NO. 87-312 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1988 

WILLIAM G. HARRIS, 

Petitioner and Appellant, 

-vsGENEVIEVE BAUER, Superintendent of 

Schools, Yellowstone County, Montana, 

Sitting for Sonja Spannering, Superintendent 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, 1987 

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 by 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 ~.2d 1099, 

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 faith-(1) 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 -- in bad faith. 

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. 

We Concur: // 

4.- 

Justice