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Kilmer v. Dillingham School District (2/14/97), 932 P 2d 757
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Notice: This opinion is subject to correction before publication in the Pacific Reporter.
Readers are requested to bring errors to the attention of the Clerk of the Appellate
Courts, 303 K Street, Anchorage, Alaska 99501, telephone (907) 264-0607, fax (907)
264-0878.
THE SUPREME COURT OF THE STATE OF ALASKA
HENRY J. KILMER, )
) Supreme Court No. S-5674/5694
Appellant/ )
Cross-Appellee, ) Superior Court No.
) 3AN-90-2779 CI
v. )
)
DILLINGHAM CITY SCHOOL ) O P I N I O N
DISTRICT, )
)
Appellee/ ) [No. 4778 - February 14, 1997]
Cross-Appellant. )
______________________________)
Appeal from the Superior Court of the State of Alaska, Third
Judicial District, Anchorage,
Joan M. Woodward, Judge.
Appearances: Lee Holen, Law Offices of Lee Holen, Anchorage,
for Appellant/Cross-Appellee. Dale W. House, Lane, Powell,
Spears, Lubersky, Anchorage, for Appellee/ Cross-Appellant.
Before: Rabinowitz, Matthews, Compton, Eastaugh and Fabe,
Justices. [Moore, Chief Justice, not participating.]
EASTAUGH, Justice.
MATTHEWS, Justice, concurring.
FABE, Justice, concurring.
COMPTON, Justice, dissenting, with whom RABINOWITZ, Justice, joins as to
Parts I and II.
I. INTRODUCTION
Henry Kilmer, former superintendent and principal of the Dillingham City School
District (District), appeals a superior court decision upholding the decision of the Dillingham
City School Board (Board) to terminate his employment for good cause.
The superior court held that Kilmer's lawsuit was properly an administrative
appeal and that the appeal could proceed although it was filed more than thirty days after the
Board decided to terminate his employment. Having converted his claim to an administrative
appeal, the court held that Kilmer had no right to a jury trial. Kilmer appeals both the court's
decision finding the Board had good cause and its decision converting his case to an appeal. The
District appeals the court's decision to waive the time limit for filing an administrative appeal.
We affirm.
II. FACTS AND PROCEEDINGS
Kilmer began work as assistant superintendent for the Dillingham City School
District in 1982 and became superintendent in 1984. In 1987 Kilmer and the District extended
his contract for two years. The contract provided that "[e]ither party may terminate this contract
for good cause. With regard to terminating the Superintendent, good cause shall include, but
not be limited to, the grounds set forth in [AS] 14.20.170."(EN1) The parties later agreed that
under the contract "good cause"would include the statutory causes or "offenses similar to those
enumerated in the statute." The agreement also provided that Kilmer "waive[d] any rights as
set forth in [AS] 14.20.095 through [AS] 14.20.210, inclusive thereof,"(EN2) and waived any
right to the District's grievance procedures. The contract also stated that "[n]evertheless, the
Superintendent shall have the right to address the Board concerning any aspect of the
Superintendent's contract or concerning possible termination of the contract."
On January 4, 1988, the parties renewed Kilmer's contract for three years.
Kilmer drafted an addendum (Addendum One) that purported to memorialize the parties'
agreement. Addendum One was approved by Board President H. Sally Smith and School Board
Clerk Joyce Armstrong and was included in minutes later approved by the Board. It provided:
The following changes were approved at the January 4, 1988
Regular School Board Meeting:
1) Renew Superintendent's Contract for 3 years.
2) No salary determination at this time.
3) The use or reimbursement of all unused leave days at any
time.
Pursuant to Addendum One, Kilmer cashed in $19,200 in unused leave during the 1988 fiscal
year and another $5,100 in unused leave in June 1989.
Near the end of the 1987-88 school year, Dillingham's high school/middle school
principal announced his retirement, effective at the end of the school year. As superintendent,
Kilmer attempted to locate another principal. The Board interviewed, but rejected, two local
candidates.
On July 16, 1988, the Board met in special session to determine what to do about
the vacant principal position. Board member Jackson McCormick was not present. Kilmer and
the Board agreed that Kilmer would act in a dual role as superintendent and principal. The
parties agreed that Kilmer would receive additional compensation for these extra duties. Kilmer
suggested that the Board retroactively purchase pension benefits for him under the Alaska
Teachers' Retirement System (TRS). (EN3) At the time, the parties did not know the precise
cost of purchasing the retirement years for which Kilmer was eligible. Kilmer testified that he
informed the Board that the cost of purchasing half of the years for which he was eligible would
be $30-40,000. Board members testified later, and the trial court found, that the Board believed
it had agreed to pay Kilmer an additional $30,000 for the 1988-89 school year. The parties
agreed that if the arrangement worked out, it would be repeated the following year, for a total
of ten years of purchased credit.
Kilmer drafted a second contract addendum (Addendum Two). It stated:
The following changes were approved at the July 16, 1988 Regular
School Board Meeting:
1. Base Salary for FY 89 will remain the same as in FY 88.
2. A net sum equal to back retirement years will be paid the
Superintendent divided over two years upon assuming the Principal
duties.
Board members Smith and Armstrong approved Addendum Two on August 5. The same day,
the Board conferred upon giving Kilmer the principal's position. The Board approved the July
16 and August 5 meeting minutes at the regular August 15 meeting.
The District business manager, Marie Wheeler, consulted a six-month old TRS
report and determined that the cost of purchasing five years of credit would be approximately
$50,000. Kilmer received this amount in two lump sums, receiving $25,000 on August 11, and,
after Wheeler had consulted with TRS and determined the exact cost of purchasing five years
of pension credit, Kilmer received a second check, for $24,581, on November 7. Both checks
were made out by business manager Wheeler and signed by Board member Shirley Wiggins.
Kilmer did not use this money to purchase past retirement years in TRS. Without
telling the Board, Kilmer put the funds into money market accounts and later used them to
purchase a travel agency in Oregon. The public was not aware that Kilmer was to receive
additional benefits for filling the principal's position. (EN4)
In January 1989 the Board conducted an evaluation of Kilmer which was very
positive. In March Kilmer's principal's compensation became public knowledge. There were
complaints about the compensation during Board meetings and Kilmer stated that "he and the
Board need[ed] to sit down and clarify the intent of the [B]oard as to what the compensation was
to be." Board member McCormick launched a recall petition against Board President Smith and
Board members Armstrong and Wiggins.
The Board retained an accounting firm to report on the compensation issue. The
accountants concluded that the language of Addendum Two was authorized by the motion which
the Board had approved in July 1988 and that "it appears that the school board intended to pay
the superintendent a lump sum"sufficient to pay for five years of pension credit. The
accountants also concluded that the amount of money Kilmer received was consistent with a
"reasonable interpretation"of the Addendum. The accountants, however, were not asked to
determine if the language of Addendum Two reflected the Board's intent.
In early April 1989 Kilmer and several Board members met in private to discuss
the extra compensation issue, and Kilmer agreed to reimburse the District so that his additional
compensation would be reduced to the $30,000 that Board members insisted they had agreed to
pay him. Kilmer announced his promise to reduce his principal's compensation to $30,000 that
same day at a public Board meeting.
McCormick's recall efforts continued, and in late April his lawyer wrote a letter
stating that the Board could be sued to recover Kilmer's principal's compensation. The Board
asked its attorney, Richard Fossey, to investigate Kilmer's compensation package. Fossey
concluded that Kilmer had received nearly $50,000 in compensation for being principal, rather
than $30,000, as a result of "poorly drafted documents and a fundamental misunderstanding
between the Scds. Given that the Board had approved the July 16, 1988 minutes and that two
Board members signed Addendum Two, Fossey concluded that Kilmer had "reasonably accepted
the additional compensation"and that "the amount paid to Mr. Kilmer [was] appropriate."
Fossey noted that while it may have been "imprudent"to pay Kilmer in advance, there was "no
legal significance"to the timing of the payments. Fossey's report concluded by recommending
that Kilmer's contract be reformed to reflect the Board's intention that the extra compensation
was to be $30,000. At the behest of the Board chair, Fossey prepared a resolution expressing
confidence in Kilmer and extending his contract as superintendent/principal for an additional
year.
The resolution was tabled at the Board's June 5 meeting. On June 6 Kilmer
cashed out $5,100 worth of unused leave. On June 9 the Board suspended Kilmer with pay
"pending [an] investigation regarding [his] compensation." A report by an accounting firm
commissioned by the Board found, however, "no irregularities"in the District's payments to
Kilmer.
On July 3 the Board decided to terminate Kilmer. It sent Kilmer a bill of
particulars explaining the reasons for its decision and stated that his termination was effective
July 15. The bill of particulars listed ten reasons (discussed infra) for Kilmer's dismissal.
In April 1990 Kilmer filed suit against the District, alleging wrongful discharge,
defamation, and a number of economic torts. The District moved to dismiss on the ground that
Kilmer's suit was an untimely administrative appeal of the Board's decision. On cross-motions
for summary judgment, the trial court concluded that Kilmer had no right to an original
action/jury trial on his discharge claim, but found that there were reasons for relaxing Appellate
Rule 602's deadline for administrative appeals. The trial court also concluded before trial that
if Kilmer prevailed, (1) he would be entitled to damages resulting from his failure to vest in
TRS, (EN5) and (2) he must offset his damages by the salary he received from his new
employment (as a superintendent in Idaho), but not by the lower cost of living at his new job
location.
The court conducted a de novo bench trial and upheld Kilmer's termination. It
held that some of the reasons listed in the bill of particulars were not grounds for termination.
For example, the court rejected claims that Kilmer had demonstrated good cause for discharge
by failing to perform timely evaluations and ensure that other District personnel did the same.
The court concluded, however, that the Board did have good cause for terminating Kilmer on
the basis of his behavior before and during the compensation controversy. The court found that
Kilmer's actions resulted in the Board's loss of trust and amounted to statutory incompetence,
or in the alternative, were a breach of fiduciary duty, a "similar ground"to incompetence.
Kilmer appeals, asking us to reverse the trial court's finding that there was good
cause for the termination. He also asks us to reverse the denial of his request for a jury trial,
and to remand for (1) determination of damages (if he prevails on his discharge claim), or (2)
a new trial on the claims in his complaint (if we affirm the court's finding of good cause).
The District cross-appeals, seeking reversal of the lower court's decision forgiving
Appellate Rule 602's thirty-day filing deadline. The District also appeals two pre-trial damages
rulings: that if Kilmer prevailed he was entitled to damages resulting from his failure to vest
in Alaska's retirement system; and that any damages Kilmer recovered need not be offset by
Kilmer's savings resulting from Idaho's lower cost of living.
III. DISCUSSION
A. Jury Trial
Kilmer argues that the trial court erred in holding that his action was an
administrative appeal, thereby eliminating his right to a jury trial. He argues that because his
contract required him to waive all statutory procedural rights and district grievance procedures,
his only means of redress was through an original civil suit tried before a jury.
We have held that a "claim is functionally an administrative appeal if it requires
the court to consider the propriety of an agency determination." Haynes v. State, Commercial
Fisheries Entry Comm'n, 746 P.2d 892, 893 (Alaska 1987). Additionally, we have held that
the test for determining when an entity is acting as an
'administrative agency' is functional. Whenever an entity which
normally acts as a legislative body applies policy to particular
persons in their individual capacities, instead of passing on general
policy or the rights of individuals in the abstract, it is functioning
as an administrative agency
within the meaning of Alaska Appellate Rule 602. Ballard v. Stitch, 628 P.2d 918, 920 (Alaska
1981) (citing Winegardner v. Greater Anchorage Area Borough, 534 P.2d 541, 544-45 (Alaska
1975)). In each of these cases there had been an administrative adjudication. The language
which we quoted above from Haynes is somewhat overbroad. The applicability of Appellate
Rule 602 also depends on an additional test: whether the entity engaged in an adjudicative
proceeding. Moore v. State, 553 P.2d 8, 29 (Alaska 1976) (rejecting claim that appeal from
non-adjudicatory agency action was not time-barred by predecessor to Appellate Rule 602). See
also Owsichek v. State, 627 P.2d 616, 619 (Alaska 1981). Cf. State v. Alex, 646 P.2d 203,
215 (Alaska 1982) (holding exhaustion of administrative remedies doctrine insupportable where
there was no administrative adjudicatory proceeding "which had various routes of administrative
appeal.").
In the present case the question whether Kilmer should have proceeded by way
of an administrative appeal is potentially of consequence in only two respects: his entitlement
to a jury trial, and application of Appellate Rule 602(a)(2)'s thirty-day period for taking an
appeal. For the reasons expressed below, we hold that Kilmer waived any right he might have
had to a jury trial, and that the thirty-day period would not apply to him. Thus it is not
necessary to decide whether Kilmer should have brought this case pursuant to Appellate Rule
602.
Our conclusion that Kilmer waived his right to a jury depends on three documents
in the record. First, the Dillingham School District withdrew its objection to Kilmer's demand
for a jury trial and filed with the court written notice of this change of position. Even
after Dillingham agreed to withdraw its objection to a jury trial, the trial court appears to have
had reservations about the parties' resulting plan to try all of their claims before a jury. In a
handwritten addendum to a calendaring notice for a pre-trial hearing, the court instructed the
parties that it planned to "inquire as to the parties' intentions to present all issues to a jury
despite the lack of authority to do so on an administrative appeal." Just two days later, Kilmer's
attorney wrote a letter to the court, stating that "[t]he parties are in agreement that all Kilmer's
claims may be tried before the court in a judge-tried case."
In his briefs to this court, Kilmer argues that his stipulation to a bench trial did
not cover all his claims, but only his remaining tort claims. Kilmer argues that it was
impossible for him to waive his rights to a jury trial on the contract claims in the letter to the
trial judge because the court had already denied his request for a jury and "it already was clear,
over [Kilmer's] objections, that the contract claim would be heard without a jury."
Were it not for Dillingham's filing of a withdrawal of its opposition and the trial
court's subsequent order, which emphasized that the parties should be prepared at the pre-trial
hearing to address the propriety of a jury trial on all of their claims, Kilmer's counsel's letter
could be construed as ambiguous. However, review of the record as a whole leaves us with the
firm belief that both parties agreed to present all of the claims to the court. The trial court was
left with this impression as well, noting at the outset of its findings that "[b]y stipulation of the
parties, all matters were tried to the court sitting without a jury . . . ." Having agreed to a
judge trial on all claims, Kilmer cannot now argue that it was error not to submit his claims to
a jury. Because Kilmer received the judge trial to which he agreed, we need not decide whether
it was error to classify his action as an administrative appeal.
B. Timeliness of Kilmer's Suit
Alaska Appellate Rule 602 requires that administrative appeals be filed within
thirty days of the date of the decision. Alaska R. App. P. 602(a)(2). Kilmer's suit was filed
nine months after he received the bill of particulars. Nevertheless, the court allowed the suit
to continue as if timely filed. The District argues that the trial court erred in relaxing the time
limit and allowing Kilmer to proceed with his appeal. (EN6) However, strict application of Rule
602(a)(2) requires that the agency clearly indicate that the decision complained of is a final order
and that the claimant has thirty days to appeal. Skudrzyk v. Reynolds, 856 P.2d 462, 463
(Alaska 1993); Manning v. Alaska R.R., 853 P.2d 1120, 1124 (Alaska 1993). Kilmer was
notified of his termination by a bill of particulars dated July 5, 1989, and a letter dated July 14,
1989. Neither communication informed Kilmer that the decision was final, or that he had thirty
days to appeal. Under these circumstances, the trial court correctly waived the thirty-day
limitation, assuming it applied.
C. Merits of the Board's Decision
The trial court held that Kilmer was discharged for good cause. (EN7) The trial
court's factual findings are reviewed using the clearly erroneous standard. Alaska R. Civ. P.
52(a). To reverse, we must have a definite and firm conviction that a mistake has been made.
City of Hydaburg v. Hydaburg Coop. Ass'n, 858 P.2d 1131, 1135 (Alaska 1993). In
determining whether a mistake has been made, we "take the view of the evidence most favorable
to the prevailing party below." Parker v. Northern Mixing Co., 756 P.2d 881, 891 n.23
(Alaska 1988) (quoting Graham v. Rockman, 504 P.2d 1351, 1353-54 (Alaska 1972)). The
court's legal conclusion is reviewed independently. Guin v. Ha, 591 P.2d 1281, 1284 n.6
(Alaska 1979). Our duty is to "adopt the rule of law that is most persuasive in light of
precedent, reason, and policy." Id.
1. Trial court's factual findings
The trial court found that Kilmer had made the following six "serious errors"in
dealing with his own compensation:
a. He procured the Board's approval of addenda to his own
contract without first obtaining legal review of the addenda.
b. He misled the Board into believing that he was seeking to
cash in leave time for past unused leave only, rather than past and
future unused leave.
c. He presented the Board with no dollar amount for the leave
for which he proposed to receive pay.
d. He led the Board to understand that his principal's pay
would be in the amount of $30,000, or if his testimony is believed,
$30,000 to $40,000, and then failed to return to the Board and
advise Board members that the amount actually approximated
$50,000.
e. He represented that the principal's compensation would in
fact be used to buy back years in the retirement system, allowing
the Board to explain the compensation to the community in terms
of a retirement benefit. He then failed to contribute the funds
received to TRS and took the funds in advance of his having
earned them, although the rationale for doing so (the accrual of
interest on the TRS contribution) no longer existed.
f. He drafted contract addenda that did not reflect the Board's
intentions (based on his own representations) regarding these
compensation matters.
The trial court found that Kilmer's "wrongful actions"constituted incompetency under the statute
and justifiably caused the Board to lose trust in him. (EN8) We find that the trial court's
findings on Kilmer's most serious errors, those relating to his unused leave and principal's
compensation, are not clearly erroneous. (EN9) We note that "great weight must be accorded
to the trial judge's experience and to [the] evaluation of demeanor testimony." Sheridan v.
Sheridan, 466 P.2d 821, 824 (Alaska 1970). When the trial judge's decision is dependent
largely upon oral testimony of the witnesses seen and heard by the court, this court must give
due regard to the trial judge's opportunity to judge the credibility of those witnesses. (EN10)
Alaska R. Civ. P. 52(a); Parker, 756 P.2d at 892; Kenai Power Corp. v. Strandberg, 415 P.2d
659, 660 (Alaska 1966).
a. Unused leave
The trial court did not clearly err in finding that Kilmer misled the Board into
believing that he was seeking to cash in leave time only for past unused leave time. Addendum
One states that Kilmer's contract was changed to allow "the use or reimbursement of all unused
leave days at any time." The testimony of the Board members makes it clear that they believed
Kilmer wanted to cash in past unused leave that had resulted from his administration of a school
construction project. The Board believed it was authorizing a one-time cash-in and was never
told of the cash value of the leave Kilmer had accumulated. (EN11) There is no indication in
the record that the Board received information about Kilmer's leave time other than through
Kilmer. Therefore, we find that the Board's testimony supports the trial court's finding that
Kilmer misled the Board.
Although Kilmer admits that he never presented the Board a dollar figure for his
leave, he argues that Addendum One is clear on its face and that it was the Board's
responsibility to figure out what it was authorizing. An assumption that the Board must share
the responsibility does not absolve Kilmer of his share of responsibility. (EN12) Because it
believed it was getting the necessary information from Kilmer, the Board had no reason to
investigate further. He wrote the ambiguous language in Addendum One and he cashed in more
leave than initially authorized. A reading of the record does not leave the clear impression that
a mistake was made by the trial court.
b. Principal's pay
We also find that the trial court did not clearly err in making findings concerning
the additional compensation for the principal position. The trial court found that the Board
believed Kilmer's additional compensation would be approximately $30,000, and that it would
be used to buy back years in the TRS. It also found that Kilmer was paid nearly $50,000 and
that he did not use that money to purchase back retirement years, but instead invested it in an
Oregon travel agency.
Kilmer argues that the court's findings are clearly erroneous because Addendum
Two clearly stated that the amount of compensation would be "based"on a retirement buy back
but did not require Kilmer to put the money into the TRS. Additionally, he argues that it was
the Board's responsibility to establish the precise amount and that the two checks (totalling
$49,581) were signed by a Board member. He also cites the fact that he returned the amount
over $30,000 when "it became clear to [him] that there was confusion."
The Board is not without responsibility, but its actions do not absolve Kilmer of
the consequences of his conduct. A party is bound not by the outer limits of an ambiguous
document, but by the terms agreed upon by the parties. See, e.g., Stepanov v. Homer Elec.
Ass'n, 814 P.2d 731, 734 (Alaska 1991) (giving effect to the reasonable expectations of the
parties). Kilmer argues that the court's finding is clearly erroneous because the language of
Addendum Two permits the actions he took. However, Kilmer's actions exceeded the agreement
reached with the Board. In addition, he fails to explain why he failed to invest in the TRS or
inform the Board that the resulting payments would substantially exceed $30,000. As the trial
court pointed out, the rationale for two lump-sum payments was specifically tied to the TRS
investment. We agree with the trial court's finding that Kilmer erred in not informing the Board
that he was to receive nearly $50,000 and that he did not plan to put the money into the TRS.
The trial court found that as a result of his errors, "Kilmer lost the trust of the
School Board." The court further found that the Board was justified in this response to Kilmer's
wrongful actions. Kilmer argues that this conclusion is erroneous because "the majority of the
Board did not proceed as though it had lost the trust of Kilmer, nor did attorney Fossey."
However, the trial court determined that Board members could "reasonably question whether
Kilmer was presenting them with all of the facts necessary for their decision making and whether
he was implementing their decisions according to their intentions." The trial court concluded
that the Board lost confidence not in Kilmer's administrative abilities but in his "integrity and
reliability." The testimony of the Board members clearly supports the court's findings that the
Board no longer trusted Kilmer on those issues and that this loss of trust was justified.
2. Trial court's conclusions of law
Having upheld the trial court's dispositive findings of fact, we must next
determine whether the court was correct in concluding that Kilmer's errors constitute good cause
for termination under Kilmer's contract. Kilmer's contract stated that Kilmer could be
terminated for "good cause." The contract defined good cause to "include, but not be limited
to the grounds set forth in [AS] 14.20.170."(EN13) During litigation, the parties stipulated that
good cause under the contract would include the statutory grounds (incompetence, immorality,
and non-compliance with the law) as well as "similar offenses."
The trial court concluded that Kilmer's actions constituted "incompetency"under
the statute because his miscommunications with the Board were a failure to perform his duties
adequately and that the Board's loss of trust "rendered him unable to perform his customary
duties adequately." Alternatively, the trial court concluded that Kilmer's actions in addressing
his own compensation matters suggested a breach of fiduciary duty that constituted a "similar"
ground for good cause discharge.
Kilmer argues that the trial court erred in concluding that loss of trust equates to
incompetence. He argues that "lack of trust is not necessarily incompetence"and that "loss of
confidence and just cause do not always equate."
Kilmer is correct in his assertion that the Board could not terminate a
superintendent merely by asserting it "no longer trusts"the superintendent. The lack of trust
must be reasonably based on the superintendent's improper actions; the unsupported subjective
beliefs of the Board would be insufficient to warrant termination. In this case, however, the trial
court concluded that given Kilmer's actions in misleading the Board in regard to his
compensation, "the Board was justified in losing trust in Kilmer." The trial court went on to
reason in the alternative that Kilmer's "serious errors"were suggestive of a breach of fiduciary
duty to the Board "in a situation rife with conflict of interest." The trial court's conclusions in
this regard do not constitute error. One of the superintendent's primary
responsibilities is providing professional leadership to the Board. The District's policy manual
states that, among other duties, the superintendent
[p]repares and submits to the board recommendations relative to
all matters requiring action by the board, placing before the board
such necessary and helpful facts, information, and reports as are
needed to insure the board's acting in full possession of all
relevant data.
Dillingham City Schools Board (DCSB) Policy Manual sec. 2.7.5 (rev. 1989).
If the Board no longer trusts the superintendent, this duty cannot be performed
adequately. Although the superintendent may be able to complete this function satisfactorily,
if the Board perceives that the superintendent may be hiding or shading necessary facts, the
relationship is no longer functional. (EN14)
Furthermore, as the trial court noted, the Policy Manual also adopts the code of
ethics adopted by the Association of School Administrators. That code requires an administrator
to "[honor] the public trust of his position above any economic or social rewards"and "not
permit considerations of private gain nor personal economic interest to affect the discharge of
his [/her] professional responsibilities." DCSB Policy Manual sec.sec. 2.4.7, 2.4.8. The trial
court's findings that Kilmer misled the Board about cashing in leave time and about the
principal's compensation each involved matters of direct economic benefit to Kilmer. It was not
unreasonable for the Board to expect Kilmer to provide accurate and complete information
concerning these matters.
Kilmer's response -- that the Board had access to accurate information -- is
inadequate. The Board should not have the burden of investigating each of Kilmer's
representations. Even Kilmer admits that one of the superintendent's primary responsibilities
is to provide leadership and expertise to the Board. If the Board were required to question the
information given to it by the superintendent, the efficiencies in having a superintendent would
be substantially decreased.
It is of no importance that Kilmer returned all but $30,000 of the monies he
received as compensation for acting as principal. This action may have helped to diminish the
public outcry over his salary, but it did not repair the trust that had already been damaged. If
Kilmer had originally taken the $30,000 agreed upon, and used it for his retirement as intended,
the public's reaction arguably would have been less hostile.
Kilmer argues that the Board is not without blame. This may be true.
Nonetheless, in a case that turns on legal issues, rather than equitable considerations (as the trial
court correctly observed) the actions of the Board are irrelevant so long as the decision to
terminate is based on the actions of the superintendent. The court permissibly found that
Kilmer's actions caused the Board's loss of trust. We therefore conclude that the trial court did
not clearly err in finding that there was good cause for termination.
IV. CONCLUSION
For reasons discussed above, we AFFIRM the trial court's decision to waive the
thirty-day filing limitation and to conduct a bench trial on Kilmer's claims. We find that the
record supports the trial court's dispositive findings of fact and hold that the court correctly
applied the law. Therefore, we AFFIRM the court's decision that Kilmer was terminated for
good cause under his contract. These conclusions make it unnecessary for us to consider the
trial court's pretrial damages rulings.MATTHEWS, Justice, concurring.
I agree fully with the opinion of the court. I write separately merely to note my
disagreement with the conclusion of the superior court that reason six of the bill of particulars
does not constitute good cause for Kilmer's termination. Reason six is that Kilmer exercised
poor judgment in recommending that he receive pay for another job while he was employed full-
time as school superintendent.
Dual office holding with substantially increased compensation is a practice which
easily lends itself to abuse. There is much common law, statutory and constitutional authority
which prohibits dual office holding by public employees. See Acevedo v. City of North Pole,
672 P.2d 130, 133-36 (Alaska 1983); Begich v. Jefferson, 441 P.2d 27 (Alaska 1968); Knuckles
v. Board of Education of Bell County, 114 S.W.2d 511, 514-16 (Ky. 1938) (offices of assistant
county school superintendent and school principal or teacher incompatible under common law
rule prohibiting dual office holding); 3 McQuillan, Municipal Corporations sec. 12.66, .67 (3d
rev. ed. 1990).
We outlined the underlying purposes of the rule prohibiting dual office holding
in Acevedo, supra at 134, 135. Among those relevant to the present case are "preventing
multiple position-holding, so that offices and positions of public trust would not accumulate in
a single person; [and] preventing individuals from deriving, directly or indirectly, any pecuniary
benefit by virtue of their dual position-holding . . . ." A strong and justified public reaction to
revelations of dual office holding with substantially increased compensation should reasonably
have been anticipated by Kilmer.FABE, Justice, concurring.
I agree with the dissent's analysis that the trial court improperly characterized this
matter as an administrative appeal and that Kilmer thus had a right to a jury trial in a direct
action against the Board. However, I join in the conclusion of the court that Kilmer waived his
right to a jury by stipulating to a bench trial on all issues. Thus, the trial court's error in
holding that Kilmer's action was an administrative appeal is harmless. COMPTON, Chief Justice, dissenting, with whom RABINOWITZ,
Justice, joins as to Parts I and II.
This dispute arises out of a complex series of events,
including (1) negotiation of an employment contract between Henry
Kilmer and the Dillingham City School District (District), acting
through its Board of Education (Board); (2) negotiation of an
addendum to that contract regarding the manner of compensating
Kilmer for indisputably accrued leave; (3) meetings between Kilmer
and the Board resulting in the expansion of Kilmer's duties to
encompass the principalship of the Dillingham middle/high school
and the negotiation of a second addendum to Kilmer's contract in
connection with that undertaking; (4) payments to Kilmer pursuant
to those addenda; (5) investigations by the District into the
propriety of those payments, none of which determined that any
impropriety had occurred; and finally, (6) numerous charges against
Kilmer, purportedly substantiating good cause for the termination
of his contract. In my view the court does not correctly analyze
the factual and legal issues Kilmer raises. The result it reaches
is not supportable. Therefore, I dissent.
The fundamental error in the court's analysis stems in
part from its threshold conclusion that Kilmer waived whatever
right he may have had to a jury, effectively holding harmless the
superior court's denial of Kilmer's constitutional right to a trial
by jury. (EN1) Op. at 11. The record does not support that
conclusion. This erroneous conclusion leads the court to review
and then sustain factual findings on issues which should have been
committed to resolution by a jury, not resolution by a superior
court judge. Even if Kilmer did waive his right to trial by a
jury, my review of the record leads me to conclude the superior
court's decision is not supportable.
I. ADMINISTRATIVE APPEAL
By concluding that Kilmer waived any right he had to
trial by a jury, this court avoids addressing whether the
proceeding in superior court was an administrative appeal or a de
novo direct action in which Kilmer was entitled to trial by a jury.
Since I have concluded that this court's waiver analysis is not
supportable, it is necessary to address what type of proceeding was
held in superior court.
I conclude that the superior court erred when it denied
Kilmer the right to initiate a direct action against the District,
limiting him instead to an administrative appeal. (EN2) This court
notes that Kilmer waived by contract statutory procedures to
administratively grieve [the Board's] decision. (EN3) Op. at 3.
It also notes that Kilmer was not contractually bound to any
administrative grievance procedure. It further notes that Kilmer
was afforded the "right to address the Board concerning . . .
possible termination of [his] contract." Op. at 3.
The District understood that Kilmer's right to a pre-
termination hearing was of constitutional dimension, as evidenced
by the District's attorney's statement to Kilmer that he "ha[d] a
constitutional due process right to notice and a hearing . . .
regarding [his] termination."(EN4) The court does not dispute
that Kilmer had no statutory right and no school district grievance
right to either. His only contractual right was the right to
"address the Board concerning . . . possible termination of [his]
contract." Op. at 3(emphasis added). The ad hoc hearing which
Kilmer was offered was for the purpose of permitting him to
"present any defenses [he] may have regarding [his] termination."
(EN5) Kilmer's contractual right to an audience before the Board,
and his constitutional right to notice and a hearing, are not the
same.
While an employee may lose the right to trial by a jury
in a suit for wrongful termination of his or her employment
contract by failing to use a contractual grievance procedure, as
long as that procedure is not futile and it affords procedural
protections, we specifically limited that holding to such a
situation. Diedrich v. City of Ketchikan, 805 P.2d 362, 367
(Alaska 1991) ("When an employee enters into a contract that
contains grievance procedures, it is not a denial of the right to
a jury trial to require the employee to follow those procedures.").
The Board did not offer Kilmer a hearing to satisfy any contractual
or statutory entitlement; he had none. The hearing he was offered
was an ad hoc remedy compelled by his constitutional due process
rights.
Kilmer's situation is unlike that of a terminated
teacher, who has no right to a trial by jury or to sue for wrongful
termination. Fairbanks N. Star Borough Sch. Dist. v. Duncan, 878
P.2d 641 (Alaska 1994) ("No right to trial by jury attaches to an
action for a statutory remedy unless the statute so provides or the
statutory remedy is a codification of a common law remedy.").
Kilmer's contract barred all the administrative remedies available
by statute to teachers.
The case which presents a situation most analogous to
Kilmer's is Casey v. City of Fairbanks, 670 P.2d 1133 (Alaska
1983). The terms of Casey's employment with the City of Fairbanks
(City) were set forth in a collective bargaining agreement between
the City and Casey's union. The agreement provided a five-step
grievance procedure for resolving employee grievances. Casey was
fired and attempted to avail himself of the grievance procedure.
However, the union declined to pursue the grievance. The agreement
contained no provision that ensured enforcement of the grievance
procedure. Casey filed suit in superior court for wrongful
discharge. The City moved to dismiss Casey's suit, claiming inter
alia that Casey had failed to exhaust his contractual remedy.
In Casey we acknowledged that "an employee must first
exhaust his contractual or administrative remedies, or show that he
was excused from doing so, before he may pursue a direct action
against his employer." Id. at 1136 (citations omitted; emphasis
added). We concluded that Casey was excused from pursuing his
contractual remedy, as a matter of law, because it would have been
futile. He was permitted to maintain a direct action against the
City.
We had no occasion to determine whether Casey had a right
to a trial by jury; the issue was not before us. However, we did
determine that Casey was permitted to bring a direct action against
his public employer, because he had no other effective remedy.
Kilmer's position is little different. Although the Board gave
Kilmer due process notice of its charges against him, and offered
to give him a due process hearing before it to permit him to
present any defenses he had to the charges it had brought, the fact
remains that Kilmer had no statutory or contractual rights that he
could enforce. There were no procedures established for
adjudicating the charges, and there was no effective way for Kilmer
to contest the District's action except by a direct action.
Wrongful termination (breach of contract) is a remedy known at
common law. Neither contract nor statute proscribed Kilmer's right
to bring a direct action against his employer for breach of
contract. Neither contract nor statute limited Kilmer's remedy to
an administrative proceeding and an administrative appeal. The
fact is that Kilmer's employer fired him for reasons it specified
in a letter of termination. The employer made no administrative
determination regarding its reasons, nor did it ever act in an
adjudicative capacity. There has never been any administrative
determination regarding the proffered reasons. Kilmer had the
right to have this determination made by a jury.
II. WA the waiver, the court is able to avoid addressing whether
Kilmer and others similarly situated nonetheless have a right to
trial by a jury.
The court bases its conclusion that Kilmer waived his
right to a jury trial on three documents. Op. at 11-12. However,
the court fails to provide any context within which these documents
originated. A review of the context is necessary to understand why
the conclusion that Kilmer waived his right to a jury trial is not
supportable.
Kilmer's original complaint contained both contract and
tort claims, (EN6) and was accompanied by a Demand for Jury Trial,
which "request[ed] and demand[ed] a trial by jury on all issues
triable of right by jury." The District's first affirmative
defense was that Kilmer had failed timely to administratively
appeal his termination as required by AS 44.62.330-630 and
Appellate Rule 602.
Kilmer moved for partial summary judgment on the
District's first affirmative defense, arguing that his action was
not an administrative appeal. Almost contemporaneously the
District moved for summary judgment, seeking dismissal of Kilmer's
claims for "wrongful termination"on the ground that "those"claims
constituted an administrative appeal. Each opposed the other's
motion, and replied to oppositions, essentially spilling a lot of
ink on the same issue. However, Kilmer raised as one of his
concerns the issue of his entitlement to a jury trial.
In ruling on these motions the superior court granted
each in part and denied each in part. It concluded that Kilmer
should have filed an administrative appeal and that he had not done
so timely, but that his failure was excused. The court "converted"
the case to an administrative appeal, and ordered Kilmer and the
District to comply with Appellate Rule 602. Two weeks after the
court entered its order, it entered a pre-trial order which
declared that the case was "Non-Jury."
Kilmer complied with the superior court's order, filing
a Notice of Appeal which stated that he was appealing "from the
agency decision, a letter to Kilmer from Dillingham City School
District called a 'Bill of Particulars.'" This notice set forth
not only Kilmer's contract claims, which had been the only subject
of the motions, but also his tort claims. It also incorporated by
reference his original complaint, which had asserted both, and
attached the original complaint as an appendix. The Notice of
Appeal was accompanied by a Request for Jury Trial. The District
promptly objected to Kilmer's request, asserting that "[t]his
matter has already been designated an administrative appeal to be
heard by Judge Joan Katz." On October 14, 1992, the court denied
Kilmer's request for jury trial, without waiting for or requesting
any response from Kilmer. The next day the District's attorney
filed a "Notice"advising the court that despite the court's order
sustaining its objection to Kilmer's request for a jury trial, the
objection was being withdrawn. (EN7) The purported withdrawal
bears a handwritten and initialed notation: "Moot upon review by
the CT 10-21-92."
At this point, Kilmer's only claims that had been put in
issue by pleadings and supported by memoranda were his contract
claims. His tort claims had not been the subject of motions, and
there was no reason for him to believe that they were not viable.
When the superior court "converted"the case to an administrative
appeal, it did not differentiate between the contract and tort
claims, or dismiss either. There would be no reason for Kilmer to
believe that he had been deprived of a jury trial on the tort
claims, except for the noted pre-trial order which stated that the
case was "Non-Jury." The order itself did not differentiate
between the contract claims, erroneously declaring them to be the
subject of an administrative appeal, and the tort claims, which
were not. Kilmer's reassertion of his demand for a jury trial must
be viewed in light of that order. There would be no right to a
jury trial on an administrative appeal of the contract claims,
though there would on the tort claims. By reasserting his demand
for a jury trial, Kilmer would be assured that he had not waived
his right to a jury trial on the tort claims.
The District objected to Kilmer's demand for a jury
trial, an objection which the superior court sustained. The court
again did not differentiate between contract and tort claims. When
the District attempted to withdraw its already sustained objection,
it did not differentiate either. The uncontroverted evidence in
the record is that the purported withdrawal was "moot,"evidenced
by the court's notation on the purported withdrawal. There is
nothing in the record to suggest that Kilmer would or should have
assumed that by virtue of the attempted withdrawal, he was being
given the opportunity to have his contract claims decided by a
jury. The focus of the issues to that point had been on contract
claims in the context of an administrative appeal.
On December 17, 1992, Kilmer filed a notice of hearing on
pending motions, scheduling the hearing for January 21. On
January 19 the court mailed the notice of hearing to the attorneys.
The notice contained a handwritten notation from the trial judge
that "[i]n addition, the court will inquire as to the parties'
intentions to present all issues to a jury despite the lack of
authority to do so on an administrative appeal. . . ."(emphasis in
original). On January 21, Kilmer's counsel, with the District's
consent, wrote the trial judge regarding matters "which may assist
with preparation for oral argument today,"one of which was "1. The
parties are in agreement that all Kilmer's claims may be tried
before the court in a judge-tried case." The record does not
disclose whether either attorney had received the court's notice
prior to transmittal of this letter.
It is these last two documents which, together with the
District's attempted withdrawal of its objection to the Request for
Jury Trial, comprise the three documents the court concludes
establish an express waiver of the right to a jury trial. Again,
context is important. The superior court had denied Kilmer's
request for jury trial, at least as far as the contract claims were
concerned, on the basis of the District's objection. The
District's purported withdrawal of that objection was noted by the
court to be moot. The court was faced with a proceeding which was
in part an administrative appeal of contract claims, in part a
conventional civil suit asserting tort claims distinct from the
administrative appeal. The court wanted to "inquire as to the
parties' intentions to present all issues to a jury, despite the
lack of authority to do so on an administrative appeal." The court
did not ask for further argument on its prior decision sustaining
the District's objection to Kilmer's request.
Assuming Kilmer's letter to the trial judge was in
response to this question, it was answered by the statement that
"all Kilmer's claims may be tried before the court in a judge-tried
case." Kilmer's agreement can be viewed as no more than his
concession that since the contract claims were to be tried to the
court, the tort claims might as well be also, just as easily as it
can be viewed as a waiver of his right to a jury trial. Kilmer
agreed that "all"claims could be tried to the court, not just the
contract claims which the court had already ordered must be tried
to the court.
This court narrows its focus to two of the documents:
Were it not for Dillingham's filing of a
withdrawal of its opposition and the trial
court's subsequent order, which emphasized
that the parties should be prepared at the
pre-trial hearing to address the propriety of
a jury trial on all of their claims, Kilmer's
counsel's letter could be construed as
ambiguous.
Op. at 12 (emphasis in original). The court's error is two-fold.
First, the superior court already had sustained the District's
objection to the jury request when the District filed its attempted
withdrawal of the objection. The superior court noted that the
notice of withdrawal was "[m]oot upon review by CT 10-21-92,"which
may be why the District does not attach any significance to this
document. (EN8) Second, the superior court did not ask the parties
to "address the propriety of a jury trial"at the hearing. It
stated that it was going to "inquire as to the parties' intentions
to present all issues to a jury despite the lack of authority to do
so in an administrative appeal. . . ." The superior court had
already held once, arguably even twice, that Kilmer did not have
any right to a jury trial on the contract claims. The only way
this court can justify its conclusion is to hold that the announced
inquiry noted on the notice of hearing was (1) a ruling by the
superior court that it was vacating its prior ruling that Kilmer
did not have the right to a trial by jury on the administrative
appeal, and (2) an acknowledgment by the superior court that Kilmer
did possess such a right. Only then could this court suggest that
Kilmer had waived his right to a jury trial by agreeing that all
claims could be tried to the court.
Had the superior court made the correct ruling to begin
with, Kilmer would have been before a jury on both his contract
claims and his tort claims. Since no issue had ever been made of
Kilmer's right to present his tort claims to a jury, there is no
reason to suggest, much less conclude, that by waiving his right to
present his tort claims to a jury, Kilmer was conceding, and thus
waiving, his right to present his contract claims to a jury, or
later claim that the superior court erred in denying him that
right. The superior court had ruled that he had no such right
because those claims had to be brought as an administrative appeal.
He should not be held to have intentionally waived a right the
court already ruled he did not have.
III. THE BILL OF PARTICULARS
The factual allegations contained in each separate reason
identified by the District in its termination letter to Kilmer,
later denominated Counts in a Bill of Particulars, were required to
be proven by the District by a preponderance of the evidence,
according to the superior court. (EN9) This court notes that the
factual findings relating to the Counts in that document should be
reviewed under the "clearly erroneous"standard. Op. at 14-15.
The resulting legal justifications, or conclusions, should be
reviewed de novo. Op. at 16.
The Bill of Particulars set forth ten (EN10) specific
Counts containing allegations of misconduct, and informed Kilmer
that based on these allegations he was
being dismissed . . . because the []Board has
lost confidence in your ability to perform the
customary administrative duties of the
superintendent's position in a satisfactory
manner. In addition, you have substantially
not complied with the policy manual of the
district.
In other words, the District's action was justified
because (1) the Board lost confidence in Kilmer's competence as
defined by AS 14.20.170(a), and (2) Kilmer had exhibited good cause
for discharge as expressed in AS 14.20.170(c) ("substantial non-
compliance"with laws or rules regarding education).
Although this court does not directly address the point,
it and the superior court collectively have held that most of the
factual allegations in the Bill of Particulars were either false or
insufficient to support a good cause termination. To the extent
that the superior court acknowledged Count 1 of the Bill, it deemed
Kilmer's actions a "less serious"error which did not justify
termination. (EN11) It found that Count 2 was false. It found
that Counts 4 and 5 were essentially pretextual reasons for
terminating the contract, since they contradicted the Board
members' unanimous testimony that they had no complaints with
Kilmer's administration of the District's educational programs.
The superior court also rejected Count 6 as a ground for
termination of the contract. Finally, this court effectively
negates half of Counts 8 and 9, noting that there is no evidence
that Kilmer had a duty to obtain review of the addenda to his
contract. (EN12) Op. at 17. To this list of rejected charges I
would add Count 3, which the record shows to be false. (EN13) In
sum, Counts 1 through 6 and half of Counts 8 and 9 of the Bill of
Particulars have been or should be set aside either as factually
unsupported by the record or legally insufficient to constitute
good cause for terminating Kilmer's contract.
What Counts remain to support the Board's decision and
the superior court's examination of that decision? The factual
allegations contained in Count 7, and parts of Counts 8 and 9,
contain the following charges: (1) Kilmer misrepresented the
amount of compensation to be received by him for performing the
principal's duties; (2) Addendum One, drafted by Kilmer, did not
reflect the intentions of the Board; and (3) Addendum Two, also
drafted by Kilmer, did not reflect the intentions of the Board.
Additionally, one of the Bill of Particulars' two legal
justifications for dismissing Kilmer was implicitly rejected by the
superior court. The District claimed that Kilmer was subject to
discharge for "substantially not compl[ying] with the policy manual
of the district." The superior court found, however, that neither
of the items in the Bill alleging policy manual violations
constituted grounds for discharge. It also found that "Kilmer did
not violate Department of Education regulations as alleged in Bill
of Particular No. 2." Like the District's own attorney, the
superior court found no violations of the policy manual, and the
Board did not appeal these findings. Thus despite this court's
implication to the contrary, there are no grounds to explain
Kilmer's discharge in terms of violation of the District's policy
manual.
The Bill of Particulars is reduced to the assertions
found in three Counts, which purportedly support the legal
justification for Kilmer's termination:
[As a result of the described] conduct, the
School Board . . . lost confidence in
[Kilmer's] ability to adequately carry out the
responsibilities of the superintendent . . .
making [him] unable to adequately perform the
functions of the superintendent's position.
Assuming that the standard of review should be that
applied to a bench trial, the superior court's findings with
reference to these remaining assertions should be scrutinized to
see if they are clearly erroneous, and if not, whether indeed they
provide grounds for Kilmer's good cause discharge.
This court does not follow this method of analysis,
however. It reviews the superior court findings, see Opinion,
Part III.C.1.a.-f., only half of two of which directly address
assertions set forth in the remaining Counts of the Bill of
Particulars, (EN14) and treats them as if they constitute
independent justification for the Board's decision to terminate
Kilmer's contract. They are relevant only to our determination
whether the assertions contained in the remaining Counts are based
on findings that are not clearly erroneous, and if so, whether they
constitute good cause for termination. This court incorrectly
treats them as if they have independent significance, and by
themselves supply legal justification for Kilmer's termination.
In my view, there is insufficient evidence to support the
assertions contained in the remaining Counts. In part the facts
that arguably support them are clearly erroneous. Count 7 alleges
that Kilmer "misrepresented the amount of compensation being
received by [him] for agreeing to perform the principal's duties."
The factual finding set forth at Opinion III.C.1.d. arguably
addresses this allegation. However, it does not contain any
finding that Kilmer "misrepresented"the amount. When addressing
the Board regarding this matter, "[h]e led the Board to understand"
that his pay, i.e. the cost of TRS buy-in, would be $30,000, or "if
his testimony is [to be] believed, $30,000 to $40,000 . . . ." It
is clear that the figure was an estimate. It was only after the
District's own Business Manager referred to an outdated TRS report
that the actual amount was determined. Although the superior court
found that Kilmer "led the Board to understand"what the amount
would be, it did not find that Kilmer himself knew that the amount
was greater than the estimate, or that he should have known that
the amount was greater. The superior court faults Kilmer for
"fail[ing] to return to the Board and advise [it] that the amount
actually [was higher]." That is not the assertion contained in
Count 7.
The viable halves of Counts 8 and 9 allege that "[t]he
contract addendum you drafted [Addendum Two and Addendum One
respectively] . . . did not reflect the intention of the School
Board." These are addressed in a conclusory statement set forth at
Opinion III C.1.f.: "[Kilmer) drafted [contract] addenda that did
not reflect the Board's intentions (based on his own
representations) regarding these compensation matters." Facially
this statement hits its mark. However, standing alone neither of
these assertions should be deemed sufficient to provide legal
justification for termination of Kilmer's contract. First, this
statement only reiterates the assertions contained in the first
sentences of Counts 8 and 9; it does not provide any subsidiary
findings on how the addenda did not reflect the intentions of the
Board. Second, the evidence before the superior court from the
accounting firm retained by the Board was that the language of
Addendum Two was authorized by the motion which the Board approved,
and that payments to Kilmer were consistent with a reasonable
interpretation of Addendum Two. This court notes that "[t]he
accountants, however, were not asked to determine if the language
of Addendum Two reflected the Board's intent,"Op. at 6, suggesting
that Kilmer thwarted the Board's intent through his draftsmanship.
Yet it was the motion that supplied authority for Addendum Two.
The parties have not argued that the motion did not convey the
Board's intent, or that Kilmer sat silently by, permitting the
Board to compensate him in a manner he knew was not contemplated.
In regard to Addendum One, three cash reimbursements for
unused leave days were made in 1988, the last on June 23. These
totaled $19,200. There was no issue regarding these cash
reimbursements until June 6, 1989, almost one year later, when
Kilmer cashed in an additional $5,100. Only then, after the
compensation dispute had erupted, did these cash reimbursements
become an issue. As stated, no factual findings indicated that
this addendum did not reflect the Board's intentions, as embodied
in the motion which the Board adopted.
IV. THE RECORD DOES NOT SUPPORT TERMINATION.
The superior court observed:
[T]he Board's conduct does not negate the fact
that Kilmer's wrongful actions gave rise to
the entire series of events. Irrespective of
its own lapses, the Board was justified in
losing trust in Kilmer. Board members could
reasonably question whether Kilmer was
presenting them with all the facts necessary
for their decision-making and whether he was
implementing their decisions according to
their intentions. A more sophisticated group
of people may (or may not) have been able to
distinguish Kilmer's actions in connection
with the narrow area of his compensation from
his otherwise competent performance. But
human nature does not necessarily allow for
such "rational"categorization.
This court tacitly accepts the superior court's account
of this case, which I believe reasonably can be read to say that an
insufficiently sophisticated group of people, the Board, had the
wool pulled over its eyes by its professional chief administrator.
Then, when the Board members realized that they had been duped,
they justifiably terminated the man who had violated their trust.
This characterization of the events and participants is not borne
out by the record.
First, as the superior court noted, "it is ultimately the
Board's responsibility to set the compensation for its
superintendent."(EN15) Second, there is no dispute that Kilmer's
contract addenda were approved on more than one occasion by the
Board, and that Kilmer did not act contrary to the language
contained in the addenda. Third, Board members disagree on whether
it was one of them or Kilmer who first suggested the possibility
that he assume the duties as principal. Fourth, Board members do
not agree whether Kilmer's additional salary was a fixed sum, a sum
equal to about one half of the salary paid to the previous
principal ($60,000), or a sum in the range of $30,000 to $40,000,
which were figures Kilmer mentioned. Fifth, Kilmer did not know
what his retirement figure was, but had to find out from the
District's Business Manager after the addendum was negotiated.
Sixth, the Board was informed by two accounting firms and its own
attorney that the payments Kilmer received were consistent with the
addenda. Finally, contrary to this court's assertions, it is not
subject to dispute that the Board was informed of each payment to
Kilmer. The superior court's conclusion that it was Kilmer's
actions that gave rise to the series of events is not supported by
the record.
In light of what is not disputed, and what the Board
members themselves disagree on, this case can be sketched as
follows. The Board took action to modify Kilmer's contract, in the
form of Addenda One and Two. These addenda were "approved"when
the Board President and Clerk signed them, and then entered into
the Board minutes and approved by the Board as a whole. Kilmer
then proceeded in accordance with his amended contract: he cashed
in unused leave in accordance with Addendum One; he assumed joint
principal/superintendent duties; and, he took principal's
compensation in the amount dictated by Addendum Two. The Board
knew about each of these actions because a Board member signed
Kilmer's checks and the entire Board received monthly finance
reports detailing the payments to him. Significantly, in
January 1989, after the Board had authorized checks for Kilmer's
principal's compensation and for approximately four-fifths of his
unused leave, the Board issued a highly positive review of Kilmer.
A month later, the Board's decisions provoked public controversy.
In response, Board members met privately with Kilmer. They
requested, and Kilmer agreed, that he reduce his principal's
compensation from the amount dictated by Addendum Two to a flat
$30,000. Kilmer then proceeded in accordance with his contract.
In the next three months, the following events occurred:
(1) public disapproval of the Board's decisions continued, fueled
by one Board member who raised the possibility of suing Board
members as individuals to recover compensation paid to Kilmer; (2)
the Board's lawyer investigated the controversy, found Kilmer's
actions reasonable, and recommended no action beyond the already-
agreed compensation reduction (at the Board President's request,
the lawyer drew up a resolution expressing confidence in Kilmer and
extending the joint principal/superintendent contract for another
year); and (3) Kilmer cashed in $5,100 in unused leave pursuant to
Addendum One.
The Board then suspended Kilmer in order to review the
results of an accountants' investigation of the payments Kilmer had
received. One week later, the stated reason for suspension
evaporated when the accountants concluded that Kilmer's
compensation was in accord with the Board's decisions. Two weeks
later Kilmer's contract was terminated, after a breakdown in
negotiations which would have released the Board from the remaining
two years of Kilmer's superintendent's contract and given Kilmer an
additional year's employment with the District in order to vest his
pension.
On this record, it is difficult to understand where this
court finds support for Kilmer's "good cause"discharge. Returning
to the three Counts of the Bill of Particulars that remain to be
reviewed, the record shows that the Board approved of, and in fact
was informed of, Kilmer's compensation at every step of the
process. It is difficult to see when or how Kilmer
"misrepresented"his principal's compensation. The Board engaged
in all necessary approvals of Kilmer's contract addenda and
authorized the checks he received. What evidence then supports the
charge that Kilmer drafted addenda that did not comport with the
Board's intent? Even the charge that the Board "lost confidence"
in Kilmer's abilities seems unsupported if measured against a
reasonableness standard, given the fact that the Board's opinion of
Kilmer was positive for months after he received all the later
disputed payments, and that each investigation conducted by the
Board found no illegalities or irregularities in Kilmer's
compensation.
In sum, the record indicates that the Board's "loss of
confidence"was a reaction to public mer's compensation. By
affirming this discharge, the court has effectively transformed
Kilmer's employment status into that of an at-will employee.
It is clear that there was a fundamental misunderstanding
between Kilmer and the Board in the matter of compensation.
Indeed, at least one member of the Board did not even consider
Kilmer's remuneration to be "compensation." There is no evidence
that Kilmer understood there was any misunderstanding regarding
compensation until a Board member made an issue of compensation,
and the public became roused. When that misunderstanding became
apparent to Kilmer, he agreed to reduce the amount authorized by
Addendum Two to a flat $30,000. It seems equally clear that the
Board, faced with public disapproval of its conduct, and a possible
lawsuit against its members individually, sacrificed Kilmer to save
itself.
I would reverse the decision of the superior court, with
directions that it grant Kilmer a trial by jury. In the
alternative, it should determine Kilmer's damages.
ENDNOTES:
1. AS 14.20.170 provides:
A teacher . . . may be dismissed at any time
only for the following causes:
(1) incompetency, which is defined as the
inability or the unintentional or intentional
failure to perform the teacher's customary
teaching duties in a satisfactory manner;
(2) immorality, which is defined as the
commission of an act that, under the laws of
the state, constitutes a crime involving moral
turpitude; or
(3) substantial non-compliance with the
school laws of the state, the regulations or
by-laws of the department, the by-laws of the
district, or the written rules of the
superintendent.
2. AS 14.20.095-.210 sets out procedural protections for teachers
who are terminated or non-retained.
3. As a means of encouraging experienced teachers to move to
Alaska, the State allows teachers to retroactively purchase up to
ten years worth of pension credit for years of service performed in
another state. Payments are calculated to represent the amount the
teacher would have paid into the system in a year gone by, plus
interest from that past year until the date of payment.
4. The superior court indicated that before March 1989 both
Kilmer and the Board were responsible for a public misperception
that Kilmer was not receiving extra compensation for his assumption
of the principal's duties.
5. Kilmer had served in Dillingham seven of the eight years
necessary for his pension to vest.
6. We review a court's decision whether to relax the Rule
602(a)(2) time limit under the abuse of discretion standard.
Skudrzyk v. Reynolds, 856 P.2d 462, 463 n.3 (Alaska 1993); Anderson
v. State, Commercial Fisheries Entry Comm'n, 654 P.2d 1320, 1322
(Alaska 1982).
7. The bill of particulars listed the following ten reasons for
Kilmer's termination:
1. Your conduct with regard to [the July 16,
1988 meeting] was unprofessional in that
no agenda of the meeting was prepared,
the meeting was not tape recorded as is
the general practice in Dillingham City
School District, and the minutes of the
meeting which were based upon your notes
did not accurately nor adequately reflect
the School Board's intention regarding
your contract and compensation.
2. You did not prepare your contract
addendums [sic] in accordance with
Department of Education regulations.
3. Checks were issued to you which were not
issued nor executed in compliance with
the Dillingham City School District
Policy Manual sec.602.
4. You failed to evaluate personnel in
accordance with the . . . District Policy
Manual . . . .
5. You have failed to properly supervise the
elementary principal to insure that the
evaluations were properly completed in a
timely manner.
6. You exercised poor judgment in
recommending to the School Board that you
be paid a significant amount of money to
perform, in addition to your duties as a
full time superintendent, the duties of a
principal which could not be performed
adequately while being the full time
superintendent . . . .
7. You misrepresented the amount of
compensation being received by you for
agreeing to perform the principal's
duties.
8. The contract addendum you drafted
[Addendum Two] . . . did not accurately
reflect the intentions of the School
Board. Moreover, while you stated you
would have the contract addendum reviewed
by School District counsel, you did not
. . . .
9. The contract addendum you drafted
[Addendum One] . . . did not reflect the
intention of the School Board. Moreover,
while you stated you would have the
contract addendum reviewed by School
District counsel, you did not . . . .
10. Because of your conduct, the School Board
and the community of Dillingham have lost
confidence in your ability to adequately
carry out the responsibilities of the
superintendent . . . making you unable to
adequately perform the functions of the
superintendent's position.
All but three of those reasons (four, five and six) concern the
manner in which Addendum One and Addendum Two were added to the
contract. The trial court found that reasons four and five,
alleged failure to conduct and ensure the completion of performance
evaluations, did not create good cause for termination. Although
there was some truth in the allegations, extenuating circumstances
existed in both instances. None of the Board members testified
that these actions resulted in their lack of trust in Kilmer. We
agree with the superior court that reasons four and five do not
constitute good cause. Given our conclusion that the Board had
other legitimate reasons to terminate Kilmer, it is not necessary
for us to decide whether the superior court clearly erred in
finding that reason six was an insufficient justification for
termination.
We further note that the trial court ordered that because of
inaccurate and untimely responses to Kilmer's request for
admissions, the District had admitted that Kilmer did not violate
Department of Education regulations in preparing the contract
addenda as alleged in reason two.
8. Although those findings are found in the trial court's
"conclusions of law,"we find that these are findings of fact that
must be reviewed under the clearly erroneous standard. It is of no
consequence what label the trial court has attached to its
findings. Urban Dev. Co. v. Dekreon, 526 P.2d 325, 328 (Alaska
1974).
9. Kilmer argues that finding (a) is clearly erroneous because
there is no evidence Kilmer had a duty to have a lawyer review the
addenda. We agree. However, we find that finding (a) is of minor
importance in relation to the court's other findings.
10. The dissent argues that this court "accepts"the trial court's
characterization of the case: that Kilmer was terminated after he
pulled the "wool over the eyes"of "an insufficiently sophisticated
group of people. . . ." Dissent at 9. The court has accepted no
such characterization, nor does this opinion rest on such a
proposition. Further, the trial court never stated that the Board
members were insufficiently sophisticated to act, implied that they
were unsophisticated, or stated that its decision was based on any
such characterization. It noted that "a more sophisticated group
of people may (or may not) have been able"to draw certain
distinctions, but it elsewhere referred to "missteps of
exceptionally well intentioned and competent people." In context
of the latter comment, the first comment cannot be read to imply
that Board members were unsophisticated or not sophisticated enough
to run the school district. We reject any possible implication
that Kilmer's transgressions should be excused because a more
knowledgeable Board would have prevented him from doing anything
objectionable.
11. Kilmer obtained a total of $19,200 in cashed-in leave in 1988.
He cashed in another $5,100 during 1989.
12. The trial court found that the Board was partially responsible
for the events leading to this case. When deciding whether there
is good cause for termination, however, it is primarily Kilmer's
conduct that must be analyzed.
13. See, supra note 1.
14. The relationship between superintendent and school board
requires a high level of confidence and trust. If the
superintendent causes this close relationship to disintegrate, then
he or she is no longer able to function as superintendent.
Wedergren v. Board of Directors, 307 N.W.2d 12, 22 (Iowa 1981).
ENDNOTES (Dissent):
1. The Alaska Constitution preserves the right to trial by
jury. Alaska Const. art. 1, sec. 16.
2. As the separate opinions filed in this case show, three
members of this court do not agree with the superior court on this
issue.
3. Paragraph 9 of the Dillingham City School District
Superintendent's Contract provides in part:
Superintendent Status. It is understood by
and between the parties that the
Superintendent serves at the pleasure of the
District. The Superintendent hereby expressly
waives any rights as set forth in A.S.
14.20.095 through A.S. 14.20.210, inclusive
thereof. In addition, the Superintendent
waives any right to any grievance procedures
established by the District. Nonetheless, the
Superintendent shall have the right to address
the Board concerning any aspect of the
Superintendent's contract or concerning
possible termination of the contract.
4. The District's attorney's letter to Kilmer commenced with the
statement that "[y]ou are hereby notified that you are dismissed."
It set forth the Board's reasons for so doing, and then advised
Kilmer that
In the contract . . . you expressly waived any
statutory rights set forth in AS 14.20.095
through AS 14.20.210, inclusive thereof.
Nevertheless, under Alaska law you have a
constitutional due process right to notice and
a hearing before the School Board to present
any defenses you may have regarding your
termination. If you would like a hearing
before the Dillingham City School Board
regarding your termination, please notify the
School District in writing within five (5)
days from the day you receive this letter.
The letter does not suggest that the Board might bear the burden of
proving the charges, or that Kilmer might be entitled to a hearing
before a tribunal consisting of persons other than those who
themselves made the charges.
5. The due process guarantees in the Alaska and United
States constitutions give public employees a right to notice and a
hearing before they can be dismissed. Odum v. University of
Alaska, 845 P.2d 432, 434 (Alaska 1993); Storrs v. Municipality of
Anchorage, 721 P.2d 1146, 1148-51 (Alaska 1986), cert. denied, 479
U.S. 1032 (1987).
6. Kilmer alleged breach of contract, breach of the covenant of
good faith and fair dealing, defamation, intentional interference
with prospective contractual relationships and business
opportunities, negligent interference with prospective business
opportunities, and invasion of privacy.
7. The District does not rely on this Notice to establish a
waiver. This is understandable, since litigants cannot
unilaterally overrule a court's decision. The superior court did
not respond directly to the District's Notice, rather it noted that
the Notice was moot. Nonetheless, this is one of the three
documents on which this court relies in concluding that a waiver
occurred.
8. In footnote 12 of the District's Brief of Appellee/Cross-
Appellant, the District asserts that "Kilmer concedes that he
agreed to waive trial by jury. Kilmer Brief at 24, note 37."
Note 37 states:
Kilmer filed a Notice of Appeal, Statement of
Points on Appeal, and Request for Jury Trial.
. . . The District objected to the jury trial
request, based on Kilmer's case being
designated an administrative appeal, and the
court denied Kilmer a jury. . . . After that,
the parties agreed to waive jury trial as to
Kilmer's remaining claims, which were not part
of the administrative appeal.
Kilmer and the District may disagree on what was intended
by Kilmer's waiver. However, the District's representation of
Kilmer's waiver is patently wrong.
9. See Johns v. Commercial Fisheries Entry Comm'n, 758 P.2d 1256,
1260 (Alaska 1988) ("We have adopted a rule that agency decisions,
in the exercise of their adjudicative powers, must be accompanied
by written findings and a decisional document."). There are
neither written findings nor a decisional document in this case,
because (1) there was no hearing from which they might be
generated, Kilmer having waived the ad hoc due process hearing, and
(2) there is no citation to any authority suggesting that the Board
had or was exercising any adjudicative powers with respect to
Kilmer.
10. Count 10 is a reiteration of the first justification for
terminating Kilmer's contract, i.e., the "loss of confidence"in
his ability to carry out the responsibilities of superintendent.
11. The superior court does not list Kilmer's failure to record
the meeting as a factor relevant to the Board's loss of faith in
Kilmer. Moreover, the Board's attorney, in his report exonerating
Kilmer of wrongdoing, found that tape recording the meeting was not
required under Alaska law or under the District's policy manual.
12. These Counts accuse Kilmer of stating that he would obtain
review, and then failed to do so. This assertion is not borne out
by the minutes of any Board meeting, however, and the superior
court made no such factual finding.
13. The District's policy manual required the signature of a Board
member and an administrator on each check. There is no question
that Kilmer's checks, which were signed by Board member Wiggins and
Kilmer himself, met this requirement. The District's attorney
found no fault with the checks issued to Kilmer.
14. These findings respectively state that Kilmer erred several
ways: by leading the Board to mistakenly believe that he intended
to cash in only past and not future unused leave; by not presenting
the Board with the dollar amount of his unused leave; and, by
taking his principal's compensation in advance, failing to use the
money to buy back retirement.
15. The court implies that Kilmer's actions breached that part of
the District policy manual that requires the superintendent to
"plac[e] before the Board such necessary and helpful facts,
information, and reports as are needed to insure the board's acting
in full possession of all the relevant data."That general
provision of the manual does not speak to the issue of the
superintendent's compensation, however. In regard to compensation,
the manual explains that the superintendent's usual advisory duties
are suspended; he need not even be present at meetings which
pertain to his employment and compensation. These provisions do
not absolve the superintendent of responsibility for
misrepresentation in matters pertaining to compensation. But as
discussed infra, the record does not support the proposition that
Kilmer engaged in misrepresentation.
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