Weslaco Federation of Teachers v. Texas Education Agency, 27 S.W.3d 258

27 S.W.3d 258

Tex. App.

2000

LEE YEAKEL, Justice.

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-l) (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, ie., 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 [District 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.

[[Image here]]

But when [the District] decided in June to decrease the local supplement and not pass on Senate Bill l’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 [District do to give teachers proper notice of this material change in their contract? Nothing. And that is what this case is about.

[[Image here]]

This case clearly falls within the Texas Supreme Court’s Bowman versus Lumb.erton 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 refd 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, 398 (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, 876 S.W.2d 84 (Tex.Civ.App. —Tyler 1964, writ refd 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.

Notes

. 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.

. 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.

. 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.

.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).

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

. See id. §§ 21.101-.106 (West 1996).

. See id. §§ 21.151-.160 (West 1996).

.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.

. 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.”

. 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).

. 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-l) (West Supp. 2000). That action at least suggests that the District could do so up to that time, including the 1995-96 school year.