The Nampa Education Association is a local education organization which, at all times relevant to this appeal, was the exclusive representative of teachers of Nampa School District No. 131 pursuant to I.C. § 33-1273.
In conformance with the negotiations agreement representatives for the Association and the District attempted to negotiate an employment contract for the 1975-76 school year. During these negotiations a dispute arose regarding the amount of the cost of living increase to which the teachers were entitled under section 4-1. Impasse was reached and pursuant to the negotiations agreement the parties participated in mediation. Unable to resolve their differences through mediation, the parties submitted the matter to a fact-finder in conformance with the negotiations agreement. Upon conclusion of the fact-finding process, an agreement still had not been reached by the parties.
Before an agreement was reached the teachers engaged in a work stoppage by failing to report for work on the first two days scheduled according to the school calendar adopted by the District. These days were scheduled primarily for teacher orientation and were later made up by the teachers. A tentative agreement was reached between the Board and the District on August 28 and the teachers returned to work on the day classes were scheduled to begin. The agreement incorporated the fact-finder's recommendation that the teachers receive an 8.72% cost of living increase, but was subject to the condition that the Association could file a lawsuit to interpret the language in section 4-1 concerning the cost of living adjustment.
The Association did file a lawsuit alleging that the Board failed to act in good faith by failing to provide according to section 4-1 of the negotiations agreement a cost of
The present suit is a class action on behalf of the teachers of the district. In their complaint the teachers alleged that the Board failed to act in good faith by granting only an 8.72% cost of living increase and sought a judgment awarding a cost of living increase of 11.1%, plus interest, attorney's fees and costs. The Board and the District answered denying the allegations in the complaint and alleging as an affirmative defense that the class action was barred by the doctrines of res judicata and collateral estoppel. In a pretrial memorandum decision, the district court held that the class action was not barred by the principles of res judicata or collateral estoppel, and, in addition, held that attorney's fees could be awarded to the class of teachers pursuant to I.C. § 12-121. Following trial, the court found that the Board acted in bad faith in its negotiations with the teachers and by only granting an 8.72% cost of living increase. The court held that the claims of the teachers were supported by the alternate theories of contract and equitable estoppel, and entered a judgment awarding the teachers an 11.1% cost of living increase, plus attorney's fees and costs. The Board and the District perfected this appeal from the judgment.
The appellants argue that the court's dismissal of the earlier suit by the Association was a decision on the merits of the same issues raised in the present case. Thus, they argue that because the class of teachers is in privity with the Association, this class action is barred by the doctrine of res judicata.
The doctrine of res judicata is generally invoked "to bar a subsequent suit by the same parties or their privies upon the same cause of action." Pocatello Industrial Park Co. v. Steel West, Inc., 101 Idaho 783, 786, 621 P.2d 399, 402 (1980) (emphasis in the original). It applies, however, only if an existing final judgment has been rendered upon the merits of a case. See Wilson v. Bittick, 63 Cal.2d 30, 35, 45 Cal.Rptr. 31, 34, 403 P.2d 159, 162 (1965); McBride v. State, 626 P.2d 760, 761 (Colo. App. 1981); Beard v. Maynard, 223 Kan. 631, 637-38, 576 P.2d 611, 615-16 (1978); Flick v. Crouch, 434 P.2d 256, 261 (Okl. 1967).
The appellants in this case rely on I.R.C.P. 41(b) to support their contention that the dismissal of the earlier suit was a decision on the merits. Rule 41(b) provides in part:
The appellants argue that pursuant to I.R.C.P. 41(b) the earlier dismissal should operate as a decision on the merits since the court in the earlier case "did not specify that the decision should not operate as an adjudication on the merits, nor was the dismissal for lack of jurisdiction, for improper venue, or for failure to join a party under Rule 19."
We agree with appellants' contention that the dismissal of the earlier suit was neither for lack of jurisdiction, for improper venue, or for failure to join a party under I.R.C.P. 19. We cannot agree, however, that the court in the earlier case failed to specify that its decision was not on the merits of the issues presented. In the action brought by the Association, the district court specifically ruled that the Association
The appellants argue that even if the class action was properly brought, the district court erred in holding that the teachers were entitled to an 11.1% cost of living increase.
The appellants contend that the Board's decision regarding the amount of the teachers' cost of living increase was a discretionary act not subject to judicial review. In support of this contention, appellants cite Enterprise, Inc. v. Nampa City, 96 Idaho 734, 536 P.2d 729 (1975), and other cases for the proposition that acts of an elected body are not subject to review by the judiciary unless the actions of that body are so fraudulent, corrupt, arbitrary or unreasonable as to amount to an abuse of the body's discretion.
We do not agree that the rule set forth in Enterprise applies under the circumstances in this case. This case cannot properly be characterized as one involving a purely discretionary act on the part of the Board. In this case, the Board was required by statute to negotiate in good faith those items listed in the negotiations agreement. See I.C. § 33-1271. Furthermore, the Board was bound by the provisions of the negotiations agreement to provide in good faith the cost of living increase, "so long as such adjustment, when considered with all economic demands of the Association shall be in accordance with sound fiscal management and in conformance with statutory responsibilities and responsible budgeting processes."
The appellants also contend that the district court's finding that the Board acted in bad faith in negotiating with the teachers and by granting only an 8.72% cost of living increase is clearly erroneous. Several arguments are provided in support of this contention.
The appellants initially argue that if the "step increases" and fringe benefits which are included in the salary schedules are considered, the record demonstrates that the teachers received an increase in excess of the 11.1% rise in the consumer price index. Thus, they contend that the Board actually complied with its duty under the negotiations agreement by offering the teachers what was termed a 7.5% salary schedule. This proposal granted a 7.5% cost of living increase and added an additional step to each column of the salary schedule, a change not demanded or even requested by the Association. The appellants presented this argument to the district court, which found it to be evidence of the Board's lack of good faith and an attempt to avoid payment of the cost of living increase. The district court stated:
We agree with the district court that step increases and fringe benefits did not constitute cost of living increases under the negotiations agreement. The wording of the negotiations agreement clearly demonstrates that the cost of living adjustment was a separate and distinct consideration. The disputed provision specifically provides: "It is understood and agreed that a cost of living adjustment will be granted as a part of the economic benefits that will be determined pursuant to this agreement." (Emphasis added.) The provision further provides that "the Board will in good faith provide the cost of living adjustment for each year that this agreement is in effect, together with other financial matters to be negotiated... ." (Emphasis added.) (The other financial matters which were to be negotiated included salaries and fringe benefits.) Under the circumstances, we cannot agree with the appellants' contention that in addition to the cost of living increase other economic benefits should be considered in determining whether the Board satisfied its obligation under section 4-1. We therefore hold that the Board did not satisfy its duty to grant a cost of living increase by proposing the 7.5% salary schedule or by granting an 8.72% cost of living increase.
The appellants also argue that because the wording of the cost of living provision was conditional and the parties understood it to be so, the district court erred in finding that the agreement was evidence of the Board's bad faith. The appellants point out that the district court considered the fact that a representative of the Board characterized the conditional language in section 4-1 as "weaseling words," and found that "[t]here was definitely an attempt on the part of the Board representatives at the time the agreement was made not to abide by the agreement in any strict way." The appellants argue: "It was clear error on the part of the trial court to interpret the negotiations agreement language which both parties hammered out, understood and approved as conditional, to be the unilateral bad faith act of one party."
We agree with the appellants' contention that the cost of living provision was conditional. We cannot agree, however, that the district court found the language of the agreement to be evidence of bad faith on the part of the Board. Nor can we conclude that the provision's conditional nature precluded a finding by the district court of bad faith. Although the language of the cost of living provision was conditional, under the provision the Board was bound to provide in good faith a cost of living
Appellants argue that the district court erred in finding that the Board failed to negotiate in good faith. However, we find substantial and competent evidence to support the district court's finding. The Board's initial proposal was presented to the Association on May 27, 1975.
The evidence also demonstrates that the Board did not provide the cost of living increase in good faith as required under section 4-1 of the negotiations agreement. The record demonstrates that approximately $45,000 in addition to the money used to fund the 8.72% increase would have been necessary to fund the full 11.1% increase. The trial court found:
There is ample evidence in the record to support the district court's finding that if the Board had eliminated or reduced nonessential items in the budget the full cost of living increase could have been granted consistent with sound budgeting practices. The budget adopted by the District included funds for four programs which had not been funded by the District prior to the 1975-76 school year.
The evidence demonstrates that the District knew it would receive additional unanticipated funds prior to the time it finally approved the negotiations package and thereby supports the district court's finding that the full cost of living increase could have been granted. After fact-finding, the only offer made by the Board was for an 8.72% cost of living increase calculated on the base salary. This offer did not include the additional step which was included in the 7.5% salary schedule originally proposed by the Board. As a result, the District was able to fund the 8.72% increase with an almost identical number of dollars as would have funded the original proposal of 7.5% with an extra step — the difference between the two proposals being only approximately $6,000. A tentative agreement including the 8.72% cost of living increase was reached between the negotiating teams of the Board and the Association on August 28, 1975. This agreement, however, included a provision under which the teachers retained the right to file a lawsuit to obtain an interpretation of section 4-1. The Association's membership voted to accept the negotiations package on August 28, 1975, but the package was not officially approved by the Board until September 8. In the interim, the 6.3 mill override levy was approved.
Because we find substantial and competent evidence to support the district court's finding that a full 11.1% cost of living increase could have been granted by the District in accordance with responsible budgeting practices, we sustain it. See I.R.C.P. 52(a); Cougar Bay, supra.
The appellants also argue that the trial court erred in its application of the clean hands doctrine. The appellants contend that "[a]mple evidence was introduced at trial to show that plaintiffs did not come before the court with clean hands." Thus, they argue that the judgment in favor of the teachers should be reversed.
The evidence chiefly relied upon by the appellants to support this contention was that the teachers, including Association president Terry Gilbert, made public statements during the negotiation proceedings in violation of the negotiations agreement
The clean hands doctrine is a well-established principle to which this Court has long subscribed. See Malcolm v. Hanmer, 64 Idaho 66, 127 P.2d 331 (1942). Simply stated the maxim stands for the proposition that "a litigant may be denied relief by a court of equity on the ground that his conduct has been inequitable, unfair and dishonest, or fraudulent and deceitful as to the controversy in issue." See 27 Am.Jur.2d Equity § 136 (1966) (footnotes omitted). The clean hands doctrine, however, "is not one of absolutes and [it] should be applied in the court's discretion, so as to accomplish its purpose of promoting public policy and the integrity of the courts." Id. (Footnote omitted.) Thus, the fact that a party has engaged in inequitable conduct will not always result in that party being denied relief under the clean hands doctrine.
The trial court in this case considered the claims of the appellants and found that representatives of the Association did make public statements during the budget hearing and that some of the teachers did engage in a work stoppage. The trial court, however, concluded that the conduct of the teachers when compared with that of the Board and the District was not so unconscionable as to justify denying relief. The court's conclusion was based in part upon its belief that the conduct relied upon by the appellants to justify the application of the clean hands doctrine against the teachers resulted, at least in part, from the inequitable conduct of the Board and the District. In light of the district court's findings that the Board acted in bad faith in its negotiations with the teachers and by failing to grant a full cost of living increase, we do not believe the trial court abused its discretion in not denying relief to the teachers on the basis of the clean hands doctrine.
In its decision awarding the teachers a full cost of living increase the district court relied primarily on the doctrine of equitable estoppel, and alternatively on a contract theory. Appellants argue that neither theory supports the relief granted to the teachers. We cannot agree.
Appellants argue that the teachers are not entitled to recover upon a theory of contract because the legislatively mandated negotiations agreement is not a contract, but rather merely a "game plan" for negotiations — an agreement to later negotiate. Appellants cite several district court cases in support of this proposition.
In Buhl this Court held that although a school board may send out binding individual employment contracts to teachers during ongoing collective bargaining negotiations or mediation, "those contracts become and are modified by applicable provisions of the agreement which thereafter results." Id. at 22, 607 P.2d at 1076. This holding lays to rest arguments that negotiation agreements are not binding contracts.
Although we agree with the appellants that in most cases negotiation agreements are simply "agreements to later negotiate," we cannot agree that as such, they cannot be binding contracts. If the parties to an agreement agree to negotiate certain subjects or to follow certain procedures
The appellants argue that the teachers should not be entitled to recover upon a theory of contract because "the only reason for which any part of the negotiations agreement was entered into at all by the Board was that it was statutorily bound to do so by Idaho Code, Section 33-1271." Thus, the appellants contend that the forced participation of the Board could not result in an enforceable contract. We do not agree.
As the district court noted, the procedures set forth in I.C. §§ 33-1271 to -1276 reflect the legislature's determination that structured negotiation procedures would benefit not only school districts and teachers, but the public as well. By these procedures the legislature has specifically empowered and required the board of trustees of each school district to enter into a negotiations agreement. See I.C. § 33-1271, supra note 9. Although the Board was required in this case to enter into a negotiations agreement with the Association, nothing in the statutes required the Board to agree to the inclusion of a cost of living provision in that agreement. The district court specifically found that the Association relinquished its position that principals be included in their bargaining unit "in consideration of the addition of the provision in the negotiations agreement for a cost of living increase." That finding is clearly supported by the testimony of the parties. Under the circumstances it would be inappropriate to hold that the Board's promise to provide a cost of living increase if certain conditions were met was unenforceable because it resulted from forced participation.
We note that the cost of living clause contained in the negotiations agreement in this case is perhaps unusual. By agreeing to provide a cost of living adjustment if certain conditions were satisfied, the Board went beyond agreeing to later negotiate on certain specified subjects or to follow certain procedures. We believe, however, that it was within the Board's authority to enter into such an agreement. I.C. § 33-1271 empowers the board of trustees of each school district to "enter into a negotiations agreement with professional employees." I.C. § 33-1271 does not specify, or in any way limit, what may be contained in such an agreement. It is for the legislature, not this Court, to place limitations upon the things to which the parties may agree in a negotiations agreement. In light of the absence of any limitations in I.C. § 33-1271, we hold it was within the Board's authority to agree to the cost of living clause in the negotiations agreement.
In summary, an enforceable contract was entered into between the Board and the Association — the exclusive representative of the teachers.
Appellants finally argue that the district court erred in granting the teachers attorney's fees pursuant to I.C. § 12-121. Under I.C. § 12-121 the district court is empowered to award reasonable attorney's fees to the prevailing party in any civil action. The appellants have not demonstrated that the award of attorney's fees to the teachers in this case constituted an abuse of the district court's discretion, and therefore the award is affirmed.
Respondents argue that the teachers should be awarded attorney's fees on appeal pursuant to I.C. § 12-121. Because this Court is not left with the abiding belief that this appeal was brought frivolously, unreasonably or without foundation, no attorney's fees will be granted. I.R.C.P. 54(e)(1); Minich v. Gem State Developers, Inc., 99 Idaho 911, 591 P.2d 1078 (1979).
The judgment is affirmed. Costs to respondents.
DONALDSON, C.J., McFADDEN, J., and McQUADE, J. (Ret.), concur.
McFADDEN, J., registered his vote prior to his retirement on August 31, 1982.
BAKES, Justice, dissenting:
I cannot agree with the majority's handling of the bad faith issue. I do not feel that the evidence presented in this case justified a finding of bad faith on the part of the school board.
A negotiations agreement is not a final contract of employment. Buhl Education Ass'n v. Joint School Dist. No. 412, 101 Idaho 16, 607 P.2d 1070 (1980). However, under the facts of this case, the school board probably did bind itself to provide a cost of living increase measured by the Consumer Price Index. The wording of this particular negotiations agreement is specific enough, regarding the expression of an intent to give a cost of living increase based upon the Consumer Price Index, to justify that finding by the trial court, even though the agreement is rendered somewhat ambiguous by the last portion of the provision in question, as set out below. Where a written contract is ambiguous, the trial court is entitled to determine the intent of the parties, and I believe there is sufficient evidence here to sustain the trial court's finding that the teachers were entitled to an 11.1% increase, and I would affirm the trial court's decision if that were the full extent of the decision. However, the trial court went beyond that point and found the board acted in bad faith. I cannot agree with this finding, or with approval given by the majority.
There are three major factors present in this case that contribute to my refusal to join with the majority on the bad faith issue. The first factor appears in the negotiations agreement itself. It says that a cost of living adjustment will be granted:
The trial court continually referred to the emphasized language as "weasel words." To the trial judge, the presence of this wording in the negotiations agreement seemed to constitute bad faith on the part of the board. This conditional language, inserted in and agreed to by both parties in the negotiations agreement, was intended to give the board an "out", but such an "out" is necessary if we are to leave to individual school boards the responsibility for determining their own school budgets.
Another factor present here is that the teachers themselves recognized that the school board might have to give them a lower increase than they felt they were entitled to. An agreement was reached between the teachers and the board on August 28, with the teachers agreeing to an 8.72% cost of living increase, subject to their right to file this lawsuit to interpret the language of the negotiations agreement.
The third and most important factor was the budget of the school district itself. During the negotiations, everyone, including the school board, assumed that a cost of living increase would be granted. One teacher indicated that Mr. Yost, negotiating for the board, said that "there was room to negotiate toward a cost of living adjustment; there were parameters to move within, but, it did not equal the cost of living." The same teacher also testified that Mr. Burns, an assistant superintendent of the school district, told the teachers that if a 7-mill override levy were passed the salary proposed near 11% with no additional step increase could be granted. This indicates that the board was proposing salary increases that would fit within the budget of the school district.
The teachers and the trial judge seemed very willing to tell the school board how it could balance its own budget in order to give the teachers their full cost of living increase. The teachers' suggestions ranged from eliminating programs (not staffing a building already built, elimination of resource teachers whose salaries had previously been funded by federal grant, etc.) to delaying purchase of a building to house district headquarters, and even to reducing the school week to four days.
The trial judge noted that money to fund a cost of living increase could be found by "reductions in budget for non-essential items, elimination of budget items having lower priority than the priority for cost of living increases... ." The majority opinion then condones the trial court's method of second guessing the board in holding that the money for the increase was available if the board had eliminated or reduced non-essential items in the budget. If this opinion is allowed to stand, then the courts will be running the school districts. The authority to determine what items should be included in a school district's budget is by law granted to the school board, and district courts (and teachers) should not be able to rule, in hindsight, that the board "could have" granted the cost of living increase if they had only reduced or eliminated some other program.
The majority opinion also attempts to second guess the board on the amount of funding that would be available to it for that budget year. It is clear that the board did not have available to it the full amount of budget moneys until after an agreement with the teachers had been entered into (when a 6.3 mill levy passed). This Court, or a district court, should not be allowed to second guess, in hindsight, a board of trustees as to the amount of funding available to them to grant budget increases.
If the majority opinion is allowed to stand as written, district courts will be allowed to substitute their judgment for that of the school board in determining the amount of funding available to a particular school district, in deciding what essential or non-essential programs to cut, and in determining what priority each program should be given. District courts, in intervening in this manner, will effectively be running the school districts. As I indicated in the Oneida case, there is little wisdom in placing the courts in such a position. Consequently, I would reverse the trial court in its finding on the bad faith issue.
Although the district court went on to state there was not "a final or binding contract" between the parties, because of its earlier ruling any consideration of the substance of the Association's complaint was purely dicta. Furthermore, although the court was correct in stating that the negotiations agreement was not a final contract in the sense that the Board was absolutely bound to provide a cost of living increase equal to the rise in the consumer price index, the court never considered the substance of the claims that the Board negotiated in bad faith and failed to grant the cost of living increase despite the fact that the conditions specified in the negotiations agreement were met.
The memorandum decision upon which appellants rely was entered in response to the defendants-appellants' motion to dismiss. The district court construed the plaintiffs' complaint as an action seeking to enforce the Board's duty under I.C. § 33-1271 to negotiate in good faith concerning the subject matter of the negotiations agreement. The court's final memorandum decision and findings and conclusions entered on March 22, 1978, relied upon the alternate grounds of contract and equitable estoppel to justify recovery by the teachers, apparently reversing the court's earlier memorandum decision. The district court's final judgment, however, controls over any conflict in its earlier memorandum decisions. See Terry v. Terry, 70 Idaho 161, 213 P.2d 906 (1950); Clark v. Clark, 58 Idaho 37, 69 P.2d 980 (1937).