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Towle v. Board of Education School District of Brown Deer

United States District Court, E.D. Wisconsin

September 29, 2016

EDWARD TOWLE, Plaintiff,
v.
BOARD OF EDUCATION SCHOOL DISTRICT OF BROWN DEER, DEBORAH KERR, and SCHOOL DISTRICT OF BROWN DEER, Defendants.

          ORDER

          J. P. Stadtmueller U.S. District Judge

         In this civil suit, Plaintiff Edward Towle (“Mr. Towle”) alleges numerous claims against Defendants Board of Education School District of Brown Deer, Dr. Deborah Kerr, and School District of Brown Deer (collectively “the District”) in relation to his placement on paid administrative leave. (Second Amended Complaint (“SAC”), Docket #1-1). Mr. Towle initially filed this action in Milwaukee County Circuit Court and, on June 6, 2011, the District removed the case to federal court. (Docket #1). This case has languished for the last five years due to the parties' numerous requests for mediation.

         This matter comes before the Court on the District's motion for summary judgment, filed on May 18, 2016. (Docket #17). On July 12, 2016, Mr. Towle filed his opposition (Docket #69) and, on August 12, 2016, the District filed its reply (Docket #83). As such, the motion for summary judgment is fully briefed and ready for disposition.[1]

         To begin, however, the Court finds it necessary to briefly discuss the claims presented in the SAC, the operative complaint in this matter, because the parties do not agree on this issue. The SAC lists eight claims: (1) Breach of Contract; (2) Defamation; (3) Tortious Interference with Contracts and Potential Contracts; (4) Violation of Due Process Under Wisconsin Constitution; (5) Violation of Due Process Under United States Constitution; (6) Breach of Contract: Memorandum of Understanding; (7) Breach of Covenant of Good Faith and Fair Dealing in Employment Contract; and (8) Breach of Covenant of Good Faith and Fair Dealing in Memorandum of Understanding. (SAC, Docket #1-1). On May 18 2016, Judge Randa granted the parties' joint motion to dismiss the Sixth and Eighth Claims. (Docket #65).

         Throughout the course of summary judgment briefing, it became apparent that the parties disagreed over the fifth claim involving a due process violation under the United States Constitution. As the only federal claim alleged, and as discussed more in detail below, the nature of this claim becomes significant when determining the Court's jurisdiction over this case.

         The District interprets the SAC to bring a property interest claim only under the Wisconsin Constitution, whereas Mr. Towle argues he was deprived of a property interest without due process of the law in violation of the Wisconsin Constitution and the United States Constitution. (Compare Def's Opening Br. at 11 with Pl's Opp. at 78). On August 30, 2016, Mr. Towle elaborated this point when he filed a motion to clarify the scope of the fifth claim, among other things. (Docket #88).[2]

         The fourth claim in the SAC clearly alleges both a liberty and property interest protected by the Wisconsin Constitution. (SAC ¶ 40) (“Mr. Towle has a liberty and property interest….”). The fifth claim, under the United States Constitution, however, makes no mention of a property interest, and instead states, “Defendants' conduct deprived him a liberty interest without due process of the law, ” and that he suffered a loss of economic opportunity due to the District's stigmatizing conduct. (SAC ¶¶ 45-46).

         Mr. Towle urges the Court to find that his fifth claim-Violation of Due Process Under the United States Constitution-is sufficient to state a claim that the District deprived him of property interests as well as liberty interests in violation of the due process clause of the United States Constitution. (Docket #89 at 6). The Court construes all pleadings liberally, however, it will not read into complaints claims that are explicitly not present. Indeed, the distinction between the fourth and fifth claims is telling-the fourth claim explicitly alleges both liberty and property interest claims whereas the fifth claim only alleges a liberty interest. The District has filed a summary judgment motion on the presumption that the only federal claim in this action alleges a deprivation of a liberty interest without due process. (See Defs' Opening Br. at 4, 11). As such, the District would be significantly prejudiced if the Court were to read into the SAC a claim that is clearly not there. The SAC was filed over five years ago, and now is not the time to clarify the claims at issue in this case.

         Accordingly, the Court will address the motion for summary judgment with the clear understanding that the federal claim in this case-the fifth claim-involves only a liberty interest. The Court will address Mr. Towle's alternative request to amend the SAC following the determination of the issues presented on summary judgment.

         1. FACTUAL BACKGROUND

         This case involves Mr. Towle's employment as the Business Manager with the District and his placement on administrative leave in 2009. Before delving into the specifics, however, the Court finds it necessary to briefly discuss the parties' factual submissions. Along with their motion for summary judgment, the District submitted proposed findings of fact (“DPFF”) (Docket #62) in accordance with Civil Local Rule 56(b)(1)(B). Mr. Towle submitted a response to those proposed findings (Docket #75) along with his own additional proposed findings of fact (Docket #76). The District then submitted a reply to its own proposed findings (Docket #85) along with a response to Mr. Towle's additional proposed findings of fact (Docket #84).

         The Seventh Circuit has emphasized the importance of local rules in regards to findings of fact because they “assist the court by organizing the evidence, identifying undisputed facts, and demonstrating precisely how each side proposed to prove a disputed fact with admissible evidence.” Bordello v. Chicago Sch. Reform Bd. of Trs., 233 F.3d 524, 527 (7th Cir. 2000) (quoting Markham v. White, 172 F.3d 486, 490 (7th Cir.1999). Mr. Towle's responses to the District's facts, however, are larded with obfuscation, argument, improper denials, and evasion. To give but one example, the District's proposed finding of fact No. 18 states: “Dr. Kerr was shocked as Mr. Towle had never told her about the District's checking accounts being overdrawn and had never come to her to describe any concerns about cash flow issues.” In response, Towle states:

Disputed. Mr. Towle had informed Dr. Kerr on several occasions that the District's bookkeeper (Sharon Batterman) was having difficulty timely reconciling the monthly statements received from the bank which related to cash management and that he had talked with the bookkeeper about this several times. Towle Dec. ¶¶ 48-49. Moreover, insufficient funds in the checking account was not a “cash flow” issue; it was a “cash management” issue. Towle Dec. ¶ 54. The purpose of taking draws on the District's short term line of credit only when funds were needed was to save interest costs and the purpose of having funds in a money market account and transferring funds to the District's checking account only when needed was to maximize the amount of interest earned by the District. Id. Although interest rates were higher during most of the 2007-2008 fiscal year than they were in 2008-2009, in 2007-2008, the District earned $290, 728 of interest income, an amount sufficient to fund several teaching positions. Id. The 2008-2009 fiscal year was different because, in prior years, the District had borrowed money in the fall and then placed the full amount borrowed in investments that would earn more interest than the interest rate on the loan. Id. But, in 2008-2009, because of the economy, there were no suitable investments available for the District to earn interest a rate higher than the loan rate. Id. Therefore, the District's cash management strategy was to take draws on the line of credit and to make transfers as late as possible when funds were needed for the checking account. Id.

(Pl's Response to DPFF ¶ 18). Despite this lengthy response, it is still not even clear if Mr. Towle disputes whether he told Dr. Kerr about checking accounts being overdrawn. As a result of this type of response and many similar examples in Mr. Towle's submissions, the Court comes close to striking Mr. Towle's response to the proposed findings of fact in its entirety. See Bordelon v. Chicago Sch. Reform Bd. of Trs., 233 F.3d 524, 528 (7th Cir. 2000) (upholding District Court's striking entire response to statements of facts for being “so full of argument, evasion, and improper denials that it defeat[ed] the whole point of [the] Local Rule[s].” Findings of fact are not the place for legal argument. The Court has limited time and resources, and submissions such as these do little to nothing to aid the Court in determining the undisputed facts for the purposes of summary judgment.

         The Court will not, however, strike Mr. Towle's responses in this instance. As discussed more thoroughly below, the Court finds that even when taking all facts in the light most favorable to Mr. Towle, his federal claim fails as a matter of law. As such, the Court finds it wiser to allow Mr. Towle's responses to the proposed findings of fact, giving him every benefit of the doubt where disputes arise, and will address the claims on the merits instead. In the future, however, the Court strongly urges all parties before it to comply with the local rules when addressing proposed findings of fact.

         The Court now turns to discuss the factual background of the case and the parties involved. Because the parties dispute so many of the proposed findings of fact, the Court will focus its discussion on the facts pertaining to the liberty claims discussed below.

         1.1 The District Hires Towle

         During the relevant time period, the District employed Mr. Towle as its Business Manager. Prior to this time, Mr. Towle was employed as the Director of Business and Financial Services of the School District of Marinette for ten years, from 1993 to 2003, and as the Director of Business and Financial Services of the School District of Westfield from 2003 until February 2007, when he resigned to accept a position as Business Manager of the School District of Brown Deer. (PPFF ¶ 3). Mr. Towle was interested in the Brown Deer Business Manager position because Brown Deer was a larger school district than Westfield, and the position would give him more responsibility, more experience with a wider variety of more complex issues, more opportunities for professional growth including the acquisition of more knowledge and the development of new skills, and the opportunity to work in an urban area with a diverse student and community population. (PPFF ¶ 4).

         The Brown Deer School District is comprised of approximately 1, 600 students in grades K4-12th grade on a 63 acre campus located on 60th Street and Dean Road in Brown Deer, Wisconsin. The current operational budget is approximately $19 million dollars. (DPFF ¶ 1). The District office staff is comprised of the Superintendent, Administrative Assistant to Superintendent, Business Manager, Administrative Assistant, Payroll Specialist, Bookkeeper, Director of Pupil Services & Administrative Assistant, Director of Curriculum & Instruction & Administrative Assistant, and Director of Facilities and Administrative Assistant. Dr. Kerr is the District Administrator for the District. (SAC ¶ 2). Dr. Kerr began employment with the District as the District Administrator in July 2007. (DPFF ¶ 4).

         Mr. Towle was hired by Dr. Kerr's predecessor in January 2007 and his initial employment contract ran from February 2007 to June 30, 2008. (SAC ¶ 5). Mr. Towle's contract was renewed in May 2008 to last from July 1, 2008, through June 30, 2010 (“the 2006-2008 Contract”). (DPFF ¶ 6).[3] The District drafted the contract and Mr. Towle asserts that he would not have entered into the contract if the Board had not agreed to employ him in the position of Business Manager or had suggested to him that he would not actually be allowed to perform any duties or come to work during the term of the contract. (PPFF ¶ 6). The Administrator's Employment Agreement included the following provision that was not contained in the 2006-2008 Contract:

The Board may terminate this contract and discharge the Administrator from employment for just cause provided that the Administrator has received notice in writing from the Board of its intent and the alleged reason or reasons for such discharge. Upon written request, a hearing shall be conducted with full regard for due process.

(PPFF ¶ 16). The Administrator's Employment Agreement also provided that “Renewal and non-renewal of this contract shall be governed by sec. 118.24, Wis. Stats., ” and, although there are certain statutory procedures (including a hearing if requested) that have to be followed, “just cause” is not required for non-renewal of an administrator's contract. (PPFF ¶ 17).

         1.2 The District Places Mr. Towle on Administrative Leave

SOn Thursday, February 5, 2009, Barb Cybele, Administrative Assistant for the Business Manager, came to Dr. Kerr with concerns about the bank wire transfer that had been done to meet the District's February 5th payroll. (DPFF ¶ 7). Ms. Cybele told her that Mr. Towle, who was out sick, had contacted payroll specialist, Sue Run, to initiate the wire transfer of $289, 913.07. (DPFF ¶ 8). The parties dispute the majority of the facts surrounding this incident; in short, Mr. Towle maintains that his actions related to the ...


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