Dunn v. Calahan (Tex.App.- Austin, Aug. 28, 2007)

Summary judgment for defendant in tortious interference suit affirmed.

Terry L. Dunn vs. M. Ann Calahan, No. (Tex.App.- Austin, August 28, 2007)(Opinion by Chief Justice Law)(tortious interference, IIED)(Before Chief Justice Law, Justices Pemberton and Waldrop)
Appeal from 146th District Court of Bell County

FROM THE DISTRICT COURT OF BELL COUNTY, 146TH JUDICIAL DISTRICT
NO. 199,002-B, HONORABLE RICK MORRIS, JUDGE PRESIDING

M E M O R A N D U M O P I N I O N

Terry L. Dunn appeals from the summary judgment rendered against him in his suit for tortious interference with contract and intentional infliction of emotional distress. In five issues on appeal, Dunn claims that the trial court erred in granting summary judgment for appellee Dr. M. Ann Calahan because a genuine issue of material fact existed in his tortious interference cause of action and in all of Calahan's affirmative defenses. Because we hold that Calahan conclusively negated at least one element of Dunn's cause of action, we affirm the trial court's summary judgment.

Background

Dunn was a student at the Killeen campus of Tarleton State University (Tarleton) working toward a degree in elementary education. In April 2000, on his way to a student teaching assignment at an elementary school, Dunn stopped at a men's bathroom facility in a public park in Killeen. (1) A man followed him into the rest room, the two had sex, and they were subsequently arrested and charged with public lewdness. Dunn pleaded no contest to the offense and was placed on deferred adjudication in August 2000.

On discovery of the arrest, Tarleton's administration had placed Dunn on probation pending the outcome of the criminal charges. One of Calahan's official duties as the head of the the Curriculum and Instruction Department at Tarleton was to decide whether a person was to be admitted or retained in the teacher education department. Pursuant to standard procedures, Calahan recommended that Dunn be removed from public school classrooms after his conviction. In a series of letters from September to November 2000, the Dean of Education, Joe Gillespie, agreed that Tarleton would provide a "deficiency plan" by which Dunn could obtain his teacher certification if he secured employment with a school district or private school as long as he met two requirements: (1) make "full disclosure" about his arrest to his prospective employer, and (2) the employer confirmed in writing to Tarleton that Dunn had fully disclosed his arrest.

In mid-July 2001, Dunn applied for a fourth grade teaching position in the Temple Independent School District (TISD). He was interviewed by Gail Leidy, an elementary school principal in the TISD. TISD expressed interest in hiring him. Dunn gave Susan Brown, the director of human resources, a letter for her to send on TISD's behalf requesting a deficiency plan from Tarleton. However, Brown was disturbed because the letter requesting the deficiency plan also stated that "Mr. Dunn has been totally forthcoming about his arrest record." As part of a reference check, Brown called the Copperas Cove school district and was informed about a newspaper article related to plaintiff's arrest. Brown had her assistant find this article; this was the same article to which Calahan later referred. As part of her follow-up reference check, Brown also called Gillespie, and was referred to Calahan. Brown asked Calahan how she, Brown, could know "that what he told me is what really happened." Calahan referred to the existence of an article in the Temple newspaper discussing the arrest; this was the same article that Brown already possessed. Calahan said that she told Brown about the newspaper article so that TISD would not be "blindsided" if a resident of TISD had seen the article in the paper. Calahan had not yet read the article.

Brown said that she did not feel comfortable that Dunn "had been totally forthcoming about his arrest records and provided all documentation related to his arrest." Although Dunn had disclosed his arrest to Leidy, he simply said that it was for "public lewdness" without detail. Leidy said that she assumed that Dunn meant he had been caught doing something like urinating on the side of a building, or perhaps "gyrating" in public where people could see. (2) The routine criminal background check showed that appellant had received deferred adjudication for public lewdness. Dunn, however, had answered "No" to a question on his application that asked if he had "ever been convicted of a felony or offenses involving moral turpitude and/or received probation or deferred adjudication." Although Dunn had already been assigned a classroom and placed in paid training, TISD ultimately declined to allow him to teach. Dunn then sued Calahan for tortious interference with contract and intentional infliction of emotional distress. (3)

Discussion

We review the district court's summary judgment de novo. Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005); Provident Life & Accident Ins. Co. v. Knott, 128 S.W.3d 211, 215 (Tex. 2003). Summary judgment is proper when there are no disputed issues of material fact and the movant is entitled to judgment as a matter of law. Tex. R. Civ. P. 166a(c); Shell Oil Co. v. Khan, 138 S.W.3d 288, 291 n.4 (Tex. 2004) (citing Knott, 128 S.W.3d at 215-16). We construe the evidence in favor of the nonmovant and indulge every reasonable inference and resolve any doubts in the nonmovant's favor. Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548-49 (Tex. 1985); Dupont Photomasks, Inc. v. Strayhorn, 219 S.W.3d 414, 418 (Tex. App.--Austin 2006, pet. denied).

A defendant seeking summary judgment must negate as a matter of law at least one element of each of the plaintiff's theories of recovery or plead and prove as a matter of law each element of an affirmative defense. Missouri Pac. R.R. v. Lely Dev. Corp., 86 S.W.3d 787, 790 (Tex. App.--Austin 2002, pet. dism'd) (citing Centeq Realty v. Siegler, 899 S.W.2d 195, 197 (Tex. 1995)). If the defendant establishes its right to summary judgment the plaintiff must then raise a fact issue. Id. When the summary judgment does not specify the grounds on which it was granted, the non-movant (as appellant) must show that each ground alleged in the motion is insufficient to support it. Goss v. Bobby D. Assocs., 94 S.W.3d 65, 68 (Tex. App.--Tyler 2002, no pet.). We must affirm the summary judgment if any of the grounds asserted in the motion are meritorious. Texas Workers' Comp. Comm'n v. Patient Advocates of Texas, 136 S.W.3d 643, 648 (Tex. 2004).

The theory of tortious interference with business relations by a third person includes two causes of action: (1) tortious interference with existing contracts, and (2) tortious interference with prospective contractual relations. Sterner v. Marathon Oil Co., 767 S.W.2d 686, 689 (Tex. 1989); see generally, 13 William V. Dorsaneo III & Cecil C. Kuhne III, Texas Litigation Guide § 205.01[1] (2007). Plaintiff has the burden of proving the essential elements of tortious interference with a contract. These elements are: (1) the existence of a contract subject to interference; (2) a willful and intentional act of interference; (3) the act was the proximate cause of plaintiff's damages; and (4) actual damage or loss. John Paul Mitchell Sys. v. Randalls Food Markets, Inc., 17 S.W.3d 721, 730 (Tex. App.--Austin 2000) (citing Texas Beef Cattle Co. v. Green, 921 S.W.2d 203, 210 (Tex. 1996)). The elements of tortious interference with a prospective contract are: (1) there must be a "reasonable probability" that the plaintiff would have entered into the prospective relationship or contract; (2) an "independently tortious or wrongful" act by the defendant that prevented the relationship from occurring; (3) the defendant did such act with a conscious desire to prevent the relationship from occurring, or knew that the interference was certain or substantially certain to occur as a result of the defendant's conduct; and (4) the plaintiff suffered actual harm or damage as a result of the defendant's interference. Johnson v. Baylor University, 188 S.W.3d 296, 304 (Tex. App.--Waco 2006, pet denied).

In his first issue, Dunn contends that the trial court erred in granting summary judgment against him on his tortious interference with contract claim. (4) Dunn's pleadings allege only interference with an existing contract. In his pleadings he states that he:

was notified by the Human Resources office of Defendant TISD that Susan C. Brown was authorizing Gail Liedy to hire Plaintiff as a teacher for academic year 2001-2002. Plaintiff signed a letter of commitment with Defendant TISD and in reliance upon the agreement that Plaintiff was hired, he gave notice and left his existing employment effective July 29, 2001."
(Emphasis added.) He also alleges that "Calahan was aware that he had been employed by TISD." (Emphasis added.) Because we will hold that Calahan conclusively negated the elements of intentional interference and causation, we will begin by assuming that a contract existed, and analyze the tort of interference with an existing contract. See Lely Dev. Corp., 86 S.W.3d at 787.
Recovery under tortious interference with contract requires that the alleged interfering party must be shown to have acted willfully and intentionally. COC Servs., Ltd. v. CompUSA, Inc., 150 S.W.3d 654, 670 (Tex. App.--Dallas 2004, pet. denied). A willful act involves more than simple participation in some act with a breaching party. See John Paul Mitchell Sys., 17 S.W.3d at 730. The defendant must knowingly induce one of the contracting parties to breach its obligations. Browning-Ferris, Inc. v. Reyna, 865 S.W.2d 925, 927 (Tex. 1993); John Paul Mitchell Sys., 17 S.W.3d at 730 (citing Davis v. HydPro, Inc., 832 S.W.2d 137, 139 (Tex. App.--Eastland 1992, writ denied). There must be some act interfering with a contract or act persuading a party to a contract to breach; for example, offering better terms or other incentives. Davis v. HydPro, Inc., 839 S.W.2d 137, 139 (Tex. App.--Eastland 1992, writ denied). Liability for intentional interference may not be based on a simple finding that the defendant performed certain acts; there must be a finding that the defendant performed certain acts with the knowledge or belief that interference with a contract would result from that contract. See Southwestern Bell Tel. Co. v. John Carlo Texas, 843 S.W.2d 470, 472 (Tex. 1992).

The act at issue in this case is the telephone conversation between Brown and Calahan in which
Calahan informed Brown about the newspaper article. Dunn alleges in his petition that Calahan "made it clear that she believed that hiring or retaining Plaintiff as a TISD teacher would embarrass both TISD and Tarleton." For evidentiary support, he refers to Brown's deposition. In Brown's deposition she said that Dr. Calahan referred to the newspaper article as giving the arrest date. Calahan did not read the article to Brown nor send her a copy. This is the totality of the evidence on which Dunn relies to support his assertion that Calahan advised TISD that hiring Dunn would create problems. Dunn refers to no other evidence that Calahan expressed any opinion to Brown, the only TISD administrator with whom she had contact, concerning Dunn's employment with TISD and our review of the record finds none. (5) In Calahan's deposition, she said that she responded to Brown's question about Dunn because she thought that Brown should have the information to "avoid being blindsided" by a parent who might have seen the article. She herself had not read the contents of the article at that time. She had no previous relationship with Brown. The record does not show any further contact with Brown or any other TISD administrator to whom she could have communicated a negative recommendation about Dunn.

Based on the evidence in the record, no reasonable fact finder could have concluded that Calahan performed an act intended to knowingly induce TISD to breach its contract with Dunn, see John Paul Mitchell Sys., 17 S.W.3d at 730, or that the conversation with Brown was done with the knowledge or belief that it would interfere with the Brown's TISD contract. See Southwestern Bell, 843 S.W.2d at 472. Accordingly, Calahan conclusively negated the element of tortious interference that requires a willful and intentional act. John Paul Mitchell Sys., 17 S.W.3d at 730. It then became Dunn's burden to raise a fact issue. Lely Dev. Corp., 86 S.W.3d at 790. Dunn produced no countervailing evidence that Calahan offered TISD some inducement to breach its contract with Dunn or that her reference to a newspaper article that TISD already had served as a "negative inducement" for TISD to breach the contract. Calahan demonstrated her entitlement to summary judgment; Dunn failed to meet his burden to raise a fact issue. See Lely Dev., 86 S.W.3d at 790.

Calahan also conclusively negated the element of causation. Causation in a tortious interference case is "but for" causation; the test in whether the act was a substantial factor in causing the injury "without which the harm would not have occurred." See COC Servs., Ltd. v. CompUSA, Inc., 150 S.W.3d 654, 679 (Tex. App.--Dallas 2004, pet. denied). The factors given by TISD as the cause of the decision not to allow Dunn to teach were that he did not "fully disclose" his arrest to TISD and that he lied on his application when he said "No" in response to the question concerning deferred adjudication. (6) Dunn's pleadings allege that Calahan's interference caused the loss of his job and the associated wages and benefits. Dunn's brief addresses the element of causation thusly: "But for Calahan's interference, Dunn would have retained his position with TISD and Calahan's actions caused TISD [sic] actions. Victoria Bank & Trust v. Brady, 811 S.W.2d 931, 939 (Tex. 1991)." That is his sole discussion on this element and he refers to no specific reference in the record that shows any causative factors for his injury other than those enunciated by TISD, nor do we find such evidence in the record. Based on this record, no reasonable factfinder could conclude that Calahan's actions were a substantial factor in causing damages to Dunn. Calahan having conclusively negated the causation element of tortious interference, see COC Servs., Ltd., 150 S.W.3d at 679, the burden shifted to Dunn to raise a fact issue, see Lely Dev. Corp., 86 S.W.3d at 790. He did not do so. Accordingly, Calahan was entitled to summary judgment against Dunn because she negated the existence of at least one element of plaintiff's cause of action. See id.

We have accepted Dunn's characterization of the contract as existing. (7) Even if we were to consider Dunn's cause of action as that for interference with prospective business relations, Calahan would still prevail by negating the elements that the defendant's conduct was independently tortious or wrongful and that the plaintiff's damage was the result of defendant's act. Johnson, 188 S.W.3d at 304. An "independently tortious act" does not mean that plaintiff must be able to prove an independent tort; the plaintiff must prove that defendant's conduct would be actionable under a recognized tort. Wal-Mart Stores, Inc. v. Sturges, 52 S.W.3d 711, 726 (Tex. 2001). Calahan and Brown produced evidence that their phone call simply involved a response by Calahan to Brown's question about how to verify the details of Dunn's offense; Calahan told Brown about a newspaper article about which Brown already knew. There is no actionable tort present; there is not even an assertion that the conversation was defamatory or fraudulent. (8) A reasonable fact finder could not conclude that Calahan committed a tortious act in her phone call. The causation element also fails for the same reasons as previously discussed. There was no evidence that Calahan's acts caused damage to Dunn; there is no evidence that the cause of TISD's non-retention of Dunn was based on any reasons other than those stated by the district, which were not based on the conversation between Brown and Calahan.

Dunn also claimed that Calahan interfered with his contract with Tarleton by preventing the deficiency plan from being implemented. However, the implementation of the deficiency plan depended on Dunn's securing employment. We have held that Calahan's actions did not interference with Dunn's contract; TISD's decision was not based on Calahan's actions. Accordingly, Calahan did not cause the termination of the deficiency plan by preventing his employment.

Conclusion

We hold that Calahan has conclusively negated one or more elements of Dunn's cause of action for tortious interference and, thus, was entitled to summary judgment. See Lely Dev. Co., 86 S.W.3d at 790. Accordingly, we overrule Dunn's first issue. Because we have held that Calahan was entitled to summary judgment as a defendant who conclusively negated one or more elements of the plaintiff's claim, we will not address Dunn's issues concerning Calahan's affirmative defenses because they are not necessary to resolve this case. See Tex. R. App. P. 47.1 (opinion to be as brief as practicable while addressing all issues necessary to disposition of claim). (9) We affirm the trial court's summary judgment.

W. Kenneth Law, Chief Justice
Before Chief Justice Law, Justices Pemberton and Waldrop
Affirmed
Filed: August 28, 2007

1. According to a newspaper article made part of the summary judgment record, the restroom in the park was under surveillance because of numerous complaints about drug use and lewdness around children. Calahan's reference to this article forms the basis of Dunn's complaint against her.
2. Similarly, Calahan said that she interpreted "public lewdness" to mean doing something "inappropriate" in public like flashing or mooning. When asked if the fact that another man was in the restroom "suggested anything to [her]" she said that it did not.
3. Dunn also sued TISD for sex discrimination and breach of contract. TISD filed a counter-claim alleging that Dunn's suit was groundless, and was brought in bad faith and for the purpose of harassment. TISD and Dunn entered an agreement to dismiss their claims against each other.
4. Dunn also contended that he had a contract with Tarleton concerning the deficiency plan with which Calahan interfered. Because the interference with the Tarleton contract could occur only if Calahan's actions caused TISD to refuse to employ Dunn, thus preventing the implementation of the deficiency plan, we discuss the claimed interference with the TISD contract first. At various times, Dunn refers to interference with business relationships, contract, and employment. However, the only relationships subject to interference are the contracts with TISD and with Tarleton. Appellee consistently refers to interference with contract, as will we.
5. Dunn asserts that Calahan was motivated to interfere with his contract because she personally did not think that Dunn should teach. At a deposition, when asked whether in her professional opinion Dunn should be a teacher, she said that he should not. However, at the time of the phone call, Calahan did not know all of the details about the arrest nor did she express an opinion to Brown concerning Dunn's employment. By the time of the deposition, Calahan learned more details and formed this professional opinion. At one point, Dunn even admitted that Calahan was not acting maliciously but in the best interests of Tarleton and the teacher education program.
6. We note that Dunn argues that he raised material fact issues concerning the scope of "full disclosure" of his arrest, i.e. did he have to disclose more than "public lewdness" and that the question concerning deferred adjudication could be interpreted as referring only to deferred adjudication for felonies and offense involving moral turpitude. However, the basis of his claim again Calahan is the one phone conversation and reference to the newspaper article, neither of which are affected by these arguments.
7. In other words, contrary to Dunn's position, a fact issue about whether the contract was existing or prospective may exist. Summary judgment is nevertheless proper because of the negation of other elements.
8. Dunn asserts that the "full disclosure" required by his "contract" for the deficiency plan did not specify that he had to disclose this newspaper article. He seems to have then interpreted the absence of specific language about the newspaper article as a prohibition against Calahan disclosing its existence. However, nowhere in the correspondence between Dunn and Tarleton concerning the deficiency plan is there any discussion of non-disclosure of any information.
9. Calahan also moved for summary judgment on Dunn's claim of intentional infliction of emotional distress. Dunn brings no issue or argument on appeal concerning the summary judgment against him on that claim and so waived appeal of that claim. See Tex. R. App. P. 38.1(e). Further, Calahan's action in disclosing the newspaper article does not rise to the level of "extreme and outrageous" conduct that this tort requires. See Twyman v. Tywman, 855 S.W.2d 619, 621 (Tex. 1993). Extreme and outrageous conduct is conduct so outrageous in character, and so extreme in degree, as to "go beyond all possible bounds of decency, and to be regarded as atrocious, and utterly intolerable in a civilized community." Id. (citing Restatement (Second) of Torts § 46, cmt. d.).

Hudspeth v. Chapel Hill ISD (Tex.App.- Austin, Jun 8, 2007)

Hudspeth v. Chapel Hill Indep. Sch. Dist. (Tex.App.- Austin, Jun 8, 2007)(Waldrop)
AFFIRMED: Opinion by Justice Waldrop
(Before Justices Patterson, Pemberton and Waldrop)

Beth Hudspeth v. Chapel Hill I.S.D. and Texas Education Agency
Appeal from 250th District Court of Travis County


FROM THE DISTRICT COURT OF TRAVIS COUNTY, 250TH JUDICIAL DISTRICT
NO. D-1-GN-04-003097, HONORABLE GISELA D. TRIANA, JUDGE PRESIDING

M E M O R A N D U M O P I N I O N

Beth Hudspeth filed a grievance against Chapel Hill I.S.D. in Tyler for crediting her with only two years of teaching experience for purposes of the district pay scale rather than seven years of teaching experience. She claims that she accepted a position at Chapel Hill I.S.D. based on a promise by the high school principal that she would be paid based on seven years of experience. Chapel Hill I.S.D. denied the grievance and the Commissioner of Education denied Hudspeth's appeal of the grievance. The district court affirmed the Commissioner's decision. On appeal to this Court, Hudspeth contends that the district court erred by affirming the Commissioner's decision because the Texas Education Agency's findings demonstrate that Chapel Hill I.S.D. is liable to Hudspeth for breach of contract or, alternatively, that Chapel Hill I.S.D. is liable to her under the theory of promissory estoppel. We affirm the judgment of the district court.

Factual and Procedural Background

Hudspeth has been a special education teacher at Chapel Hill High School since August 2002. Before being hired by Chapel Hill I.S.D., she worked at Stepping Stone, a private school in Smith County, where her annual salary was close to $30,000. In June 2002, Greg Wright, the principal of Chapel Hill High School, called Hudspeth and asked her to interview for a teaching position. During the interview, Hudspeth told Wright that she had taught at Stepping Stone for nine and one-half years, seven of which were full-time. They did not discuss salary or the accreditation status of Stepping Stone at that time. Soon after the interview, Wright called and offered Hudspeth the teaching position. During their telephone conversation, Hudspeth asked about salary and again told Wright that she had seven years of full-time teaching experience. Hudspeth also asked Wright for $1,500 to be applied toward her tuition for an alternative certification program. Wright told Hudspeth that he needed to get permission from Chapel Hill I.S.D. Superintendent Joe Stubblefield before he could promise her a specific salary. Shortly thereafter, Wright called Hudspeth and told her that in accordance with her seven years of teaching experience, she would be paid an annual salary of $31,720, plus the $1,500 that she requested for tuition.

Based on these representations, Hudspeth orally accepted the position with Chapel Hill I.S.D. and stopped looking for other jobs. (1) Wright informed Hudspeth that the terms of her employment would be presented for approval at the June 24 meeting of the Chapel Hill I.S.D. Board of Trustees. The board approved the terms of her employment on June 24 and, shortly thereafter, Hudspeth signed a probationary contract for the 2002-2003 school year. On or about August 14, after Hudspeth had begun working for Chapel Hill I.S.D., Royce Sulser, Human Resources Director for Chapel Hill I.S.D., informed her that he had received her service record from Stepping Stone and that because Stepping Stone was accredited for only two of the seven years that she worked there full-time, Chapel Hill I.S.D. could only credit her with two years of teaching experience for the purposes of the pay scale. Sulser told Hudspeth that, as a result, her salary would be reduced to $26,390.

Hudspeth filed a grievance with Chapel Hill I.S.D. regarding her reduction in salary and appealed through three levels at Chapel Hill I.S.D., culminating with the denial of her appeal at a Level III Grievance Hearing before the board. Hudspeth appealed to the Texas Education Agency, which signed a final order denying her appeal on July 9, 2004. Hudspeth sought judicial review of the Texas Education Agency's decision, and on April 14, 2006, the district court affirmed the Commissioner's decision.

Standard of Review

A district court may not reverse the Commissioner's decision unless it was not supported by substantial evidence or the Commissioner's conclusions of law were erroneous. Tex. Educ. Code Ann. § 21.307(f) (West 2006). Substantial evidence review is a limited standard of review requiring "only more than a mere scintilla" to support an agency's determination. Montgomery Indep. Sch. Dist. v. Davis, 34 S.W.3d 559, 566 (Tex. 2000) (quoting Railroad Comm'n v. Torch Operating Co., 912 S.W.2d 790, 792 (Tex. 1995)). In conducting a substantial evidence review, the court determines whether the evidence as a whole is such that reasonable minds could have reached the same conclusion as the agency in the disputed action. See Texas Educ. Agency v. Goodrich Indep. Sch. Dist., 898 S.W.2d 954, 957 (Tex. App.--Austin 1995, writ denied). The court may not substitute its judgment for that of the agency and may only consider the record on which the agency based its decision. See id.; State v. Public Util. Comm'n, 883 S.W.2d 190, 203 (Tex. 1994). The test is not whether the Commissioner reached the correct conclusion, but whether some reasonable basis exists in the record for his action. Public Util. Comm'n, 883 S.W.2d at 204. The findings, inferences, conclusions, and decisions of an administrative agency are presumed to be supported by substantial evidence, and the burden is on the appellant to prove otherwise. Id.

The question of whether an agency's determination meets the substantial evidence standard is one of law. Montgomery, 34 S.W.3d at 566. On questions of law, the trial court is not entitled to deference on appeal. Texas Dep't. of Pub. Safety v. Alford, 209 S.W.3d 101, 103 (Tex. 2006) (per curiam). On appeal of the district court's judgment, the focus of the appellate court's review, as in the district court, is on the decision of the Commissioner. Montgomery, 34. S.W.3d at 562; Tave v. Alanis, 109 S.W.3d 890, 893 (Tex. App.--Dallas 2003, no pet.); Goodie v. Houston Indep. Sch. Dist., 57 S.W.3d 646, 650 (Tex. App.--Houston [14th Dist.] 2001, no pet.).

Discussion

Hudspeth contends that the district court erred in affirming the Commissioner's decision because the Texas Education Agency's findings demonstrate that Chapel Hill I.S.D. is liable to Hudspeth for breach of contract.

The elements of a breach of contract claim are (1) that a valid contract existed, (2) that the plaintiff performed or tendered performance, (3) that the defendant breached the contract, and (4) that the plaintiff was damaged as a result of the breach. New York Life Ins. Co. v. Miller, 114 S.W.3d 114, 121 (Tex. App.--Austin 2003, no pet.). The operational policies adopted by a school board before making an employment contract with a teacher form part of the contract and the teacher's employment is subject to those policies. Perry v. Houston Indep. Sch. Dist., 902 S.W.2d 544, 547 (Tex. App.--Houston [1st Dist.] 1995, writ. dism'd w.o.j.); Myrtle Springs Reverted Indep. Sch. Dist. v. Hogan, 705 S.W.2d 707, 709 (Tex. App.--Texarkana 1985, writ ref'd n.r.e.).

Although Hudspeth's probationary contract is not included in the record, all parties agree that there was a valid contract. Testimony at the Level III Grievance Hearing indicates that the contract did not specify a dollar amount, but instead stipulated that Hudspeth would be paid in accordance with board policy. It is undisputed that Hudspeth has continued to work at Chapel Hill High School as a special education teacher and has fully performed her obligations under the contract. Hudspeth contends that the board breached the contract. She argues that because Wright and Stubblefield were acting as agents of the board within the scope of their apparent authority, the board is bound by their representation that her salary would be $31,720.
The superintendent of a school district acts as the agent of the board of trustees and his acts bind the board unless they are unauthorized. Bowman v. Lumberton Indep. Sch. Dist., 801 S.W.2d 883, 888 (Tex. 1990). A high school principal is not per se the agent of the board of trustees, but a school principal could act as an agent of the board if appointed to do so or if the requirements of an implied agency are met. Welch v. Coca-Cola Enters., Inc., 36 S.W.3d 532, 540 (Tex. App.--Tyler 2000, pet. dism'd by agr.). To establish an implied agency or apparent authority to act as an agent, one must show that the principal either knowingly permitted its agent to hold himself out as having authority or "showed such lack of ordinary care as to clothe the agent with indicia of authority." Nationsbank, N.A. v. Dilling, 922 S.W.2d 950, 952-53 (Tex. 1996). In determining whether an agent has apparent authority, a court may consider only the principal's conduct leading a third party to believe that the agent has authority. Id. at 953.
In this case, it is not Superintendent Stubblefield who made the salary representation to Hudspeth, but Principal Wright. There is no evidence that the board made any representation, express or implied, that Wright had the authority to negotiate Hudspeth's salary. It is undisputed that as a part of the discussion of salary with Hudspeth, Wright informed her that he would need to get approval from Stubblefield. Wright also informed Hudspeth that the terms of her employment would need to be approved by the board. Thus, when Wright told Hudspeth that her salary would be $31,720, he did not hold himself out as acting on behalf of the board. Because the board did not knowingly permit Wright to hold himself out as having authority, nor did it show a lack of ordinary care so as to clothe Wright with "indicia of authority," Wright was not acting as an agent of the board for the purposes of binding the board to the amount of
Hudspeth's salary.

Even if Wright had the apparent authority to bind the board, the board is not liable for breach of contract. The $31,720 salary, which was based on Hudspeth's representation that she had seven years of full-time teaching experience, was not included in the probationary contract. Chapel Hill I.S.D. policy provides that no credit is given for work completed at unaccredited schools. (2) Chapel Hill I.S.D. policies form part of Hudspeth's contract, and she was paid in accordance with those policies. Thus, the district court did not err in finding substantial evidence to support the Commissioner's conclusion that Chapel Hill I.S.D. did not breach its contract with Hudspeth.
Hudspeth also contends, in the alternative, that the district court erred in affirming the Commissioner's decision because the Texas Education Agency's findings demonstrate that Chapel Hill I.S.D. is liable to Hudspeth under the theory of promissory estoppel.
The requisites of promissory estoppel are (1) a promise, (2) foreseeability of reliance on the promise by the promisor, and (3) substantial reliance by the promisee to his detriment. English v. Fischer, 660 S.W.2d 521, 524 (Tex. 1983). The reliance must be reasonable and justified. Id. The general rule that estoppel does not apply to a unit of government exercising its governmental power is subject to several exceptions. Bowman, 801 S.W.2d at 888. Estoppel may apply to "municipalities and similar local units of government" when justice requires its application, and there is no interference with the exercise of governmental functions. Id. Estoppel may also apply when a school board's agent acts within the scope of his apparent authority, unless the acts were unauthorized. Id. Finally, estoppel may apply against a subdivision of government where the governing body is a board or commission if the evidence clearly indicates that the subordinate officer's act was done with the knowledge of the governing body and was so closely related to the expressed will of the governing body that the officer's act constitutes an act that of the board itself. Id. Hudspeth argues that her case falls within each of these exceptions.

First, Hudspeth argues that justice requires the application of estoppel and that there is no interference with the exercise of the board's governmental functions. This exception is available "only in exceptional cases where the circumstances clearly demand its application to prevent manifest injustice." City of White Settlement v. Super Wash, Inc., 198 S.W.3d 770, 774 (Tex. 2006) (quoting City of Hutchins v. Prasifka, 450 S.W.2d 829, 836 (Tex. 1970)). This Court has also held that this exception is limited to municipalities. Dillard v. Austin Indep. Sch. Dist., 806 S.W.2d 589, 595 (Tex. App.--Austin 1991, writ denied), abrogated on other grounds by Federal Sign v. Texas S. Univ., 951 S.W.2d 401, 405-406 (Tex. 1997), superseded by statute as stated in General Servs. Comm'n v. Little-Tex Insulation Co, Inc., 39 S.W.3d 591, 598 (Tex. 2001); see also City of White, 198 S.W.3d at 774 (referring only to municipalities in discussing this exception). The use of estoppel against a governmental unit under this exception is "clearly linked" to the proprietary actions of a municipality. Dillard, 806 S.W.2d at 594-95. Because a school district has no proprietary functions, estoppel cannot be applied to a school district under this exception. Id. We also hold that even if this exception could be applied to a school district, this case is not the "exceptional case where the circumstances clearly demand its application to prevent manifest injustice."

Next, Hudspeth argues that the board is bound by Wright's salary representation regardless of whether it had actual knowledge of it because Wright was an agent of the board acting within the scope of his authority. As discussed above, Wright was not an agent of the board for the purposes of binding the board to a salary amount. However, even if Wright was acting as an agent of the board under these circumstances, the acts of an agent of a board do not bind the board if the acts were unauthorized. Bowman, 801 S.W.2d at 888. The record contains no evidence that the salary that Wright quoted to Hudspeth was an exception approved by the board or that Wright was authorized by the board to negotiate salaries greater than those provided in district policy. In addition, at the time that Wright told Hudspeth that she would be paid $31,720 based on seven years' experience, Chapel Hill I.S.D. had not yet received Hudspeth's teaching record and had no way of knowing that Stepping Stone was only accredited for two of those years.

Finally, Hudspeth argues that an exception to the general rule that estoppel does not apply to a governmental unit is appropriate because the evidence indicates that Wright acted with the knowledge of the board and that his act was so closely related to the will of the board as to constitute an act of the board itself. Hudspeth characterizes the "act" as Wright's offering her a job and states that the board "had to know" that Hudspeth had been offered a job at Chapel Hill I.S.D.. This is an incorrect application of this exception because none of the parties dispute that Wright offered the job to Hudspeth. Rather, the "act" at issue is Wright's representation that Hudspeth's salary would be $31,720. The record contains no evidence that the board had knowledge of this salary representation. In fact, the record indicates that the board routinely approves teachers' employment without knowledge of specific salaries. The transcript of the Level III Grievance Hearing shows a board member asking what is included in a teacher's contract regarding salary. Finally, the promise of $31,720 is not so closely related to the board's will as to constitute an act of the board itself. Absent an exception granted by the board, paying this salary to a teacher with only two years of experience at an accredited school is in direct conflict with board policy.

The record does not contain evidence to support any of the exceptions that Hudspeth asserts to the general rule that estoppel does not apply to a unit of government exercising its governmental power. Thus, the trial court did not err in determining that the Texas Education Agency's findings did not demonstrate that Chapel Hill I.S.D. is liable on the theory of promissory estoppel.

Affirmed.
____________________________________________
G. Alan Waldrop, Justice
Before Justices Patterson, Pemberton and Waldrop
Affirmed
Filed: June 8, 2007

1. See Decision of the Designee of the Commissioner, Finding of Fact 7 ("Based on the salary representation, Petitioner stopped looking for other jobs, orally agreed to work for Respondent, and signed a probationary contract for the 2002-2003 school year.")
2. Chapel Hill I.S.D. board policy specifically incorporates the Commissioner's rules on creditable years of service, which specify that teaching credit is not awarded for work done at an unaccredited private school. See 19 Tex. Admin. Code § 153.1021(g) (2007).