Ballard v. Giltner Public Schools, School Dist. No. 2, Hamilton County

• Decision Date: 04 December 1992
• Docket Number: No. S-90-036,S-90-036
• Parties: , 79 Ed. Law Rep. 250 Loretta F. BALLARD, Appellee, v. GILTNER PUBLIC SCHOOLS, SCHOOL DISTRICT NO. 2, HAMILTON COUNTY, Nebraska, Appellant.
• Court: Nebraska Supreme Court

Page 855

492 N.W.2d 855

241 Neb. 970, 79 Ed. Law Rep. 250

Loretta F. BALLARD, Appellee, v. GILTNER PUBLIC SCHOOLS, SCHOOL DISTRICT NO. 2, HAMILTON COUNTY, Nebraska, Appellant.

No. S-90-036.

Supreme Court of Nebraska.

Dec. 4, 1992.

Syllabus by the Court

1. Res Judicata: Proof. For use of res judicata, a litigant must affirmatively raise the issue and prove the factual basis for application of res judicata.

2. Breach of Contract: Words and Phrases. Breach of contract is a contractual party's failure, without legal excuse, to perform a promissory obligation which forms the whole or part of a contract.

3. Breach of Contract: Proof. As an affirmative defense, breach of contract 4. Employer and Employee: Words and Phrases. For the purpose of an employer-employee relationship, insubordination is an employee's willful or intentional disregard of, or refusal to obey, an employer's reasonable order, rule, or regulation, which is expressed or implied and is given or promulgated under lawful authority related to the employment.

must be pleaded and proved by the party having the burden of proof for the defense.

John F. Recknor, of Barlow, Johnson, DeMars & Flodman, Lincoln, for appellant.

L. William Kelly III, of Kelly & Schroeder, Grand Island, for appellee.

HASTINGS, C.J., and BOSLAUGH, WHITE, CAPORALE, SHANAHAN, GRANT, and FAHRNBRUCH, JJ.

SHANAHAN, Justice.

PROCEDURAL BACKGROUND

In the county court for Hamilton County, Loretta F. Ballard sued Giltner Public Schools, School District No. 2 of Hamilton County, Nebraska (School District), for breach of their written employment contract. In its answer, the School District pled res judicata, based on a decision by the Nebraska Appeal Tribunal which determined that Ballard was disqualified from receiving unemployment compensation benefits, and alleged that Ballard had breached her employment contract as the result of employee misconduct.

The trial court concluded that the School District had breached the employment contract because Ballard's dismissal from employment was unjustified, and awarded Ballard a judgment of $4,558 against the School District, after credit for Ballard's receipt of 1 month's salary ($522) and $1,184 in unemployment compensation benefits to which Ballard was unentitled. Ballard does not contest use of unemployment compensation benefits as a credit in determining the amount of the damages judgment awarded to Ballard. Cf. Bang v. International Sisal Co., 212 Minn. 135, 4 N.W.2d 113 (1942) (receipt of unemployment compensation benefits is not allowable as a credit against damages recovered in an employee's action for breach of employment contract). Cf., also, Dehnart v. Waukesha Brewing Co., 21 Wis.2d 583, 124 N.W.2d 664 (1963) (receipt of unemployment compensation benefits is allowable as a credit against damages recovered in an employee's action for breach of employment contract). The School District appealed to the district court, which affirmed the county court judgment.

BALLARD'S DISMISSAL FROM EMPLOYMENT

Ballard had been employed by the School District as an assistant cook for 8 years pursuant to annual written agreements. Ballard's most recent agreement, which was denominated "School Employee Contract," stated that the period of her employment was August 29, 1983, to May 24, 1984, at an annual salary of $6,264 paid in monthly installments. The contract also stated that Ballard's employment could exist during the contract period "as long as [she] render[ed] satisfactory service."

On the morning of September 29, 1983, just 1 month after commencement of her work as a cook for the School District under the contract in issue, Ballard was called into the office of Douglas Bandemer, school principal, to discuss the misconduct of her son, an eighth grade student at the same school where Ballard worked. At the conclusion of the conference, and as Ballard was leaving the principal's office, the principal's secretary heard Ballard, in a Shakespearean aside, say that the principal was a "dumb bastard." After the secretary told the principal what Ballard had said, the principal fired Ballard that same afternoon.

Ballard applied for unemployment compensation benefits pursuant to the Employment Security Law, Neb.Rev.Stat. § 48-601 et seq. (Reissue 1988), but was later disqualified from benefits when the Department

                of Labor determined that Ballard's employment was terminated as a result of work-related misconduct.  In Ballard's appeal to the Nebraska Appeal Tribunal, the tribunal determined that Ballard's remark [241 Neb. 973] "was such as to disregard the standards of behavior which an employer has a right to expect of its employees on the business premises and thereby jeopardized the employer/employee relationship."   Ballard did not appeal the tribunal's decision
                

STANDARD OF REVIEW

An action for damages resulting from a breach of contract is a law action.

In a bench trial of a law action, a trial court's factual findings have the effect of a verdict and will not be set aside unless clearly erroneous. In reviewing a judgment awarded in a bench trial of a law action, an appellate court does not reweigh evidence, but considers the evidence in the light most favorable to the successful party and resolves evidentiary conflicts in favor of the successful party, who is entitled to every reasonable inference deducible from the evidence.

Broekemeier Ford v. Clatanoff, 240 Neb. 265, 267, 481 N.W.2d 416, 418 (1992). Accord, Albee v. Maverick Media, Inc., 239 Neb. 60, 474 N.W.2d 238 (1991); Justice v. Hand, 227 Neb. 856, 420 N.W.2d 704 (1988); Alliance Nat. Bank v. State Surety Co., 223 Neb. 403, 390 N.W.2d 487 (1986).

RES JUDICATA

The School District contends that as the result of Ballard's proceeding under the Employment Security Law, the doctrine of res judicata precludes relitigation of the employee misconduct issue decided by the Nebraska Appeal Tribunal. According to the School District, because the Nebraska Appeal Tribunal determined that termination of Ballard's employment resulted from work-related misconduct, the trial court in Ballard's contract action was bound by the Nebraska Appeal Tribunal's determination under the Employment Security Law.

In NC+ Hybrids v. Growers Seed Assn., 228 Neb. 306, 310-11, 422 N.W.2d 542, 545 (1988), we stated:

The doctrine of res judicata is based on the principle that a final judgment on the merits by a court of competent jurisdiction is conclusive upon the parties in any later litigation involving the same cause of action....

Res judicata is founded on a policy favoring termination of an action by preclusion or prevention of subsequent litigation on the same cause.

For use of res judicata, a litigant must affirmatively raise the issue and prove the factual basis for application of res judicata. See, DeCosta Sporting Goods, Inc. v. Kirkland, 210 Neb. 815, 316 N.W.2d 772 (1982); Tedco Development Corp. v. Overland Hills, Inc., 205 Neb. 194, 287 N.W.2d 49 (1980); State ex rel. Weasmer v. Manpower of Omaha, Inc., 163 Neb. 529, 80 N.W.2d 580 (1957). See, also, Grand Lodge I.O.O.F. v. Marvin, 220 Neb. 197, 369 N.W.2d 54 (1985) (use of the specific phrase "res judicata" is unnecessary when the facts alleged supply a basis for assertion of res judicata).

The School District did plead and offered to factually establish the decision of the Nebraska Appeal Tribunal in which the tribunal concluded that Ballard's remark about the principal was employee misconduct which disqualified Ballard from receiving unemployment compensation benefits. However, § 48-636 of the Employment Security Law specifically provides:

Except insofar as reconsideration of any determination is had under sections 48-630 to 48-632, any right, fact, or matter in issue, directly passed upon or necessarily involved in a determination or redetermination which has become final, or in a decision on appeal which has become final, shall be conclusive for all the purposes of the Employment Security Law as between the Commissioner of Labor, the claimant, and all employers who had notice of such determination, redetermination, or decision. Subject to appeal proceedings and judicial review as provided in sections 48-633 to 48-644, any determination, redetermination, or decision as to rights to benefits shall be conclusive for all the purposes of such law and shall not be subject to collateral attack by any employer.

(Emphasis supplied.)

In White v. Ardan, Inc., 230 Neb. 11, 430 N.W.2d 27 (1988), we determined that conclusiveness of findings pursuant to the Employment Security Law is limited by § 48-636. In White, the plaintiffs sued their former employer for breach of their employment contracts. When Ardan asserted that termination of the plaintiffs' employment was based on employee misconduct, the plaintiffs responded by showing that prior proceedings under the Employment Security Law had concluded with a finding that the plaintiffs were not guilty of misconduct in their employment with Ardan; hence, according to the plaintiffs in White, the doctrine of res judicata legally prevented Ardan's showing any employee misconduct to preclude the plaintiffs' subsequent contract action. This court disagreed by noting that § 48-636 (Cum.Supp.1986) specifically provides that "any determination made under the Nebraska Employment Security Law is conclusive for the purpose of that law." (Emphasis in original.) 230 Neb. at 22, 430 N.W.2d at 34. Because White did not involve a claim for unemployment benefits, but, rather, involved a claim based on breach of contract, the doctrine of res judicata was unavailable in the employees' subsequent contract action for damages.

The School District argues that pursuant to our later holding in Scott v. Mattingly, ...