Bietz v.
Filed 1/28/13 Bietz v. Westwood U. Sch. Dist. CA3
NOT TO BE PUBLISHED
California
Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or
relying on opinions not certified for publication or ordered published, except
as specified by rule 8.1115(b). This
opinion has not been certified for publication or ordered published for
purposes of rule 8.1115.
IN THE COURT OF
APPEAL OF THE STATE OF CALIFORNIA
THIRD APPELLATE
DISTRICT
(Lassen)
----
HENRY BIETZ,
Plaintiff and Appellant,
v.
WESTWOOD UNIFIED SCHOOL
DISTRICT,
Defendant and Respondent.
C070217
(Super. Ct. No. 51231)
The trial
court sustained the Westwood Unified
School District’s (District)
demurrer without leave to amend, finding that the District’s Board policy 2121,
patterned on Government Code section 53260’s mandatory provisions,
provides the exclusive administrative
remedy for termination of Superintendent Henry Beitz’s contract for illegal
practices. The ruling, in effect, means
that section 53260, and therefore policy 2121, bar litigation of a
claim for damages as a matter of law
if the District terminates a superintendent’s contract because it believes the
superintendent has engaged in fraud, misappropriation of funds, or other
illegal fiscal practices and its belief is confirmed by an independent
audit. (Gov. Code, § 53260, subd.
(b)(1).)
We asked
for supplemental briefing on the threshold and dispositive issue in the
case: whether Government Code section
53260, which is entitled “Maximum cash settlement provisions in contracts of
employment; Settlement on termination of contract of district superintendent of
schools†and refers, by its terms, to “settlements†(Deering’s Ann. Gov. Code,
§ 53260 (2004 ed.)), applies at all to a lawsuit brought pursuant to various
provisions of the Education Code and does not involve a settlement.
471 (Page).) The District argues that the term
“settlement,†as used in section 53260, subdivision (a) and construed by
the court in Page, has an entirely
different meaning as used in subdivision (b).
We disagree and accordingly reverse.
FACTS
On appeal
of a judgment of dismissal following the sustaining of a demurrer without leave
to amend, we must assume the truth of the facts alleged by the plaintiff,
including exhibits attached to the complaint.
(Schifando v. City of
(2003) 31 Cal.4th 1074, 1081; Satten
v. Webb (2002) 99 Cal.App.4th 365, 374-375.) We can also consider matters subject to
judicial notice. (Zelig v. County of
(2002) 27 Cal.4th 1112, 1126.) Our
recitation of the facts, therefore, is based upon the pleadings and requests
for judicial notice.
The
District hired Bietz in 2000 to serve as its superintendent for a four-year
term and extended the term of the contract in 2004 and again in 2008. In 2001 the District chartered the Westwood
Charter School (WCS). Bietz alleges that
the District thereafter “failed to comply with its statutorily required
oversight of WCS.†In or about 2004
Bietz also became the superintendent of WCS while maintaining his position as
superintendent of the District.
According to the complaint, both boards approved this arrangement, in
which he headed a school he was charged with overseeing as a superintendent of
the District.
At issue is
the 2008 employment agreement. Two
paragraphs are pertinent. Paragraph g
provides: “This contract is subject to
all applicable laws and regulations of the State of California. The State Board of Education, and the
Governing Board of the Westwood Unified School District. [Sic.] Said laws, rules and regulations are hereby
made a part of the terms and conditions of this contract as though herein set
forth.†Paragraph h states: “It is further understood and agreed that the
Governing Board must comply with the provisions of State Law relating to
termination of a superintendent’s contract.â€
In December
2008 the Lassen County Office of Education entered into a contract with the
Fiscal Crisis & Management Assistance Team (FCMAT) to provide an Assembly
Bill No. 139 extraordinary audit to determine if the District and/or WCS was in
violation of statutes governing conflicts of interest (§§ 1090-1099) or
employment (§§ 1126-1127). After an
extensive investigation, FCMAT issued a report with detailed findings,
including violations of various Government Code sections. The trial court took judicial notice of the
report.
FCMAT found
that Bietz’s simultaneous employment as superintendent of the District and of
WCS, as well as his receiving payments for consulting services provided to
Westwood Charter School Services, Inc., was a three-way compensation scheme in
violation of conflict of interest laws.
FCMAT also found that Bietz failed to list this conflict of interest on
his form 700 statement of economic interest, which is required to be filed with
the state pursuant to sections 1126 and 87300 through 87313.
Bietz
alleges that FCMAT’s report “wrongly took issue†with his simultaneous
service. The Attorney General thereafter
initiated criminal proceedings for conflict of interest against Bietz. In March 2009 the District approved Bietz’s
request for a one-year leave of absence as superintendent of the District. About a year later, he informed the board
that he planned to return to work for the District on July 1, 2010.
On May 5,
2010, the interim superintendent, on behalf of the board, informed Bietz that
it had decided to rescind his employment contract. According to the written notification, “The
Board’s decision is based on a determination that you have breached your
contract with the District by (1) failing to properly disclose conflicts of
interest to the Board; (2) committing other violations of conflict of interest
laws while simultaneously serving as the District’s superintendent,
superintendent of the Westwood Charter School (‘WCS’) and a consultant to WCS;
(3) failing to disclose financial interests on your FPPC Form 700, Statement of
Economic Interest filings; (4) failing to properly notify laid off
certificated employees of their reemployment rights; and (5) failing to
properly hire certificated employees.â€
In a response
to the District’s notification, counsel for Bietz objected to the notice of
rescission, arguing that a rescission was inconsistent with a breach of
contract. The District thereafter
terminated Bietz’s employment contract as superintendent and gave him the
option of taking a teaching position.
Bietz filed
a complaint for breach of contract and
indemnity. The indemnity claim is no
longer at issue. He alleges that “[a]s a
direct and proximate result of [the District’s] actions, [Bietz] has suffered
damages consisting of loss of his salary and compensation, including retirement
benefits, damages to his income earning ability, damages to his professional
and personal reputation, and has suffered significant emotional distress, all
to be shown in a sum according to proof.â€
The trial court sustained the District’s demurrer without leave to amend
and Bietz appeals.
DISCUSSION
We begin,
as we must, with the express language of the statute at issue. Section 53260 states:
“(a) All
contracts of employment between an employee and a local agency employer shall
include a provision which provides that regardless of the term of the contract,
if the contract is terminated, the maximum cash settlement that an employee may
receive shall be an amount equal to the monthly salary of the employee
multiplied by the number of months left on the unexpired term of the
contract. However, if the unexpired term
of the contract is greater than 18 months, the maximum cash settlement shall be
an amount equal to the monthly salary of the employee multiplied by 18.
“(b)(1)
Notwithstanding subdivision (a), if a local agency employer, including an
administrator appointed by the Superintendent, terminates its contract of
employment with its district superintendent of schools that local agency
employer may not provide a cash or noncash settlement to its superintendent in
an amount greater than the superintendent’s monthly salary multiplied by zero
to six if the local agency employer believes, and subsequently confirms,
pursuant to an independent audit, that the superintendent has engaged in fraud,
misappropriation of funds, or other illegal fiscal practices. The amount of the cash settlement described
in this paragraph shall be determined by an administrative law judge after a
hearing.
“(2) This
subdivision applies only to a contract for employment negotiated on or after
the effective date of the act that added this subdivision [fn. omitted].
“(c) The
cash settlement formula described in subdivisions (a) and (b) are maximum
ceiling on the amounts that may be paid by a local agency employer to an
employee and is not a target or example of the amount of the cash settlement to
be paid by a local agency employer to an employee in all contract termination
cases.â€
In
the statute, its purpose, and the relevant legislative history. “Applying plain and commonsense meaning to
the statute’s words [citation], the payment limitations of section 53260 apply
to any ‘settlement’ a public employee ‘may receive’ under his or her contract
in the event that contract is severed or terminated before the end of the
contract term. Use of the permissible
verbal auxiliary ‘may’ suggests the statute does not mandate that the employee
receive any of the specified cash and benefits upon contract termination. [Citations.]
That conclusion is bolstered by subdivision (c) of section 53260,
which provides that the formulas of subdivisions (a) and (b) are ‘maximum
ceiling[s],’ not target or example amounts.
Thus, depending on the number of months remaining on the unexpired term
of the employee’s contract, the employer and employee are entitled to negotiate
a cash settlement of any amount up to the specified maximum.†(Page,
supra, 180 Cal.App.4th at pp.
488-489.)
The court
divined the purpose of the statute from the legislative history. “[T]he Assembly Local Government Committee
analysis states: ‘[T]he author has
introduced this bill to address the concern that local governments are using
their limited public resources to “buy out†the contracts of highly paid
executives.’ (Assem. Com. on Local
Government, Analysis of Sen. Bill No. 1972 (1991-1992 Reg. Sess.) as amended
June 24, 1992, p. 3.) It provides the
following background: ‘Most of the
nearly 1.4 million Californians who work for local agencies . . . serve in
civil service systems. However, top
administrators and managers usually serve at the pleasure of local elected
officials. Some of these executive
officials, such as school superintendents . . . have employment contracts with
their local agency employers.’ (
report of the state Auditor General, which noted that school and community
college districts enter into employment contracts with their superintendents,
and listed the average net settlement payments made upon early termination of
the contract, as well as the remaining contract periods. (Ibid.) The Auditor General was concerned about the
impact of early renegotiation, renewal and contract extension practices on the
size of monetary settlements occurring upon early contract termination.†(Page,
supra, 180 Cal.App.4th at pp.
490-491.)
The Senate
Local Government Committee expressed similar concerns about the amount of
settlement payments. The committee
analysis explains: “Some observers are
troubled that local governments use their scarce public revenues to ‘buy out’
the contracts of highly paid executives. . . .
Although relatively rare, some local governments buy-out their
executives’ contracts when they fire them.
Even when school districts renew superintendents’ contracts early, they
sometimes turn around and let them go.
These practices produce cash settlements that disturb public
watchdogs. One hospital district
terminated its chief executive 32 months before the contract expired, paying
$206,042 in settlement. A community
college district paid its superintendent $126,000 to settle the seven remaining
months of an unexpired contract. While
no-cut contracts may be fine for professional sports figures, local governments
should not pay their former executives not to work. S.B. 1972 imposes statewide standards on
local contracts to limit excessive cash settlements.†(Sen. Com. on Local Government, Analysis of
Sen. Bill No. 1972 (1991-1992 Reg. Sess.) p. 2.)
Interestingly,
there is no mention in Page or in its
analysis of the Senate or Assembly Committees of any intention to abolish an
employee’s rights to bring civil actions under the Education Code or the
Government Code. Rather, the purpose was
to place maximum ceilings on settlement payments whether the employer
unilaterally terminated the contract, or the employer and employee came to an
agreement. The court in
speak to the underlying reasons for
the contract termination or the nature of legal claims, if any, asserted by the
public employee in connection with such termination; it is silent on those
points. On its face, the statute’s
application is unqualified: it is not
conditioned by or limited to any particular circumstance prompting the
termination and settlement of the public employee’s contract. Rather, its cash and noncash settlement
limitations apply ‘if the contract is terminated’ regardless of the underlying
reasons for termination or the employee’s legal claims he or she may possess at
the time of termination.†(
considered, but rejected, having the statutory limitations apply only to
circumstances in which the parties mutually agreed to terminate the contract,
presumably instances not involving the employee’s assertion of legal claims or
causes of action.†(Id. at pp. 491-492.)
Nevertheless,
the District argues that the use of “settlements†in subdivision (b) of
section 53260 does not have the same plain and commonsense meaning it has in
subdivision (a) of that section, the particular subdivision at issue in
The District argues that to use the same definition of the word
“settlement†would render subdivision (b) meaningless. In its supplemental letter brief, the
District explains: “This interpretation
of the term ‘settlement’ in subdivision (b) is bolstered by the fact
subdivision (b) only applies if the public entity believes the
superintendent has engaged in fraud, misappropriation of funds or other illegal
fiscal practices. This subdivision does
not require the superintendent to agree he or she has engaged in
such misconduct, only that the public entity holds this belief. It would be a rare day that a superintendent
admits or concedes to such misconduct such that they would agree to limit their
compensation to no more than 6 months as called for by subdivision (b).â€
On its
face, we must reject the notion that the Legislature would use a word as
important as “settlement†in the title and one subdivision of a statute and,
without any indication or explanation, use the same word to mean something
entirely different in the very next subdivision. Such an argument violates the fundamental
rule of statutory construction that compels us to apply the plain meaning of
the words used in the statute.
Nor do we
accept the District’s argument that subdivision (b) of section 53260 is
meaningless if we construe “settlement†to mean settlement. The District contends that requiring the
parties to have an agreement as to the amount in dispute does not make sense in
the context of subdivision (b), in which they are required to go in front of an
administrative law judge for a formal hearing during which each side vigorously
advocates its position. The District
ignores the statutory language which limits any hearing by an administrative
law judge to the determination of “[t]he amount of the cash settlement
described in this paragraph . . . .†The
“cash settlement described in this paragraph†is earlier defined as being an
amount paid following termination of a contract of employment by way of a
“settlement,†which may not be greater than an amount equal to six months’
salary. (§ 53260, subd. (b).)
It is not
for us to determine how frequently a superintendent would be willing to settle
his claims for a maximum of six months’ salary when a district believes he has
been engaged in financial irregularities, or to assess the wisdom of the
Legislature’s statutory scheme. Rather,
our job is to construe the statutory language in context and to effectuate the
purpose of the law. The District assumes
that “settlement†means the parties have to agree on a settlement amount. Not so.
A superintendent may be willing to forego his right to bring a civil
claim for damages and submit the determination as to the amount of the damages,
subject to the ceiling, to an administrative law judge. Thus, section 53260 is silent as to the
superintendent’s choice of remedies and says nothing about curtailing his right
to pursue a civil claim instead of settling with the District. Rather, the purpose of the law is to restrain
the District’s generosity, not to deprive an employee of a
opportunity to prove damages in excess of the ceiling imposed by section 53260.
We
conclude, therefore, that the demurrer without leave to amend was improvidently
sustained. The statute upon which the
District premised its demurrer limits cash settlements in the event a district
terminates a superintendent’s contract early; it does not apply to a civil
action initiated by the aggrieved superintendent. There is nothing in the language or history of
section 53260 to suggest that the Legislature intended to abolish an employee’s
civil claim for damages. Rather, the
statute expressly states, and therefore we must divine the Legislature’s intent
to mean, that section 53260 caps settlement payments. The trial court erred by applying the statute
so as to foreclose Bietz from pursuing whatever rights he has to a
sought to be addressed by the statute -- a huge settlement payment to someone
the District believes has engaged in financial improprieties.
DISPOSITION
The
judgment is reversed. Bietz shall
recover costs on appeal. (Cal. Rules of
Court, rule 8.278(a)(1).)
RAYE , P. J.
We concur:
BLEASE , J.
MAURO , J.
name="_ftn1" title="">[1] All further statutory references are to the
Government Code unless otherwise designated.
name="_ftn2" title="">[2] We need not, therefore, address the remainder
of the issues raised in the briefs.
