This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (2000).

 

STATE OF MINNESOTA

IN COURT OF APPEALS

C1-00-836

 

Grace E. Bushard,

Appellant,

 

vs.

 

Independent School District #833, et. al.,

Respondents.

 

Filed January 16, 2001

Affirmed in part, reversed in part, and remanded

Randall, Judge

 

Washington County District Court

File No. 82-C3-99-001071

 

 

John A. Fabian, Diane M. Odeen, Nichols, Kaster & Anderson, 4644 IDS Center, 80 South Eighth Street, Minneapolis, MN  55402 (for appellant)

 

Jeff M. Zalasky, Erstad & Riemer, P.A., 1000 Northland Plaza, 3800 West 80th Street, Minneapolis, MN  55431 (for respondent)

 

 

            Considered and decided by Randall, Presiding Judge, Kalitowski, Judge, and Forsberg, Judge.*


U N P U B L I S H E D   O P I N I O N

RANDALL, Judge

            Appellant commenced this action against respondents Independent School District #833 and Ernie Pines.  Appellant alleged breach of employment contract and retaliatory discharge in violation of Minnesota's whistleblower statute, Minn. Stat. § 181.932 (2000) by the school district.  Appellant also alleged tortious interference with appellant's employment contract by Pines.  The district court granted summary judgment against appellant. Appellant argues there are genuine issues of material fact as to (a) whether the school district was appellant's employer for purposes of the breach of contract claim and (b) whether Pines tortiously interfered with appellant's employment contract.  Appellant also asserts the district court erred by concluding as a matter of law that appellant was not protected under Minnesota's whistleblower statute.  We affirm in part, reverse in part, and remand.

FACTS

            In April 1995, appellant Grace E. Bushard was hired as the Family Links Services Collaborative coordinator for Washington County (the collaborative).  The collaborative is an interagency organization funded by various state and private grants. Respondent South Washington County School District #833 (ISD #833) was a member of the collaborative, and respondent Ernie Pines was the community education director for ISD #833.

In addition to its membership in the collaborative, ISD #833 also served as the collaborative's fiscal agent.  As the fiscal agent, ISD #833's duties included hiring and supervising the collaborative's staff pursuant to ISD #833's personnel policies and procedures. According to the collaborative's interagency agreement, these responsibilities were to be shared with other designated collaborative members.

Bushard went on maternity leave from October 1997 to January 1998.  Before returning to work, Bushard attempted to contact Pines to discuss modifying her work schedule.  Bushard also contacted the collaborative, and in February 1998, after meeting with Pines, the collaborative decided to allow Bushard to change her work schedule and telecommute on a six-month trial period.

The collaborative began to discuss the possibility of changing its fiscal agent in mid-1997, but no action was taken until March 1998.  At the end of March 1998, the collaborative directed Bushard to write a letter to Ramsey Action Program to determine its interest in acting as the collaborative's fiscal agent.  Around that same time, Bushard attended a state-wide meeting for coordinators of various collaboratives.  At this meeting Bushard was told that a collaborative's fiscal agent was not allowed to retain interest earned from state grant money received by a collaborative.  Bushard shared this information with the ISD #833's representative to the collaborative as well as ISD #833's accountant.

On April 30, 1998, following discussions earlier in the month between Pines and Bushard about her role in researching new fiscal agents for the collaborative and about ISD #833's retention of interest earned from the collaborative's grant money, ISD #833 terminated Bushard's employment. 

            On January 27, 1999, Bushard filed a complaint against ISD #833 alleging breach of employment contract and violation of Minnesota's whistleblower statute, Minn. Stat. § 181.932 (2000), by ISD #833.  She also alleged tortious interference with her employment contract by Pines.  ISD #833 and Pines moved for summary judgment.  After a hearing on December 17, 1999, the district court granted the summary judgment motion.  Bushard appeals the grant of summary judgment to ISD #833 and Pines.

D E C I S I O N

            When reviewing a grant of summary judgment by the district court, an appellate court should address whether there are any genuine issues of material fact and whether the district court erred as a matter of law.  Hedglin v. City of Willmar, 582 N.W.2d 897, 901 (Minn. 1998).  On appeal, the evidence is viewed in the light most favorable to the nonmoving party.  Fabio v. Bellomo, 504 N.W.2d 758, 761 (Minn. 1993). Summary judgment is appropriate when the nonmoving party has failed to show sufficient evidence to establish the existence of an element essential to the party's case and on which the party will carry the burden of proof at trial.  Lubbers v. Anderson, 539 N.W.2d 398, 401 (Minn. 1995).  Allegations and speculations are not enough to avoid summary judgment.  Bob Useldinger & Sons, Inc. v. Hangsleben, 505 N.W.2d 323, 328 (Minn. 1993).           

I.                   Breach of Employment Contract

The district court determined that Bushard's employer was ISD #833. As a result, the court concluded that her only recourse for a breach of contract claim was by writ of certiorari.  Contrary to the district court's conclusion, Bushard raised a material issue of fact regarding whether ISD #833 was Bushard's employer, which should not have been decided by the district court on summary judgment.

The district court relied on several facts to determine that ISD #833 was Bushard's employer.  First, the collaborative's interagency agreement provided that the collaborative's staff should be hired and supervised according to the fiscal agent's personnel policies and procedures.  The collaborative's fiscal agent was ISD #833.  Second, Bushard received her paychecks and benefits through ISD #833. Third, Pines, an employee of ISD #833, evaluated her work performance.  Finally, she met with Pines to discuss issued related to the collaborative.

 Bushard argues that ISD #833 was her employer for administrative purposes only because the collaborative's grant money needed to be handled by a fiscal agent. She contends the collaborative was her true employer because her salary was paid from the grant money received by the collaborative and her duties were directed by the collaborative.  Also, the interagency agreement provided that the fiscal agent along with other designated members of the collaborative were responsible for hiring and supervising collaborative employees.  Of the five signatories to the agreement, only ISD #833 is a classic public employer.  At oral argument, it was accepted that decisions made by the collaborative were subject to a quorum vote of majority plus one vote, and nothing in the record shows that the four private agencies could not outvote ISD #833. Although the fiscal agent could also be an employer, there is no law or rule holding that a fiscal agent and an employer are synonymous.  A fiscal agent has similar attributes of a court-appointed receiver who is given complete authority to monitor and manage a corporate entity forced into receivership.  Although the receiver has control over the company, the people working for the corporation would still be considered employees of the company rather than employees of the court-appointed receiver monitoring the corporation.  Similarly, ISD #833's status as the collaborative's fiscal agent does not necessarily mean that ISD #833 was the employer of the employees working for the collaborative.

We conclude that Bushard has raised specific facts to show a genuine issue for trial regarding the identity of her true employer. Absent a factual determination on this issue, it is impossible to resolve whether Bushard's breach of contract claim is barred by her failure to petition for review by writ of certiorari, and we remand to settle this factual dispute.

Further, even assuming the district court correctly determined that ISD #833 was Bushard's employer, Bushard argues ISD #833 failed to follow its own personnel policies because she did not receive written notice of her termination.  She contends that the lack of a written notice meant she was not given due notice of her right to petition for a writ of certiorari.

A writ of certiorari can be issued only if it is "issued within 60 days after the party applying for such writ shall have received due notice of the proceeding sought to be reviewed."  Minn. Stat. § 606.01 (2000).  In a nonjudicial proceeding, the due notice requirement of Minn. Stat. § 606.01 "requires, at a minimum, that notice be given in writing and that it be reasonably calculated to reach" the individual.  Bahr v. City of Litchfield, 420 N.W.2d 604, 607 (Minn. 1988).  Once notice has adequately been given, the 60-day limitation period to petition for a writ of certiorari commences.  Id.  If an administrative body has adopted formal rules regarding service of notice, however, failure to comply with those rules justifies the conclusion that it has not satisfied the due notice requirement of Minn. Stat. § 606.01.  Id.

Here, ISD #833's employee discipline policy provided that "[n]otice of disciplinary action other than oral reprimand shall be in writing, stating the reason(s) for the disciplinary action." According to the policy, disciplinary actions included termination.  The policy also provided that within seven calendar days of receipt of the written disciplinary action, the employee may request a hearing before a committee of the school board.  Pines informed Bushard that she was terminated on April 30, 1998. On May 11, 1998, Bushard wrote a letter to the human resources director of South Washington County Schools inquiring about the reasons for her termination.  In a letter dated May 20, 1998, the director referred Bushard to ISD #833's employee discipline policy and informed her that "[t]his is the policy under which you may appeal your termination."  The director further wrote that she had missed the seven-day-appeal deadline, and that if she still chose to appeal the matter, ISD #833 would argue that her appeal was untimely.[1]  The district court did not address whether the letter from the superintendent met the due notice requirement to commence the running of the 60-day limitation to petition for a writ of certiorari. 

Hence, summary judgment was not appropriate because genuine issues of material fact remain concerning ISD #833's compliance with the statutory requirements for providing due notice to Bushard, thereby commencing the 60-day limitation for her to petition for a writ of certiorari.

II.        Tortious Interference with Employment Contract

As a general rule, a party cannot interfere with its own contract.  Nordling v. Northern States Power Co., 478 N.W.2d 498, 505 (Minn. 1991).  In addition, a corporation's agent, acting within the scope of his duties, cannot be sued for tortious interference of a contract.  Id. at 505-06.  A third party, however, "who interferes with and causes the breach of a contract may be held liable" for tortious interference of a contract.  Kallok v. Medtronic, Inc., 573 N.W.2d 356, 361 (Minn. 1998).

In this case, the district court determined that Pines was acting as ISD #833's agent and could not be sued for tortious interference of Bushard's employment contract.  Bushard reasserts her argument that ISD #833 was not her employer; accordingly, Pines was a third party who could be sued for tortious interference.

Further, Bushard claims that even if ISD #833 was her employer, Pines could still be sued for tortious interference because he was acting with malice, which was outside the scope of his employment duties.  See Nordling, 478 N.W.2d at 506 (observing malice can be critical factor in determination of whether agent acted outside scope of duties).

The district court did not address this malice theory.  The court merely concluded that "[b]ecause a party cannot interfere with its own contract, this claim must be dismissed."  But Bushard presented evidence to the district court to support her contention that Pines acted with malice.  Specifically, Bushard argued that Pines yelled and screamed at her for proposing to change her work schedule and for researching the possibility of the collaborative changing its fiscal agent.  Bushard claimed Pines stated, "If the Coordinating Circle asked you to put a gun to your head and shoot yourself, would you do that?"  Bushard further claims Pines stated, "I will block you.  I will block everything you do.  I will let people know how you operate."  Bushard asserts that the tone of these conversations was threatening and hostile.  In addition, Bushard argues that her termination by Pines was in retaliation of her research into the possibility of the collaborative changing its fiscal agent.  If such a change was made, ISD #833 would no longer be the collaborative's fiscal agent.

Viewing the evidence in the light most favorable to Bushard, a genuine issue of material fact exists regarding (a) whether Pines was a third-party to Bushard's employment contract and (b) whether, if Pines was not a third party, he acted outside the scope of his employment duties by maliciously terminating Bushard.

II.                Whistleblower Claim

            The Minnesota whistleblower statute prohibits an employer from discharging or penalizing an employee who

in good faith, reports a violation or suspected violation of any federal or state law or rule adopted pursuant to law to an employer or to any governmental body or law enforcement official.

Minn. Stat. § 181.932, subd. 1(a) (2000).  The employee has the burden of establishing a prima facie case of retaliatory discharge by showing:

(1)  statutorily-protected conduct by the employee; (2) adverse employment action by the employer; and (3) a causal connection between the two.

 

Rothmeier v. Investment Advisers, Inc., 556 N.W.2d 590, 592-93 (Minn. App. 1996) (citation omitted), review denied (Feb. 26, 1997).

Here, Bushard argues she was discharged because she reported that ISD #833 was illegally retaining interest earned on state grant money received by the collaborative.  The district court concluded that Bushard did not point to any statute or rule violated by ISD #833 so she could not seek protection under the whistleblower statute.  Bushard argues the district court erred by (a) concluding that ISD #833 did not violate Minn. Stat. § 124D.23, subd. 6 (2000), and (b) not considering other statutes and rules ISD #833 may have violated.  In response, ISD #833 admitted that it retained the interest money, but it asserts that there was no applicable rule or law prohibiting such action.

            Statutory construction is a question of law, which appellate courts review de novo.  Brookfield Trade Ctr., Inc. v. County of Ramsey, 584 N.W.2d 390, 393 (Minn. 1998). When interpreting statutes, the court must "ascertain and effectuate the intention of the legislature."  Minn. Stat. § 645.16 (2000).  If the statute's words are free from ambiguity, the court may not disregard them.  Id. 

            Contributors to a collaborative "may not reduce their financial commitment except as specified in the agreement or by federal declaration."  Minn. Stat. § 124D.23, subd. 6. Bushard relies on this language to argue ISD #833 reduced its financial commitment by retaining the interest income from the grant money, thereby violating the statute. 

Minn. Stat. § 124D.23, subd. 6, is unambiguous.  The statute does not state that interest income cannot be retained by a collaborative's fiscal agent.  Courts cannot add to a statute "what the legislature purposely omits or inadvertently overlooks."  Ullom v. Independent Sch. Dist. No. 112, 515 N.W.2d 615, 617 (Minn. App. 1994) (quotation and citation omitted).  Accordingly, this court has no authority to interpret Minn. Stat. § 124D.23, subd. 6, to mean that ISD #833's cannot retain the interest earned from grant money.

            Bushard also relies on a document entitled "Fiscal Agent Requirements" to argue that ISD #833 violated a state law by retaining interest earned on the collaborative's grant money.  Bushard received this document from a financial official of the Minnesota Department of Children, Families, and Learning, which is not a member of the collaborative.  The document states that a collaborative's fiscal agent is required to return "all [principal] and interest on the funds invested on behalf of the collaborative to the collaborative."  At the bottom of the document is a notation referring to Minn. Stat. § 121.8355 (which has been renumbered to Minn. Stat. § 124D.23) and Minn. Stat. § 256F (without citing the year of either statute). Bushard does not claim that this document is part of the collaborative's policies, and, as stated above, Minn. Stat § 124D.23 does not specifically state that a collaborative's fiscal agent must return interest earned from grant money.  Further Minn. Stat. § 256F (2000) makes no reference to the interest earned on grant money.

            ISD #833 relies on a different letter from the Minnesota Department of Children, Families, and Learning informing it that the language of its renewal contract was changed to include a provision requiring fiscal agents to "allocate all interest earned on the revenue to the program for which [it is] serving as a fiscal agent."  This change was made due to confusion over actual ownership of interest earned from grant money.  The letter further informed ISD #833 that "this clause will not impact you to date."

            Although this letter is in no way an indication of approval of ISD #833's practice of retaining interest money, it does indicate that there was confusion over ownership of the interest money and that the contract had been changed to correct the confusion.  But, the new contract did not apply to ISD #833 at the time Bushard reported the matter to her supervisor because the new provision of the contract provision did not take effect until the collaborative's 1998-1999 contract year.

            While it is true that Bushard called a matter of public policy to her supervisor's attention, she could not make a claim that ISD #833 was violating any rule or law.  The fact that the state changed its policy in 1999 does not mean that prior to 1999 ISD #833 was breaking the law.  So, Bushard did not blow the whistle on any wrongdoing; rather she recommended a common sense change to an existing policy, and the change later happened.

Bushard also argues that ISD #833's retention of interest money may have violated Minn. Const., art. 11, § 13, Minn. Stat. § 609.52, subd. 2, 3 (2000), or Minn. Stat. § 609.456 (2000).  Bushard is raising this argument for the first time on appeal.  In Bushard's complaint filed with the district court, she broadly alleges that ISD #833 was using "grant funds in violation of Minnesota law and the Fiscal Agent Requirements." During the summary judgment motion hearing, Bushard based her argument solely on Minn. Stat § 124D.23, subd. 6.  Accordingly, this court will not address this portion of Bushard's argument.  See Thiele v. Stich, 425 N.W.2d 580, 582 (Minn. 1988) (holding appellate courts may only consider issues presented to and addressed by the district court).  Additionally, neither the constitutional provision nor the statutes she cites prohibit ISD #833 from retaining interest income from state grant money.

            Therefore, (a) the plain meaning of Minn. Stat. § 124D.23, subd. 6, does not require ISD #833 to return interest earned to the collaborative; (b) the Fiscal Agent Requirements document does not support Bushard's claim that ISD #833 violated a federal or state law or rule; (c) Bushard did not assert a violation of any other law or rule in district court; and (d) the laws Bushard cites for the first time on appeal do not support her claim.  Bushard has not met her burden of showing she made a good faith report that ISD #833 violated a federal or state rule or law.  See Obst v. Microtron, Inc., 614 N.W.2d 196, 204 (Minn. 2000) (concluding report of suspected violation must implicate actual federal or state law).  As a result, the district court did not err in granting ISD #833's motion for summary judgment on this issue.

            Affirmed in part, reversed in part, and remanded.



* Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. art. VI, § 10.

[1] Bushard seems to argue that ISD #833 did not comply with its own policies by failing to provide her written notice of her right to appeal to the school board.  A writ of certiorari can be issued, however, even if Bushard did not receive a hearing before the school board.  See Dokmo v. Independent Sch. Dist. No. 11, 459 N.W.2d 671, 676 (Minn. 1990) (observing hearing has never been a requirement before petitioning for writ of certiorari).  The key issue is whether ISD #833 provided adequate notice of termination in order to commence the running of the 60-day limitation for petitioning for certiorari.