Dist T.L. v. >Brentwood> >Union> >School>.

















Filed 3/26/13 Dist T.L. v. Brentwood Union School. CA1/4

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>NOT TO BE PUBLISHED IN OFFICIAL REPORTS

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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opinion has not been certified for publication or ordered published for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



FIRST
APPELLATE DISTRICT



DIVISION
FOUR




>

T.L. et al., Plaintiffs and Appellants, v. BRENTWOOD UNION SCHOOL DISTRICT et al., Defendants and Respondents.

A133428 (Contra Costa County Super. Ct. No. 1003226)

T.L, individually
and on behalf of her minor son, N.L., sued the Brentwood Union School District
(District) for, among other things, breach of contract and retaliation in
violation of the Unruh Civil Rights Act
(Civ. Code, § 51 et seq. (Unruh Act)).
On appeal, T.L. contends the trial court erred in sustaining the
District’s demurrer to her causes of action for href="http://www.fearnotlaw.com/">breach of contract and Unruh Act
violations. We affirm in part and
reverse in part.

>I.
FACTUAL BACKGROUND

N.L.
is a child eligible for services under the Individuals with Disabilities
Education Act (20 U.S.C. § 1400 et seq. (IDEA), based on his
classification as “autistic-like.” He
received services from the District for several years, beginning in 2005. A dispute arose among the District, T.L. on
behalf of N.L., and T.L. in her individual capacity, regarding those
services. On January 29, 2010, the parties
entered into a Compromise and Release
Agreement (Agreement) to resolve the dispute, and formalized a new
Individualized Education Plan (IEP) for N.L. that same day. The District’s Board approved and ratified
the Agreement on February 10, 2010. The
agreement was to last two years, unless the family moved its residence outside
the District’s boundaries.

Under
the IEP, services were to run from January 29 through July 31, 2010. The Agreement placed a monetary cap on
services, and the District agreed to pay $23,500 for independent assessments,
attorney fees, and missed occupational therapy.
T.L. agreed to pay all other costs related to special education. As well, the Agreement specified that the
District’s obligation to fund IEP services was conditioned on continued
residency within the District: “If, at
any time covered by this Agreement, Parents and [N.L.] move their residence, as
defined by California Government Code [section] 244,href="#_ftn1" name="_ftnref1" title="">[1]
outside the District’s geographical boundaries during the 2009-2010 school year
or 2010-2011 school year, the District’s obligation to fund IEP services will
immediately cease.”

The
Agreement also included a general release pursuant to which T.L. released and
discharged the District “from any and all known or unknown rights, claims,
demands, and causes of action pursuant to the Individuals with Disabilities
Education Act, as amended, Section 504 of the Rehabilitation Act, and related href="http://www.mcmillanlaw.com/">California law (including, but not
limited to: assessment, placement,
program and services, compensatory education, reimbursement and attorney’s
fees) in connection with [N.L.’s] educational program including past, present
and future claims . . . . , except that the parties reserve the right to seek
enforcement of the Agreement . . . .”

Several
months into the Agreement T.L. filed a complaint with the California Department
of Education (CDE) on allegations the District was not complying with the terms
of the Agreement and the IEP. CDE
apparently made several findings against the District and ordered corrective
actions.

Meanwhile,
toward the end of June 2010, the District asked T.L. for proof of
residency. On September 7, 2010, the
District notified T.L. that the Agreement was “ ‘no longer in
effect’ ” due to her breaches. The
District advised T.L. on September 24 that its investigation revealed she was
no longer a resident. On October 1,
2010, the District notified T.L. of the right to appeal the residency finding
and provided a copy of the Board’s residency policy. Additionally, District personnel provided
reasons for the residency determination.

The
residency policy states: “If the
Superintendent or designee, upon investigation, determines that a student’s
enrollment is based on false evidence of residency, he/she shall revoke the
student’s enrollment. Before any such
revocation, the parent/guardian shall be sent written notice of the facts
leading to the decision. This notice
shall state the parent/guardian’s right, within 10 school days, to schedule a
meeting with a hearing officer to
inspect supporting documents, rebut district evidence, question any district
witnesses, . . . on the student’s behalf. . . . [¶] If the parent/guardian
fails to schedule the above meeting, the student’s enrollment shall be revoked
11 school days after the date of the notice.”
Further, if the parent does meet with the hearing officer, the parent
has the right to appeal the hearing officer’s decision to the Board, with
rights to be represented, rebut district evidence, question any district
witness, and present documentary evidence and witness testimony. The Board’s decision is final.

T.L.
received a letter from the District on October 20, 2010, informing her that the
District “was terminating services for N.L.”

In
November 2010, T.L. sued the District and three administrators alleging breach
of the Agreement and other causes, and filed a first amended complaint
following the District’s demurrer. In
its tentative ruling on the District’s demurrer to the first amended complaint,
the trial court indicated it would sustain the demurrer without leave to amend,
holding that T.L. failed to exhaust the District’s administrative process
concerning its residency decision and failed to plead the futility exception to
the exhaustion requirement. After oral
argument the court permitted T.L. leave to amend, but made it clear it had
“already ruled on the exhaustion issue and the futility exception.”

Ruling
on the District’s demurrer to the second amended complaint, the trial court
overruled the demurrer to the causes of action for breach of the Agreement and
breach of the implied covenant of good faith and fair dealing, but only as to
breaches that occurred between March 2010 and August 2010—i.e., prior to
termination of the Agreement. The court
held that T.L. could not challenge the District’s termination of services to
her son based on the District’s residency determination, because she failed to
exhaust her administrative remedies. It
sustained the demurrer without leave to amend to the third and fourth causes of
action for declaratory relief because both causes sought a judicial
determination of the parties’ rights and obligations concerning termination of
N.L’s services due to the District’s residency finding. As to these causes of action, T.L. similarly
failed to exhaust administrative remedies
with respect to that determination. As
to the remaining causes of action, the demurrer was sustained without leave to
amend for varying reasons: the fifth cause
of action for declaratory relief because it did not frame a present, active
controversy; the sixth cause for retaliation because defendants were immune
under the Tort Claims Act; the seventh cause for violation of Civil Code
section 52.1 because T.L. failed to plead the essential elements of such a
claim; and the eighth claim for violation of the Unruh Act because the general
release precluded the claim.

On
appeal T.L. seeks reversal of the trial court’s orders limiting her breach of
contract claims to the period March 2010 to August 2010 and barring her from
arguing that the District’s appeal procedure was inadequate. As well, she appeals the order sustaining the
demurrer to the Unruh Act cause of action.

>II.
DISCUSSION

A. Standard
of Review

When
reviewing the sufficiency of a complaint against a demurrer, we treat the
demurrer as admitting all properly pleaded material facts, but do not assume
the truth of deductions, contentions, or legal conclusions. As well, we liberally construe the pleading in
the interest of substantial justice between the parties, affording the
complaint a reasonable interpretation and reading the allegations in
context. (Arce v. Kaiser Foundation Health Plan, Inc. (2010) 181 Cal.App.4th
471, 481.) Further, when the demurrer is
sustained, we determine de novo if the factual allegations are sufficient to
state a cause of action under any legal theory.
(Id. at p. 482.)

B. Breach
of Contract Claims

T.L.
maintains that the trial court arbitrarily restricted claims to the period
March 2010 to August 2010, contrary to allegations in the second amended
complaint. Specifically, that pleading
alleged that on August 23, 2010, N.L. began attending Springstone School and
the District to date had not reimbursed T.L. for her $3,000 deposit. (The second amended complaint was filed in
May 2011.) Additionally, the District
failed to pay under the terms of the Agreement for Springstone, from October
2011 and thereafter.

The
District counters that the initial IEP, which was incorporated into the
complaint, expired on July 31, 2010.
However, the Agreement is not limited to paying for services related to
that IEP. Further, the District claims
T.L. did not cite any breaches occurring after July 31, 2010, but that is not
the case, as shown above. The District
additionally argues that by September 24, 2010, its investigation revealed T.L.
was no longer a resident, and under the terms of the Agreement, its obligations
immediately ceased. However, the
complaint states that the District notified T.L. on October 1, 2010, that she
had a right to appeal the residency determination within 10 days and provided
her with a copy of its residency policy.
That policy provides that a student’s enrollment is revoked 11 school
days after the date of notice of the right to schedule a meeting with a hearing
officer following a residency determination.
By the District’s own alleged actions, N.L.’s enrollment was not revoked
until expiration of the 11 day period—in other words on or about October 12,
2010.

On
appeal, T.L.’s argument is this: the
second amended complaint alleges material breaches of the contract that
occurred prior to October 12, 2010,
the date it asserts the District’s termination of residency was effective. We conclude that the trial court erroneously
limited T.L.’s contract-related claims to a period ending August 2010.href="#_ftn2" name="_ftnref2" title="">[2] Accordingly, on this narrow issue we must
reverse.href="#_ftn3" name="_ftnref3" title="">[3]

C. Failure to Exhaust Administrative Remedies

T.L.
next challenges the trial court’s determination that she failed to exhaust her
administrative remedies with respect to the District’s residency
determination.

“A
demurrer may properly be granted based on the failure to adequately plead an
exhaustion of administrative remedies. (Kirkpatrick
v. City of Oceanside (1991) 232 Cal.App.3d 267, 277, 283.) A plaintiff must exhaust the administrative
remedies available before resorting to the courts. The issue is one of jurisdiction. (Abelleira v. District Court of Appeal
(1941) 17 Cal.2d 280, 293.) The
exhaustion requirement applies to statutory administrative remedies and also to
internal grievance procedures of public and private organizations. (Westlake Community Hosp. v. Superior
Court (1976) 17 Cal.3d 465, 474–477; Moreno v. Cairns (1942) 20
Cal.2d 531, 535. . . .)” (Shuer v.
County of San Diego (2004) 117 Cal.App.4th 476, 482.)

The parties agree that Education
Code section 48200 establishes the general rule under California law that the
school district responsible for the education of a child between the ages of 6
and 18 is the district in which the child’s “parent or legal guardian”
resides. (See Katz v. Los
Gatos–Saratoga Joint Union High School Dist. (2004) 117 Cal.App.4th 47, 57 (“Section 48200 embodies the
general rule that parental residence dictates a pupil’s proper school
district.”) The parties disagree,
however, about how residency should be determined. The District maintains that T.L. was
obligated to exhaust her administrative remedies by challenging its residency
determination as set forth in its residency policy.

Conversely, T.L. argues that the
District’s internal residency procedures cannot be utilized to “trump” federal
and state procedures for removing a disabled child’s special education
rights. She maintains that the gravamen
of her claims has nothing to do with residency; rather the issue of residency
is a defense raised by the District to avoid its obligations under the
Agreement. As well, T.L. asserts that
even if exhaustion was required here, exhaustion would have been futile because
she was not provided with a fair and adequate opportunity to challenge the
residency determination. T.L. complains
that the District refused to produce the witnesses she wanted to question and
that the District intended to call a witness who also would have served as the
hearing officer.

Preliminarily, we agree with T.L.
that residency has nothing to do with the claims she raised regarding the
District’s alleged breaches of contract.
Residency does not involve a programmatic change in the IEP or an assessment
of the student’s disability to evaluate qualification for special education
service. Rather, residency is a basic
requirement for all educational services, including students with special
education needs. (See Ed. Code, § 48200;
Katz v. Los Gatos–Saratoga Joint Union High School Dist., supra, 117
Cal.App.4th at p. 57.) Although T.L. did
not sue under the IDEA, she appears to argue that IDEA regulations should
govern her breach of contract claim.
Even if true, it would not affect the residency issue. For example, in Roxbury Township. Bd. of
Ed. v. Milford Bd. of Ed. (N.J.
1995) 662 A.2d 976, the court observed that residency may be relevant to
the question of which district would be obligated to pay for compliance with
the IDEA, but residency was not governed by the IDEA; it was “a matter of local
law.” (Id. at p. 982.) Here, “local law” provides that children 6 to
18 years old who go to public school must attend schools in the district in
which their parents or guardians reside.
(Ed. Code, § 48200.) Children
whose parents live outside a school district may not attend school in that
particular district. (Anselmo v.
Glendale Unified School Dist. (1981)
124 Cal.App.3d 520, 522-523; 67 Ops.Cal.Atty.Gen. 452 (1984).) T.L. cites no authority nor have we found any
cases supporting the proposition that the IDEA requires a school district to
provide special education services to students who reside outside its
borders. There simply is no basis for
holding that the determination of residency under the IDEA or the Education
Code should be different from the ordinary determination of residency. (Union
School Dist. v. Smith (9th Cir. 1994) 15 F.3d 1519, 1525.) T.L. provides no authority exempting N.L.
from the residency requirement or the District’s policies and procedures for
enforcing that requirement.

Once the District notified T.L. that
it was revoking N.L.’s enrollment, she was required to follow the District’s
procedures for challenging its residency determination or suffer the
consequences. Inasmuch as T.L. failed to
appeal the District’s decision, she cannot now challenge this
determination. While it is true that the
rule requiring exhaustion of internal administrative remedies does not apply
where an administrative remedy would be futile (County of San Diego v. State
of California (1997) 15 Cal.4th 68, 89),
“[t]he futility exception . . . is a very narrow one” (County of
Contra Costa v. State of California (1986) 177 Cal.App.3d 62, 77). “In order to invoke the futility exception, a
plaintiff must show ‘ “that the [agency] has declared what its ruling will
be on a particular case.” ’[Citation.]
A plaintiff need not pursue administrative remedies where the agency’s
decision is certain to be adverse.
[Citation.]” (Howard v. County
of San Diego (2010) 184 Cal.App.4th 1422, 1430.) T.L. has failed to demonstrate that such
futility exception has any application here.

D. Unruh Claims

T.L.
maintains that the trial court erroneously determined that the release barred
her Unruh Act claims. This matter is one
of contractual interpretation, making our review de novo, where, as here, there
is an absence of conflicting extrinsic
evidence. (Parsons v. Bristol Development Co. (1965) 62 Cal.2d 861,
865-866.)

Interpretation
of a release or settlement is governed by the same legal principles generally
applicable to all contracts. (>General Motors Corp. v. Superior Court
(1993) 12 Cal.App.4th 435, 439.) Thus,
we look first to the literal terminology of the contract itself to determine
and to effectuate the intention of the parties.
(Civ.Code, §§ 1638, 1639; Pacific Gas & E. Co. v. G. W. Thomas
Drayage etc. Co. (1968) 69 Cal.2d 33, 38.)
We enforce this outward expression of the agreement, rather than a
party’s subjective unexpressed intention.
(Edwards v. Comstock Insurance Co. (1988) 205 Cal.App.3d 1164,
1169; see also Winet v. Price (1992) 4 Cal.App.4th 1159,
1165-1167.)

The relevant language of the release
in the instant case is as follows:
“Parents . . . hereby fully release and discharge the District
. . . from any and all known or unknown rights, claims, demands, and
causes of action pursuant to the [IDEA], as amended, Section 504 of the
Rehabilitation Act, and related California Law . . . >in connection with N.L.’s educational
program including past, present and future claims, through the end of the
2011 extended school year, except that the parties reserve the right to seek
enforcement of the Agreement . . . . [¶] In the event that
one party breaches the Agreement . . . the non–breaching party is
entitled to all remedies legally available to them, including attorney fees
incurred.” (Italics added.)

Although releases of future claims
do not categorically violate public policy, T.L., relying on Civil Code
section 1668, asserts that interpreting the instant release as applying to
unknown future claims improperly exempts the District for liability for its
intentional wrongful acts in violation of the href="http://www.fearnotlaw.com/">Unruh Act. Civil Code section 1668 provides: “All
contracts which have for their object, directly or indirectly, to exempt anyone
from responsibility for his own fraud, or willful injury to the person or
property of another, or violation of law, whether willful or negligent, are
against the policy of the law.” Taken
literally, this statute would prevent settlement of most civil litigation, in
contradiction of the strong public policy in favor of settlement. Public policy does not oppose “private,
voluntary transactions in which one party, for a consideration, agrees to
shoulder a risk which the law would otherwise have placed upon the other party
. . . .” (Tunkl v. Regents of
University of California (1963) 60 Cal.2d 92, 101.) The parties, while represented by counsel,
expressly contracted to bear the risk of loss of unknown claims. Civil Code section 1668 does not apply to
invalidate this Agreement as to T.L.’s future Unruh Act claims.

The cases cited by T.L. do not alter
our conclusion that the general release is valid. For example, in Baker Pacific Corp. v.
Suttles (1990) 220
Cal.App.3d 1148, 1153, an asbestos removal company required its employees to
sign a release for fraud and intentional acts as a condition of
employment. In finding the release
invalid under Civil Code section 1668, the court explained that: “This ‘pistol
to the head’ approach to an employment relationship, where hiring is
conditioned on acceptance of statutorily proscribed terms, is not acceptable to
us.” (Id. at p. 1155.)

Similarly, inapposite is >Health Net of California, Inc. v. Department
of Health Services (2003) 113 Cal.App.4th 224, 226-227 (>Health Net), which involved a contract
between the Department of Health Services and a contractor that contained a
clause purporting to prohibit damages with respect to any violation of
statutory or regulatory law. The
appellate court deemed the exculpatory provision to be unenforceable as against
public policy under Civil Code section 1668.
(Id. at p. 227.)

Baker and >Health Net are distinguishable from the
instant case in several important respects.
Here, the release was not a contract of adhesion, forcing T.L. to take
it or leave it. Nor did the release
purport to exempt the parties from any statutory or regulatory provisions. Finally, neither Baker nor Health Net
involved a negotiated settlement agreement.
“It is important to recognize there is a strong public policy favoring
settling of disputes. [Citation.] ‘We note that there is a well-established
policy in the law to discourage litigation and favor settlement. Pretrial settlements are highly favored
because they diminish the expense of litigation.’ [Citation.]
Additionally, “Freedom of contract is an important principle, and courts
should not blithely apply public policy reasons to void contract
provisions.’ ” (Kaufman v.
Goldman (2011) 195 Cal.App.4th 734, 745.)


T.L. also maintains that even if the
release is not proscribed by Civil Code section 1668, her Unruh Act claim is
excluded from the release because it is “limited only to claims ‘ in connection
with [N.L.’s] educational program . . . .’ ” T.L. cites no authority supporting her
interpretation, but merely restates the language from the release provision. The oft-stated goal of contract
interpretation is “ ‘to give effect to the parties’ mutual intentions as of the
time of contracting . . . .
Where contract language is clear and explicit and does not lead to
absurd results, we ascertain intent from the written terms and go no
further.’ [Citation.]” (Shaw
v. Regents of Univ. of California (1997) 58 Cal.App.4th 44, 53.) The plain language of the release states that
T.L. agreed to fully release all claims she had “in connection with N.L.’s
educational program including past, present and future claims . . . .” Yet, the second amended complaint alleges
that District retaliated against her because of her “advocacy . . .
about her son’s special education program and accommodations.” This allegation is plainly a claim made “in
connection with N.L.’s educational program . . . .” The existence of T.L.’s retaliation claim is
inherently dependent on her son’s educational program. Accordingly, T.L.’s retaliation claim
necessarily falls within the scope of the claims surrendered in the release.

III. DISPOSITION

For the reasons stated, the judgment
is affirmed in part, and reversed in part.
On remand, T.L. is entitled to proceed with her breach of contract
claims occurring before October 12, 2010.
Each party to bear their own costs on appeal.







_________________________

REARDON,
J.





We concur:





_________________________

RUVOLO, P. J.





_________________________

HUMES, J.