Brown v. White

366 So.3d 626

Charles and Patsy BROWN and Prevailing Faith Ministries aka/dba Prevailing Faith Christian Academy v. John WHITE, Superintendent Louisiana Department of Education and Louisiana Department of Education State of Louisiana and Louisiana Board of Elementary and Secondary Education (Bese)

2022 CA 1122

Court of Appeal of Louisiana, First Circuit.

Judgment Rendered: April 14, 2023

L. Douglas Lawrence, Kristen B. Pleasant, Jessica W. Williams, Donecia Banks-Miley, Monroe, Louisiana, Counsel for Plaintiffs/Appellants, Charles Brown and Patsy Brown

Jeff Landry, Attorney General, Amber M. Babin, Alex B. Hayes, Assistant Attorneys General, Baton Rouge, Louisiana, Counsel for Defendants/Appellees, State of Louisiana, through the Department of Education; John White, Superintendent; and Louisiana Board of Elementary and Secondary Education

BEFORE: WELCH, PENZATO, AND LANIER, JJ.

PENZATO, J.

Plaintiffs, Charles Brown and Patsy Brown, as co-pastors and operators of Prevailing Faith Christian Academy, filed suit against the Louisiana Department of Education, John White in his capacity as former Superintendent of the Louisiana Department of Education, and the Board of Elementary and Elementary Education (BESE), seeking declaratory relief and alleging due process violations and tort claims. ¹ For the following reasons, the trial court's July 21, 2022 judgment granting the motion for summary judgment in favor of the Department, Superintendent White, and BESE is affirmed in part and reversed in part. Additionally, we notice a peremptory exception raising the objection of no cause of action, sua sponte, finding the plaintiffs fail to state a cause of action against the Board of Secondary and Elementary Education and render judgment dismissing this defendant, with prejudice.

BACKGROUND

Legal History & Applicable Law

In 2008, the Louisiana legislature enacted the "Student Scholarships for Educational Excellence Act" and created the "Student Scholarships for Educational Excellence Program." La. R.S. 17:4011, La. R.S. 17:4014. The program, sometimes colloquially referred to as the "voucher program," was intended to "create additional options" for all Louisiana schoolchildren by providing scholarships to eligible students to attend participating schools. La. R.S. 17:4012.

The Louisiana Department of Education administers the program and determines student eligibility for scholarships. La. R.S. 17:4014, La, R.S. 17:4015(1). The Department notifies parents and students whether they have been awarded a scholarship and remits scholarship payments to participating schools on behalf of scholarship recipients. La. R.S. 17:4015(4) and (5) ; La. Admin. Code tit. 28, Pt. CLIII, § 303. The amount to be paid for a scholarship is divided into four equal payments made to each participating school in September, December, February, and May of each school year. La. R.S. 17:4017(A) ; La. Admin. Code tit. 28, Pt. CLIII, § 501(E).

A school that chooses to participate in the voluntary program and elects to enroll scholarship recipients must annually notify the Department of its intent to participate and specify the number of seats the school will have available for scholarship recipients at each grade level. La. R.S. 17:4020 ; La. Admin. Code tit. 28, Pt. CLIII, § 301(B). To be eligible to participate, a nonpublic school must, among other things, meet program requirements and must be approved by BESE. La. R.S. 17:11, La. R.S. 17:4013(3), and La. R.S. 17:4021 ; La. Admin. Code tit. 28, Pt. CLIII, § 101, § 1303. Pursuant to a legislative directive, BESE adopted and promulgated rules and regulations in accordance with the Administrative Procedure Act to implement the provisions of the Student Scholarships for Educational Excellence Act. La. R.S. 17:4025(A). Bulletin 133, published in the Louisiana Administrative Code, was promulgated in accordance with this requirement. La. Admin. Code tit. 28, Pt. CLIII, § 101, et seq.

Pertinently, a participating school must submit to the Department an independent financial audit of the school conducted by a certified public accountant who has been approved by the legislative auditor. La. R.S. 17:4022(3) ; La. Admin. Code tit. 28, Pt. CLIII, § 501(G), § 901(A)(6), and § 1303. The annual audit shall address rules of financial practice contained in Bulletin 133. These rules require that scholarship funds be spent on "educational purposes" and prohibit any expenditure of scholarship funds constituting "gross irresponsibility." ² La. Admin. Code tit. 28 Pt. CLIII, § 1303. "Violations may result in a school being declared ineligible to participate." La. Admin. Code tit. 28, Pt. CLIII, § 1303. Similarly, failure to correct violations of the rules contained in Bulletin 133 or evidence of gross fiscal irresponsibility "may result in penalties including the school being declared ineligible to participate." La. Admin. Code tit. 28, Pt. CLIII, § 1303.

Factual History

Prevailing Faith Christian Academy, a nonpublic school in Monroe, Louisiana, participated in the program. During the 2013-2014 school year, the Academy submitted to the required program audit performed by Postlethwaite & Netterville, an independent accounting firm appointed by the legislative auditor. Postlethwaite & Netterville identified non-payroll expenditures by the Academy that either lacked supporting documentation or did not meet criteria for "educational purpose" and concluded that a program overpayment was made to the Academy in the amount of $13,635.75. By May 2014, the Academy had not provided Postlethwaite & Netterville with documentation to address the areas of non-compliance. As a result, the Department withheld $10,200 from program funds disbursed to the Academy in May 2014.

Thereafter, the legislative auditor conducted an investigation of the Academy. See La. R.S. 17:4022(3), La. R.S. 24:513. In its September 2015 report, the legislative auditor concluded that the Academy did not maintain adequate financial records for the period July 1, 2013 to July 1, 2014. It found $84,924 of expenditures in program scholarship funds, which were either unsupported by documentation or did not meet criteria for "educational purpose." The legislative auditor concluded that the Academy "should return the $84,924 to the Department of Education." As a result of this determination, $74,724 of scholarship funds was withheld from the 2015-2016 first quarter disbursement made to the Academy, for a total amount of $84,924 in withheld program funds. ³ The Academy was removed from the program due to its purported "gross fiscal irresponsibility."

The Browns, in their capacity as administrators of the Academy (collectively referred to as "the Academy"), filed a petition for declaratory relief and damages against the Department, former Superintendent John White, and BESE. The Academy sought a declaration that the Department acted outside of its statutory authority and violated state law by removing the Academy from the program "prior to first placing [it] on a one year probation." The Academy also alleged that the Department violated state and federal due process principles by removing it from the program "without a hearing or some other form of due process of law." Finally, the Academy asserted tort claims and sought damages, including reputational damages and lost income.

The defendants filed a motion for summary judgment in May 2019, asserting that the Academy had no vested property interest in the program and was not entitled to a one-year probationary period prior to being terminated from the program. Therefore, the defendants argued that the Academy could not succeed on a due process claim.

The defendants also moved for summary judgment on the basis that they are entitled to discretionary immunity pursuant to La. R.S. 9:2798.1 or quasi-judicial immunity. The defendants asserted that the actions taken in response to the Academy's purported violation of program rules were discretionary and were "purely adjudicative" decisions. According to the defendants, the relevant statutes do not set forth specific steps that must be taken before a school may be removed from the program; "rather, the decision is merely discretionary." In the defendants’ reply memorandum in support of the motion, they asserted that Superintendent White is entitled to "qualified immunity for the alleged constitutional violations under the Fourteenth Amendment." This defense appears to be based on qualified immunity as applied in actions brought against government officials under 42 U.S.C. § 1983. See Petersen v. Johnson , 57 F.4th 225, 232 (5th Cir. 2023).

In opposition to the motion, the Academy argued that certain testimony by Superintendent White undermined the defendants’ assertion that the complained-of decisions were discretionary. Particularly, Superintendent White testified that, when a school is declared ineligible, it is a function of the regulations and a determination of whether the facts satisfy the criteria, not the decision-making authority of the state superintendent or any other official. Thus, the Academy argued that whether the Department was engaged in policymaking or discretionary acts within the course and scope of its lawful duties was an unresolved issue of material fact.

The Academy further asserted that the evidence offered by the defendants demonstrated that the challenged actions were taken by the Department, not Superintendent White or BESE; therefore, neither of these defendants were entitled to immunity for policymaking or discretionary acts. Additionally, the Academy maintained that the Department exceeded its statutory authority by removing the Academy from the program. According to the Academy, once the Department concluded that it was not compliant with program criteria, the only option was to place the Academy on probation pursuant to La. R.S. 17:4022(3).

On the issue of due process, the Academy argued that it had protected property interests in...