Case Name: Gary GROUNDS, Petitioner, v. TOLAR INDEPENDENT SCHOOL DISTRICT, Respondent
Court: Supreme Court of Texas
Jurisdiction: Texas
Decision Date: 1993-06-23
Citations: 856 S.W.2d 417
Docket Number: No. D-2168
Parties: Gary GROUNDS, Petitioner, v. TOLAR INDEPENDENT SCHOOL DISTRICT, Respondent.
Judges: Concurring opinion by GONZALEZ, J.
Reporter: South Western Reporter Second Series
Volume: 856
Pages: 417–428

Head Matter:
Gary GROUNDS, Petitioner, v. TOLAR INDEPENDENT SCHOOL DISTRICT, Respondent.
No. D-2168.
Supreme Court of Texas.
June 23, 1993.
Jefferson K. Brim, III, Austin, for petitioner.
Andrew Ottaway, Granbury, for respondent.

Opinion:
OPINION
CORNYN, Justice.
In this case we consider whether the legislature conferred upon public-school teachers in Texas a constitutionally protected property interest by virtue of the Term Contract Nonrenewal Act (TCNA). Tex. Educ.Code § 21-201-211. For the reasons set out below, we hold that the legislature did grant teachers a property interest. We, therefore, reverse the court of appeals' judgment and remand this cause to that court for consideration of points of error relating to damages and attorney's fees not previously addressed.
I.
Petitioner, Gary Grounds, was a teacher and a coach for the Tolar Independent School District (the District) during the 1983-84 school year. In February of 1984, the District notified Grounds that his one-year teaching contract would not be renewed. Grounds' requests for an explanation of the nonrenewal and for a hearing were denied. Grounds appealed to the Commissioner of Education (the Commissioner) who ordered the District to renew Grounds' contract for the 1984-85 school year.
The District declined to either abide by or appeal the Commissioner's order. Grounds then sued the District, alleging both breach of his employment contract and violation of his right to procedural due process. Grounds claimed that the due process violation arose not from the District's failure to renew his 1983-84 contract, but solely from its refusal to provide him with its reasons for nonrenewal of his contract and a hearing. The parties even tually settled the contract claim, expressly reserving the due process claim for judicial determination, including Grounds' request for damages and attorneys' fees.
After a bench trial, the district court concluded that even if Grounds established a due process violation, he sustained no damages as a result. The trial court, accordingly, rendered judgment that Grounds take nothing. The court of appeals affirmed the trial court's judgment but did so because it concluded that the TCNA does not create a property interest in term-contract renewal, 827 S.W.2d 10. As a result, the appellate court did not reach Grounds' complaint that the trial court's failure to award damages and attorney's fees was against the great weight and preponderance of the evidence.
II.
Texas public-school teachers are ordinarily employed under annual contracts. Before the TCNA was enacted, a school district could choose not to renew a teacher's term contract without providing any reason. See Hix v. Tuloso-Midway Indep. Sch. Dist., 489 S.W.2d 706 (Tex.Civ.App.—Corpus Christi 1972, writ ref'd n.r.e.). Teachers serving under term contracts had no property interest in renewal. Id. As the court of appeals in Hix explained, a teacher enjoyed no such interest because "there was no statute, administrative rule or Texas decision that required the Board of Trustees [of the school district] to give plaintiff a hearing on the cause of nonre-newal of his contract." Id. at 711. Contract renewal decisions were left to the unfettered discretion of school districts.
The legislature altered this situation, however, with the enactment of the TCNA in 1981. The TCNA provides for automatic renewal of a teacher's term contract unless the district complies with certain statutory prerequisites. Tex.Educ.Code § 21.201-.211. Those prerequisites include providing the teacher with notice of preestablished reasons for nonrenewal and a hearing. Id.
It is constitutionally significant that the TCNA requires preestablished reasons for nonrenewal of teaching contracts in addition to notice and a hearing. Some substantive limit on the State's discretion is an essential characteristic of a property interest warranting constitutional protection. Cain v. Larson, 879 F.2d 1424, 1426 (7th Cir.) cert. denied, 493 U.S. 992, 110 S.Ct. 540, 107 L.Ed.2d 537 (1989). The United States Supreme Court defined a constitutionally protected property interest in Logan v. Zimmerman Brush Co. as "an individual entitlement grounded in state law, which cannot be removed except 'for cause'." 455 U.S. 422, 430, 102 S.Ct. 1148, 71 L.Ed.2d 265 (1982) (quoting Memphis Light, Gas & Water Div. v. Craft, 436 U.S. 1, 11-12, 98 S.Ct. 1554, 1561-62, 56 L.Ed.2d 30 (1978)) (other citations omitted). The "for cause" requirement discussed in Logan constitutes a substantive limit on the State's discretion creating a property interest. Likewise, the TCNA requirement of preestablished reasons for nonrenewal constitutes a substantive limit on the State's discretion creating a property interest.
Although school-district trustees initially adopt the reasons to decline to renew teachers' term contracts, the TCNA constrains school districts by requiring that those reasons be preestablished as part of a district's official policies. The TCNA provides that "[t]he board of trustees of each school district shall establish policies consistent with this subchapter which shall establish reasons for nonrenewal." Tex. Educ.Code § 21.203(b). Thus, a decision not to renew a particular teacher's contract is not entirely discretionary, but rather must be predicated on one or more previously established reasons. A decision not predicated on one of the district's preestab-lished reasons is ineffectual, and the teacher's contract is renewed by operation of law. See id. at § 21.204(b). Thus, in Seifert v. Lingleville Independent School District, we held that a teacher's contract was renewed by operation of law when the justification given by the school district for nonrenewal was not among its preestab-lished reasons. 692 S.W.2d 461 (Tex.1985).
The requirement of preestablished reasons for nonrenewal found in the TCNA is just the type of restraint on State discre-
tion the federal courts have recognized as providing a property interest. For instance, in Cleveland Board of Education v. Loudermill, the United States Supreme Court held that an Ohio statute provided a constitutionally protected property interest in continued employment because discharge of civil servants was permissible only for the reasons listed in the statute. 470 U.S. 532, 539 n. 4, 105 S.Ct. 1487, 1491 n. 4, 84 L.Ed.2d 494 (1985). Similarly, in Sanchez v. City of Santa Ana, the Ninth Circuit addressed a city charter provision and noted that "by providing that an employee may be demoted for certain specified reasons, [the provision] implicitly restricted the City's authority to demote an employee to the specified reasons." 915 F.2d 424, 429 (9th Cir.1990) cert. denied, — U.S. -, 112 S.Ct. 66, 116 L.Ed.2d 41 (1991). Thus, the court held that Sanchez enjoyed a constitutionally protected property interest. Id.; see also Gorman v. Robinson, 977 F.2d 350, 357 (7th Cir.1992) (recognizing property interest because housing authority policy allowed dismissal only for just cause); Linton v. Frederick County Bd. of County Comm'rs, 964 F.2d 1436, 1438-39 (4th Cir.1992) (recognizing property interest because employees could be dismissed only for cause as specified in county personnel rules); Moffit v. Town of Brookfield, 950 F.2d 880, 885 (2nd Cir.1991) (recognizing property interest because collective bargaining agreement between town and police allowed dismissals only for just cause); Richardson v. Felix, 856 F.2d 505, 509 (3d Cir.1988) (recognizing property interest because statute allowed dismissal, demotion, or suspension only for cause); Nicholson v. Gant, 816 F.2d 591, 597 (11th Cir.1987) (per curiam) (recognizing property interest because county commission policies required notice of reasons prior to dismissal of employees); Schaper v. City of Huntsville, 813 F.2d 709, 713-14 (5th Cir.1987) (recognizing property interest because police captain could only be dismissed for just cause); Sheets v. Johnson, 805 F.2d 767, 772 (8th Cir.1986) (recognizing property interest because statute provided for merit review and personnel manual stated reasons for termination); Findeisen v. North East Indep. Sch. Dist., 749 F.2d 234, 237 (5th Cir.1984) cert. denied, 471 U.S. 1125, 105 S.Ct. 2657, 86 L.Ed.2d 274 (1985) (recognizing property interest because teacher could be discharged only "for lawful cause" or "because of necessary reduction of personnel"). The fact that the State retains some discretion in its decisions does not preclude the existence of a property interest. The Supreme Court determined in Loudermill that the statute at issue provided a property interest in continued employment, even though the broad categories of reasons for dismissal listed in the statute compelled subjective decision making. 470 U.S. 532, 539 n. 4, 105 S.Ct. 1487, 1491 n. 4, 84 L.Ed.2d 494 (1985). Specifically, under the statute, civil servants could be dismissed only for the reasons of: "incompetency, inefficiency, dishonesty, drunkenness, immoral conduct, insubordination, discourteous treatment of the public, neglect of duty, violation of such sections or the rules of the director of administrative services or the commission, or any other failure of good behavior, or any other acts of misfeasance, malfeasance, or nonfeasance in office." Id.; see also Cummings v. South Portland Housing Auth., 985 F.2d 1, 3 (1st Cir.1993) (recognizing property interest because housing authority manual stated that all actions affecting employees would be based solely on "merit" and permitted dismissal only for "unsatisfactory performance" or a "substantial violation" of regulations).
Nor does the fact that the reasons for nonrenewal are not listed in the TCNA itself, but rather are established by school-district trustees, preclude the existence of a property interest. In Goudeau v. School District Number 37 of Oklahoma City, the Tenth Circuit recognized a property interest in favor of certain employees of boards of education, although the permissible reasons for a board to suspend, demote, or terminate those employees were not listed in the statute itself, but rather were established by the boards themselves. 823 F.2d 1429, 1430 (10th Cir.1987). In Gou-deau, the property interest derived from a statute declaring that "a support employee who has been employed by a local board of education for more than one (1) year shall be subject to suspension, demotion or termination only for cause, as designated by the policy of the local board of education...." Id. Accordingly, whether a statute enumerates reasons for the removal of an entitlement or requires that reasons be enumerated elsewhere is not constitutionally significant.
By requiring preestablished reasons, the TCNA limits a school district's discretion in decisions not to renew teachers' term contracts. We conclude that this limit on the school district's discretion is sufficient to create a property interest entitled to due process protection.
Our conclusion comports with post-ife decisions in Texas. We have previously acknowledged that the TCNA "was specifically designed to give teachers due process rights when a school district decides not to renew the teacher's contract of employment." Central Educ. Agency v. George West Indep. Sch. Dist., 783 S.W.2d 200, 202 (Tex.1989). The Commissioner has also interpreted the TCNA in the same manner. See Salinas v. Ben Bolt-Palito Blanco Indep. Sch. Dist., No. 202-Rla-882 (Comm'r Educ. April 29, 1983) p. 17; see also William T. Armstrong & Rosemary L. Hollan, Teacher Termination and Nonrenewal in Texas Public Schools, 16 St. MaRy's L.J. 783, 793 (1985) (recognizing TCNA's provision of property interest in reemployment). Even the District itself has conceded that the TCNA provides term-contract teachers with a constitutionally protected property interest.
For these reasons, we hold that the TCNA creates a property interest in term-contract renewal for teachers, warranting due process protection. Because the District failed to provide reasons for nonre-newal, it violated Grounds' right to procedural due process. We, therefore, reverse the judgment of the court of appeals and remand the cause to that court for consideration of the points of error it did not previously address.
Concurring opinion by GONZALEZ, J.
Dissenting opinion by HECHT, J., joined by PHILLIPS, C.J.
. Grounds makes only a passing reference to the Texas Constitution in a point of error, and did not brief or argue the subject. Therefore, we limit our opinion to his claim under the Fourteenth Amendment to the United States Constitution.
. This property interest exists despite the fact that a teacher has no contractual right to reemployment. See Perry v. Sinderman, 408 U.S. 593, 601, 92 S.Ct. 2694, 2699-2700, 33 L.Ed.2d 570 (1972).
. We therefore disagree with the Fifth Circuit's decision in English v. Hairston, which held to the contrary. 888 F.2d 1069, 1070 (5th Cir.1989). English relied on Hix which correctly stated the law prior to the TCNA's enactment but no longer accurately reflects a term-contract teacher's interest in renewal.