicable.”
The trial court made findings related to that contention. The trial court
rejected Fleming’s argument that severance pay had not been sought under Amendment
No. 11, and found: “[Fleming] asks the Court to apportion fees incurred in defending
against the portion of his claim that was based on the written Superintendent Contract,
versus those incurred in defending against the claim of an oral/mutual agreement.
[Fleming] does not attempt to identify the specific fees or hours to discount. . . . [¶]
Even to the extent [Fleming] may have asserted oral promises, he still sought to ground
them in the written contract. The promises were said to be based specifically in
Amendment No. 11, and its language on payment of [Fleming]’s legal fees and 18
months’ severance. . . . [Fleming] did not plead them as independent causes of action. He
plead[ed] a right to these benefits in a single cause of action for breach of contract within
the [first amended complaint], upon which [CUSD] prevailed. Thus, the suggestion to
parse out the claim is not well-taken.”
Substantial evidence supported those findings. In the amended complaint,
Fleming pleaded a single cause of action for breach of written contract, based on the
superintendent agreement and amendments, including Amendment No. 11. The amended
complaint did not seek recovery of severance pay or criminal defense fees based on the
resignation agreement. Fleming asserted his right to 18 months of salary as severance
pay was grounded in Amendment No. 11, which was attached to the amended complaint
as an exhibit. The amended complaint quoted the attorney fees provision of Amendment
No. 11 as the basis for recovery of fees. Fleming never sought leave to amend to allege
breach of the resignation agreement or any other agreement.
26
The trial court also assumed that Fleming had pleaded separate,
independent claims for breach of written contract and breach of oral contract. The trial
court concluded apportionment of attorney fees between causes of action would not be
necessary because “any claim of an oral agreement was intertwined and overlapping with
the written contract.”
When a cause of action for which attorney fees may be recovered is
combined with other causes of action for which attorney fees may not be recovered, the
prevailing party may recover attorney fees only on the causes of action for which fees are
recoverable. (Reynolds Metals Co. v. Alperson (1979) 25 Cal.3d 124, 129.) However,
“‘[a]ttorney’s fees need not be apportioned when incurred for representation on an issue
common to both a cause of action in which fees are proper and one in which they are not
allowed.’ [Citation.] ‘Attorneys fees need not be apportioned between distinct causes of
action where plaintiff’s various claims involve a common core of facts or are based on
related legal theories.’ [Citation.] Apportionment is not required when the issues in the
fee and nonfee claims are so inextricably intertwined that it would be impractical or
impossible to separate the attorney’s time into compensable and noncompensable units.”
(Graciano v. Robinson Ford Sales, Inc. (2006) 144 Cal.App.4th 140, 158-159; see
Reynolds Metals Co. v. Alperson, supra, at pp. 129-130; Akins v. Enterprise Rent-A-Car
Co. (2000) 79 Cal.App.4th 1127, 1133 [attorney fees awarded the prevailing party need
not be apportioned between causes of action “[w]hen the liability issues are so
interrelated that it would have been impossible to separate them into claims for which
attorney fees are properly awarded and claims for which they are not”].)
“Where fees are authorized for some causes of action in a complaint but not
for others, allocation is a matter within the trial court’s discretion.” (Amtower v. Photon
Dynamics, Inc. (2008) 158 Cal.App.4th 1582, 1604.) In this case, the trial court did not
abuse its discretion by deciding not to apportion attorney fees. The record demonstrates
the issues related to Amendment No. 11 and the issues related to the resignation
27
agreement were “so inextricably intertwined that it would be impractical or impossible to
separate the attorney’s time into compensable and noncompensable units.” (Graciano v.
Robinson Ford Sales, Inc., supra, 144 Cal.App.4th at p. 159.) Fleming did not attempt an
apportionment in opposing CSUD’s motion for attorney fees.
DISPOSITION
The judgment and the order granting CSUD’s motion for attorney fees are
affirmed. Respondent shall recover costs incurred on appeal.
FYBEL, J.
WE CONCUR:
RYLAARSDAM, ACTING P. J.
ARONSON, J.
28
Fleming v. Capistrano Unif. School Dist. CA4/3
Combined Opinion