Unified School District No. 446 v. Sandoval

The opinion of the court was delivered by Rosen, J.: On review of an unpublished opinion by the Court of Appeals, this court considers whether the district court properly found an enforceable oral contract to terminate Deborah L. Sandoval’s employment as a teacher with Unified School District No. 446, Independence, Kansas (the District). Sandoval began her employment with the District on September 1, 2000. During the 2007-08 school year, she taught Spanish at Independence High School. On February 22, 2008, Principal Mitch Shaw informed her that he was recommending the District not renew her teaching contract for the 2008-09 school year and that the superintendant and the Board of Education of Unified School District No. 446 (board) supported his decision. On the morning of March 10, 2008, a local Kansas National Education Association (KNEA) leader, Tim Knoles, informed Sandoval that Superintendent Chuck Schmidt would be available to talk with her before that evening’s board meeting. That afternoon, Sandoval met with Schmidt and with her KNEA UniServ Director, Tony White. A UniServ director is employed by KNEA to represent teachers in employment matters. The parties were unable to come to terms at that time. White attended the board meeting that evening, where he sat in a different room from the board and staff and communicated in person with the board through Schmidt and with Sandoval by telephone. The board met in executive session to discuss Sandoval’s contract and possible resignation but took no action in open session. During the course of the meeting, White called Sandoval and told her the board had made an offer of paid leave until the end of a disability period but had offered no insurance and no additional financial compensation. She rejected that offer and authorized White to make a counteroffer of 180 days of paid leave, medical insurance until she reached the age of 65, and a lump-sum payment of $20,000. — 280 — White subsequently called Sandoval again and reported that the board had made a counteroffer of 180 days of paid leave to qualify for KPERS disability benefits, which would require her to leave the classroom on March 28, 2008; paid insurance on the bottom tier for 5 years; and a lump-sum payment of $20,000 in the event that she did not qualify for disability benefits. Sandoval told White to accept the proposal on her behalf. District policy allows the board to consider the resignation of any certified employee that is submitted to the board in writing. After the meeting, White approached Schmidt and asked him how the board wanted to arrange putting the settlement in writing. White offered to provide a draft based on standard settlement agreements, which typically address personnel files, removal of personal property, and confidentiality. Schmidt responded that an attorney for the board would draft the agreement. On the afternoon of March 12, 2008, White received from Schmidt an e-mail draft of a settlement agreement. White sent a reply, suggesting several modifications of the terms. The two exchanged additional messages relating to the acceptability of the modifications. Later in the day on March 12, Sandoval informed Knoles that she had changed her mind and wanted to proceed with a due process hearing. She repeated this information to White on the following day. White immediately tried to get in touch with Schmidt and, later that week, he notified Schmidt that Sandoval was no longer willing to accept tire board’s terms communicated to her on the evening of March 10. On March 24, 2008, Schmidt sent Sandoval a letter stating that the board had deferred nonrenewal of her contract from the March 10 meeting because it understood that an agreement had been reached. The letter went on to say: “Since we have now been informed that you changed your mind on this settlement, this letter is to inform you that the USD 446 Board of Education will proceed with a resolution to non-renew your contract at the board meeting on April 14, 2008.” On March 28, 2008, Sandoval went to the school and taught her class as she usually did. The District provided no substitute teacher for her classroom on that day or any of the following days. She — 281 — finished her teaching assignment for the 2007-08 school year. On April 14, 2008, the hoard adopted a resolution of nonrenewal of Sandoval’s contract, including a clause reserving the right to enforce the oral agreement that had been arrived at during the March 10 board meeting. After the end of the school term, the District filed a petition in Montgomery County District Court. The petition sought a declaratory judgment that Sandoval had entered into an oral contract governing the terms of her separation from the District. It also sought an injunction barring a statutory due process hearing because she had agreed to terminate her employment. The district court granted the temporary injunction. The parties both filed motions for summary judgment. On August 29, 2008, the district court entered an order granting summary judgment to the District, holding that Sandoval had entered into a binding oral contract with the District. As a consequence, she had waived her statutory due process hearing. The Court of Appeals affirmed the decision in an unpublished opinion. This court granted Sandoval’s petition for review. Both parties urge this court to decide the issue based on the pleadings and uncontroverted facts. The parties filed cross-motions for summary judgment, and the uncontroverted facts contained in the motions provide a sufficient basis for this court to determine as a matter of law whether the parties were bound by an enforceable oral contract. When the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law, summary judgment is appropriate. The district court is required to resolve all facts and inferences that may reasonably be drawn from the evidence in favor of the party against whom the ruling is sought. When opposing a motion for summary judgment, an adverse party must come forward with evidence to establish a dispute as to a material fact. In order to preclude summary judgment, the facts subject to the dispute must be material to the conclusive issues in the case. On appeal, the same rules apply; summary judgment must be denied — 282 — if reasonable minds could differ as to the conclusions drawn from the evidence. Questions of law, including those at the heart of summaiy judgment decisions, are subject to de novo review on appeal. Thomas v. Board of Shawnee County Comm’rs, 293 Kan. 208, Syl. ¶¶ 1, 2, 262 P.3d 336 (2011). Whether a contract exists depends on the intentions of the parties and is a question of fact. Reimer v. Waldinger Corp., 265 Kan. 212, 214, 959 P.2d 914 (1998); Augusta Bank £ Trust v. Broomfield, 231 Kan. 52, 60, 643 P.2d 100 (1982). However, when the legally relevant facts are undisputed, the existence and terms of a contract raise questions of law for the court’s determination. Nungesser v. Bryant, 283 Kan. 550, 566, 153 P.3d 1277 (2007). Also, when the material facts are uncontroverted, an appellate court reviews summaiy judgment de novo. Superior Boiler Works, Inc. v. Kimball, 292 Kan. 885, 890, 259 P.3d 676 (2011). In order to form a binding contract, there must be a meeting of the minds on all the essential elements. Albers v. Nelson, 248 Kan. 575, 580, 809 P.2d 1194 (1991). An unconditional and positive acceptance is required to form a contract; a conditional acceptance of a settlement offer is but a counteroffer, which does not create a contract. Nungesser, 283 Kan. 550, Syl. ¶ 5. The standard of proof for demonstrating the existence of an oral contract is the preponderance of the evidence. In re Estate of Strat-mann, 248 Kan. 197, 806 P.2d 459 (1991). In an action based on contract, the plaintiff bears the burden of proving the existence of the contract alleged in the petition. Steele v. Harrison, 220 Kan. 422, 428, 552 P.2d 957 (1976). The terms of an oral contract and the consent of tire parties may be proven by the parties’ acts and by the attending circumstances, as well as by the words that the parties employed. Quaney v. To-byne, 236 Kan. 201, Syl. ¶ 3, 689 P.2d 844 (1984). It is not necessary that a party expressly declare an admission of entering into an oral contract. Tobyne, 236 Kan. at 210. Sandoval essentially contends that all of the communications about the terms of her resignation constituted nothing more than preliminary negotiations in preparation for a final, written settlement agreement. The District, on tire other hand, maintains that — 283 — the communications produced a valid, enforceable separation contract. Professors Arthur L. Corbin and Joseph M. Perillo discuss the distinguishing characteristics of preliminary negotiations and binding agreements in terms of the parties’ intentions and their manifest expressions of agreement: “The term preliminary negotiation’. . . may be used to include all those communications and other events in a bargaining transaction that are antecedent to acceptance, that is, antecedent to the completion of the contract. In this sense, eveiy offer is a part of the negotiation that is preliminary to the making of a contract. Indeed, there may be more than one offer. In tire preliminary haggling process, there are frequently offers and counteroffers, each one of which has a certain legal operation, but, none of which is transformed into a contract. To determine whether or not a bargaining transaction actually results in the making of a contract, courts must consider all of the preliminary negotiations, all of the offers and counteroffers, interpret the various expressions of the parties, and form a judgment as to whether they ever finally expressed themselves as in agreement on complete and definite terms. "In the process of negotiation a party may use words that standing alone would normally be understood to be words of ‘contract,’ at the same time limiting them in such a way as to show that a subsequent expression of assent on Iris or her part is required. In such a case the expression is neither an operative offer nor an operative acceptance. It is merely part of preliminary negotiation.” 1 Corbin on Contracts § 2.1, pp. 100-01 (rev. ed. 1993). Some evidence in the record, taken in isolation, supports the district court’s determination that Sandoval formed a binding oral contract on March 10, 2008. The Court of Appeals relied on this standard of review in affirming the district court. This is, however, the incorrect standard for reviewing undisputed evidence in sum-maiy judgment motions and for determining whether a contract exists, which are questions of law. See Superior Boiler Works, 292 Kan. at 890; Nungesser, 283 Kan. at 566. A number of factors mitigate against finding that the parties formed the intent to establish a contract. First, the parties, through their agents, entered into subsequent discussions relating to modifications of the terms of the agreement, particularly with respect to confidentiality and custody of school and personal property. Although a contract may exist even though — 284 — the parties agree to resolve nonessential terms at a later time, and minor differences between an offer and an acceptance may not prevent the formation of a contract, there must be an acceptance of the exact terms of an offer, and the acceptance must be unconditional and unequivocal. Nungesser, 283 Kan. at 568. The fact that the parties continued to exchange communications demonstrates that the parties did not understand that they had reached a full meeting of the minds and had bound themselves and each other as of March 10. Second, District policy stated that resignations would be considered if submitted in writing. This policy may have led Sandoval to the reasonable expectation that her acceptance of the board’s offer would not become binding until she signed a written settlement agreement. Third, the board did not accept Sandoval’s resignation in open meeting, and the board’s minutes did not mention Sandoval’s resignation, even though the minutes expressly stated that another employee’s resignation had been accepted. While a contract reached in violation of the Open Meetings Act is not inherently defective, see Krider v. Board of Trustees of Coffeyville Community College, 277 Kan. 244, Syl. ¶ 5, 83 P.3d 177 (2004), the absence of ratification in open meeting and the absence of the acceptance of Sandoval’s resignation in the minutes are compelling evidence that the board did not intend the agreement to be find as of March 10. Fourth, White signed an affidavit stating that in his many years of negotiating teacher resignations, the terms of resignation settlement agreements were always set out in writing. This testimony does not in itself belie the existence of an oral contract, but it suggests that there was no understanding by Sandoval that she would be bound by her oral communication of resignation, and there was therefore no meeting of the minds as to a binding contract as of March 10. The board has failed to prove a meeting of the minds on all the essential elements of the negotiated terms and has failed to prove an unconditional and positive acceptance of the board’s terms by Sandoval. The dialogue between the parties constituted nothing — 285 — more than preliminary negotiations and did not culminate in a binding contact, either on March 10 or at any later date. Even assuming arguendo that the parties formed a contract on March 10, the uncontroverted facts presented in the motions for summary judgment established that the parties later mutually rescinded any such contract. The dissent maintains that repudiation was not specifically raised by Sandoval and that considering the issue violates our rules of appellate procedure. Applying legal consequences to uncontroverted facts is not prohibited by our rules, especially when the facts demonstrate so clearly that the board’s actions were entirely inconsistent with the veiy terms they maintain were in force. The court is not required to reach the wrong conclusion when the parties do not advocate for the correct application of the law to the facts. The parties to a contract may mutually rescind their contractual obligations. Blakesley v. Johnson, 227 Kan. 495, 501, 608 P.2d 908 (1980). We have specifically recognized that teachers and school districts may rescind their contractual agreements by conduct inconsistent with the continued existence of the contract. Mutual assent to abandon the contract may be inferred both from the parties’ conduct and by tire attendant circumstances. Brinson v. District, 223 Kan. 465, 474, 576 P.2d 602 (1978), overruled on other grounds by Umbehr v. Board of Wabaunsee County Comm’rs, 252 Kan. 30, Syl. ¶ 2, 843 P.2d 176 (1992). Assuming a contract existed, an essential term of the contract required Sandoval to leave the classroom by March 28 in order to qualify for KPERS disability benefits. Nevertheless, the District provided no substitute teacher beginning on March 28 and did not inform Sandoval that she was not to come to the school and teach her classes as of that date. Instead, she finished her teaching duties for the year, and the District paid her salary for that term. The board sent her a letter informing her that it would nonrenew her contract, and on April 14, 2008, the board adopted a resolution of nonrenewal. A contract ceases to be in force when it is rescinded by mutual consent, and the courts will treat a contract as abandoned when one party acquiesces to the acts of another party that are inconsis — 286 — tent with the existence of a contract. See Dickinson v. Lawrence Lodge, 135 Kan. 87, 90, 9 P.2d 985 (1932). The actions by both the board and Sandoval were clearly inconsistent with the existence of a contract to terminate her employment as of March 28 and each acquiesced in the conduct of the other. Even if the parties formed the intent to be bound by an oral termination agreement, they both soon abandoned both that intent and the agreement. The parties agree that the essential facts are uncontroverted. The conclusions of law that they—and judges applying tire law to those facts—reach are, on the other hand, highly controverted. Applying law to agreed-upon facts is a proper function of this court; we see no purpose to be served by remanding this case to tire district court to perform the same duty that we are able to perform at this level. We conclude as a matter of law that no enforceable contract exists between the parties. The judgment of the Court of Appeals affirming the district court is reversed. The judgment of the district court is reversed.