Ahlschlager v. Lawton School District, 2010 OK 41 (Okla. 6/1/2010)
| Decision Date | 01 June 2010 |
| Docket Number | No. 105626.,105626. |
| Citation | 2010 OK 41 |
| Parties | Derald Ahlschlager, individual; Shirley Ahlschlager, individual, Clayton Alexander, individual; Barbee Barker, individual; Bill Barker, individual; Cleo Bass, individual; Elbert Bentley, individual; Doyle Blackburn, individual; Jerry Boucher, individual; Mary Boucher, individual; Carolyn Brown, individual; Louetta Cheek, individual; Roma Chenoweth, individual; Edna Dean, individual; Karen Denison, individual; Dianne Dirickson, individual; Henry Dirickson, individual; Catherine Donahue, individual; Eunice Edison, individual; Rundell Edison, individual; Dixie Elder, individual; (Roy) Lynn Erman, individual; Sandra Ewing, individual; Jimmie Fishgrab, individual; Karen Gardner, individual; Jack Green, individual; Rhonda Hankins, individual; Bonny Hartline, individual; David Hill, individual; Ron Honeycutt, individual; Fred Michael Hooper, individual; Rheu Nell Horton, individual; Jeanne Jarvis, individual; Bill Johnson, individual; Howard Johnson, individual; Jo Jean Johnson, individual; Yvonne Johnson, individual; Sue Large, individual; David Lucas, individual; Virginia Luca, individual; Rodney Mastin, individual; Doris McNair, individual; Linda Moon, individual; Neta Morris, individual; Aves Munson, individual; Peggy Myers, individual; Carole Neptune, individual; Larry New, individual; Myrna New, individual; Cynthia Sharron Nichols, individual; Bryan Nunn, individual; Marcia Peppell, individual; Gwendolyn Phelps, individual; Patricia Pricer, individual; Louise Ratcliff, individual; Henry Ray, individual; Janet Ray, individual; Janet Ray, individual; Jay Roberts, individual; Loydel Robertson, individual; Kenneth Schraner, individual; Jody (Joanne) Sherry, individual; Zema (Sally) Smiddy, individual; Delton Smith, individual; Howard Smith, individual; Judith Smith, individual; Rosemary Smith, individual; Sharon Smith, individual; Russa Stout, individual; Erma (Ruth) Strickland, individual; Maxie Tenopir, individual; Melvin Tubbs, individual; Betty Tumlinson, individual; Roberta (Butch) Vowell, individual; Imogene Wilkinson, individual; Mary Wilson, individual; Carolyn Youngstredt, individual; and Kenneth Youngstredt, individual, Appellees/Counter-Appellants, v. Lawton School District, Independent School District 008 of Comanche County, a political subdivision of the State of Oklahoma, Appellant/Counter-Appellee. |
| Court | Oklahoma Supreme Court |
CERTIORARI TO THE COURT OF CIVIL APPEALS DIVISION IV
¶ 0 Retired employees brought an action against their former employer, a school district, asserting a breach of early retirement contracts. A jury determined that the contracts were breached and awarded damages. The trial court, Honorable Richard Van Dyck, Comanche County, entered judgment on the verdict. The Court of Civil Appeals reversed holding that the failure to present evidence of the school district's indebtedness for the fiscal year in which the judgment was entered made the judgment void. On rehearing, that court held a new trial was required as a result of the void judgment.
CERTIORARI PREVIOUSLY GRANTED;
OPINION OF THE COURT OF CIVIL APPEALS VACATED;TRIAL COURT JUDGMENT VACATED;
CAUSE REMANDED WITH INSTRUCTIONS.
Stanley M. Ward, Woodrow K. Glass, Scott F. Brockman, Ward & Glass, LLP, Norman, Oklahoma for Appellees/Counter-Appellants.
Barry K. Roberts, Norman, Oklahoma for Appellees/Counter-Appellants.
Karen L. Long, Jerry A. Richardson, Rosenstein, Fist & Ringold, Tulsa, Oklahoma for Appellant/Counter-Appellee, Lawton School District.
C.E. Wade, Jr., Wade & Mackey, Lawton, Oklahoma for Appellant/Counter-Appellee, Lawton School District.
¶ 1 The primary issue in this matter is the effect of noncompliance with title 62, section 362 of the Oklahoma Statutes which requires proof of a municipality's or school board's current indebtedness before a judgment may be entered in a suit based on contract. This Court holds that the failure to present proof of actual indebtedness for the fiscal year in which a judgment is entered in a contract action voids such judgment. However, that failure is a jurisdictional defect in the judgment only. It does not void the jury's determination that a breach of contract occurred, nor does it void the jury's award of damages. Further, for the reasons stated in this opinion, this Court rejects the assertions of error concerning the trial of this matter. The trial court's judgment is vacated and the matter is remanded to the trial court for a determination of current indebtedness for the fiscal year in which judgment is to be entered on the jury's verdict and consideration of an award of attorney fees and prejudgment interest.
¶ 2 Independent School District No. 8 of Comanche County (Lawton School District) offered an early retirement incentive plan to its employees from 1993 until 1998. The goal of the plan was to generate savings for the District by encouraging the retirement of senior level employees who could be replaced by less experienced employees who earned less money. Under the plan, eligible retirees would receive ten per cent of their annual salary and payment of the cost of the retiree's participation in the Oklahoma State and Educational Employees Health Plan until the retiree aged out of the plan, died, accepted employment which would disqualify the retiree from benefits under the Oklahoma Teachers' Retirement System, or "[b]ecause of a lack of funds, the Board of Education does not authorize the payments in any subsequent fiscal year." The contracts provided no explanation concerning the nature or extent of the "lack of funds" that would justify termination of the plan. It did provide that if the District discontinued benefits, the retiree would have the option of returning to a position with the Lawton Public Schools.
¶ 3 In April of 2002, all retirees receiving benefits under the plan were notified that the Lawton School District was faced with "a financial crisis" that would likely cause the elimination of benefits under the plan. In August of 2002, the Board of Education voted to terminate the payments to retirees under the plan but to continue to pay for the retirees' health insurance.
¶ 4 In February of 2004, seventy-nine retirees brought this action alleging that the District had breached its contracts with them by terminating payments under the plan and failing to reinstate the plan in subsequent years. The matter was tried to a jury in January of 2008.
¶ 5 The District's position at trial was that the decision to terminate the plan benefits was a proper fiscal decision in light of the "financial crisis" caused by a reduction in funding from the State of Oklahoma. It presented evidence of the cost saving measures it implemented which included the elimination of positions by attrition and the elimination of certain programs. Retirees' position was that despite the reduction in funding, the District had adequate funds available to fund the early retirement incentive plan and simply chose not to make the funding of the plan a priority. Retirees presented evidence of sufficient carry-overs of funds from prior fiscal years to fund the program. They also presented evidence to demonstrate the programs were re-instituted and the positions were re-filled.
¶ 6 The jury returned a verdict for Retirees in the amount of $1.4 million, and the trial court subsequently entered judgment on the jury's verdict. Retirees' application for prejudgment interest was denied but their request for prevailing party's attorney fees was granted.
¶ 7 The District appealed arguing that (1) the judgment was void for Retirees' failure to present evidence of the District's indebtedness for the fiscal year in which the judgment was entered pursuant to sections 362 and 363 of title 62, (2) the plan violated the debt limitation of Article 10, section 26 of the Oklahoma Constitution by purporting to bind a school district's revenues beyond the fiscal year in which the contracts were entered, (3) the plan was void for its failure to obtain the approval of the Attorney General pursuant to section 17-116.7 of title 70, (4) the trial court erred in admitting parol evidence as to the meaning of "lack of funds" in the plan, (5) the jury's finding that the District breached its contracts with Retirees was not supported by competent evidence, and (6) the trial court abused its discretion in awarding attorney fees. Retirees counter-appealed arguing that they were entitled to an award of prejudgment interest on the jury award and that the trial court erred in denying the request.
¶ 8 The Court of Civil Appeals considered the failure to present evidence of the District's indebtedness for the fiscal year in which the judgment was rendered to dispose of the matter. It declared the judgment void along with subsequent orders of the trial court which awarded attorney fees and denied prejudgment interest. It remanded the matter "to the trial court for the purpose of receiving evidence pursuant to Section 362, to include the fiscal year in which any judgment on the jury verdict is rendered and the judgments for attorney fees, if any, or prejudgment interest, if any, are entered." The Court of Civil Appeals apparently attempted to clarify its directions on remand by including the following statement in its order denying rehearing:
Because the judgment was vacated, a new trial will be required. At that trial, the Plaintiffs/Appellees [Retirees] will or will not be able to produce the evidence required by 62 O.S. 2001 § 362 discussed in the Opinion. As made clear in the Opinion, no other issue was addressed. Therefore, the Petition for Rehearing is DENIED.
Retirees petitioned for certiorari review urging that the Court of Civil Appeals erred in rejecting their argument that the requirements of section 362 had been satisfied. Today's holding, that the judgment is void but the jury verdict is not tainted by any infirmity, requires resolution of...
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