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Towle v. Kerr

Court of Appeals of Wisconsin, District I

January 29, 2019

Edward Towle, Plaintiff-Appellant,
v.
Deborah Kerr, Individually and as District Administrator, Board of Education of School District of Brown Deer and School District of Brown Deer, Defendants-Respondents.

         Not recommended for publication in the official reports.

          APPEAL from an order of the Cir. Ct. No. 2010CV7338 for Milwaukee County:

          Before Kessler, P.J., Brash and Dugan, JJ.

          JOHN J. DIMOTTO, JUDGE.

         ¶1 KESSLER, P.J. Edward Towle appeals an order of the circuit court granting summary judgment to Deborah Kerr, the Board of Education of the School District of Brown Deer, and the School District of Brown Deer. Towle contends that the circuit court erred in finding that the defendants did not breach Towle's contract when he was placed on an administrative leave, that Towle's constitutional property and liberty interests were not violated, that the defendants did not violate a duty of good faith and fair dealing, and that the defendants did not tortiously interfere with Towle's contract or prospective contracts. We affirm.

         BACKGROUND

         Undisputed Facts

         ¶2 Towle was the business manager for the School District of Brown Deer from February 2007 through June 30, 2010. Towle's final contract with the District ran from July 1, 2008 through June 30, 2010. On February 9, 2009, Kerr, as the superintendent of the District, placed Towle on paid administrative leave pending an investigation into financial irregularities. Specifically, the District was investigating: (1) insufficient funds in the District's bank account; (2) wire transfers by unauthorized persons while Towle was out sick; (3) procedures for obtaining draw requests on the District's line of credit; and (4) disorganization.

         ¶3 On February 10, 2009, Kerr met with Kara Schuerman, the president of the Brown Deer Education Association (BDEA). Towle, as business manager of the District, was a member of the District's bargaining team and had frequent contact with the BDEA. The District and the BDEA were in the process of labor negotiations. Kerr informed Schuerman that Towle was placed on administrative leave pending an investigation into financial irregularities. Kerr suggested that Schuerman inform the BDEA that Towle was on leave to prevent miscommunication during labor negotiations.

         ¶4 Schuerman subsequently sent the following email to the eleven members of the BDEA:

I was asked to inform you, on behalf of Dr. Kerr, that our business manager Edward Towle has been placed on administrative leave for irregular accounting and business practices.
Dr. Kerr is investigating details and working with the [Department of Public Instruction] to perform necessary budget predictions (a budget will be presented to the Finance Committee March 9th). She has some ideas as to interim business manager possibilities but we are not at that point yet.
Dr. Kerr felt it important that you are made aware of the issue as you will certainly hear rumblings in your building and the community. We have no more
information other than the above first statement. If you have any questions, please don't hesitate to ask me.

         ¶5 On February 13, 2009, counsel for the District informed Towle's counsel of the specific areas of investigation. Towle's counsel responded to the letter addressing the District's concerns and then met with District officials to discuss the concerns. On March 30, 2009, a public auditing firm, Virchow, Krause & Company, LLP, sent the District the results of its independent investigation. The report identified irregular findings in multiple areas, including, but not limited to, cash management, food service claims, and budget variances. Towle continuously requested to return to work, however, Kerr maintained Towle's administrative leave.

         ¶6 Towle's counsel then suggested that Kerr write letters of reference for Towle so that Towle could seek employment elsewhere. On May 22, 2009, Kerr and Towle signed a "Memorandum of Understanding," in which Kerr agreed to provide Towle with letters of reference for other employment opportunities and Towle agreed not to use those letters in future litigation. Kerr and Towle also entered into a "Tolling Agreement" regarding any injuries alleged by Towle, giving Towle additional time to find new employment without filing a notice of claim.

         ¶7 In the months that followed, Kerr provided multiple reference letters on Towle's behalf, but Towle did not obtain employment. In July 2009, Towle filed a notice of claim with the District, seeking reinstatement and various damages. On November 3, 2009, Kerr provided Towle with a notice that the Board of Education of the School District of Brown Deer (the Board) was considering non-renewal of Towle's contract. On November 9, 2009, the Board denied Towle's claim. The following day, Kerr filed charges against Towle with the Board and sought termination of Towle's employment.

         ¶8 In January 2010, the parties attempted mediation, which was unsuccessful. At the end of the month, Kerr sent a letter to the Board president stating that the District no longer wished to terminate Towle, but that it wished to proceed with non-renewal proceedings. A hearing on Kerr's request for non-renewal was ultimately scheduled for April 2010.

         ¶9 In the interim, Towle applied for a business manager position with the Grayslake School District in Illinois. Kerr provided Towle with a reference letter and Towle was offered the position. On April 7, 2010, Towle signed a contract with the Grayslake School District. Five days later, Towle submitted a letter of resignation to the School District of Brown Deer. Towle stated his effective resignation date as July 1, 2010. The Board accepted Towle's resignation and the non-renewal hearing was cancelled. Towle continued to receive all economic benefits under his District contract through June 30, 2010.

         ¶10 Following Towle's resignation letter, local media ran a series of articles about Towle's administrative leave, resignation, and payment. The Grayslake School District rescinded Towle's offer. Kerr subsequently issued a statement stating, as relevant:

Mr. Towle was hired before I assumed this position, and his contract was extended in June 2008 for a two-year period. However, I placed Mr. Towle on paid administrative leave pending an investigation into serious concerns about operations in the Business Office. After discussing this matter with the Board and our legal counsel, we followed the terms of his ...

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