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Patricia Paulsen et al v. Twin Rivers Unified School District

September 27, 2012

PATRICIA PAULSEN ET AL., PLAINTIFFS AND APPELLANTS,
v.
TWIN RIVERS UNIFIED SCHOOL DISTRICT, DEFENDANT AND RESPONDENT.



(Super. Ct. No. 34-2011-00095012-CU-BC-GDS)

The opinion of the court was delivered by: Robie , Acting P. J.

Paulsen v. Twin Rivers Unif. School Dist.

CA3

NOT TO BE PUBLISHED

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

After they did not receive the severance payments they were promised for resigning their employment with a school district (Grant Joint Union High School District; hereafter, Grant) that was merging with three other districts, plaintiffs Patricia Paulsen, Joan Polster, Jacques Whitfield, and Patricia Newsome (collectively, plaintiffs) sued the successor district (defendant Twin Rivers Unified School District; hereafter, Twin Rivers) and petitioned for arbitration of their claims pursuant to the arbitration clauses in their employment agreements with Grant. The trial court refused to compel arbitration on the ground that plaintiffs' resignations had rendered their employment agreements, and the arbitration clauses contained therein, "no longer valid and binding."

On appeal, we conclude the trial court erred. As we will explain, the arbitration clauses in the employment agreements are enforceable whether or not plaintiffs remain entitled to employment under those agreements, and the dispute here falls within the scope of those still-viable arbitration clauses. In addition, we reject Twin Rivers' arguments that plaintiffs waived their right to arbitration, that arbitration should not be ordered because the subject contracts are illegal, and that ordering arbitration would violate public policy. Because Twin Rivers is a party to two other cases arising out of the same severance deal, however, there is a possibility of conflicting rulings that requires the trial court to exercise its discretion under Code of Civil Procedure section 1281.2 in deciding how this case should proceed. Because the trial court did not exercise that discretion, we will reverse the order denying arbitration and remand the matter to the trial court for further proceedings.

FACTUAL AND PROCEDURAL BACKGROUND

During the 2007-2008 school year, Grant employed each plaintiff in an administrative position pursuant to a written contract. Paulsen was the Assistant Superintendent of Business and Finance; her term of employment ran through June 2010. Polster was the Associate Superintendent of Educational Options; her term of employment ran through June 2009. Whitfield was the District General Counsel; his term of employment ran through June 2010. Newsome was the Interim Superintendent; her term of employment in that position ran through June 2008, but thereafter she was to return to her previous position as the Deputy Superintendent of Educational Services through June 2010.

"By virtue of the passage of 'Measure B' in 2007, Sacramento County voters approved the unification of [Grant] and three smaller elementary school districts into one district. Effective July 1, 2008, the merger would result in a new, larger district known as Twin Rivers Unified School District." (Polster v. Sacramento County Office of Education (2009) 180 Cal.App.4th 649, 653-654 (Polster).)

After the passage of Measure B, Grant's governing board decided to offer severance payments to some of the district's administrative employees to avoid redundant administrative staff at the central office level. (Polster, supra, 180 Cal.App.4th at p. 654.) To that end, in March 2008 Grant's board adopted what was known as the Central Office Transition Plan (hereafter, the Plan). Plaintiffs each elected to participate in the Plan.

Under the terms of the Plan, in exchange for receiving either 12 or 18 months of pay, each plaintiff was required to "submit an irrevocable letter of resignation effective June 30, 2008." According to the Plan, "Said letter of resignation [wa]s presumed to be conditional upon the receipt by the employee of the full amount of the proffered buyout."

The Sacramento County Superintendent of Schools refused to authorize the special payroll runs necessary to implement the Plan until he completed an investigation of its legality. (Polster, supra, 180 Cal.App.4th at pp. 653-655.) As a result, in April 2008, four of the administrators who had elected to participate in the Plan (including Paulsen, Polster, and Whitfield) filed a petition for writ of mandate seeking to compel the Superintendent and the Sacramento County Office of Education to approve the payroll warrants. (Id. at pp. 653, 655.) In June 2008, while the mandamus action was pending, the Superintendent announced that he was "staying the [Plan] and rescinding the requests for payroll warrants to implement the [P]lan, on the ground that the [Plan] was 'inconsistent with [Twin Rivers'] ability to meet its obligations for next fiscal year.'" (Id. at p. 656.) Later that month, however, the trial court ruled in the administrators' favor and issued a writ commanding the Superintendent to approve the special salary runs necessary to implement the Plan. (Id. at pp. 656-657.) The Superintendent and the County Office of Education appealed. (Id. at p. 657.)

In a published decision issued in December 2009, this court reversed the trial court, concluding that the administrators had failed to show that the Superintendent abused his discretion in refusing to approve the payroll requests. (Polster, supra, 180 Cal.App.4th at pp. 669-670.) Thereafter, in 2010, plaintiffs sought reinstatement and back pay from Twin Rivers and demanded arbitration of their claims pursuant to the arbitration clauses contained in their employment agreements with Grant. Each agreement contained an arbitration clause that provided that "[a]ny controversy or claim arising out of or relating to this Agreement or the breach of this Agreement shall be settled by binding arbitration."

When Twin Rivers refused to participate in arbitration, plaintiffs commenced this action by filing a complaint for breach of contract, misrepresentation, breach of statutory duty, and declaratory relief in January 2011. Two months later in March 2011, plaintiffs filed a petition to compel arbitration and to stay the action.

Twin Rivers opposed the petition to compel arbitration on numerous grounds, contending plaintiffs had failed to establish the existence of an agreement to arbitrate and had waived their right to arbitrate by litigating the Polster case, and that ordering arbitration would be contrary to public policy and could result in inconsistent rulings between the courts and the arbitrator. On the latter point, Twin Rivers noted that it was also a defendant in a case brought by another Grant administrator arising out of the Plan (the Kitamura case), but in that case there was no demand for arbitration. (Kitamura et al. v. Twin Rivers Unified School District (C070343, app. pending) (Kitamura).)

The trial court invited further briefing on whether the language in the Plan providing that the letters of resignation were presumed to be conditional on the receipt of the promised severance payments "runs afoul of Education Code [section] 44930 . . . and related case law."*fn1 The court also invited briefing on whether plaintiffs could seek arbitration under the arbitration clauses in their employment agreements if the conditional language in the Plan did run afoul of Education Code section 44930.

In June 2011, the trial court denied the petition to compel arbitration, reasoning that even though plaintiffs did not receive the promised severance payments, their resignations pursuant to the Plan nonetheless "were effective in terminating plaintiffs' original employment agreements, the very agreements which contain the arbitration clause[s] on which the present motion is expressly based. Because such employment agreements are therefore no longer valid and binding, the Court is unable to find any valid and binding arbitration clause on which to grant this motion to compel arbitration."

Plaintiffs timely appealed the order denying their petition to compel arbitration.

DISCUSSION

I

Code Of Civil Procedure Section 1281.2

As pertinent here, Code of Civil Procedure section 1281.2 provides as follows:

"On petition of a party to an arbitration agreement alleging the existence of a written agreement to arbitrate a controversy and that a party thereto refuses to arbitrate such controversy, the court shall order the petitioner and the respondent to arbitrate the controversy if it determines that ...


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