Case Title: WELLS v. BOARD OF TRUSTEES OF LARAMIE COUNTY SCH. DIST. NO. 1

Citation: 

Docket Number: 99-99

State: wyoming

Court: Wyoming Supreme Court

Date: 2000-04-10T00:00:00Z

Document:
WELLS v. BOARD OF TRUSTEES OF LARAMIE COUNTY SCH. DIST. NO. 12000 WY 863 P.3d 861Case Number: 99-99Decided: 04/10/2000Supreme Court of Wyoming
 
KEVIN M. WELLS and GEORGE 
JON LIPPINCOTT, Appellants (Plaintiffs), v.BOARD OF 
TRUSTEES OF LARAMIE COUNTY SCHOOL DISTRICT NO. 1; ROBERT MYERS, individually and 
in his official capacity as Superintendent, Appellees (Defendants).

Appeal from the District 
Court of Laramie County, The Honorable Nicholas G. Kalokathis, 
Judge.

Patrick E. 
Hacker of Patrick E. Hacker, P.C., Cheyenne, WY. Argument by Mr. Hacker, 
Representing Appellants.Stuart R. Day and Scott W. Skavdahl of 
Williams, Porter, Day & Neville, P.C., Casper, Wyoming, Argument by Mr. Day, 
Representing Appellees.

Before 
LEHMAN, C.J., and THOMAS, MACY, GOLDEN, and HILL, JJ.

LEHMAN, Chief 
Justice.

[¶1] The central 
issue in this appeal is whether a school district is bound by the contracts that 
it entered into with teachers, where those contracts were not entirely in 
conformance with the school district's salary schedule. Appellants Kevin M. 
Wells and George Jon Lippincott assert claims of breach of contract, equitable 
estoppel, and promissory estoppel against appellee Board of Trustees of Laramie 
County School District No. 1 (Board). The district court granted summary 
judgment to the Board. We hold that the district court misapplied the applicable 
law and that there are genuine issues of material fact as to whether the Board 
was bound by the contracts. We, therefore, reverse and 
remand.

ISSUES

[¶2] Wells and 
Lippincott offer these issues for review: 

1. Should school 
districts be held to a lesser standard of honesty, competence and responsibility 
in their business dealings with their employees than are private 
employers?

2. Can a school district 
waive a policy adopted for the benefit of the district to govern internal 
operations?

3. Does the doctrine of 
estoppel operate against governmental entities when the entity acts in a 
business or proprietary capacity or where it does not relate to governmental 
functions?

4. Is a governmental 
employee who acts outside the scope of his authority in making representations 
and promises to governmental employees personally liable?

5. Are there material 
issues of fact which would preclude summary judgment?

[¶3] In 
response, the Board poses these issues:

[1.] Did the district 
court properly find that Board of Trustees for Laramie County School District 
No. 1 was bound by the terms of the Negotiated Agreement, entered into with the 
Cheyenne Teachers Education Association and the lawfully adopted, promulgated 
and published Laramie County School District No. 1 Policy and Administrative 
Regulations governing the calculation of teacher 
compensation?

[2.] Did the district 
court properly find that the annual salary amounts to be paid to Plaintiffs were 
void ab initio and unenforceable where those salaries were erroneously 
calculated contrary to the terms of the Negotiated Agreement and School District 
Policy and Regulations governing [the] calculation of Teacher's 
compensation?

[3.] Is a school 
district's policy, regulations and terms of the Negotiated Agreement with all 
certified classroom teachers subject to waiver where a teacher's salary is 
erroneously calculated?

[4.] Did the District 
Court properly find that based upon the undisputed facts of this case as a 
matter of law Plaintiffs could not assert a claim based upon promissory 
estoppel?

[5.] Did the district 
court properly find that Plaintiffs could not assert individual claims against 
School District Administrators?

FACTS

[¶4] Wells and 
Lippincott are continuing contract teachers1 in Laramie County School District 
No. 1 (the District). The Board establishes teachers' salaries pursuant to a 
schedule agreed upon by the District and the Cheyenne Teachers Education 
Association (CTEA), the union representing the District's teachers. The schedule 
determines a teacher's salary based on the individual's level of education and 
years of experience.

[¶5] In August 
1992, the District offered Wells a teaching position at the lowest pay level, 
which he declined. Several days later, the District's Human Resources Director, 
Richard Wiederspahn, offered Wells the same position at a pay level higher than 
he would have been eligible for, if an exacting construction of the District 
policy and the union agreement had been applied. Wells accepted the offer and 
has received subsequent pay increases based on his initial salary and length of 
service. In 1996, after teaching in the District for a number of years, 
Lippincott requested a review of his salary classification and an exemption from 
a District policy to move him into a higher pay grade. District Superintendent 
Robert Myers granted the exemption, which resulted in a pay raise for 
Lippincott. Both teachers committed to teach in the District for the 1997-98 
school year.

[¶6] In 
September 1997, after the school year had begun, the Board met and determined 
that Wells' and Lippincott's salary classifications were higher than authorized. 
It notified both teachers that it would immediately reduce their salaries. Wells 
and Lippincott filed suit in the district court to prevent the salary 
reductions. Their complaint asserted causes of action for breach of contract, 
promissory estoppel, breach of the covenant of good faith and fair dealing, and 
deprivation of due process. Wells and Lippincott later sought to amend their 
complaint by adding Richard Wiederspahn as a defendant and spelling out their 
claims against Robert Myers in greater detail. The Board moved for summary 
judgment on all claims, which the district court granted. The court held Wells' 
and Lippincott's contracts were void to the extent they varied from District 
policy, and the teachers were not justified in relying on them. The court also 
denied the plaintiffs' motion to amend. Having found their claims meritless, it 
reasoned the amendments would "unnecessarily delay the appeal process." Wells 
and Lippincott timely appealed that judgment.

STANDARD OF 
REVIEW

[¶7] In 
reviewing a trial court's entry of summary judgment, we examine the record in 
the light most favorable to the nonmoving party, giving that party all 
reasonable inferences that can fairly be drawn from the record. Summary judgment 
is proper only when no genuine issues of material fact exist and the prevailing 
party is entitled to judgment as a matter of law. A genuine issue of material 
fact is a disputed fact that, if proven, would establish or refute an essential 
element of a cause of action or a defense raised by the parties. For a summary 
judgment motion to be successful, the movant must make a prima facie showing 
that no genuine issue of material fact exists. The burden thereafter shifts to 
the opposing party to demonstrate the existence of a genuine issue of matter 
fact. Gordon v. Spectrum, Inc., 981 P.2d 488, 491-92 (Wyo. 1999) (and cases 
cited therein). Moreover, this court evaluates the propriety of summary judgment 
using the same standards and materials used by the district court, affording no 
deference to the district court's decision on issues of law. A grant of summary 
judgment may be affirmed on any proper legal grounds supported by the record. 
Patel v. Khan, 970 P.2d 836, 838 (Wyo. 1998).

DISCUSSION

[¶8] At the 
outset, it is significant that we recognize that the licensing, hiring, firing, 
tenuring, promoting, adjusting of salaries, and other aspects of the employment 
of teachers is a very structured process which involves statutes (e.g., Wyo. 
Stat. Ann. §§ 21-2-802, 21-3-111(a)(vi)(C); 21-7-110; 21-7-102(a)(ii)), rules 
and regulations adopted by school boards, and agreements negotiated between 
school boards and associations representing teachers. See 2 James A. Rapp, 
Education Law, § 6.05[4][b] (1999). We also note that this is an area of law 
where there has been considerable stability over time. Each of these elements is 
significant in the resolution of disputes which arise in this setting. However, 
generally applicable principles of law, including general contract principles, 
as well as common sense, continue to apply even though the process is highly 
structured. 2 James A. Rapp, Education Law, § 6.05[4][e] ("The law governing 
contract formalities required of employment contracts in the educational setting 
are essentially the same as applied in other contexts to private or public 
entities.").

[¶9] In a proper 
case, a "board of education may ratify a contract or be estopped to deny it, 
even without formal official action of the board" if the objections to the 
contract "are technical rather than substantial, going to the formality of 
execution rather than to the authority to employ." Such a case exists where a 
board permits a putative employee "to rely upon the contract as valid, to give 
up other employment, to enter upon the duties of the office and perform services 
under the contract."

Id.

[¶10] The 
district court determined that, while the appellants had a legitimate 
expectation in continued employment, they did not enjoy an expectation of a 
particular salary. That theory, however, rests on a presumption that appellants' 
original contracts and the salaries provided by those contracts (as well as 
increases in salary based on the contracts) were a variance from the Board's 
salary schedule and were "unauthorized payments." If the premise that the 
original contracts were "void" fails, then the next conclusion, that appellants 
were not entitled to salary increases, must also fail. While it may be true that 
appellants' had no expectation of a particular increase in salary, under the 
governing statute they did have an expectation of any salary increases adopted 
by the Board. Wyo. Stat. Ann. § 21-7-104(a) (Lexis 1999). Likewise, teachers 
have an expectation that salaries will not be reduced, unless as a part of a 
general salary reduction applicable to at least 50 percent of the teachers in 
the district. Wyo. Stat. Ann. § 21-7-111(a)(iii) (Lexis 
1999).

[¶11] The 
district court also determined that neither equitable estoppel nor promissory 
estoppel were applicable under the circumstances of this case. The district 
court based its determination in this regard on the conclusions that the 
superintendent and the human resources director were not authorized to deviate 
from the salary schedule, that there was present no exception based upon fraud 
or "rare circumstances," and that appellants were charged with constructive 
knowledge of these administrators' lack of authority to vary from the Board's 
salary schedule. We will note here that the Board is at least equally, if not 
more so, charged with knowledge of its salary schedule and other pertinent rules 
and regulations, as well as its authority to deviate from those rules and to 
ratify contracts entered into by its agents.

[¶12] The issues 
relating to estoppel under the circumstances of this case are not, however, that 
easily answered. In the case, Bowman v. Lumberton Independent Sch. Dist., 801 S.W.2d 883 (Tex. 1990), the Supreme Court of Texas held, in a case whose facts 
bear significant similarity to facts we must deal with here, that fact issues as 
to estoppel and ratification precluded summary judgment. Id., at 884-88. 
Continuing, the Texas court noted that "the acts of the agent of the board would 
not bind the board only if the acts were unauthorized." Id., at 888. That court 
also recognized that "[w]hen the superintendent and district finance manager as 
his subordinate issue paychecks and deal with the financial amounts payable 
under teacher contracts, they do so as agents of the trustees within the scope 
of their apparent authority." Id., at 888. Further, "[e]stoppel may apply 
against a school district as to the school superintendent's power to execute an 
employment contract with a teacher." Id., at 888. Continuing, the court 
recognized, "[While] estoppel cannot be used to create a new power or enlarge 
one already in existence, it may be employed to defend against mere 
irregularities in the doing of a thing in controversy where the power was 
present to do so." Id., at 889 (quoting El Paso County v. City of El Paso, 357 S.W.2d 783, 789 (Tex.Civ.App. - El Paso 1962, no writ)). The Bowman case was 
relied upon, along with other authority, by 2 James A. Rapp, Education Law, § 
6.05[7][b], n.231, for the proposition that: "[W]here salaries are fixed above 
the minimums, the board's discretion to reduce salaries even in excess of the 
minimums may be limited."

[¶13] 
Ratification by the Board presents an even more significant issue. A contract of 
a teacher, which may be deemed unenforceable because of lack of authority or 
regularity in the making of it, may be ratified by those having the authority to 
do so. Ratification is equivalent to a full compliance with the necessary 
formalities and renders the contract valid from its inception. Holdridge v. 
Board of Education of Keenesburg RE-3, 879 P.2d 448, 450 (Colo.App. 1994); 
Lommasson v. Sch. Dist. No. 1, Multnomah County, 261 P.2d 860, 866-68 (Or. 
1953), (opinion withdrawn on rehearing, 267 P.2d 1105, 1110 (1954), but cleaving 
"to that part of the earlier opinion . . . which relates to . . . the 
ratification of teacher contracts."); see also Andrews v. Union Parish Sch. Bd., 
184 So. 574, 577-78 (La.App. 1938); Hosford v. Board of Education of City of 
Minneapolis, 275 N.W. 81, 84 (Minn. 1937); Day v. Sch. Dist. No. 21 of Granite 
County, 38 P.2d 595, 597 (Mont. 1934); Smith v. School Dist. Tp. of Grove, Adair 
County, 250 N.W. 126, 127-28 (Iowa 1933); McLaughlin v. Board of Education of 
Fordson Sch. Dist. of City of Dearborn, 239 N.W. 374, 376 (Mich. 1931); 78 
C.J.S. Schools and School Districts § 217, p. 372 (1995); 1 James A. Rapp, 
Education Law, § 4.02[5] (1999). As an illustration of this principle, in their 
treatise on this subject, Robert R. Hamilton and E. Edmund Reutter, Jr., Legal 
Aspects of School Board Operation, p.100 (1958) assert: 

[¶14] Another 
illustration is the situation in which the superintendent of schools purports to 
enter into a teaching contract with a teacher. Since only the board can enter 
into formal contracts, the superintendent has thus exceeded his authority. 
However, if the board subsequently ratifies and validates the action of the 
superintendent, the contract is as valid as if it had been entered into between 
the teacher and the board in the first instance.

[¶15] It is also 
clear that a school board's authority to contract with teachers may be 
delegated:

Thus, where the law makes 
it the duty of a board to employ teachers, the board may delegate to the 
superintendent or to a committee the authority to ascertain proper persons to be 
employed and even to draw up tentative contracts, but the contracts must be 
ratified by the board itself, or they will not be valid. Where, on the other 
hand, all terms of a contract have been definitely agreed on by the board at a 
legal meeting, the ministerial duty of executing the contract or reducing it to 
the proper form may be delegated to an agent.

Newton Edwards, 
The Courts and the Public Schools, pp.168-69 (3rd ed. 
1971).

[¶16] Although 
decided in a different context, pertinent Wyoming authority supports the 
conclusions set out above. Appellants contend they had binding contracts with 
the District, averring the District could not modify their contracts without 
written notice on or before May 15. In support of these contentions, appellants 
cite Wyo. Stat. Ann. §§ 21-7-106 and 21-7-107 (Lexis 1999). The district court 
dispensed with appellants' breach of contract claim by finding the contracts 
were void from their inception because they did not comply with the approved 
salary schedule. The court reasoned that the administrators had no authority to 
deviate from the approved schedule, and appellants were charged with knowledge 
of that fact. As noted above, we find the pertinent authorities to be to the 
contrary.

[¶17] By 
statute, the authority to determine teachers' salaries is vested in the Board. 
Wyo. Stat. Ann. § 21-3-111(a)(vi)(C) (Michie 1997). The Board has exercised that 
authority by establishing, in negotiations with the CTEA, a salary schedule for 
teachers. The Board argues that not only were its administrators not authorized 
to deviate from the salary schedule, but the Board itself could not do so. As 
set out more fully above, we are not persuaded by those arguments. Although the 
administrators who granted variances from the salary schedule to Wells and 
Lippincott may not have had specific authority from the Board to do so, the 
Board approved, honored, and renewed the contracts. In so doing, the Board 
arguably ratified those "unauthorized" acts. See Lahnston v. Second Chance Ranch 
Co., 968 P.2d 32, 36 (Wyo. 1998) ("Implied ratification of a previously 
unauthorized act may result from 1) accepting and retaining the benefits of the 
act, 2) silence, acquiescence, or failure to repudiate . . 
.").

[¶18] The Board 
seeks to avoid performance by claiming the contracts violated its own policies 
and its negotiated agreement with the CTEA. We hold that inconsistency with 
District regulations, by itself, does not render the contracts invalid. The 
regulations are internal procedures adopted for the benefit of the District, 
rather than for the protection of other parties, and may therefore be waived by 
the District. See Roberts v. Lincoln County Sch. Dist. No. One, 676 P.2d 577, 
580 (Wyo. 1984). The CTEA agreement is similarly unavailing for the Board here. 
The facts indicate that the CTEA, the exclusive bargaining agent for the 
District's teachers, was willing to "work out an accommodation" so appellants' 
salaries would not be decreased. If the CTEA does not insist on strict 
enforcement, we will not allow the Board to invoke the agreement to save itself, 
from itself.

[¶19] Wells and 
Lippincott next argued the Board should be estopped from avoiding performance 
because appellants had relied, to their detriment, on the representations in 
their contracts. The district court rejected the equitable estoppel argument, 
reasoning that the government may be equitably estopped only in "rare and 
unusual circumstances" and "may not be estopped for the unauthorized acts or 
errors of its officers or employees." The district court cited the following 
declarations from this court:

Equitable estoppel should 
not be invoked against a government or public agency functioning in its 
governmental capacity, except in rare and unusual circumstances and may not be 
invoked where it would serve to defeat the effective operation of a policy 
adopted to protect the public.

Big Piney Oil & Gas 
Co. v. Wyoming Oil and Gas Conservation Comm'n, 715 P.2d 557, 560 (Wyo. 
1986).

[¶20] Equitable 
estoppel does not apply to governmental or sovereign functions, especially where 
it would defeat the public interest. [Furthermore,] the state may not be 
estopped for the unauthorized acts or errors of its officers or 
employees.

[¶21] State 
Highway Comm'n v. Sheridan-Johnson Rural Electrification Ass'n, 784 P.2d 588, 
592 (Wyo. 1989) (citation omitted).

[¶22] The 
court's application of Big Piney and Sheridan-Johnson, however, ignores the 
distinction between an "agency functioning in its governmental capacity," and an 
agency functioning as an employer or in a proprietary capacity. We have 
consistently recognized that estoppel is available against a governmental agency 
for the unintentional, misleading statement of its representative, when the 
agency is functioning in a proprietary capacity. State ex rel. Workers' 
Compensation Div. v. Barker, 978 P.2d 1156, 1159-61 (Wyo. 1999); Bauer v. State 
ex rel. Worker's Compensation Div., 695 P.2d 1048, 1053 (Wyo. 1985); Seaman v. 
Big Horn Canal Ass'n, 29 Wyo. 391, 397-99, 213 P. 938, 940 (1923). If the 
district court's holding were accepted at face value, there could never be 
estoppel against any governmental agency. Such a result would be clearly at odds 
with past rulings of this court. We hold that the district court erred in 
determining, as a matter of law, that the Board could not be equitably estopped 
where the material facts necessary to reach that conclusion are in 
dispute.

[¶23] The 
district court's grant of summary judgment is reversed, and the case is remanded 
to the district court for further proceedings consistent with this 
opinion.

Footnotes

1 A 
continuing contract teacher is one "who has been employed by the same school 
district in the state of Wyoming for a period of three (3) consecutive school 
years, and has had his contract renewed.