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Town of Warren v. Bristol Warren Regional School District

Supreme Court of Rhode Island

May 12, 2017

Town of Warren et al.
Bristol Warren Regional School District et al. And Town of Bristol by and through its Town Council and its Town Treasurer, Julie Goucher, As Interested Party.

         Providence County Superior Court PC 14-1628, Louis M. Matos, Associate Justice

          For Plaintiffs: Anthony DeSisto, Esq. Peter F. Skwirz, Esq.

          For Defendants: Andrew D. Henneous, Esq. Michael J. Polak, Esq. Gina A. DiCenso, Esq. Michael A. Ursillo, Esq.

          Present: Suttell, C.J., Goldberg, Flaherty, Robinson, and Indeglia, JJ.


          Francis X. Flaherty, Associate Justice

         These consolidated appeals arise from a judgment of the Superior Court regarding the statutory interpretation of the manner in which state education aid funds that are received by the Bristol Warren Regional School District (BWRSD or district) should be calculated and apportioned to its constituent towns, Bristol and Warren. The defendants, the BWRSD, the Bristol Warren Regional School Committee (BWRSC or committee), and the Town of Bristol, appeal from a Superior Court judgment granting Warren's petition and complaint for declaratory judgment.[1] The defendants argue that the trial justice misconstrued the Rhode Island Board of Education Act, G.L. 1956 chapter 7 of title 16 (Education Act) and the Rhode Island Education Equity and Property Tax Relief Act, G.L. 1956 chapter 7.2 of title 16 (Funding Formula Act). The defendants further maintain that the trial justice failed to accord proper deference to the Rhode Island Department of Education's (RIDE) interpretation of those statutes. In a separate argument, Bristol posits that the Superior Court did not have jurisdiction over this declaratory-judgment action because Warren failed to join all interested parties and further that Warren's claims are barred by the doctrine of res judicata. After careful consideration of the record, and for the reasons set forth in this opinion, we affirm the judgment of the Superior Court.


         Facts and Travel

         The BWRSD and the Enabling Legislation

         The contiguous towns of Bristol and Warren form the BWRSD, which was established pursuant to chapter 330 of the 1991 Public Laws of Rhode Island (enabling legislation). The BWRSC, consisting of nine members, was created to govern the BWRSD in accordance with the enabling legislation. The Joint Finance Committee (JFC) was formed under P.L. 1991, ch. 330, sec. 3, § X(I)(3) of the enabling legislation; it consists of nine members appointed by the town councils of Bristol and Warren. At the time of the dispute, the JFC comprised six representatives from Bristol and three from Warren.[2]

         The enabling legislation lays out the approval process for the district's annual budget. In that regard, it provides that the superintendent of the district is to prepare and present a preliminary annual budget to the committee containing estimates of the funds needed to operate the district for the ensuing fiscal year. The committee then submits its proposed budget to the JFC for approval. Upon approval of the budget, each town is required to appropriate funds for the district, which are "apportioned between the cities on a per public pupil calculation using enrollment as of the prior October 1, " pursuant to the enabling legislation.[3]

         The parties have stipulated[4] that, since the formation of the BWRSD, its treasurer would reduce the annual budget, as approved by the JFC, by the total amount of state aid and any other miscellaneous revenue sources, and then would apportion the remaining balance of the budget by the student population, on a per-capita basis from each municipality.

         The Prior Litigation

         In 2012, the BWRSD and the BWRSC filed suit against Warren, seeking a declaratory judgment and a writ of mandamus, demanding that Warren appropriate its full share of the 2012-2013 school budget for the BWRSD, as was determined by the JFC. See Bristol Warren Regional School District v. Town of Warren, No. PC12-4653, 2014 WL 1396941 (Apr. 4, 2014) (the prior litigation). The budget for that fiscal year required that Warren pay the sum of $12, 164, 919 to the district. Id. at *2. However, Warren balked; at its financial town meeting, the town voted to appropriate only $11, 748, 919 of the budgeted amount. Id. In April 2014, the Superior Court determined that Warren was not authorized to reject a budget that had been approved by the JFC because the enabling legislation cloaked the JFC with final budgetary authority. Id. at *6. Therefore, the court ordered Warren to appropriate the additional funds to the BWRSD. Id. That judgment was not appealed.

          The Current Dispute

         In early December 2013, while the prior litigation remained pending, the state representative for Warren contacted RIDE about the state calculations for the education aid funding formula. In particular, he questioned why Bristol and Warren were assessed the same local share per pupil even though Warren students, because of a higher rate of state aid, were generating a greater per-pupil share of the state revenues. In response to his inquiry, RIDE provided a spreadsheet that compared the formula aid by region and by member town for the BWRSD. According to Warren, those calculations "confirmed Warren's claim that it would in fact receive more aid if the calculations were made with reference to the comparative rates of students receiving free or reduced price lunch, rather than with reference to a blended figure."

         In March 2014, Warren's finance director received an email from the district informing him of the projected 2014-2015 school budget. That same day, the finance director submitted a memorandum to the town manager, indicating that the proper allocation of state education aid should be on a weighted per-pupil basis in accordance with the basis of need of the municipalities. Attached to the memorandum was RIDE's funding formula analysis for the 2015 fiscal year showing the figures for Bristol and Warren, both separately and as a regional district. The memorandum was presented to the JFC shortly thereafter. The JFC, however, did not adopt the recommendations set forth in the memorandum.

         Later that month, Warren filed a petition for writ of mandamus, injunctive relief, and a complaint for declaratory judgment against the BWRSD, the BWRSC, and the Town of Bristol. In its filing, Warren claimed that the enabling legislation and the Funding Formula Act required that state aid be allocated not on a per-capita per-pupil basis, but on a weighted per-pupil basis, taking into account the number of students with free or reduced-price lunch in each town, the median income of each town, and the total assessed property values of each town.

         The Lower Court Proceedings

         During a hearing on May 12, 2014, RIDE's senior finance officer testified that RIDE made use of specific data components to determine state education aid for individual districts. Those data components include the state share ratio, which consists of, among other factors, property values, free and reduced-price lunch data for students, and adjusted equalized weighted assessed valuations (EWAV). The senior finance officer affirmed that, under the funding formula, a poorer community typically is allocated more money from the state for education aid than a more affluent community. She further specified that, in the case of Bristol and Warren, state aid is currently "calculated as a regional district, so the data components are added together." Significantly, she testified that, if state aid were to be calculated separately, the state aid assigned to each student for Bristol would be $2, 897 and $5, 442 for Warren for the 2015 fiscal year.

         Subsequent hearings were held on May 13 and 15, 2014. During the May 15 hearing, the trial justice determined that Warren's claim was not precluded under the doctrine of res judicata. In that regard, the trial justice concluded that he did "not believe that the issue of how the credits are to be apportioned [wa]s squarely addressed by the enabling legislation." The trial justice, however, did not at that time come to a conclusion about the ultimate statutory interpretation issue; instead, he asked the parties to submit supplemental memoranda and encouraged Warren to consider joining RIDE as a party to the litigation.

         Warren then filed a second amended petition and complaint, naming RIDE as a defendant, because that agency oversees and disburses state aid to schools. Warren alleged that, rather than allocate aid separately to Warren and Bristol as provided for under the Education Act and the Funding Formula Act, RIDE disbursed a lump sum to the BWRSD, which in turn subtracted the amount of state aid from its total budget and then apportioned the remaining cost to each town on a per-student basis. According to Warren, this improperly shifted some of Warren's state aid to Bristol and resulted in Warren being "overcharged" $2, 054, 790 in fiscal year 2014-2015. RIDE subsequently filed a motion to dismiss Warren's second amended petition and complaint on the ground that the complaint failed to state a claim upon which relief could be granted against RIDE. All parties, including Warren, Bristol, the BWRSD, and the BWRSC, filed objections to RIDE's motion to dismiss. After a hearing on RIDE's motion to dismiss in July 2014, the trial justice denied the motion.

         The case was reached for trial in April 2015. At the close of all the evidence, and after taking into consideration the memoranda and oral arguments of the parties, the trial justice issued a bench decision. With respect to the argument that the Superior Court lacked jurisdiction under the Uniform Declaratory Judgments Act (G.L. 1956 chapter 30 of title 9) because all interested parties had not been joined, the trial justice determined that there had not been any motion to add additional defendants by any party, nor had there been any request for intervention by any other school district to participate in the matter. The trial justice found that a determination in favor of defendants on the ground of failing to join all necessary parties would "essentially require[] the [c]ourt to speculate as to which other parties may or may not be affected by the [c]ourt's holding[.]" And the trial justice declared that "the [c]ourt should not have to speculate as to which other parties are going to be affected and which parties should or should not be joined."

          With respect to defendants' arguments as to the amount of deference that should be afforded to RIDE, the trial justice recognized that there had been no regulation or authority that had been promulgated by the agency on the issue. The trial justice specified that

"where the statute and any rule established by RIDE ha[d] not been established pursuant to any rulemaking process, any vetting, any solicitation of opinions, anything of that nature, that at most RIDE's position may have persuasive authority in order to give effect to the purpose of the Act as intended by the [L]egislature * * *."

         He concluded that RIDE was "not entitled to full Chevron[5] deference because there ha[d] been no rule or regulation established by RIDE in regards to this legislation."

         Turning to the statutory interpretation argument, the trial justice articulated "that RIDE and the Town of Bristol [we]re to a large extent basing their argument on a section that contain[ed] the definition of certain terms." He continued, "that definitional section d[id]n't in any way state how moneys [we]re to be allocated to other regional school districts. It only deal[t] with Chariho.[6] And the only section that state[d] specifically how the equalized weighted assessed valuation [wa]s to be determined [wa]s at [§] 16-7-21." The trial justice said that "the [L]egislature could have made a clear statement that Bristol Warren should be treated jointly for allocation and distribution, [but] it did not." The trial justice voiced that "the clear language of that statute * * * indicate[d] that the allocation should be determined directly pursuant to Bristol and Warren's individual tax bases as required by the funding formula both at [§] 16-7-21 and at [§] 16-7-20." He found "that the clear language require[d] that the allocation be made pursuant to each city and town." And he stated "that at best [§] 16-7-16 create[d] an ambiguity" and "what [wa]s more persuasive to the [c]ourt as to how to resolve that ambiguity [wa]s contained in the section regarding the legislative findings * * *."[7] The trial justice resolved "that if the money was allocated the way RIDE and Bristol ha[d] advocated, that that determination would not treat property taxpayers [equitably]; because it is clear and undisputed that Warren's tax base is substantially more depressed than Bristol's tax base." The trial justice determined that RIDE should calculate the funds separately, allocate them separately, and distribute the funds to the BWRSD separately.

         On May 20, 2015, Warren filed a motion for final judgment pursuant to Rule 54(b) of the Superior Court Rules of Civil Procedure. The Superior Court entered judgment on July 24, 2015,

"direct[ing] entry of a declaratory judgment that, under the State Funding Formula, the Rhode Island Department of Education shall calculate and disburse funding formula funds separately for the Town of Bristol and the Town of Warren and distribute each allotment separately to the regional school district so that the treasurer of the regional school district under Section 12 of the enabling legislation shall receive the funds for each town and allocate credit accordingly[.]"

         After judgment was entered on behalf of Warren, defendants timely appealed.[8]

         II Issues on Appeal

         On appeal, the BWRSD and the BWRSC argue that the Superior Court erred when it (1) failed to give effect to the plain language of the Education Act and the Funding Formula Act mandating that state aid for a regional school district be calculated for the district as a whole and not separately for each municipality and (2) did not give full deference to RIDE's interpretation of the statutory framework concerning the proper manner of calculating and allocating state aid to regional school districts. In its appeal, the Town of Bristol contends that the Superior Court (1) misinterpreted the governing statutory scheme and ignored the statutory definition of "community" as it applies to funding to the BWRSD; (2) lacked jurisdiction because plaintiff failed to join the necessary parties; (3) did not afford the required deference to RIDE's interpretation of the statute; and (4) failed to bar plaintiff's claims pursuant to the doctrine of res judicata.


         Res Judicata


         Standard of Review

         This Court "determine[s] the applicability of res judicata as a matter of law." Ritter v. Mantissa Investment Corp., 864 A.2d 601, 605 (R.I. 2005) (citing Wright v. Zielinski, 824 A.2d 494, 497 (R.I. 2003)). We review determinations of questions of law de novo. Lamarque v. Centreville Savings Bank, 22 A.3d 1136, 1140 ...

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