Klinger v. Adams County School Dist. No. 50

Decision Date06 March 2006
Docket NumberNo. 04SC724.,04SC724.
Citation130 P.3d 1027
PartiesPetitioner: Mary KLINGER, v. Respondents: ADAMS COUNTY SCHOOL DISTRICT NO. 50, and Board of Education of Adams County School District No. 50.
CourtColorado Supreme Court

Colorado Education Association, Charles F. Kaiser, Denver, for Petitioner.

Semple, Miller, Mooney & Farrington, P.C., Martin Semple, Melissa Mequi, Denver, for Respondents.

Kathleen Shannon, Denver, for Amicus Curiae Colorado Association of School Boards.

MULLARKEY, Chief Justice.

I. Introduction

We granted certiorari to determine the meaning of the phrase "ordinary and necessary expenses" as used in section 22-63-202(2)(a), C.R.S. (2005),1 and as applied to reimbursement for damages incurred by a public school district in this state when one of its teachers resigns without giving the statutorily required 30 day notice.2 We find that the phrase "ordinary and necessary expenses" limits the damages a school district can recover from a teacher who resigns with insufficient notice to actual expenditures incurred in finding the teacher's replacement. Therefore, we conclude that the court of appeals erred in its analysis of the statutory language and we reverse Klinger v. Adams County School District No. 50, 109 P.3d 1014 (Colo.App.2004).

II. Facts and Procedural History

The petitioner, Mary Klinger, worked as a teacher for Adams County School District No. 50 and its Board of Education (the "District") for 12 years. She worked full-time for 10 years and worked part-time during her final two years of employment with the District. Klinger was employed under an annually renewing employment contract. The employment contract provided:

If the Teacher abandons, breaches, or otherwise refuses to perform services for the District pursuant to the terms of this Agreement, the District shall be entitled to recover from the Teacher all damages provided by law, including, but not by way of limitation, the right to recover damages in securing the services of a suitable replacement teacher, not in excess of 1/12th [sic] of the Teacher's annual salary.

The contract incorporated by reference the provisions of section 22-63-202(2)(a), which authorizes a school district to withhold certain expenses as damages up to one-twelfth of the annual salary of a teacher who resigns without providing notice of resignation 30 days prior to the succeeding academic year.3

In May 2001, Klinger received her assigned teaching schedule for the 2001-2002 school year, which began on August 20, 2001. The schedule created a personal conflict for Klinger who attempted to obtain a change in assignment from the District's administration. The District did not adjust Klinger's assignment and, on August 6, 2001, she accepted a part-time teaching position with the Jefferson County School District. On August 10, 2001, the Adams County School District received her letter of resignation, which was effective immediately.

Following receipt of Klinger's resignation letter, the District informed her that it had incurred costs related to finding her replacement totaling $1,569.50 and had withheld her entire final paycheck totaling $1,426.50, one-twelfth of her net annual salary. The District's itemized breakdown of its costs included: $133.50 for advertising and recruitment activities, $1,389 for the salaries of District employees who interviewed prospective replacements, and $47 for the efforts of non-employee third parties who assisted in finding Klinger's replacement.

Klinger filed a complaint, alleging a breach of contract and a violation of section 22-63-202(2)(a).4 During the subsequent jury trial, the only witnesses were Klinger and the District's human resources director. The director testified that the District did not specifically advertise for the replacement position, that the employees conducting the interviews were not paid overtime for their work in finding Klinger's replacement, and that no substitute teachers were hired to cover classes for those employees when they were conducting interviews. At the close of the director's testimony, Klinger moved for a directed verdict, arguing that as a matter of law, "expenses" in section 22-63-202(2)(a) means out-of-pocket expenses and, therefore, the allowable damages were limited to $47. The trial court denied the motion, stating that the jury must determine the "ordinary and necessary expenses" to secure a suitable replacement teacher.

The jury awarded Klinger $133.50, presumably for the District's claimed advertising and recruitment costs. The jury's award was in harmony with the human resources director's testimony that the District hired from an existing applicant pool and did not specifically advertise for the replacement position. The jury did not reimburse Klinger for the portion of her salary the District withheld based on the salaries it paid employees who assisted in finding her replacement. Klinger appealed the trial court's ruling.

The court of appeals affirmed the trial court, holding that the term "ordinary and necessary expenses" was inclusive of salaries paid to employees who assisted in finding a replacement teacher and who otherwise would have been engaged in other projects. Klinger petitioned this court for certiorari review and we granted the petition. We reject the court of appeals' interpretation of the statutory language and therefore we reverse its ruling.

III. Analysis

The result in this case turns on whether the statutory provision limiting a school district's recovery of damages to the "ordinary and necessary expenses" it incurs in finding a replacement for a teacher who resigns with insufficient notice allows recovery of monies paid to salaried employees when the employees would have been paid the same amount regardless of the teacher's late resignation. See § 22-63-202(2)(a). The court of appeals answered this question in the affirmative, reasoning that "ordinary and necessary expenses" in section 22-63-202(2)(a) includes "overhead" when used in the damages context. We find that the court of appeals' holding was inconsistent with the applicable principles.

As the court of appeals noted, the term "overhead" is commonly used in the damages context while the phrase "ordinary and necessary expenses" is not. Klinger, 109 P.3d at 1016-17. Had the general assembly meant section 22-63-202(2)(a) to permit recovery for "overhead," it could have utilized that specific term. We decline to endorse the court of appeals' interpretation. Instead, we interpret "ordinary and necessary expenses" in its context and consistently with the relevant caselaw, the education policy priorities expressed by the legislature, and general contract law principles.

A.

Statutory interpretation is a question of law which this court reviews de novo. See, e.g., Ryals v. St. Mary-Corwin Reg'l Med. Ctr., 10 P.3d 654, 659 (Colo.2000). When interpreting a statute, our task is to give effect to the intent of the general assembly. See, e.g., Colorado Office of Consumer Counsel v. Pub. Util. Comm'n, 42 P.3d 23, 27 (Colo.2002). We avoid interpreting a statute in a way that would defeat the obvious intent of the legislature. Id.

When interpreting the general assembly's intent, we turn first to the language of the statute. See, e.g., People v. McCullough, 6 P.3d 774, 778 (Colo.2000). We read words and phrases in context and construe them literally according to common usage unless they have acquired a technical meaning by legislative definition. People v. Yascavage, 101 P.3d 1090, 1093 (Colo.2004). Where the language is clear and unambiguous, we do not resort to other rules of statutory construction. Slack v. Farmers Ins. Exch., 5 P.3d 280, 284 (Colo.2000); McCullough, 6 P.3d at 778. However, where the language is ambiguous we rely on other factors such as legislative history, the consequences of a given construction, and the end to be achieved by the statute. Yascavage, 101 P.3d at 1093.

Section 22-63-202(2)(a) indicates that the phrase "ordinary and necessary expenses" is an additional limitation on the damages cap of one-twelfth of the amount of the resigned teacher's annual salary. The recovery a school district may obtain "[s]hall not exceed" such expenses. § 22-63-202(2)(a), (emphasis added). The use of the word "shall" indicates that the legislature intended that the limitation on damages to the school district's expenses be mandatory, not hortatory. See, e.g., Reg'l Transp. Dist. v. Outdoor Sys., Inc., 34 P.3d 408, 420 (Colo.2001).

Prior interpretations of the statute have construed "ordinary and necessary expenses" as a required limitation. Stackhouse v. Sch. Dist. No. 1, County of Denver, 919 P.2d 902, 905 (Colo.App.1996) (section 22-63-202(2)(a) requires that school board prove withheld amount does not exceed "ordinary and necessary expenses" incurred in securing a suitable replacement teacher). None of our prior cases has construed what qualifies as an "expense" under the statute. See id. at 905 (summary judgment reversed and case remanded to trial court for determination of "actual expenses" incurred by school board); Klinger, 109 P.3d at 1016.

Looking to the general definitions of "ordinary and necessary expenses," it is apparent that it is commonly used in accounting or tax law terminology. Black's Law Dictionary defines an "expense" as "[a]n expenditure of money, time, labor, or resources to accomplish a result; esp. a business expenditure chargeable against revenue for a specific period." Black's Law Dictionary, 598 (7th ed.1999); see also Webster's Encyclopedic Unabridged Dictionary 680 (Deluxe ed.1996) ("expenses" defined as "charges incurred during a business assignment or trip [or] money paid as reimbursement for such charges"). An "expenditure" is defined as "[t]he act or process of paying out; disbursement." Black's at 598. And an "ordinary and necessary expense" is defined as "[a]n expense that is normal or...

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