Phillips v. Trustees, Madison School District No. 7

NO. 93-116
IN THE SUPREME COURT OF THE STATE OF MONTANA
1994
HAZEL MARIE PHILLIPS,
Petitioner and Respondent,
v.
TRUSTEES, MADISON SCHOOL DISTRICT NO. 7,
and NANCY KEENAN, Superintendent of
Public Instruction,
Respondents and Appellants.
APPEAL FROM: District Court of the First Judicial District,
In and for the County of Lewis and Clark,
The Honorable Thomas C. Honzel, Judge presiding.
COUNSEL OF RECORD:
For Appellants:
Charles E. Erdmann, Erdmann Law Office,
Helena, Montana (for Madison School District)
Kathleen Holden, Chief Legal Counsel,
Office of Public Instruction, Helena,
Montana (for Nancy Keenan)
For Respondent:
J. C. Weingartner, Attorney at Law,
Helena, Montana
For Amicus Curiae:
Janice Frankino Doggett, Attorney at Law! Helena,
Montana (for Montana School Boards Association)
Emilie Loring, Attorney at law, Missoula,
Montana (for Montana Education Association)
Submitted on Briefs: September 2, 1993
Decided: January 28, 1994
Filed:
Justice William E. Hunt, Sr., delivered the opinion of the Court.
The Madison School District No. 7 Trustees (trustees), and
Nancy Keenan, Montana Superintendent of Public Instruction (state
superintendent), appeal from an order of the First Judicial
District Court, Lewis and Clark County, reversing the state
superintendent's decision concerning the termination of respondent,
Hazel Marie Phillips, a Twin Bridges school teacher.
We affirm.
Did the District Court err when it reversed the state
superintendent's decision, which had reversed the county
superintendent's decision, on the grounds that the county
superintendent considered evidence not available to the trustees?
In 1989, Phillips was a tenured English and Art teacher
employed by the Madison School District for over 16 years. On or
about January 3, 1989, the trustees passed a resolution declaring
a school district financial emergency and authorized a ballot to
consider a $103,020 emergency levy for the high school, and a
$73,621 emergency levy for the elementary school. The voters
defeated the levies. At a meeting on February 3, 1989, the
trustees eliminated a number of programs including the English/Art
program. On February 23, 1989, the trustees submitted a second
proposed set of emergency levies at $38,884 and $47,277, of which
the voters approved. On March 1, 1989, the trustees informed
Phillips of the school superintendent's recommendation to eliminate
her position in a reduction of force, due to the financial
2
emergency. On March 22, 1989, at the hearing for Phillips and two
other tenured teachers, the trustees voted to accept the school
superintendent's recommendation that Phillips' teaching contract be
terminated.
Phillips claimed that the school superintendent recommended
her termination to the trustees because of a personality conflict
between the two. On April 17, 1989, Phillips appealed the decision
to the county superintendent. On October 24, 1989, the county
superintendent found that Phillips was unjustly terminated because
of a personality conflict with the school superintendent, and not
because of a financial emergency. On November 22, 1989, the
trustees filed an appeal to the state superintendent who affirmed
the county superintendent on November 30, 1990.
On December 28, 1990, the trustees filed a petition for
judicial review in the Fifth Judicial District Court, Madison
County. Subsequently, the parties determined that the record
reviewed by the state superintendent was incomplete. On
February 19, 1991, by agreement and stipulation of the parties, the
court remanded the case to the state superintendent with orders to
obtain and review all the evidence presented by the parties to the
county superintendent.
On June 27, 1991, the state superintendent reversed her first
decision by reversing the decision of the county superintendent.
The state superintendent found that on October 24, 1989, the county
superintendent improperly weighed financial informationunavailable
3
to the trustees on March 22, 1989, when they decided to accept the
school superintendent's recommendation that Phillips' contract be
terminated.
On August 27, 1991, Phillips filed a petition for judicial
review in the First Judicial District Court, Lewis and Clark
County, asking the court to reverse the final order of the state
superintendent and to reinstate the order of the county
superintendent. On December 10, 1992, the First Judicial District
Court found that because the hearing with the county superintendent
was de novo, the county superintendent properly could consider any
information before her, including the financial evidence admitted
at the hearing without objection by the trustees. Further, the
court found that the county superintendent's findings of fact were
not clearly erroneous, and her conclusions of law were neither
arbitrary nor capricious. Consequently, the District Court
reversed the decision of the state superintendent and reinstated
the county superintendent's decision that had reversed the
trustees' decision to terminate Phillips* contract.
On January 25, 1993, the trustees and state superintendent
filed this appeal.
Did the District Court err when it reversed the state
superintendent's decision, which had reversed the county
superintendent's decision, on the grounds that the county
superintendent considered evidence not available to the trustees?
4
We agree with the First Judicial District Court. The District
Court properly upheld the county superintendent's decision, after
finding that it was supported by reliable, probative, and
substantial evidence, and not clearly erroneous. Section
2-4-704(2)(a)(v), MCA. The court then properly determined that the
hearing before the county superintendent was a hearing de novo.
Johnson v. Beaverhead County High Sch. Dist. (1989), 236 Mont. 532,
771 P.2d 137; Yanzick v. School Dist. 23 (1982), 196 Mont. 375, 641
P.2d 431; Section 20-3-210(l) and (3), MCA. Because the county
superintendent's review is de novo, the county superintendent could
review any relevant issues of law or fact before her at the time of
the hearing.
The county superintendent's findings of fact and conclusions
of law reveal that in light of the trustees' claim of a financial
emergency, she considered financial data regarding the school
district's budget: "The Reserve account in the amount of
$57,298.00 for the 1989-90 fiscal year was double the 1987-88
amount of $25,227.00 and triple the 1988-89 amount of $14,704.00.VV
At the hearing, Phillips introduced an exhibit into evidence dated
July 24, 1989, containing the 1989-90 high school budget of
$57,298.71, for the year beginning July 1, 1989, and another
financial summary dated August 2, 1989. Both of these summaries
post-date March 22, 1989, the date on which the trustees voted to
terminate Phillips' contract.
5
We hold that the proceedings before the county superintendent
were de novo proceedings and she could properly consider all
relevant evidence presented to her.
We affirm the District Court.
We concur:
Chief Justice
Justices
6
Justice James C. Nelson specially concurs.
I concur in the result reached by this Court, although I do so
while acknowledging the impossible position in which the statutory
scheme places the board of trustees.
MY frustration is primarily grounded in the anomalous
situation ably discussed by the dissent regarding the use of
evidence not available to the Trustees or in existence at the time
of their decision, at the & m hearing before the county
superintendent. Under § 20-4-205, MCA, the board of trustees is
required to make its teacher hiring decisions for the next school
year at a time before final budgetary information is available
under Title 20, Chapter 9, Part 1. As the respondents correctly
point out in their brief on appeal:
In good financial times this process generally works as
districts can expect to receive increased state support
and some growth in district taxable valuation. In
troubled financial times, however, or where districts are
experiencing declining enrollment, the trustees find
themselves in a situation where they must make staffing
decisions before they are aware of their final budget
revenue figures. In these situations the trustees make
the best decision they can with the available
information.
Under that sort of statutory scheme, one can hardly fault the
school board for planning programs and hiring teachers and staff
very conservatively, especially when the board is increasingly
faced with failed school levy elections, taxpayer revolts and major
changes in school funding laws that seemingly follow each session
of the legislature and each court challenge.
Notwithstanding, our school laws also provide that a teacher
who claims that his or her teaching contract was, for an improper
7
reason, not renewed by the board of trustees, is entitled to a I'&
nova" hearing before the county superintendent. sec!::,oas %!I-3-2iG,
20-4-204, MCA; Johnson v. Beaverhead Cty. Sch. D. (1~989j, 236 Mont.
532, 534, 771. P.2d 137, 138; Yanzick v. School District No. 23
(1982), 196 Mont. 375, 385, 641 P.2d 431, 437.
A de nova hearing is "[a] new hearing oc a hearing for the
second time, contemplating an entire trial in [the] same manner in
which [the] matter was originally heard and a review of prfU~ious
hearing. On hearing 'de nova' [the] court hears [the] inatte: as
court of original and not appellate jurisdiction." lxacji:s LSW
Dictionary 649 (5th ed. 1979).
In Pickett v. City of Billings (1993) __ Knnt. P.2d
, 50 St. Rep. 1586, 158G, we recently stated:
Hlacjr's Law Dictionary (4th ed. 1968) 3.157'7, de~fines tr.iaJ.
de Ii@"@ as 1f L. 1 new trial or retrial ha,d i:1 an app?-l.!.iite
ra
court in whi~ch .the whole :zase is gi:ne into ._._i.~ _- no -tria!~
.%s it .._._ . . . ~--
whatever had been had in the court belcg." The:re.fore, a
district court must conduct the procecdinys before it s
if the case had orjxinated in that court, following all
statutes and rules governing district cour~t: proceedl.nqs.
(Emphasis added).
Section 20-3-210, MCA, briefly describes the proce;:ure by
which the county superintendent conducts a hearing do novor, That
section provides in pertinent part:
(3) The county superintendent shall hear the appeal and
take testimony in order to determine the facts rela,ted to
the controversy and may administer oaths to the witnesses
that testify at the hearing. The county superintendent
shall prepare a written transcript of the hearing
proceedings. The decision on the matter of the
controversy that is made by the county superintendent
must be based uoon thucts established at the hearing.
Section 20-3-210(3), MCA. (Emphasis added.) Also, 5 2-4-703, MCA,
8
provides that "the court may order that the additional evidence be
taken before the agency upon conditions determined by the court."
In an Opinion of the Attorney General discussing whether a
hearing before a county superintendent is an original proceeding
with de
- nova
- consideration, the Attorney General stated that:
The term "hearing" when used with reference to a
proceeding is an equity term synonymous with "trial," and
includes the reception of evidence and arguments thereon
for the sake of deciding correctly thereon. Grant v.
Michaels [(1933)], 94 Mont. 452, 461, 23 P.2d 266.
Montana law thus has specified a de nova type proceeding
upon appeal to the county superintendent, and not merely
a review of a decision of a school board. An analogous
situation is an appeal from justice court to district
court. Although that proceeding is referred to as an
appeal, it is a trial de nova and original proceeding.
The decision rendered by the school board is not voided
by full consideration of the controversy by the county
superintendent, but the board's decision is taken into
consideration alone with facts, documents and testimony
presented at the hearina.
35 Op. Att'y. Gen. No. 42 (1973). (Emphasis added.) The last
sentence of the above paragraph implicitly contemplates that
additional evidence may be presented at the county superintendent's
level of hearing and review.
While the above authorities do not precisely address the
relevance of post-termination evidence at the hearing de nova, and
while the position taken by the respondents and by the dissent has
logical appeal -- why should the school board's hiring decisions be
second guessed on the basis of budget evidence not even in
existence when the board was required to make its decisions? --
nevertheless, despite exhaustive research, I have located no
persuasive authority which would preclude the use of that sort of
evidence in a de nova proceeding, given the obligation of the
9
county superintendent to act as the initial fact finder in the
controversy.
Moreover, the cited authorities do contemplate that on a
hearing or trial de nova, that the evidence is to be presented "as
if the case had originated in that [tribunal]" and "as if no trial,
whatever, had been had in the [tribunal] below" and on the basis of
facts, documents and testimony established and presented at the &
m hearing. Under those authorities, there is nothing to
preclude the de nova finder of fact from considering relevant
evidence that may not have been available to the first tribunal,
given the requirement that the second hearing is an original, "from
scratch" proceeding.
On - nova review, the tribunal or hearing officer (here the
de -
county superintendent) is entitled to hear all relevant evidence on
the controversy at issue. See § 2-4-612, MCA, which makes Rule
402, M.R.Evid., applicable to administrative agencies. Rule 402,
M.R.Evid., states that all relevant evidence is admissible, except
where specific exceptions apply.
"Relevant evidence" is simply:
. . . evidence having any tendency to make the existence of
any fact that is of consequence to the determination of
the action more probable or less probable than it would
be without the evidence . . . [and] . . . may include
evidence bearing upon the credibility of a witness or
hearsay declarant.
Rule 401, M.R.Evid. Stated another way, the test of relevancy is:
. ..whether an item of evidence will have any value, as
determined by logic and experience, in proving the
proposition for which it is offered.
Derenberger v. Lutey (1983), 207 Mont. 1, 9, 674 P.2d 485, 489.
10
Importantly, our rules of evidence do not qualify relevancy on the
basis of when the evidence came into existence in relation to the
matter at issue.
If, as in the instant case, the teacher claims that the non-
renewal of her contract for lack of funds was merely a pretext,
then proh~ibiting the use of relevant, post-termination evidence
regarding the availability of funds might deprive her of one of the
most probative pieces of evidence with which she can prove her
case.
Moreover, on balance, it makes more sense to admit such
evidence than to disallow it. If the evidence is admitted, the
school board still has the ability to prove that its decision not
to renew the teacher's contract was based solely on financial
reasons and was not merely a pretext to justify a wrongful
discharge. If, on the other hand, the evidence cannot even be
considered, then the teacher is deorived of using the one piece of
evidence that, along with other evidence, might prove that her
allegations are correct.
Quite simply, if, as here, the statutory scheme forces a
Hobson's choice, then, the hearing & novo, being, at its root, a
search for the truth, we should err on the side of allowing more
relevant information on the issue rather than less.
Accordingly, while acknowledging the well-reasoned and argued
positions of the Trustees here,
dissent, I must, nevertheless, concur.
Chief Justice J. A. Turnage:
I concur in the specially concurring opinion of Justice
Nelson.
' Chief Justice
12
I respectfully dissent from the opinion of the Court. I would
reverse the District Court.
My disagreements with the Court are two. First, the Court
does not address the District Court's threshold determination that
the Trustees waived their objection to consideration of post-
termination information by the County Superintendent. I would
reverse the District Court on this issue because it is my view that
the Trustees made a sufficient and, indeed, legally correct
objection to the relevance of that information. While the record
can be read narrowly to support the District Court's determination
that no tlobjectionl' stated in such terms was made, I would read the
record before us more generously under these circumstances where
neither party raised or briefed the "objection/waiver" issue in the
District Court.
It seems to me that a fair reading of the record indicates
that the parties agreed to allow all the post-termination evidence
into the record for purposes of the County Superintendent's hearing
subject to objections in their post-hearing briefs. The Trustees
then argued in their brief that the school district was unaware of
what the reserve fund level ultimately would be at the time they
were compelled to make their termination decision; in essence, I
read that to be an objection to the post-termination evidence on
relevance grounds. Certainly it appears that the parties so
understood matters to and through the subsequent proceedings in the
District Court during which Phillips did not raise an issue with
regard to any waiver by the Trustees. For these reasons, I would
13
reverse the District Court's determination that the Trustees failed
to object and thereby waived their right to object to use of the
post-termination evidence.
Second, the Court's total lack of discussion of the
significant issue before us for the first time in this case--
namely, whether such post-termination evidence can be used by a
county superintendent in reviewing a termination decision made by
school district trustees--is troubling. While that discussion is
ably provided in Justice Nelson's concurrence, the formal Court
opinion is devoid of legal analysis of the issue.
On the merits of that critical issue--whether evidence not in
existence at the time of the Trustees' decision can be used in
reviewing that decision--I also disagree with the Court. The Court
correctly states that hearings before a county superintendent of
the kind at issue here are de nova hearings. The Court then
proceeds to a conclusion that, because the hearing is de nova, any
relevant issues of law or fact before the County Superintendent
could be reviewed as if the Trustees' decision had never taken
place. I agree with that conclusion as well. The crux of the
issue, though, is precisely that raised by the Trustees--is
evidence regarding the financial circumstances of the school
district which did not exist at the time of the Trustees' decision
"relevant" in reviewing that decision? The Court seems to conclude
that it is, without specifically so stating and without discussion
or citation to authority. I disagree.
It is my view that post-termination evidence--that is,
14
evidence which did not exist at the time a termination decision was
statutorily required--is not relevant and, therefore, cannot be
used by a county superintendent in reviewing a termination
decision. While a county superintendent's hearing is de nova under
our interpretations of 5 20-3-210, MCA, that conclusion does not
mandate or even suggest a conclusion that l'facts" which did not
exist at the time of the decision are relevant. The Trustees must
act within statutory time frames and they must act based on
information available at that point in time. To suggest that a
decision made on the only information available properly can be
reviewed at a later time by either the county superintendent, the
state superintendent, or any court, based on an entirely different
informational and evidentiary basis is without logic and puts
school trustees in an untenable position.
Sections 20-3-210(l) and (3), MCA, provide in pertinent part:
[T]he county superintendent shall hear and decide all
matters of controversy arising in the county as a result
of decisions of the trustees of a district in the county.
. . .
The county superintendent shall hear the appeal and take
testimony in order to determine the facts related to the
controversy.
The "Controversy1 before the County Superintendent in this case was
the validity of the Trustees' decision to terminate Phillips.
Section ZO-3-210(3), MCA, authorizes the County Superintendent to
determine the "facts related to" that controversy. The related
facts, I submit, can be only those which existed at the time the
controversy came into existence, namely, the facts which existed
15
and which were available to the Trustees at the time they made
their decision. To hold that later-existing "facts" relate, and
thus are relevant, to an earlier decision, is to graft into
substantive Montana law the kind of hindsight which each of us
always hopes will not be used to judge our personal or professional
decisions. I cannot agree.
'"-.. 1..
Justice Fred J. Weber concurs in the f
16