NO. 8 7 - 3 1 2
IN THE SUPREME COURT OF THE STATE OF MONTANA
1988
WILLIAM G. HARRIS,
Petitioner and Appellant,
-vs-
GENEVIEVE BAUER, Superintendent of
Schools, Yellowstone County, Montana,
Sitting for Sonja Spannering, Superin-
tendent of Schools, Park County, Montana,
and LIVINGSTON SCHOOL DISTRICTS NO. 1 & 4,
Park County, Montana and ED ARGENBRIGHT,
State of Montana, Superintendent of Public
Instruction,
Respondents and Respondents.
APPEAL FROM: The District Court of the Sixth Judicial District,
In and for the County of Park,
The Honorable Douglas Harkin, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Berger, Nelson & Gai; Arnold A. Berger, Billings,
Montana
For Respondents:
Richard P. Bartos, Office of Public Instruction,
Helena, Montana
Felt & Martin; Laurence R. Martin, Billings, Montana
Submitted on Briefs: Oct. 22, 1 9 8 7
Decided : January 19, 1988
Clerk
Mr. Justice John C. Sheehy delivered the Opinion of the
Court.
Plaintiff appeals from an order of the District Court,
Sixth Judicial District, Park County, affirming the decision
of the acting county superintendent and the State
Superintendent of Public Instruction reducing plaintiff's
award of back pay by amount of summer earnings; awarding 6%
interest rate per annum on award of back pay; and denying
plaintiff's attorneys fees. We affirm in part and reverse
and remand in part.
William Harris raises the following issues on appeal:
1. Did the District Court err in affirming the acting
county superintendent and the State Superintendent of Public
Instruction's decision to deduct plaintiff's summer earnings
from the award of back pay?
2. Did the District Court err in affirming the decision
of the acting county superintendent and the State
Superintendent of Public Instruction that Harris is entitled
to an interest rate of 6% per annum on his back wages and
benefits?
3. Did the District Court err in affirming the decision
of the acting county superintendent and the State
Superintendent of Public Instruction in refusing plaintiff
attorney fees?
The record reveals the following pertinent facts.
Harris was employed by the Livingston School District as a
school psychologist from the beginning of the 1973-74 school
year through to April 15, 1981. In April 1981 Harris was
notified of his dismissal from employment by a letter from
the Board of Trustees. Harris requested a statement in
writing from the Board regarding the reasons for his
termination. The Board did not furnish Harris with a written
statement delineating the reasons for his termination but
rather referred him to the Park County attorney. Harris
appealed the decision of the Board to the Park County
Superintendent of Schools pursuant to S 10.6.101, A. R.M.
The acting county superintendent affirmed the Board of
Trustee's determination that Harris did not have tenure and
could be dismissed at will. The State Superintendent
affirmed the decision of the acting county superintendent.
However, on review, the District Court reversed the acting
county and state superintendent on the question of tenure.
The District Court found that Harris had tenure and ordered
reinstatement and back pay. This Court in Harris v. Bauer
(Mont. 1983), 672 P.2d 26, 40 St.Rep. 1793, remanded the case
to the District Court to determine whether discharge was
appropriate in light of this court's finding that Harris was
a "tenured" teacher and if the discharge was wrongful, the
measure of damages.
In November, 1983, the District Court remanded this
matter to the county superintendent of schools for Park
County for determination of the following issues:
1. Was Harris properly and legally discharged as a
tenured teacher?
2. If Harris was improperly discharged, was he still
employed by the school district?
3. If Harris was still employed what sums were payable
to him as salary?
4. If Harris was still employed by the school district,
what sums were payable to the Teacher's Retirement System on
his behalf?
5. If Harris was still employed by the school district
was he entitled to attorney fees and if so in what amount?
In May, 1985, the acting county superintendent Mike
Bowman conducted a subsequent hearing on the matters directed
by the District Court. The parties filed an agreed statement
of facts as well as written briefs. Both parties presented
exhibits, testimony and made oral arguments.
In June, 1985, Bowman found that: Harris' discharge was
not proper or legal as it violated S 20-4-207, MCA; the
dismissal by the Board was void for want of jurisdiction:
The Board in the letter of discharge had not notified Harris
of the charges against him in sufficient detail to allow
Harris to "formulate a defense": Harris was denied an
opportunity to meet the charges prior to dismissal; and the
notice itself failed to substantiate a causal relationship
between Harris' alleged violations and the performance of his
duties. Bowman concluded that procedural defects had tainted
the first dismissal action by the school.
On August 12, 1985, the school district filed a notice
of appeal before the State Superintendent from the June 9,
1985 findings of fact and conclusions of law and order of
the county superintendent of schools, and from the August 8,
1985 order denying the school district's petition for
rehearing. On August 16, 1985, Harris filed a notice of
cross-appeal alleging errors comnlitted by Bowman in his June
9, 1985 findings of fact, conclusions of law and order and
his July 5, 1985 judgment. Harris contended Bowman erred in
concluding that: 1) Harris was not entitled to attorney
fees, and 2) by reducing Harris' damages by his summer
earnings.
In January, 1986, the State Superintendent received the
briefs of the parties on all issues and held oral argument.
On August 4, 1986, the State Superintendent issued his
findings of fact, conclusions of law and order along with an
opinion in which he affirmed Bowman's award to Harris of
$110,518.74 plus additional back wages, and benefits accrued
since the date of the award. The State Superintendent
"asked" for "supplemental requests" so that a "supplemental
order" could be issued to cover such wages and benefits.
On September 16, 1986, the State Superintendent issued
his judgment. In it, he awarded Harris the sum of
$118,192.22 which included Bowman's award and interest on
that award of 6% per annwn. The judgment reflected the
agreement between the parties to the effect that Harris was
not entitled to any additional salary or benefits subsequent
to July 1, 1985 as a result of the school district's second
termination of Harris. This "second termination" is on
appeal but is not issue in this case. The State
Superintendent affirmed the deduction of Harris' total
earnings (which included his summer earnings from the date of
his initial termination on April 14, 1981 through July 1,
1985) from his award of back wages. Both parties were
involved in the calculation of damages which included the
deduction of total earnings. However, Harris specifically
noted the amount of his sununer earnings in documents filed
with the acting county superintendent and raised the issue
immediately in his notice of cross-appeal.
Harris then petitioned the District Court for review of
the decision of the State Superintendent. The District Court
affirmed the findings of fact, conclusions of law and order
of the State Superintendent. Harris now appeals to this
Court.
The Montana Administrative Procedure Act (MAPA) is
applicable in the present case. Both the acting county
superintendent and the state superintendent are found within
the definition of an agency as defined by MAPA. Sections
2-4-102, 2-3-102, MCA, Yanzick v. School District No. 23,
Etc. (19821, 196 Mont. 375, 641 P.2d 431.
The present case constitutes a "contested case" under
Contested case means any proceeding before an
agency in which a determination of legal rights,
duties or privileges of a party is required by law
to be made after an opportunity for hearing . . ..
Section 2-4-102 (4), MCA.
The standard of judicial review in contested case
proceedings is delineated in § 2-4-704, MCA, which provides:
Standards of review. (1) The review shall be
conducted b y the court without a jury and shall be
confined to the record. In cases of alleged
irregularities in procedure before the agency not
shown in the record, proof thereof may be taken in
the court. The court, upon request, shall hear
oral argument and receive written briefs.
(2) The court may not substitute its judgment for
that of the agency as to the weight of the evidence
on questions of fact. The court may affirm the
decision of the agency or remand the case for
further proceedings. The court may reverse or
modify the decision if substantial rights of the
appellant have been prejudiced because the
administrative findings, inferences, conclusions,
or decisions are:
(a) in violation of constitutional or statutory
provisions;
(b) in excess of the statutory authority of the
agency;
(c) made upon unlawful procedure;
(dl affected by other error of law;
(e) clearly erroneous in view of the reliable,
probative, and substantial evidence on the whole
record;
(£1 arbitrary or capricious or characterized by
abuse of discretion or clearly unwarranted exercise
of discretion; or
(g) because findings of fact, upon issues
essential to the decision, were not made although
requested.
In Johnson v. Bozeman School District No. 7 (Mont.
1987), 734 P.2d 209, 211, 211-212, 44 St.Rep. 531, 534, this
Court held:
Findings of fact by an administrative agency are
subject to the "clearly erroneous" standard of
review. However, conclusions of law are subject to
the "abuse of discretion" standard of review, where
the scope is broader.
This Court further expounded on the subject in City of
Billings v. Billings Firefighters (1982), 200 Mont. 421, 430,
651 P.2d 627, 632, wherein the Court stated:
Those standards differ due to an agency's expertise
regarding the facts involved and the court's
expertise in interpreting and applying the law.
The appellant asserts that it was error for his award to
be reduced by the amount of his summer earnings during the
period in question. We agree.
"Section 2-4-702 (1)(b), MCA indicates that issues
brought before the agency proceeding auton~atically become
subject to judicial review." Sorlie v. School Dist. (Mont.
1983), 667 P.2d 400, 402, 40 St.Rep. 1070, 1073. Evidence
concerning the issue regarding set-off of summer wages was
before the agency. The plaintiff presented a statement of
his earnings to the hearings officer dividing sunmler and
school year earnings and as such the issue was raised before
the agency at the initial hearing. Once judgment was
rendered, appellant filed notice of cross-appeal raising the
reduction of his award by his sununer earnings as an issue.
The issue of whether the plaintiff's award should be reduced
by his summer earnings is properly before this Court.
The amount of money appellant would have received in
salary and benefits under his teaching contract had he not
been wrongfully discharged is a question of fact, as is the
amount of income the plaintiff earned during the period in
question. However, the question of whether the appellant's
back pay should be reduced by his summer earnings is clearly
a question of law.
The hearings examiner arrived at Harris' award by adding
his annual contract benefits and salary that he would have
received for the time period in question had he not been
wrongfully discharged. (Harris' annual compensation was
based upon a nine month teaching year.) The county
superintendent then reduced this amount by the appellant's
total earnings during this same period. This was done
despite the fact that plaintiff presented the acting county
superintendent with a statement of earnings that separated
income earned during the nine month school year and income
earned during the summer.
The appellant derived his replacement income by building
fireplaces. The work was seasonal and as such most of the
work occurred during the summer months. These summer months
were not covered by the appellant's nine month contract. Had
the appellant not been wrongfully discharged; he would have
been able to maintain both employments. Clearly his summer
employment would not have interfered with his position as a
school psychologist.
The purpose of the award in this case is to make the
plaintiff whole and compensate him for the salary and
benefits he would have received had he not been wrongfully
discharged. There is no question but that many teachers by
choice or necessity supplement their salaries by
"moonlighting" or by obtaining summer jobs. There is no
evidence to suggest that the appellant's summer activities
would have interfered with his primary responsibilities as a
school psychologist. Had appellant not been wrongfully
discharged, he would have enjoyed both incomes. We hold that
"moonlighting" or second job income should not offset awards
of back pay for teachers unless it can be shown that the
recipient of the award would have been unable to hold the
"other" job at the same time as the job for which he is
receiving the back pay. Whateley v. Skaggs Co. (Colo. 1981),
508 F.Supp. 302; Bing v. Roadway Express, Inc. (5th Cir.
1973), 485 F.2d 441.
The respondents assert that the plaintiff should be
precluded from questioning the reduction of the award by the
appellant's 1982-85 summer wages as plaintiff voluntarily
agreed to the figures which were submitted to the acting
county superintendent. At the administrative hearing,
appellant's counsel was requested to submit information on
interest calculations and stated that he would do so. No
other requests for information pertaining to damages were
made. Respondents have not offered any evidence or case law
to support their position that summer wages should be offset
against a judgment awarding back pay.
The appellant's award should be increased by $16,328.18,
representing the total summer earnings amount previously
deducted from appellant's award. The plaintiff is entitled
to receive interest at the rate of 6% per annum on this
additional award of back pay.
The plaintiff next contends that he is entitled to
receive interest in the amount of 10% on his back salary,
instead of the 6% interest rate previously awarded him. The
record shows plaintiff failed to raise the issue of interest
rate before the agency or before the State Superintendent in
his cross appeal. The plaintiff has also failed to show good
cause why this issue was not raised in a prior proceeding.
As such this Court will not entertain the issue. Section
2-4-702 (1)(b), MCA.
Lastly, we address the issue of whether the plaintiff is
entitled to attorney fees.
The general rule on attorney fees is that absent a
specific contract provision or statutory grant, the
prevailing party is not entitled to an award of
attorney fees either as costs of the action or as
an element of damage.
Pryor School Dist. v. Supt. of Public Inst. (~ont.
1985), 707 P.2d 1094, 1099, 42 St.Rep. 1405, 1413, citing
Martin v. Crown Life Ins. Co. (Mont. 1983), 658 ~ . 2 d1099,
Appellant states in his reply brief that he ". . . does
not rely on contract or other statute authorizing fees except
for S 25-10-711, MCA. Section 25-10-711, provides:
25-10-711. Award of costs against governmental
entity when suit or defense is frivolous or pursued
in bad at-1
- - fih() In any civil action brought by
or against the state, a political subdivision, or
an agency of the state or a political subdivision,
the opposing party, whether plaintiff or defendant,
is entitled to the costs enumerated in 25-10-201
and reasonable attorney's fees as determined by the
court if:
(a) he prevails against the state, political
subdivision, or agency; and
(b) the court finds that the claim or defense of
the state, political subdivision, or agency that
brought or defended the action was frivolous or
pursued - - faith.
in bad
In Dept. of Revenue v. New Life Fellowship (Mont. 1985),
703 P.2d 860, 42 St.Rep. 1129, this Court held that §
25-10-711(1) (b), MCA, requires a finding by the court of bad
faith or a frivolous action on the part of the state before
attorney fees can be awarded to the opposing party. After
reviewing the decision of the Superintendent of Public
Instruction, the District Court made findings of fact to the
effect that there is no evidence of bad faith on the part of
the school district in any of the proceedings. The District
Court also found that the school district's actions in
defending itself from the plaintiff's appeal from his
termination were not pursued in a frivolous manner. The
plaintiff has failed to offer any evidence which contradicts
these findings of fact. We will not substitute our judgment
for that of the District Court absent a finding of arbitrary
or capricious conduct. The plaintiff is not entitled to
attorney fees.
Reversed and remanded with instructions to amend the
judgment for plaintiff in the amount of $16,328.18, plus
interest at a rate of 6% per annum.
4.-
Justice
We Concur: /
/