Marshall School District v. Hill

MARSHALL SCHOOL DISTRICT v. Ron HILL

CA 96-370                                          ___ S.W.2d ___

                  Court of Appeals of Arkansas
                           Division II
                 Opinion delivered March 5, 1997


1.   Appeal & error -- ruling of trial court -- ruling may be
     affirmed if right result was reached even if based upon wrong
     reason. -- The appellate court may affirm a ruling by the
     trial court if it reached the right result, even though it may
     have announced the wrong reason. 

2.   Attorney & client -- circuit court was authorized to award
     attorney's fees not subject to specified limit -- amount of
     attorney's fee awarded was appropriate. -- Where appellee's
     action against appellant was for breach of contract, the
     circuit court was authorized to award attorney's fees, which
     were not subject to a specified limit; although the trial
     court referenced Ark. Code Ann.  16-22-309 (Repl. 1994) in
     its opinion, the court may have actually relied upon Ark. Code
     Ann.  16-22-308 (Repl. 1994), inasmuch as it recited in its
     judgment that the damages awarded were for breach of contract;
     an attorney's fee award of $14,975.00 was appropriate under 
     16-22-308.

3.   Schools & school districts -- appellant's argument without
     merit -- collateral-source rule not applicable to employment
     breach-of-contract cases where dismissed employee has
     subsequently earned income from other sources. -- Appellee's
     assertion that the court erred in reducing the award by the
     earnings he received through other employment, and that the
     court should have followed the precedent set in Green Forest
     Public Schools v. Herrington, 287 Ark. 43, 696 S.W.2d 714
     (1985), wherein the supreme court specifically held that an an
     award of back pay was not to be reduced by the unemployment
     compensation that the employee had received subsequent to his
     wrongful dismissal, was without merit; the collateral-source
     rule has never been applied in Arkansas to employment breach-
     of-contract cases where the dismissed employee has
     subsequently earned income from other employment. 

4.   Schools & school districts -- where teacher prevails on
     contact dispute reasonable effort must be made to mitigate
     damages -- proper measure of damages discussed. -- As was held
     in Western Grove Sch. Dist. v. Strain, 288 Ark. 507, 707 S.W.2d 306 (1986), where a teacher prevails on a contract
     dispute under the Arkansas Teacher Fair Dismissal Act, the
     aggrieved party must use reasonable care, effort, and
     expenditure to mitigate damages; the proper measure of damages
     is the loss sustained by the teacher, less any mitigation
     earnings that may be realized through subsequent employment.

5.   Schools & school districts -- two cases not inconsistent --
     trial court's decision to consider appellee's subsequent
     earnings in mitigation of damages not erroneous. -- Where 
     Western Grove School District involved the duty to mitigate
     through subsequent employment, while Green Forest Public
     Schools involved the effect of unemployment benefits in
     breach-of-employment contract actions, the two cases were not
     inconsistent; the precedent set in Western Grove School
     District was controlling; appellee had a duty to take
     reasonable steps to mitigate the damages, and he did so by
     seeking and finding other employment; the court's decision to
     consider his subsequent earnings in mitigation of damages was
     not erroneous.


     Appeal from Searcy Circuit Court; Karen Baker, Judge; affirmed
on appeal and cross-appeal.
     Brazil, Adlong, Murphy & Osment, by: William Clay Brazil, for
appellant. 
     Martin Law Firm, P.A., by:  Thomas A. Martin, and Jerry D.
Patterson, for appellee. 
     John B. Robbins, Chief Judge.
     Appellee Ron Hill was hired by appellant Marshall School
District as a football coach and teacher for the 1992-93 school
year.  His annual salary was set at $31,081.00.  On January 21,
1993, he was notified in writing that the superintendent was going
to recommend that his contract not be renewed for the following
year.  The superintendent's recommendation was based essentially
on his opinion that the football program had deteriorated to an
unacceptable level.  Mr. Hill requested a hearing, which was
conducted on March 1, 1993.  After the hearing, Marshall School
District's Board of Directors decided not to renew Mr. Hill's
contract.
     Mr. Hill appealed the decision of the Board of Directors to
the Searcy County Circuit Court.  In his complaint, Mr. Hill
alleged that the refusal of Marshall School District to renew
his contract constituted a breach of its contract with him. 
Specifically, Mr. Hill contended that, in making its decision,
the appellant violated the terms of the Teacher Fair Dismissal Act.
The circuit court agreed, finding that the school district did
not comply with the Act in that it (1) failed to notify Mr. Hill,
in writing, of problems that could lead to nonrenewal and
(2) produced no documentation of efforts to assist Mr. Hill in
correcting the deficiencies that could lead to nonrenewal.  The
circuit court awarded him damages and attorney's fees against
Marshall School District.
     On appeal, neither party asserts that the trial court's
decision to award damages and attorney's fees was error.  Rather,
the issues on appeal pertain only to the amount of damages and
attorney's fees awarded.  The circuit court ordered Marshall School
District to pay damages in the amount of $44,924.00 and attorney's
fees in the amount of $14,975.00.  On direct appeal, Marshall
School District argues that the award of attorney's fees was
excessive.  On cross-appeal, Mr. Hill contends that the damages
award should have been $93,234.00 instead of $44,924.00.  We affirm
the circuit court's decision in all respects.
     We first address Marshall School District's argument
pertaining to the issue of attorney's fees.  The circuit court's
order included the following statement:
     The court has considered the plaintiff's petition for
     attorney's fees pursuant to A.C.A 16-22-309 and upon
     consideration of the plaintiff's petition for attorney's
     fees and other matters within the knowledge of the court
     and which may have been brought to the attention of the
     court by the defendant, the court finds a reasonable
     attorney's fee to be in the amount of $14,975.00.

Arkansas Code Annotated section 16-22-309 (Repl. 1994) provides, in
pertinent part:
       (a)(1) In any civil action in which the court having
     jurisdiction finds that there was a complete absence of
     a justiciable issue of either law or fact raised by the
     losing party or his attorney, the court shall award an
     attorney's fee in an amount not to exceed five thousand
     dollars ($5,000), or ten percent (10%) of the amount in
     controversy, whichever is less, to the prevailing party
     unless a voluntary dismissal is filed or the pleadings
     are amended as to any nonjusticiable issue within a
     reasonable time after the attorney or party filing the
     dismissal or the amended pleadings knew, or reasonably
     should have known, that he would not prevail.
Marshall School District now asserts that, pursuant to the above
statute, the circuit court was without authority to award more than
$5,000.00 in attorney's fees.  It submits that the circuit court
lacked the discretionary power to award $14,975.00, and that this
award should be reversed.
     We affirm the amount of attorney's fees awarded by the circuit
court.  We agree that Ark. Code Ann.  16-22-309 (1987) limits
attorney's fees to a maximum of $5,000.00.  However, as argued by
the appellee before the trial court and now on appeal, Ark. Code
Ann.  16-22-308 (Repl. 1994) is applicable to this case.  See
Junction City Sch. Dist. v. Alphin, 56 Ark. App.    ,     S.W.2d  
  (February 19, 1997).  Arkansas Code Annotated section 16-22-308
provides:
       In any civil action to recover on an open account,
     statement of account, account stated, promissory note,
     bill, negotiable instrument, or contract relating to the
     purchase or sale of goods, wares, or merchandise, or for
     labor or services, or breach of contract, unless
     otherwise provided by law or the contract which is the
     subject matter of the action, the prevailing party may be
     allowed a reasonable attorney's fee to be assessed by the
     court and collected as costs.
Mr. Hill's action against Marshall School District was for breach
of contract, and pursuant to the above statute, the circuit court
was authorized to award attorney's fees, which were not subject
to a specified limit.  Although the trial court referenced section
16-22-309 in its opinion, the court may have actually relied on
section 16-22-308, inasmuch as it recited in its judgment that the
damages awarded were for breach of contract.  At any rate, it has
been established that this court may affirm a ruling by the trial
court if it reached the right result, even though it may have
announced the wrong reason.  Summers Chevrolet, Inc. v. Yell
County, 310 Ark. 1, 832 S.W.2d 486 (1992).  Under the facts of
this case, we hold that an attorney's fee award of $14,975.00 was
appropriate under Ark. Code Ann.  16-22-308 (Repl. 1994).
     The remaining issue is raised by Mr. Hill in his cross-appeal. 
It involves the measure of damages by which the trial court
computed the $44,924.00 award to be paid by Marshall School
District.
     In assessing the damages suffered by Mr. Hill as a result
of his dismissal, the circuit court first considered lost salary
for the 1993-94, 1994-95, and 1995-96 school years, which amounted
to $93,234.00.  The court then reduced this amount by earnings
that Mr. Hill received through other employment during the same
time frame.  He worked at a shirt factory for a brief period,
during which he earned $10,317.00.  Mr. Hill then worked as a
teacher for Westside Schools for two years at an annual salary
of about $27,103.00.  Thus, his total earnings were approximately
$64,523.00.  The circuit court reduced this amount by $16,138.00,
which represented the cost expended by Mr. Hill in seeking other
employment.  After subtracting the cost expended by Mr. Hill from
his earnings, the court concluded that his damages had been
mitigated by $48,313.00.  The court subtracted this amount from the
three years' salary that had been lost and arrived at $44,924.00 as
the amount of damages owed by Marshall School District.
     Mr. Hill appeals this damages award, contending that he was
entitled to judgment for the full $93,234.00.  Specifically, he
asserts that the court erred in reducing the award by the earnings
he received through other employment.  For his argument, Mr. Hill
cites Green Forest Public Schools v. Herrington, 287 Ark. 43, 696 S.W.2d 714 (1985).  In that case, the supreme court affirmed an
award of back pay that had been sought pursuant to the Arkansas
Teacher Fair Dismissal Act.  In addition, the court specifically
held that the award was not to be reduced by the unemployment
compensation that the appellee had received subsequent to his
wrongful dismissal.  In doing so, the court announced:
     It is a general rule that "recoveries from collateral
     sources do not redound to the benefit of a tortfeasor,
     even though double recovery for the same damage by the
     injured party may result," Amos, Adm's v. Stroud &
     Salmon, 252 Ark. 1100, 482 S.W.2d 592 (1972); Vermillion
     v. Peterson, 275 Ark. 367, 630 S.W.2d 30 (1982).  The
     question is whether the collateral source rule applies
     to employment situations and, specifically, whether
     unemployment compensation is a collateral source.  This
     is an issue of first impression in Arkansas, but other
     courts have held that with regard to damages for breach
     of an employment contract, unemployment benefits received
     were not deductible by the employer in mitigation of
     damages.  22 AmJur2d Damages  209, p. 293 (1965). 
     Furthermore, an Arkansas federal district court has held
     that unemployment compensation benefits are a collateral
     source and cannot be used to offset a judgment against a
     tortfeasor.  Collins v. Robinson, 568 F. Supp. 1464 (D.C.
     Ark. 1983).  Accordingly, we adopt this application of
     the collateral source rule and hold that appellee's
     unemployment benefits should not be deducted from his
     award of back pay.

Id. at 49-50, 696 S.W.2d  at 718.  Mr. Hill acknowledges that
the collateral-source rule has never been applied in Arkansas
to employment breach-of-contract cases where the dismissed employee
has subsequently earned income from other employment.  He now urges
this court to apply the collateral-source rule and find that the
damages owed by Marshall School District should not have been
reduced by his income from other sources.
     Despite the argument being raised by Mr. Hill, we find that
the disposition of this issue is dictated by Western Grove Sch.
Dist. v. Strain, 288 Ark. 507, 707 S.W.2d 306 (1986).  In that
case, a teacher prevailed on a contract dispute under the Arkansas
Teacher Fair Dismissal Act, and the supreme court discussed
possible mitigation of damages through other employment.  The court
held that, in such cases, the aggrieved party must use reasonable
care, effort, and expenditure to mitigate damages.  The court also
held that the proper measure of damages is the loss sustained by
the teacher, less any mitigation earnings that may be realized
through subsequent employment.
     Mr. Hill contends that Western Grove School District and Green
Forest Public Schools are inconsistent and that we should follow
the precedent set in the Green Forest Public Schools opinion.  We,
however, find no inconsistency.  Western Grove School District
involved the duty to mitigate through subsequent employment, while
Green Forest Public Schools involved the effect of unemployment
benefits in breach-of-employment contract actions.  In the instant
case, the precedent set in Western Grove School District is
controlling.  Mr. Hill had a duty to take reasonable steps to
mitigate the damages, and he did so by seeking and finding other
employment.  The court's decision to consider his subsequent
earnings in mitigation of damages was not erroneous.
     Affirmed on appeal; affirmed on cross-appeal.
     Griffen and Roaf, JJ., agree.