Weslaco Federation of Teachers v. Texas Education Agency Commissioner of Education Jim Nelson And Weslaco Independent School District

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN

NO. 03-99-00435-CV

Weslaco Federation of Teachers, Appellant

v.

Texas Education Agency; Commissioner of Education Jim Nelson; and Weslaco

Independent School District, Appellees

FROM THE DISTRICT COURT OF TRAVIS COUNTY, 250TH JUDICIAL DISTRICT

NO. 98-07619, HONORABLE MARGARET A. COOPER, JUDGE PRESIDING

This case involves a salary dispute between Appellee Weslaco Independent School

District (the "District") and the Weslaco Federation of Teachers (the "Federation"). After the

District denied its grievance regarding compensation, the Federation appealed to the

Commissioner of Education (the "Commissioner"), (1) who found in favor of the District. The

Federation then brought this suit in district court, seeking judicial review of the Commissioner's

decision. The district court upheld the Commissioner, and the Federation appeals. We will

affirm the district court's judgment.

BACKGROUND

Since at least the 1987-88 school year, the District has paid its teachers a local

supplement (2) in addition to the state-mandated minimum salary. (3) In notifying teachers of their

salaries for an upcoming school year, the District has in the past separated a teacher's total salary

into those two components: the state-mandated minimum and the local supplement.

In the 1987-88 school year, the District's local supplement was $3800. The next

year, the District raised the local supplement to $4000, where it remained until 1992-93. That

year the District raised the supplement to $5000, where it remained until the 1995-96 school year,

when the District reduced the supplement. This reduction forms the controversy now before this

Court.

The District employs its teachers through written contracts that provide for a one-year term of service. Generally, teachers at the District sign their contracts in April or May

before the start of the school year in late August. A teacher who wishes to resign must do so at

least 45 days before the start of the school year. See Tex. Educ. Code Ann. §§ 21.105 (a),

.160(a), .210(a) (West 1996). Once this date passes, a teacher becomes bound to the contract and

must remain with the District for the upcoming school year. See id. §§ 21.105(c), .160(c),

.210(c) (West 1996). For the 1995-96 school year, the deadline for unilateral resignation was July

3, 1995. (4)

Each year, the District sets teachers' salaries when it adopts the budget for that

school year. In 1995-96, the District did not adopt a budget until August 28, 1995, after the

school year started and the deadline for unilateral resignation had passed. Thus, teachers' salaries

for 1995-96 were not established until August 28, after the District's teachers had become

contractually bound to the District for that school year.

The Seventy-Fourth Legislature raised the state minimum salary for teachers

effective with the 1995-96 school year. See Act of May 27, 1995, 74th Leg., R.S., ch. 260, sec.

1, § 21.4011, 1995 Tex. Gen. Laws 2207 , 2278-79 ("Senate Bill 1") ( Tex. Educ. Code Ann.

§ 21.402 , since amended). Senate Bill 1 did not prohibit a district from reducing the amount of

its local supplement. Compare id. , with Act of May 30, 1999, 76th Leg., R.S., ch. 369, § 1.30,

1999 Tex. Gen. Laws 2471 , 2482 ( Tex. Educ. Code Ann. § 21.402 (c-1) (West Supp. 2000))

(school district must pay teachers greater of new state minimum or previous year's salary,

including supplement, plus $300 per month). By the end of June 1995, the District's assistant

superintendent for administration had prepared four budgets for the District's consideration and

presented them to the District's board of trustees. Only one of the proposed budgets retained the

previous $5000 local supplement. During the summer of 1995 while evaluating several budgets

that had varying effects on the local supplement, the District gave the teachers no notice that it

was considering lowering the local supplement.

Shortly before the teachers received their September paychecks, the District finally

notified them of their new salaries. The District did not divide the salary into the traditional two

components of state minimum and local supplement, as it had in the past. However, by

comparing their actual salaries with the state minimum, the teachers realized that they were not

being paid the previous $5000 supplement. For the first time since the 1987-88 school year, the

supplement varied from teacher to teacher based on the extent of teaching experience, and every

teacher's local supplement was less than $5000. However, despite the reduction in local

supplement, due to the increased state minimum requirement, all teachers' salaries were higher

than that of the previous year. Several teachers testified that they expected to receive the previous

local supplement of $5000 in addition to the new state-mandated minimum salary. It is undisputed

that the District had used the existence of a $5000 local supplement to recruit teachers for the

1995-96 school year but in fact paid its teachers a lower amount.

The Federation filed a grievance on behalf of numerous members aggrieved by the

District's action. The District's superintendent denied the grievance. The Federation

unsuccessfully appealed to the District's board of trustees. The Federation then appealed to the

Commissioner. The Commissioner found that although a school district cannot reduce a teacher's

total salary after the teacher can no longer unilaterally withdraw from her contract, a school

district may set a salary schedule that reduces elements of that salary so long as the teacher's total

compensation is not reduced. The Federation sought judicial review in the district court, who

affirmed the Commissioner's decision. The Federation now appeals, arguing that (1) as a matter

of law, the teachers' contracts require the District to pay according to the salary schedule adopted

before performance began, i.e. , the $5000 local supplement effective in 1994-95 plus the new

state minimum; (2) as a matter of law, the District cannot reduce or eliminate the local supplement

after the teachers become bound to their contracts; and (3) estoppel prevents the District from

reducing the $5000 local supplement.

DISCUSSION

I. Terms of the Contracts

By its first two issues, the Federation argues that as a matter of law, the terms in

the teachers' contracts required the District to pay a salary according to the salary schedule

adopted before performance begins. According to the Federation, performance began on either

July 3 (the day the teachers became bound) or August 14 (the day school began), and the salary

schedule in place at that time was the 1994-95 salary schedule, which obligated the District to pay

a $5000 local supplement. The Federation asserts that the 1994-95 method of compensation was

incorporated into the 1995-96 contracts and that the District could not reduce or eliminate the local

supplement after the teachers became bound to their contracts. The Federation argues that

contracts require mutuality and cannot be subsequently modified after teachers become bound and

that the past practice of paying a $5000 local supplement in addition to the state-mandated

minimum salary strengthens its contention that the $5000 local supplement is part of the 1995-96

contracts. The Federation further reasons that because the contracts themselves require the

District to pay its teachers the $5000 local supplement, the Commissioner acted arbitrarily and

capriciously in basing his decision on general policy rather than the teachers' contracts.

A. Waiver

The District first responds by arguing that the Federation has waived both its issues

by raising them for the first time on appeal and by making various judicial admissions. Generally,

to preserve error in an administrative appeal, a party must file with the agency a motion for

rehearing that sufficiently identifies the claimed error. See Yamaha Motor Corp. v. Motor Vehicle

Div., Tex. Dep't of Transp. , 860 S.W.2d 223, 229 (Tex. App.--Austin 1993, writ denied). In its

motion for rehearing, the Federation argued that "the Commissioner's decision arbitrarily nullifies

and ignores the language of [the District's] contracts, requiring the [D]istrict to pay 'an annual

salary according to the salary schedule to be adopted by the Board before the performance of this

Contract begins.'" We hold that the Federation's motion for rehearing is sufficient to preserve

its first two issues for this Court's review.

The District further argues that the Federation waived these issues by making

several judicial admissions. The District directs us to the Federation's attorney's opening

statement to the Commissioner:

Now, although teachers were told when they were hired by [the District] that the

supplement had been there for a long time . . ., we agree it's not written anywhere

that the supplement is permanently irrevocable, but that's not what this case is

about.

. . . .

But when [the District] decided in June to decrease the local supplement and

not pass on Senate Bill 1's full-state increase to teachers, even though the district

was fully aware that the teachers were relying on this and they had a reasonable

expectation, what did the [D]istrict do to give teachers proper notice of this

material change in their contract? Nothing. And that is what this case is about.

. . . .

This case clearly falls within the Texas Supreme Court's Bowman versus

Lumberton case [a case based solely on an estoppel theory]. The Teachers must

win under contract and estoppel principles . . . .

To qualify as a judicial admission, a statement must be (1) made in the course of

a judicial proceeding; (2) contrary to an essential fact for the party's recovery; (3) deliberate, clear

and unequivocal; (4) related to a fact upon which judgment for the opposing party could be based;

and (5) enforcing the admission would be consistent with public policy. See United States Fidelity

& Guar. Co. v. Carr , 242 S.W.2d 224, 229 (Tex. Civ. App.--San Antonio 1951, writ ref'd);

Roberts v. Burkett , 802 S.W.2d 42, 44 (Tex. App.--Corpus Christi 1990, no writ). A true judicial

admission is a formal waiver of proof usually found in pleadings or the stipulations of the parties.

See Mendoza v. Fidelity and Guar. Ins. Underwriters, Inc. , 606 S.W.2d 692, 694 (Tex. 1980);

Frazer v. Texas Farm Bureau Mut. Ins. Co. , 4 S.W.3d 819, 825 (Tex. App.--Houston [1st Dist.]

1999, no pet.).

The attorney's opening argument, which is not evidence in the case, constitutes no

more than a forceful and persuasive summary of the Federation's case. The Federation does not

argue that the contracts state that the supplement is "permanently irrevocable." These general

statements delineating what "this case is about" are not deliberate, clear, and unequivocal

statements. We further note that these statements are unsworn. "The policy underlying judicial

admissions is to prevent a party from recovering after he has sworn himself out of court."

Roberts , 802 S.W.2d at 45 (citing Carr , 242 S.W.2d at 229 ). Judicial admissions are a formal

act, and the doctrine should be applied with caution. See id. We hold that the statements made

by the Federation's attorney do not constitute judicial admissions. We will consider the

Federation's initial two issues.

B. Interpretation of the Contracts

The Federation urges this Court to determine the meaning of the teachers' contracts

de novo as a matter of law, but the District argues that we should employ a substantial evidence

review. We agree with the Federation. An administrative determination of a question of law,

unlike a determination of a disputed fact, is not entitled to a presumption of validity. See Teacher

Retirement Sys. v. Cottrell , 583 S.W.2d 928, 930 (Tex. Civ. App.--Austin 1979, writ ref'd n.r.e.).

The interpretation of an unambiguous contract is purely a question of law. See Columbia Gas

Transmission Corp. v. New Ulm Gas, Ltd. , 940 S.W.2d. 587, 589 (Tex. 1996) (determining

whether contract is ambiguous is question of law); Coker v. Coker , 650 S.W.2d 391, 393 (Tex.

1983) (if contract is unambiguous, court will construe contract as question of law). Therefore,

an agency's interpretation of an unambiguous contract is not binding on a district or appellate

court.

When construing a written contract, we "ascertain the intent of the parties as

expressed in the instrument." National Union Fire Ins. Co. v. CBI Indus., Inc. , 907 S.W.2d 517,

520 (Tex. 1995). In deciding whether a contract is ambiguous, we consider the written instrument

as a whole and determine if it is subject to more than one reasonable interpretation in light of the

circumstances present at the time of its formation. See Grain Dealers Mut. Ins. Co. v. McKee ,

943 S.W.2d 455, 458 (Tex. 1997). If the contract can be given a certain or definite legal

meaning, then it is not ambiguous and should be construed as a matter of law. See id .; National

Union , 907 S.W.2d at 520 . An ambiguity does not arise simply because the parties advance

different interpretations of the contract's language. See Grain Dealers , 943 S.W.2d at 458 .

The District employs teachers under three types of contracts: a one-year term

contract ("term contract"), (5) a one-year probationary contract ("probationary contract"), (6) and a

continuing contract of employment ("continuing contract"). (7) The term contract and probationary

contract have the same provision regarding salary:

The Board shall pay the Employee an annual salary according to the salary

schedule to be adopted by the Board before the performance of this Contract

begins, but in no event less than the state minimum salary.

The continuing contract provides:

The Board shall pay the Employee an annual salary according to the salary

schedule adopted by the Board, but in no event less than the state minimum salary.

The Federation argues that the contracts incorporate the terms of the salary

schedule in existence at the time the teachers became bound by the contracts. (8) At the time the

teachers became bound to their contract, whether that date is July 3 or August 14, the only salary

schedule in existence was the one for the school year 1994-95, which required the District to pay

a $5000 local supplement in addition to the state minimum salary. Furthermore, because the

$5000 local supplement is a material term of the contract, it cannot be altered once the teachers

became bound to their contracts. See Central Educ. Agency v. George West ISD , 783 S.W.2d

200, 202 (Tex. 1989) (school district cannot unilaterally abrogate material part of teacher's

contract without committing breach).

The Federation is correct that an unsigned paper may be incorporated into a

contract signed by the person to be charged. See MTrust Corp. N.A. v. LJH Corp. , 837 S.W.2d

250, 253-54 (Tex. App.--Fort Worth 1992, writ denied). However, the Federation's argument

fails because the 1994-95 salary schedule was not incorporated into the 1995-96 contracts. The

contracts clearly state that the District will pay its teachers an annual salary based on a salary

schedule, which will be adopted by the District before performance of the contract begins. For

the 1995-96 school year, the District failed to adopt a salary schedule before the teachers began

performing their contracts. According to the contracts, when the District fails to timely adopt a

salary schedule, the default position is that teachers will receive no less than the state minimum

salary; the default is not the previous year's salary schedule. (9)

The Federation argues that this case is similar to International Motorists Ass'n v.

Aguilar , 402 S.W.2d 516 (Tex. Civ. App.--Austin 1966, writ dism'd w.o.j.), and Stowers v.

Harper , 376 S.W.2d 34 (Tex. Civ. App.--Tyler 1964, writ ref'd n.r.e.). In Aguilar , this Court

noted, "We have no doubt that a simple agreement to renew . . . an identified contract, where no

new terms are added, is sufficient to incorporate the provisions of the old . . . contract into a new

agreement on the same terms as the former agreement." 402 S.W.2d at 519-20 . Here, however,

the teachers did not simply renew their previous contracts; they signed entirely different contracts.

The 1995-96 contracts did not incorporate the 1994-95 salary schedule; in fact, the contracts

contemplated that a new salary schedule would be adopted by the District for the 1995-96 school

year.

Stowers can be distinguished on similar grounds. In Stowers , a sales associate and

his employer entered into an employment contract that stated "for each and every full calendar

year during the continued performance thereof[,]" the sales associate will be compensated in a

certain manner. See Stowers , 376 S.W.2d at 36 . The employer changed the method of

compensation without notifying the sales associate. See id. at 39 . The appellate court, in

affirming the trial verdict for the employee, stated that as a matter of law there was no

modification of the contract because the employer never notified the employee of the change. See

id. Thus, the original contract governed their relationship, and the employee had to be

compensated under the original method. See id. Here, the wording of the contract is different.

The Stowers contract implied on-going terms of employment--"for each and every full calendar

year." The teachers' contracts, however, are clearly limited to one year and state that the teacher

"shall be employed on a 183 day basis for school year 1995-96." The District never modified the

1995-96 contract because the 1994-95 salary schedule and the compensation method employed

thereunder were never incorporated into that contract.

We hold as a matter of law that the teachers' contracts do not require the District

to pay its teachers a $5000 local supplement. Cf. Allen v. Lumberton ISD , 746 S.W.2d 524, 526

(Tex. App.--Beaumont 1988) (holding that teacher contract did not guarantee teachers certain local

supplement), rev'd on other grounds sub nom. Bowman v. Lumberton ISD , 801 S.W.2d 883 (Tex.

1990). Because we so hold, we do not reach the Federation's argument that the Commissioner

acted arbitrarily and capriciously in rendering a policy decision in this case as opposed to

determining what teachers were due under their contracts. (10) We overrule the Federation's first

and second issues.

II. Estoppel

By its third issue, the Federation argues that the District is estopped from

eliminating the $5000 local supplement and that the Commissioner's decision to the contrary was

against the substantial weight of the evidence. Specifically, the Federation argues that the

Commissioner's finding that the District did not conceal from the teachers their salaries for the

1995-96 school year was not supported by the substantial weight of the evidence.

Agency decisions that are not supported by substantial evidence are deemed

arbitrary and capricious. See Public Util. Comm'n v. Gulf States Utils. Co. , 809 S.W.2d 201,

211 (Tex. 1991). In conducting a substantial-evidence review, we must first determine whether

the evidence as a whole is such that reasonable minds could have reached the conclusion the

agency must have reached in order to take the disputed action. See Texas State Bd. of Dental

Exam'rs v. Sizemore , 759 S.W.2d 114, 116 (Tex. 1988); Texas Health Facilities Comm'n v.

Charter Med.-Dallas, Inc. , 665 S.W.2d 446, 453 (Tex. 1984). We may not substitute our

judgment for that of the agency and may consider only the record on which the agency based its

decision. See Sizemore , 759 S.W.2d at 116 . Furthermore, the reviewing court is prohibited from

substituting its judgment as to the weight of the evidence on questions committed to agency

discretion. See Charter Med.-Dallas , 665 S.W.2d at 452 .

The agency's findings, inferences, and conclusions are presumed to be supported

by substantial evidence, and the appealing party bears the burden of showing a lack of substantial

evidence. See id. at 453 . The appealing party cannot meet this burden merely by showing that

the evidence preponderates against the decision. See id. If substantial evidence would support

either affirmative or negative findings, the reviewing court must uphold the order, resolving any

conflicts in favor of the agency's decision. See id. "The true test is not whether the agency

reached the correct conclusion, but whether some reasonable basis exists in the record for the

action taken by the agency." Id. at 452 . The reviewing court should sustain the decision if it

determines that reasonable minds could have reached the same conclusion the agency reached.

See Suburban Util. Corp. v. Public Util. Comm'n , 652 S.W.2d 358, 364 (Tex. 1983).

Here, the District's assistant superintendent for administration testified that he and

his department were responsible for preparing the budget for the District, including setting the

teachers' salaries. By the end of June, the assistant superintendent had prepared four budgets for

the District to choose from and presented them all to the District's board of trustees; one of the

budget proposals included a $5000 local supplement but was not adopted. The District did not

adopt a salary schedule for the 1995-96 school year until August 28. Although the District may

not have publicized the fact that it was considering a reduction of the local supplement, it could

not conceal teachers' salaries before that date because the salary schedule was not adopted until

then. During early September, the District held meetings with teachers at various school

campuses to explain the new salary schedule. We hold that there was substantial evidence in the

record from which the Commissioner could determine that the District did not conceal from the

teachers their salaries for the 1995-96 school year.

We next consider the question of promissory estoppel. The requisites of

promissory estoppel are: (1) a promise, (2) foreseeability of reliance thereon by the promisor, and

(3) substantial reliance by the promisee to his detriment. See English v. Fischer , 660 S.W.2d 521,

524 (Tex. 1983). The Federation argues that an injustice occurred because teachers expected to

be paid the state minimum salary plus the $5000 local supplement for the 1995-96 school year

when they signed their contracts and by the time they found out that they would not be paid the

full $5000 local supplement, it was too late for them to seek a job with another district that paid

such a supplement.

In his decision the Commissioner stated, "Some teachers guessed that their new

salaries would be the state minimum plus a supplement of $5,000. This was mere guess. Other

reasonable guesses could be made because districts are not required to continue the same

supplement." We suspect that the teachers' actions amounted to more than mere guesswork. The

District's delay put its teachers in the position of committing themselves to binding contracts

without informing them what they would be paid. They commenced the school year still

uncertain. They knew that the legislature has increased the state minimum salary; they knew that

the District had paid a local supplement for eight years; they knew the supplement had never been

reduced; they knew the supplement had been $5000 for the last three years; they knew they could

not be paid less than their total salary from the prior year; and they knew the District had

recruited teachers for 1995-96 on the basis it paid a $5000 supplement. Nevertheless, although

understandably unfair on the surface, we must hold that the contracts themselves did not promise

a $5000 local supplement, nor did the District's past actions bind them to pay a $5000

supplement. The Federation points to no other act that they contend constitutes a promise to pay

a $5000 local supplement. We hold that there is a reasonable basis in the record for the

Commissioner's conclusion. (11) We overrule the Federation's third issue.

CONCLUSION

Having overruled all of the Federation's issues, we affirm the district court's

judgment.

Lee Yeakel, Justice

Before Chief Justice Aboussie, Justices Jones and Yeakel

Affirmed

Filed: August 31, 2000

Publish

1. This appeal was originally filed in the name of the predecessor to the present Commissioner

of Education. We have substituted the current holder of that office as the correct party to this

proceeding. See Tex. R. App. P. 7.2(a). Appellees the Texas Education Agency and the

Commissioner of Education jointly filed a separate brief. Because their arguments and interests

do not diverge from those of the District, we will not refer to these appellees individually unless

necessary for clarity.

2. A local supplement is an additional amount of compensation, beyond the state-mandated

minimum salary, that a local school district may pay to teachers using local money. School

districts often use a local supplement to attract, recruit, and retain teachers.

3. The legislature mandates a minimum salary that a school district must pay a teacher. See,

e.g., Act of May 27, 1995, 74th Leg., R.S., ch. 260, sec. 1, § 21.4011, 1995 Tex. Gen. Laws

2207 , 2278-79.

4. A teacher may resign after the deadline but must have permission of the district's board of

trustees to do so. See Tex. Educ. Code Ann. §§ 21.105 (b), .160(b), .210(b) (West 1996).

5. See Tex. Educ. Code Ann. §§ 21.201 -.213 (West 1996).

6. See id. §§ 21.101-.106 (West 1996).

7. See id. §§ 21.151-.160 (West 1996).

8. The Federation acknowledges that the contract provision in the continuing contract is

slightly different from the provision in the term and probationary contracts but does not

differentiate its argument by type of contract.

9. The continuing contract is not as explicit and simply refers to a "salary schedule adopted

by the Board." However, the same analysis applies--if the District failed to adopt a salary schedule

in connection with the 1995-96 contract, the default position is the state-minimum salary, not the

previous salary schedule.

In his decision, the Commissioner noted an additional limitation on the District, beyond the

default in the contract: "The Commissioner has repeatedly held that a district may not reduce a

teacher's total salary after the teacher can no longer unilaterally withdraw from his contract. . . .

It cannot be the law that teachers can find out that their pay has been cut by thousands of dollars

after they cannot withdraw from their contracts."

10. The Federation also argues that the teachers are entitled to the $5000 local supplement

based on the past practice of the District in paying a $5000 local supplement. However, the fact

that teachers received this local supplement in the years preceding does not constitute an implied

or de facto agreement by the District to continue the $5000 local supplement. See

Allen v.

Lumberton ISD , 746 S.W.2d 524, 526 (Tex. App.--Beaumont 1988), rev'd on other grounds sub

nom. Bowman v. Lumberton ISD , 801 S.W.2d 883 (Tex. 1990).

11. We note that the legislature addressed this situation when it next increased the state salary

minimum by prohibiting a District from reducing the local supplement. See Tex. Educ. Code

Ann. § 21.402 (c-1) (West Supp. 2000). That action at least suggests that the District could do

so up to that time, including the 1995-96 school year.

The Federation points to no other act that they contend constitutes a promise to pay

a $5000 local supplement. We hold that there is a reasonable basis in the record for the

Commissioner's conclusion. (11) We overrule the Federation's third issue.

CONCLUSION

Having overruled all of the Federation's issues, we affirm the district court's

judgment.

Lee Yeakel, Justice

Before Chief J