ACADEMY v. Adams County School Dist. No. 12

• Decision Date: 17 September 2001
• Docket Number: No. 99SC548.,99SC548.
• Citation: 32 P.3d 456
• Parties: ACADEMY OF CHARTER SCHOOLS, a charter school; Academy of Charter Schools Association, a voluntary association; Wanda Barnes; John Kircher; Mindie Knowles; Eric Sanderson; Brenda Soucie; Philip Winkler and Evalee Winkler, Petitioners, v. ADAMS COUNTY SCHOOL DISTRICT NO. 12; Board of Education, Adams County School District No. 12, Respondents.
• Court: Colorado Supreme Court

32 P.3d 456

ACADEMY OF CHARTER SCHOOLS, a charter school; Academy of Charter Schools Association, a voluntary association; Wanda Barnes; John Kircher; Mindie Knowles; Eric Sanderson; Brenda Soucie; Philip Winkler and Evalee Winkler, Petitioners, v. ADAMS COUNTY SCHOOL DISTRICT NO. 12; Board of Education, Adams County School District No. 12, Respondents.

No. 99SC548.

Supreme Court of Colorado, En Banc.

September 17, 2001.

Rehearing Denied October 15, 2001.

Law Office of Shawn D. Mitchell, Shawn D. Mitchell, Broomfield, CO, Attorney for Petitioners.

Semple, Miller & Mooney, P.C., Patrick B. Mooney, Kathleen M. Shannon, Julie C. Tolleson, Denver, CO, Attorneys for Respondents.

Justice MARTINEZ delivered the Opinion of the Court.

In this case, we consider whether a charter school may seek enforcement of the charter contract with its local school district. Plaintiffs-petitioners, Academy of Charter Schools (Academy), Academy of Charter Schools Association, and seven named individuals, seek to enforce a charter contract with Adams County School District No. 12 (the District) in court instead of through the dispute resolution process in the contract. Academy also seeks reversal of the court of appeals' determination that the private association of individuals here lacks standing to enforce the charter contract, regardless of the charter school's authority to sue the District.

In its complaint, Academy alleged that the District breached the charter contract in several ways, including withholding of promised support, retaining state and federal funds belonging to Academy by law, and violating Academy's statutory and contractual authority by interfering with Academy operations, including budgeting, hiring, and contracting. Academy initially sought enforcement of the contract from the State Board of Education (the State Board), which declined to exercise jurisdiction, concluding that Academy's remedy lay in enforcing the contract in district court. The district court dismissed Academy's complaint pursuant to the District's C.R.C.P. 12(b)(5) motion to dismiss, concluding that charter schools lack the authority to enforce their charter contracts. The district court further held that the Charter Schools Act (the Act) does not give charter schools authority to sue because charter schools are subordinate to their districts.

On appeal, the court of appeals affirmed the district court decision, but limited the rationale. The court of appeals held that, despite the implied authority given to charter schools to enforce their contracts in the Act, the fact that charter schools are subordinate to their school districts prevents them from bringing suit. The court concluded that, without an explicit expression of legislative intent to the contrary, subordinate agencies cannot sue their superior bodies. Acad. of Charter Schs. v. Adams County Sch. Dist. No. 12, 994 P.2d 442, 444 (Colo.App.1999). The court of appeals further held that the Act not only failed to express explicit authority to sue, but also that the Act withheld implied authority because a charter school is part of the school district that grants its charter.¹ Id. In 1999, the General Assembly amended section 22-30.5-104(7)(b), describing the power of charter schools to enter into various types of service contracts with their local school district or other third parties. Ch. 302, sec. 5, § 22-30.5-104(7)(b), 1999 Colo. Sess. Laws 1255, 1256. In that amended section, the legislature also expressly granted standing to charter schools to sue for enforcement of contracts formed under that paragraph (b). § 22-30.5-104(7)(b), 7 C.R.S. (2000). Finally, in House Bill 99-1274 (HB1274 or the Amendment), section 1 states that the legislative declaration behind the bill was to clarify the General Assembly's intent concerning the empowerment of charter schools to enter into contracts. Ch. 302, sec. 1, 1999 Colo. Sess. Laws 1255. The General Assembly also enacted section 22-30.5-107.5, 7 C.R.S. (2000). Ch. 302, sec. 3, § 22-30.5-107.5, 1999 Colo. Sess. Laws 1255, 1255-56. That section outlines the dispute resolution process to resolve disputes that may arise concerning the implementation of the charter contracts. § 22-30.5-107.5.

In light of theses 1999 amendments to the Act, we disagree with the decision of the court of appeals. We hold that the express grant of standing to charter schools to sue for enforcement of service contracts entered into in order to carry out the educational program described in the charter clarifies the power originally granted to charter schools in the Act. Because the charter contract between Academy and the District encompasses many contractual provisions related to the types of service contracts considered in section 22-30.5-104(7)(b), we hold that Academy has standing to bring those claims related to the service provisions of the contract against the District in the judicial system.

However, we further conclude that the dispute resolution process outlined in section 20-30.5-107.5 serves as a retroactive change of the process to resolve disputes concerning the governing policy provisions of the charter contract. Thus, we hold that the disputes between Academy and the District arising out of implementation of the statutorily required portions of the charter contract are not justiciable and are reserved for resolution by the State Board. Accordingly, we reverse the decision of the court of appeals, in part, and affirm it, in part.

I.

In 1993, following the enactment of the Charter Schools Act (the Act), sections 22-30.5-101 to 209, 7 C.R.S. (2000), a group of parents in Adams County developed a plan to open a charter school. The group formed an unincorporated voluntary association, named the Academy of Charter Schools.² The Association submitted an application for the Academy of Charter Schools to the Adams County School District No. 12. After negotiations, the District voted to approve Academy's application, but with significant alterations. Academy, considering these changes to be a rejection and counteroffer by the District, appealed to the State Board. The State Board ruled that the District had indeed denied Academy's application, and that such denial was contrary to the best interests of the District, the community, and the students. The State Board remanded the issue to the District and Academy, instructing the two parties to resolve their dispute in a manner consistent with the State Board's decision.

In September 1994, the District and Academy entered into a charter contract which authorized the establishment of a charter school. Shortly thereafter, the District served Academy with notice of intent to withdraw the charter. After the District withdrew Academy's charter, Academy again appealed to the State Board, which ruled that revocation of the charter was, once again, contrary to the best interests of the District, the community, and the students.

Academy continues to function as a charter school, but brings this case because of alleged non-compliance by the District. Per the requirements in the contract, for the first year of the charter's existence, the District is required to provide Academy students with funding and services approximately equal to the resources given to other students in the District. This means that the District would give one-hundred percent of the per pupil operating revenues (PPOR) on a per capita basis, plus in-kind services, to help cover start-up costs for the first year. In years two and three, the District would continue to provide resources, although at a lower level than the first year of operation. Those resources consist of funding equal to eighty percent of the District's PPOR on a per capita basis. Additionally, in years two and three of the school's existence, the contract states that the District is to provide in-kind services making up for the other twenty percent of the PPOR.

In its complaint, Academy states numerous claims alleging that the District has not fulfilled its contractual obligations. For example, Academy alleges that after the first year, the District has refused to provide the services agreed upon, and has instead provided only employee payroll and accounting processing services, and has asserted that some portion of the District's overhead counts against the twenty percent. Academy additionally alleges that the District, in derogation of its statutory duty, refused to distribute to Academy state and federal funds generated by disabled Academy students, or the staff serving them, under section 22-30.5-112(3)(a), 7 C.R.S. (2000).

Academy further claims that, under the charter contract and the Act, Academy has the authority to direct its affairs, including responsibility for its budget, operations, and for contracting with third parties. Academy alleges that the District refuses to allow Academy to possess or control its own funds, and instead the District maintains control over Academy's funds, requiring Academy to request payment for expenditures. By retaining this fiscal power, Academy alleges that the District illegally retains an effective line-item veto power over Academy operations, and that the District receives interest payments generated by Academy funds at Academy's expense. This behavior, Academy claims, is consistent with the District's policy of imposing new requirements upon Academy without amending the contract.

In response to all of these violations, Academy filed its complaint against the District. The District filed a motion to dismiss, or alternatively a motion for summary judgment. After Academy filed an amended complaint and the District filed a new motion to dismiss or for summary judgment, the district court granted the District's motion. The district court held that a charter school has no standing or statutory authority to sue its authorizing board of education, that the private association here had no standing to bring suit under the charter...