Genesis Sch., Inc. v. Mo. St. Bd. of Educ.

688 S.W.3d 242

GENESIS SCHOOL, INC., Respondent,

v.MISSOURI STATE BOARD OF EDUCATION, Appellant.

WD 86457

Missouri Court of Appeals, Western District

OPINION FILED: APRIL 23, 2024

Appeal from the Circuit Court of Cole County, Missouri, The Honorable Cotton Walker, Judge

Charles William Hatfield, Alixandra Cossette, Alexander Clark Barrett, Hardin Thomas Haynes, Jefferson City, MO, Attorneys for Respondent.

Clayton Weems, Jefferson City, MO, Attorney for Appellant.

Before Division Three: Cynthia L. Martin, Presiding Judge, Mark D. Pfeiffer, Judge and Edward R. Ardini, Jr., Judge

Cynthia L. Martin, Presiding Judge

The Missouri State Board of Education ("State Board") appeals from the trial court’s entry of a judgment that declared unlawful and arbitrary the State Board’s decision to revoke the charter of Genesis School, Inc. ("Genesis"). The State Board argues that Genesis lacked standing to seek section 536.150¹ review of the State Board's decision. Finding no error, we affirm.

Factual and Procedural History²

[1, 2] Genesis is a public charter school located in Kansas City, Missouri that educates students in kindergarten through eighth grade. The State Board is charged with supervising "the instruction in [ ] public schools" within the State of Missouri and serves as the head of the Missouri Department of Elementary and Secondary Education ("DESE"). Mo. Const. art. IX § 2(a).

Genesis’s first public charter sponsor was the University of Missouri-Kansas City ("UMKC"). After UMKC stopped sponsoring charter schools in 2018, Genesis’s new sponsor became the University of Missouri-Columbia ("MU"). In 2020, the State Board authorized MU’s renewal of Genesis’s charter through June 2025. After the State Board revoked MU’s ability to serve as a sponsor for Genesis in 2022, the Missouri Charter Public School Commission ("Commission") became Genesis’s new sponsor. The Commission is a state commission that sponsors public charter schools throughout the state. The Commission and Genesis entered into a new charter agreement with a term from July 1, 2022, until June 30, 2025. The new charter agreement between the Commission and Genesis included a performance contract mandating performance goals and a progressive notification system if Genesis was failing to meet those goals.

In September of 2022, the Commission sent Genesis a "Notice of Potential Closure" letter informing Genesis that it anticipated closing the school at the end of the 2022-2023 school year. The Commission then sent a letter on December 15, 2022, definitively informing Genesis that the Commission intended to revoke Genesis’s charter. Genesis timely requested a hearing before the Commission pursuant to section 160.405.8(3). On January 30, 2023, the Commission conducted a hearing pursuant to procedures it had established as required by section 160.405.8(4). During that hearing, the Commission presented evidence of the reasons for revocation of Genesis’s charter, and Genesis presented evidence refuting that there was a proper basis for revoking its charter. On February 15, 2023, the Commission adopted a resolution revoking Genesis’s charter citing as the authority for its decision section 160.405.8(1)(b)(a), which authorizes revocation of a charter "if there is clear evidence of underperformance as demonstrated in the charter school’s annual performance report in three of the last four school years." The Commission’s resolution notified Genesis that its decision was subject to an appeal to the State Board pursuant to section 160.405.8(4).

By letter dated March 10, 2023, Genesis exercised its right to appeal the Commission’s revocation decision to the State Board. Genesis argued that the Commission’s revocation of Genesis’s charter constituted a breach of the parties’ charter agreement, and that the Commission’s decision to revoke the charter was unlawful because it was not based on any allowable reason for revocation set forth by statute or in the charter agreement. Genesis’s written request for an appeal asked the State Board to reverse the Commission’s decision and to reinstate Genesis’s charter.

The State Board considered Genesis’s appeal during a regularly scheduled meeting on April 24, 2023, that was conducted by video conference. The meeting was open to the public for observation and began at 11:03 a.m. The minutes of the meeting reflect that after conducting other regular business a motion was made and seconded to revoke Genesis’s charter. The motion passed and the State Board’s meeting adjourned at 11:32. Notes were prepared for the meeting by M.V., the Commissioner of Education and chief administrative officer for the State Board. M.V.’s notes indicate that "based on all of the materials submitted, it is clear that the [ ] Commission revocation process was deficient." Among other things, the notes indicate that although the Commission’s notice of revocation cited Genesis's underperformance on the annual performance reports for three of the last four years, the Commission acknowledged that it did not rely on annual performance report scores when it decided to revoke Genesis’s charter. The notes further indicated that "[t]here are other legal concerns with how the [ ] Commission conducted this revocation, as far as its policies, work with the charter, language in its performance contract, and adherence to the requirements of the performance contract." The State Board nonetheless voted to revoke Genesis’s charter because it believed "Genesis has a long history of failing to provide quality education for its students, and intervention by the State Board to place it with a new sponsor was unsuccessful."

Following the State Board’s decision, Genesis filed a petition for judicial review of a noncontested administrative agency decision pursuant to section 536.150 in the Circuit Court of Cole County, Missouri. In its petition, Genesis asserted Counts I through V against the Commission and Count VI against the State Board. The State Board filed a motion to dismiss Count VI arguing, (as it does in this appeal), that Genesis lacked standing to seek judicial review under section 536.150 because it is a public entity. The Commission also filed a motion to dismiss similarly arguing that Genesis lacked standing to pursue judicial review under section 536.150 because it is a public entity. The trial court denied both motions.

Prior to trial, the parties submitted a joint stipulation of facts and exhibits. During trial some additional evidence was submitted although the State Board called no witnesses. On June 21, 2023, the trial court entered a judgment ("Judgment") which included findings of fact and conclusions of law. Among other things, the trial court found with respect to the Commission that: (i) the Commission’s published policies related to revocation do "not include a statutory requirement that the Commission revoke a charter if the charter school’s academic performance is below that of the resident district for three of the last four years"; (ii) the wording of the Commission’s resolution revoking Genesis’s charter and the testimony of the Commission’s executive director make clear that the decision to revoke Genesis’s charter relied only on the ground that there was clear evidence of underperformance as demonstrated in Genesis’s annual performance reports in three of the last four school years; (iii) annual performance reports for Genesis for three of the last four school years did not exist at the time the Commission revoked Genesis’s charter because there were no useable reports for school years 2020 and 2021;³ (iv) though the Commission could not have relied on annual performance reports for three of the last four school years to revoke Genesis’s charter, the Commission did not claim that it revoked Genesis’s charter for any other reason; (v) the Commission’s executive director admitted that revocation of Genesis’s charter was not based upon or supported by the Commission’s policies or the terms of the charter agreement; and (vi) Genesis presented evidence to show that there are no other grounds for revocation, which the trial court credited.

Among other things, the trial court found with respect to the State Board that: (i) the State Board’s chief administrative officer admitted there were deficiencies in the Commission’s revocation processes; (ii) the State Board knew the Commission’s process failed to meet necessary standards; (iii) the State Board "did not undertake any objective review itself but instead essentially ratified the revocation"; (iv) the State Board "considered no data and relied on no standards or criteria to make its decision;" (v) the State Board offered the trial court "no evidence concerning its decision other than the official minutes, which state there was a motion, which was seconded and adopted"; and (vi) though Genesis and Commission witnesses testified that they provided information to the State Board in advance of the State Board’s consideration of Genesis’s appeal, "there was no evidence that the State Board ever considered--or even saw—that information."

Based on the aforesaid factual findings, the trial court concluded as a matter of law⁴ that: (i) the matter it was considering was a noncontested case because there was no formal proceeding or hearing before an administrative body, and thus there was no agency record created for the trial court to review; (ii) the Commission’s action in revoking Genesis’s charter was unlawful because it was based on performance data that did not exist and could not have been relied on, and because the Commission breached the charter agreement with Genesis; and (iii) the State Board’s revocation of Genesis’s charter was unlawful and arbitrary, whether viewed as a ruling on appeal or as some exercise of the State Board’s independent authority to revoke a charter (which the trial court held the State Board does not appear to have absent lawful revocation by a sponsor). The Judgment ordered and...