Miles v. Unified School District 500 ( 2021 )

FILED
United States Court of Appeals
UNITED STATES COURT OF APPEALS Tenth Circuit
FOR THE TENTH CIRCUIT March 30, 2021
_________________________________
Christopher M. Wolpert
Clerk of Court
SUSAN M. MILES,
Plaintiff - Appellant,
v. No. 20-3067
(D.C. No. 2:17-CV-02685-DDC-TJJ)
UNIFIED SCHOOL DISTRICT NO. 500, (D. Kan.)
KANSAS CITY, KANSAS; VALERIE
CASTILLO,
Defendants - Appellees.
_________________________________
ORDER AND JUDGMENT*
_________________________________
Before TYMKOVICH, Chief Judge, HOLMES and BACHARACH, Circuit Judges.
_________________________________
Susan M. Miles appeals from a district court order that enforced her agreement
with her former employer, the Unified School District, to resign her employment and
release her discrimination claims. Exercising jurisdiction under 28 U.S.C. § 1291, we
affirm.
*
After examining the briefs and appellate record, this panel has determined
unanimously that oral argument would not materially assist in the determination of
this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is therefore
ordered submitted without oral argument. This order and judgment is not binding
precedent, except under the doctrines of law of the case, res judicata, and collateral
estoppel. It may be cited, however, for its persuasive value consistent with
Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
BACKGROUND
Miles worked for the School District as a teacher at McKinley Elementary School
in Kansas City, Kansas. Valerie Castillo was the school principal.
In April 2016, Miles fell in a classroom and suffered “occipital neuralgia and
post-concussive syndrome.” Aplt. App. at 14. She took leave under the Family and
Medical Leave Act (FMLA) for the rest of the school year and retained an attorney,
Kathleen Cossairt, to file a worker’s compensation claim.
In August 2016, while still on FMLA leave, Miles received a paycheck from the
School District. She was “almost sure” the paycheck was sent “in error,” id. at 69, so she
notified Cossairt and emailed a School District employee, asking whether the payment
was correct and whether “future payments [would] come through worker’s comp or . . .
through the district,” id. at 71. Three more paychecks were mistakenly sent to Miles by
the end of September. She cashed all the checks and used the funds, which totaled
$9,678.68, to pay bills and living expenses.
On October 26, one of the School District’s attorneys, Fred Greenbaum, sent
Cossairt a letter, requesting “credit for the payments if and when we resolve this matter.”
Id. at 70. Cossairt responded that the “overpayment of wages” concerned
“employer/employee legal issues,” and that she represented Miles only in “her work
comp case.” Id. at 78 (emphasis omitted).
On November 16, one of the District’s other attorneys, Greg Goheen, wrote Miles
about “the wage overpayments,” demanding repayment within ten days, as she was “not
working [in August and September] and had exhausted all available leave.” Id. at 80. He
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warned Miles that if she did not repay the money, her teaching contract might be
terminated and “legal proceedings may be initiated.” Id.Miles apparently notified Cossairt, who said she would “try to negotiate a
repayment” with the guidance of an employment-law attorney. Id. at 67; see also id. at
74. On November 21, Cossairt obtained an extension of the payment deadline to
December 30, 2016.
In mid-December, Cossairt notified Goheen and Greenbaum that Miles had
applied for a loan to repay the erroneously issued checks. On December 28, Cossairt
provided an update, stating that she had “tried calling and emailing [Miles] with no
response.” Id. at 83. Attorney Robert Turner responded, warning Cossairt that the
School District might “forward this matter to the District Attorney for handling if not
resolved,” and that “Miles’ continued failure to pay” could result in the “termination of
her teaching contract.” Id. at 82. Turner offered a “repayment plan with a tender of
[Miles’s] resignation . . . and [a] release.” Id. at 82. Cossairt forwarded Turner’s email
to Miles.
The December 30 deadline passed without repayment. On January 3, 2017, Miles
spoke with Turner. According to Miles, Turner said she was being terminated and the
School District was considering speaking to the District Attorney about criminal charges.
Turner claimed he merely said that she could not return to work because of the repayment
issue and that he had repeated the offer of a resignation and release.
On January 5, Miles met with Turner and repaid the School District. Turner gave
Miles a “Mutual Release and Separation Agreement,” id. at 52, for her to review. She
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took the agreement to Cossairt, who reviewed it and suggested adding a worker’s
compensation release clause and a clarification about unemployment benefits. Turner
agreed to the modifications and emailed a revised agreement to Miles.
On January 9, Miles met with Turner again and signed the agreement. In doing so,
Miles felt she “had no other option . . . as [she] would otherwise face criminal charges.”
Id. at 75.
In December 2017, Miles sued the School District and Principal Castillo in federal
court. She claimed the School District was liable for (1) disability discrimination and
failure to accommodate, in violation of the Americans with Disabilities Act, 42 U.S.C.
§ 12101-12213; (2) discontinuing her healthcare coverage, in violation of the
Consolidated Omnibus Budget Reconciliation Act, 29 U.S.C. §§ 1161-68, and
(3) retaliatory discharge in violation of Kansas public policy, see Pfeifer v. Fed. Exp.
Corp., 304 P.3d 1226, 1231-32 (Kan. 2013). She also claimed that the School District
and Principal Castillo were liable under the FMLA for discrimination and retaliation, in
violation of 29 U.S.C. §§ 2601-2654.
The School District filed counterclaims based on Miles’s execution of the release
and separation agreement. That agreement provides, in relevant part:
Employee Status. It is acknowledged by execution of this Agreement
[that] Employee hereby voluntarily resigns her position with the Employer
effective immediately . . . .
...
Releases by Employee and Employer. . . . Employee . . . hereby fully
releases and discharges Employer [and its agents and employees] from all
rights, claims and actions which Employee has arising out of, relating to, or
in connection with her employment with Employer and separation from her
current position, as well as any claim in connection with any past, present
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or future salary, expenses or other benefits of any kind whatsoever. By
signing this Agreement, Employee releases . . . any such claims whether for
discrimination, breach of contract, or any other claim, in law or equity,
including but not limited to federal, state or local laws prohibiting
discrimination . . . .
Aplt. App. at 52-53.
The district court stayed the employment-discrimination proceedings to consider
the agreement’s enforceability. After conducting a bench trial on the enforceability issue,
the district court found the agreement enforceable, dismissed Miles’s claims, and entered
judgment for the School District.
On appeal, Miles argues that the district court erred by not setting aside the
agreement due to fraud and by finding that she knowingly and voluntarily waived her
federal employment claims.
DISCUSSION
I. Standard of Review
“Following a bench trial, we review the district court’s factual findings for clear
error and its legal conclusions de novo.” Acosta v. Foreclosure Connection, Inc.,
903 F.3d 1132, 1134 (10th Cir. 2018) (internal quotation marks omitted). “We will
reverse under the clear error standard only if the district court’s finding is without factual
support in the record or if, after reviewing all the evidence, we are left with a definite and
firm conviction that a mistake has been made.” Id. (internal quotation marks omitted).
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II. Fraudulent Misrepresentation
Miles sought to set aside the release and separation agreement on the basis of
Turner’s statements regarding the School District referring her to the District Attorney.
Although Kansas law allows setting aside a written contract due to fraud, there must be
“an untrue statement of fact, known to be untrue by the party making it, which is made
with the intent to deceive or recklessly made with disregard for the truth, where another
party justifiably relies on the statement and acts to his or her injury and damage.” Albers
v. Nelson, 809 P.2d 1194, 1197-98 (Kan. 1991). “The existence of fraud is normally a
question of fact,” and it “must be proven by clear and convincing evidence.” Cmty. First
Nat’l Bank v. Nichols, 443 P.3d 322, 333 (Kan. App. 2019) (internal quotation marks
omitted).
The district court rejected Miles’s assertion of fraud, explaining that “Turner
testified that the [School] District had followed this procedure—i.e., referring the matter
to the District Attorney—in earlier situations where an employee refused to return
overpaid funds,” and that Turner had good cause to believe there were grounds for
criminal charges because Miles had missed the December 30 deadline and had not repaid
the funds as of the date of Turner’s statements. Aplt. App. at 100.
Miles argues that the district court failed to consider whether Turner recklessly
made the statements, without regard for their truth. Specifically, she contends that
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elements of the applicable criminal statute1 are not satisfied by her conduct. But the issue
is not whether Miles could ultimately be convicted under the statute. Rather, the issue for
purposes of the fraud analysis centers on what Turner believed when making the
statements. Turner testified he believed that Miles’s failure to repay the money involved
a crime. And Miles does not dispute that the School District had referred matters
involving other employees to the District Attorney or that she had not repaid the funds as
of January 3, 2017, when Turner made the last of his statements regarding a criminal
referral. Consequently, Miles has not shown that Turner exhibited either deception or
recklessness when referencing the possibility of criminal charges.2
1
Section 21-5802(a) provides that the crime of “[t]heft of property lost,
mislaid or delivered by mistake” involves obtaining control of another person’s
property by a person who:
(1) Knows or learns the identity of the owner thereof;
(2) fails to take reasonable measures to restore to the owner lost property,
mislaid property or property delivered by a mistake; and
(3) intends to permanently deprive the owner of the possession, use or benefit
of the property.
Kan. Stat. Ann. § 21-5802(a).
2
Miles also argues there was fraud because the School District was silent about
the possibility of a criminal referral after she repaid the funds. She does not appear to
have raised this argument below, and we generally do “not consider arguments raised for
the first time on appeal.” Strauss v. Angie’s List, Inc., 951 F.3d 1263, 1266 n.3 (10th Cir.
2020). Moreover, she does not address the elements of fraud by silence in any detail.
See Stechschulte v. Jennings, 298 P.3d 1083, 1097 (Kan. 2013) (setting out the five
elements of a fraud-by-silence claim). We “will not consider issues adverted to in a
perfunctory manner, unaccompanied by some effort at developed argumentation.”
Armstrong v. Arcanum Grp., Inc., 897 F.3d 1283, 1291 (10th Cir. 2018) (ellipsis and
internal quotation marks omitted)).
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The district court did not clearly err in rejecting Miles’s assertion of fraud.
III. Totality of the Circumstances
Although a plaintiff may agree to waive employment discrimination claims, that
waiver must be knowing and voluntary. Torrez v. Pub. Serv. Co. of N.M., Inc., 908 F.2d
687, 689 (10th Cir. 1990). To determine whether a waiver was knowing and voluntary,
we consider the totality of circumstances, such as:
(1) the clarity and specificity of the release language; (2) the plaintiff's
education and business experience; (3) the amount of time plaintiff had for
deliberation about the release before signing it; (4) whether [p]laintiff knew
or should have known h[er] rights upon execution of the release;
(5) whether plaintiff was encouraged to seek, or in fact received benefit of
counsel; (6) whether there was an opportunity for negotiation of the terms
of the Agreement; and (7) whether the consideration given in exchange for
the waiver and accepted by the employee exceeds the benefits to which the
employee was already entitled by contract or law.
Id. at 689-90. “Waiver and release are affirmative defenses on which the employer bears
the burden.” Rivera-Flores v. Bristol-Myers Squibb Caribbean, 112 F.3d 9, 12 (1st Cir.
1997) (considering a waiver and release of claims under the Americans with Disabilities
Act); see also Baum v. Great W. Cities, Inc., of N.M., 703 F.2d 1197, 1202 (10th Cir.
1983) (noting generally that release and waiver are affirmative defenses).
The district court referenced the Torrez factors and stressed the following
circumstances. Miles took the agreement and left Turner’s office to consider it. Turner
imposed no time limit for that process, and he recommended that she consult an attorney.
Miles had Cossairt review the agreement, and she then proposed modifications, which the
School District accepted. Finally, the agreement specifically mentioned waiving federal
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claims. Given these circumstances, the district court concluded that the School District
demonstrated Miles knowingly and voluntarily waived her federal remedies.
On appeal, Miles focuses on Torrez factor seven, consideration. She argues that
she received no payment or any other benefit for releasing her claims. The School
District points out, however, that it promised (1) not to seek the suspension of Miles’s
teaching license, (2) to respond to employment inquiries about Miles by, among other
things, stating that she voluntarily resigned; and (3) to make available to Miles “copies of
any in-service credits.” Aplt. App. at 84-85.3
Under Kansas law, these promises constitute consideration. “Consideration is
defined as some right, interest, profit, or benefit accruing to one party, or some
forbearance, detriment, loss, or responsibility, given, suffered, or undertaken by the
other.” Varney Bus. Servs., Inc. v. Pottroff, 59 P.3d 1003, 1014 (Kan. 2002) (internal
quotation marks omitted). It “need not be a thing of pecuniary value or reducible to such
value,” and “any benefit, profit or advantage flowing to the promisor which he would not
have received but for the contract, . . . is sufficient consideration to support the promise.”
Long v. Buehler, 648 P.2d 270, 275 (Kan. App. 1982) (internal quotation marks omitted);
cf., e.g., State ex rel. Ludwick v. Bryant, 697 P.2d 858, 861 (Kan. 1985) (finding
consideration in “a promise by the creditor to refrain from legal proceedings or an
extension of time within which the debtor may pay the creditor”). Although Miles
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The district court said it was unable to assess, based on the available
evidence, whether the consideration given by the School District exceeded benefits
Miles was already entitled to receive. Similarly, in Torrez, this court did not weigh
the consideration given by the employer. See 908 F.2d at 690.
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disputes committing any “wrongdoing for the [School] District to report to any
authority,” Aplt. Opening Br. at 29, she does not dispute cashing four paychecks that she
suspected had been erroneously issued and missing the repayment deadline. Because the
School District promised not to reveal these issues to the Kansas Board of Education and
prospective employers, Miles obtained a benefit. Miles does not address the School
District’s promise to provide copies of in-service credits. Nor does she contend she was
already entitled to receive these benefits. In short, she has not demonstrated error based
on the Torrez consideration factor.
Finally, Miles claims that the School “District’s fraud left [her] confused about her
rights.” Aplt. Opening Br. at 30. But we have already determined Miles has not shown
fraud. And as the district court succinctly observed, her consultation with Cossairt
undercuts her argument that she was unable to understand the terms of the release and
separation agreement. See Pierce v. Atchison Topeka & Santa Fe Ry. Co., 110 F.3d 431,
438 (7th Cir. 1997) (stating that “the participation of an attorney in negotiating the
release, will give rise to a presumption that the waiver was knowing and voluntary”).
The district court did not clearly err in finding that Miles knowingly and
voluntarily waived her federal employment claims.
CONCLUSION
We affirm the district court’s judgment.
Entered for the Court
Timothy M. Tymkovich
Chief Judge
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