Committee for Educational Equality v. State

The judgment below not being final, the appeal is dismissed.

This appeal arises from two consolidated lawsuits filed in the circuit court of Cole County. Two additional parties were allowed to intervene as plaintiffs after that consolidation. Taken together, the plaintiffs include a not-for-profit corporation representing eighty-nine school districts known as the Committee for Educational Equality, the same eighty-nine school districts, separately named, an additional thirty-seven school districts, fifty-one students from the named plaintiff school districts, and two taxpayers. Mixed within the petitions are several claims, some claims more clear than others. Read together, the petitions allege that the funding of schools through the property tax provided for in Mo. const, art. X, § 11, and the “Foundation Formula” for state aid to schools, § 163.031, RSMo 1986, have resulted in inequities in the distribution of money to school districts and, thus, inequities in the quality of education provided to individual students in different parts of the state. Pursuant to Mo. const, article I, §§ 2 and 10, providing for equal protection of the laws and due process, the claim is made that students in the plaintiff public schools are being denied the fundamental right to equality in access to education. None of the plaintiffs make any claim of a denial of federal rights to due process or equal protection of the laws. In addition, the pleadings claim the funds for education provided by the state pursuant to § 168.031, RSMo 1986, are inadequate to provide students a free public education as assertedly required by Mo. const, art. IX, § 1(a). The pleadings also suggest that pursuant to Mo. const, art. Ill, § 36, no funds may lawfully be appropriated for subordinate purposes until adequate funds for education are provided.

Intermingled with the above allegations is the claim that the General Assembly has violated its duty pursuant to Mo. const, art. IX, § 3(b), which provides in part: “[I]n no case shall there be set apart less than twenty-five percent of the state revenue, exclusive of interest and sinking fund, to be applied annually to the support of the free public schools.”

The named defendants are the state of Missouri, the Governor, the Treasurer, the State Board of Education, the Missouri Department of Elementary and Secondary Education, its Commissioner, and the Attorney General.

After the lawsuits were commenced, four school districts, Ladue, Pattonville, Kirkwood and School of the Osage, sought to intervene as defendants apparently because one of the petitions asked for a “pro rata” redistribution of the “Foundation Formula” funds free of the “previous year” restraint of § 163.081, RSMo 1986, and a concern that the trial court might declare unconstitutional the property tax structure, under which those four districts are considered “rich” districts.

An extended trial was held and a judgment entered on January 15, 1993. The operative portion of the judgment now before us includes the following three paragraphs:

The court specifically determines and declares that the Foundation Formula contained in § 163.031, RSMo, at the level at which it is presently funded is unconstitutional because of the provisions of § 1(a) of article IX [providing for free public schools], § 2 of article I [providing for equal protection of the laws], § 36 of article III [providing for appropriations for public education to be second in order] and/or §§ 40(24) and 40(30) of article III [prohibiting the General Assembly from passing any local or special law relating to the management of public schools and prohibiting special laws where general laws can be made applicable] of the Missouri Constitution.

The court determines and declares that the General Assembly ... must provide a child living in a poor school district the same opportunity to receive substantially the same educational [sic] as a child living in a rich district, and that deviations from equality in the distribution of resources are not permissible except to provide resources either (a) to the least advantaged or (b) for specifically identified educational needs. The court further determines and declares that the present system of funding public schools in Missouri does not comport with the requirements heretofore declared in this paragraph.

The court determines and declares that the General Assembly must provide adequate funds to establish and maintain a system of public education at the elementary and secondary level providing a general diffusion of knowledge and intelligence at the level necessary in this era to preserve the rights and liberties of the people. The court further declares that the state does not meet the requirements herein above determined and declared in this paragraph.

The judgment did not identify any school district or class of school districts excluded from the operation of § 163.031, RSMo 1986. No finding was made that any district had failed to provide a particular student with a free public education. The judgment focuses primarily on the inequality of educational opportunity for students in “poor” districts and the inadequacy of funding provided by the state.

In addition, the judgment did not order a redistribution of appropriated funds. Although the findings suggest that a new, simplified and more flexible formula might be desirable, the judgment does not require that a new funding formula be established. The judgment only declared that the General Assembly must “provide adequate funds.” The trial court withheld giving instructions on how the General Assembly was to accomplish its task. The trial court retained jurisdiction to enter an injunction and other equitable relief. The judgment was stayed until ninety days after the next regular session to give the General Assembly time to enact a “constitutionally sufficient plan for funding public education in Missouri.”

The court also reserved for later decision the question of whether the “current level of funding of public education in Missouri meets the minimal constitutional level of twenty-five percent of state revenues as required by § 3(b) of article [IX] of the Missouri Constitution.” From this judgment the defendants, state of Missouri and school districts of Pat-tonville, Ladue, School of the Osage and Kirkwood, appeal. In addition, a cross-appeal was filed by the Lee’s Summit group of plaintiffs. This group includes several public school districts as well as students in some of those districts.

The parties seek to impress on us the importance of the claims made and the dire consequences that will follow a ruling unfavorable to their respective positions. Unfortunately, they have presented us with a record complicated by jurisdictional deficiencies that inhibit a decision on the merits. The judgment appealed from fails to fully dispose of all claims, giving rise to questions of ap-pealability of the judgment due to an absence of finality and aggrievement of appealing parties. Public school districts and taxpayers seek to invoke rights belonging to individual students, giving rise to questions of standing. Into this morass is added the repeal of the only statute declared to be unconstitutional as applied, which, in turn, raises questions of mootness.

I.

At the outset, this Court, sua sponte, must determine its own jurisdiction of this appeal. ABC Fireproof Warehouse Co. v. Clemans, 658 S.W.2d 28, 30 (Mo. banc 1983). This is not a matter of mere technical concern. Judicial integrity and restraint demand it. “To avoid an arbitrary discretion in the courts, it is indispensable that they should be bound by strict rules and precedents which serve to defíne and point out their duty in every particular case that comes before them.” The Federalist Papers No. 78 (Alexander Hamilton). Courts, no less than the citizens they serve, must abide the rules and precedents defining their jurisdiction. To do otherwise is to erode the very foundation of the rule of law.

The right to appeal is established by statute. Mo. const, art. V, § 5. A prerequisite to appellate review is that there be a final judgment. § 512.020, RSMo 1986. Even though all claims were not decided by the judgment, the trial court made an express determination that there was no just reason for delay and its judgment was final for purposes of appeal.

This case clearly involves multiple claims and multiple parties. The rule regarding the appealability of judgments which are not final as to all claims or to all parties is Rule 74.01(b):

When more than one claim for relief is presented in an action, whether as a claim, counterclaim, cross-claim, or third-party claim, or when multiple parties are involved, the court may enter a judgment as to one or more but fewer than all of the claims or parties only upon an express determination that there is no just reason for delay. In the absence of such determination, any order or other form of decision, however designated, ... shall not terminate the action....

Rule 74.01(b) permits a trial court to designate as final a judgment “as to one or more claims but fewer than all claims.” Thus, the minimum unit of disposition is at least one claim. Lockett v. Owens-Coming Fiberglass, 808 S.W.2d 902, 906 (Mo.App. 1991). A judgment which resolves fewer than all legal issues as to any single “claim for relief’ is not final notwithstanding the trial judge’s designation as such. Similarly, a judgment that disposes of only one of several remedies and leaves other remedies relating to the same legal rights open for future adjudication is not a final judgment under Rule 74.01(b). Team, Inc. v. Schlette, 814 S.W.2d 12, 13-14 (Mo.App.1991); Quiktrip Corp. v. City of St. Louis, 801 S.W.2d 706, 711 (Mo.App.1990).

Rule 74.01(b) was adopted as a rule of this Court in 1988. Its predecessor was former Rule 81.06, which provided in part:

When a separate trial of any claim, counterclaim or third party claim is ordered in any case and a jury trial thereof is had, the separate judgment entered upon the verdict therein shall be deemed a final judgment for the purposes of appeal within the meaning of § 512.020. When a separate trial is had before the court without a jury of claims arising out of the same transactions, occurrences or subject matter as the other claims stated or joined in the case, the judgment entered shall not be deemed a final judgment for purposes of appeal within the meaning of § 512.020, RSMo, unless specifically so designated by the court in the judgment entered.

Notwithstanding well-reasoned decisions to the contrary, Rule 81.06 was construed to give a trial court essentially unfettered discretion to decide if its orders were final and appealable, even though there was only a “partial disposition ... of a distinct judicial unit.” Speck v. Union Elec. Co., 731 S.W.2d 16, 20 (Mo. banc 1987). This Court apparently rethought that decision within the year when it adopted Rule 74.01(b). Unlike its predecessor, the new rule conditioned the exercise of discretion by the trial court on the existence of a judgment that disposed of at least one claim as to one party.

When Rule 74.01(b) was adopted as a rule of this Court in 1988, it was copied almost verbatim from Federal Rule of Civil Procedure 54(b). The meaning of the phrase “one claim for relief’ was developed in the federal cases prior to the adoption of our rule. While not binding authority, the federal cases are highly persuasive. Where a federal rule has been construed by the federal courts and our Court thereafter adopts a rule on the same subject using identical language, there is no principled way to ignore the federal cases.

Under the federal eases construing F.R.C.P. 54(b), in determining whether an action presents more than one claim for relief, the focus is on the number of legal rights asserted in the action. If a complaint seeks to enforce only one legal right, it states a single claim, regardless of the fact that it seeks multiple remedies. Liberty Mut. Ins. Co. v. Wetzel, 424 U.S. 737, 744 n. 4, 96 S.Ct. 1202, 1206-07 n. 4, 47 L.Ed.2d 435 (1976). A further refinement of what is meant by “one claim” is that a claim is “the aggregate of operative facts which give rise to a right enforceable in the courts.” McIntyre v. First Nat. Bank of Cincinnati, 585 F.2d 190, 192 (6th Cir.1978); Rhodes v. Jones, 351 F.2d 884, 886-87 (8th Cir.1965); Backus Plywood Corp. v. Commercial Decal, Inc., 317 F.2d 339, 341 (2nd Cir.1963). Worded somewhat differently, claims are considered separate if they require proof of different facts and the application of distinguishable law, subject to the limitation that severing the claims does not run afoul of the doctrine forbidding the splitting of a cause of action. Spiegel v. Trustees of Tufts College, 843 F.2d 38, 45 (1st Cir.1988); Tolson v. United States, 732 F.2d 998, 1002 (D.C.Cir.1984). The purpose and policy behind F.R.C.P. 54(b) is to avoid redundant review of multiple appeals based on the same underlying facts and similar legal issues. Hudson River Sloop Clearwater, Inc., v. Department of the Navy, 891 F.2d 414, 418 (2nd Cir.1989).

Missouri’s Rule 74.01(b) serves precisely the same purpose. A construction of Rule 74.01(b) that defeats the underlying purpose of the rule must be rejected. By withholding ruling on part of a claim, questions are left open which, upon full adjudication of the claim by a trial court, may make the order appealed from moot or which, when fully decided, may even change the identity of aggrieved parties.

Applying the above principles to the case at hand, the plaintiffs made multiple claims even though the claims are not segregated into counts. Neither the pleadings nor the judgment are models of clarity. However, the claims raised include the claim that the students’ right to equal protection of the law has been violated and that the General Assembly’s duty to provide adequate funding for education has been violated by § 163.031, RSMo 1986, as funded. Closely allied to the adequacy of funding assertion is a claim, almost implicit in nature, that the legislature violates the requirement that educational funding be second in order when it appropriates and disburses money for subordinate purposes without adequately funding education. In support of those claims the plaintiffs asked for the remedies of declaratory judgment, injunction and other equitable relief. The trial court, in response to the claims and the requests for relief, entered a declaratory judgment with regard to the equal protection, adequacy of funding and priority of funding claims. However, the trial court specifically retained jurisdiction over those claims “for the purpose of enforcing the judgment including, if needed, the grant of injunctive relief, the appointment of qualified educator(s) as master(s) or the utilization of such other equitable and legal powers as may be just and proper.” Plainly, the circuit court did not dispose of all of the remedies sought as to any one claim for relief.

Although not briefed, at oral argument it was suggested that the judgment was final because it disposed of the “claim” for declaratory judgment. That argument misapprehends the nature of the declaratory judgment act. The declaratory judgment act was designed to provide a preventative remedy. It supplements but does not supplant other remedies. “[It] affects exclusively matters of practice, pleadings, and forms and modes of proceedings; it does not create any new or substantive rights, but is procedural in nature.” 26 C.J.S. Declaratory Judgments § 1 (1956). While the declaratory judgment act is liberally construed to accomplish its preventive purpose, it is but one of several remedies, not a substantive claim.

In International Minerals & Chemical Corp. v. Avon Products, 817 S.W.2d 903 (Mo. banc 1991), the plaintiff had filed a 5-count petition. The trial court had granted judgment as to Count I, a count seeking a deelar-atory judgment regarding an indemnity agreement. The petition alleged that there was an indemnity agreement between the plaintiff and defendant under which the defendant had agreed to pay patent infringement claims that might be made against the plaintiff by third parties. Although the precise amount of damages was undetermined when the action was filed, Count V of the same petition asked for damages under the indemnity agreement. The trial court entered a judgment finding that an indemnity agreement existed under which the defendant was liable for certain patent infringement claims made against the plaintiff. However, the trial court withheld ruling on the separate count relating to damages for breach of the indemnity agreement. This Court concluded that there was ample authority “for defining by rule the scope of the finality requirement so as to include a determination that could be made subject of a separate judgment.” 817 S.W.2d at 906. That ease is distinguishable from the case now under consideration. In that case, the assessment of damages for patent infringement was dependent upon different operative facts, some of which were undetermined when the petition was filed, and upon a different legal theory from the existence and terms of the indemnity agreement. Even though the indemnity claim and the patent infringement claim were connected, each involved different legal theories and different operative facts.

There are no additional or different facts, and no additional legal principles applicable in determining whether to grant injunctive or other equitable relief in addition to the declaratory judgment in this case. Because remedies are left wholly unresolved regarding each of the claims for relief made before the trial court, the judgment is not final.

International Minerals, while reaching the correct result, went too far in some respects. It states there is “no substantial distinction between Rule 74.01(b) and former Rule 81.06.” 817 S.W.2d at 905 n. 2. It also states, “Rule 74.01(b) does not borrow substantially from [F.R.C.P. 54(b)].” 817 S.W.2d at 905. No fair reading of the three rules supports those statements. Plainly, Rule 74.01(b) and F.R.C.P. 54(b) are essentially identical, while former Rule 81.06 does not even approach the wording of the other two rules. Specifically, former Rule 81.06 has no requirement that the judgment dispose of at least one claim for relief as to one party as a precondition to the exercise of discretion to determine “no just reason for delay” of the appeal. To hold that Rule 74.01(b) and former Rule 81.06 are the same renders meaningless the requirement that the order dispose of one claim. To the extent that International Minerals might be read to remove the requirement that the judgment dispose of one claim as to one party, it should not be followed. A judgment is not final merely because it could, in a hypothetical case, be final if it does not, in the case under consideration, dispose of one claim for relief as to any party.

II.

Even if we were to strain the meaning of “one claim” beyond the limits of the plain meaning of the words and to ignore the nearly uniform construction of those same words predating adoption of our Rule 74.-01(b), there is a second reason why the judgment here was never final.

Assuming there is at least one claim fully resolved as to at least one party, Rule 74.01(b) grants circuit courts the discretion to declare that aspect of the judgment final upon a finding of “no just reason for delay.” Absent such finding, Rule 74.01(b) is inapplicable. The circuit judge, in exercising that discretion, is granted broad latitude to act as a “dispatcher” of the case. Curtiss-Wright Corp. v. General Electric Co., 446 U.S. 1, 8, 100 S.Ct. 1460, 1465, 64 L.Ed.2d 1 (1980). However, where the circumstances of the case and the judgment entered are wholly inconsistent with a finding of “no just cause for delay,” a finding to that effect by a trial court is an abuse of discretion. The peculiar posture of this case demonstrates just such an abuse of discretion.

The trial court’s order, entered January 15, 1993, did not become immediately effective but provided:

In order to allow time for the General Assembly to enact a constitutionally sufficient plan for funding public education in Missouri and also to allow time for the appellate review of this memorandum opinion and judgment, the effectiveness of the foregoing paragraphs one through five are stayed until ninety days after adjournment of the first regular session of the 87th General Assembly. The court reserves the authority to modify the stay upon prior notice to the parties. (Emphasis added).

A stay “to allow time for appellate review” was meaningless for two reasons. First, execution of judgment is automatically stayed pending appeal where, as here, an appellant is a school district. Rule 81.09. Second, no “executory process” follows a declaratory judgment. Gutensohn v. KC. Southern Ry. Co., 140 F.2d 950, 953 (8th Cir.1944). The only viable reason for granting a stay was that of judicial economy.

At times, principles of judicial economy will militate in favor of certifying “no just reason for delay” to allow an appeal of an isolated claim. At other times, principles of judicial economy will be better served by staying a declaration or an execution of a judgment to permit the parties to rectify the source of conflict without the expense, time and energy consumed by an appeal. In this case, the trial judge attempted to both certify an incomplete judgment final for purposes of appeal and to stay entry of the order to allow the legislature time to enact a new funding formula. It is clear that the judge wisely anticipated the legislature’s willingness to act while the judgment was stayed. However, all of the benefits of judicial economy served by a stay to allow parties to resolve their dispute without an appeal would be defeated by authorizing contemporaneous pursuit of an appeal.

The language used — “allow time for the General Assembly” and “the effectiveness of the foregoing paragraphs one

through five are stayed”—demonstrates a just reason for delay as of the entry of the order on January 15, 1993. The general finding that there was “no just reason for delay” is a direct contradiction of the specific finding that the judgment should be stayed to permit legislative action. No one contests the trial court’s authority to stay its judgment. Clearly, the stay was consistent with principles of sound judicial administration.

In granting the stay, the circuit court necessarily determined that just reason existed for delay in giving effect to its judgment because of the potential that the General Assembly might repeal § 163.031, RSMo 1986, and provide for a new funding formula. Where a new enactment supersedes the statute on which the litigants rely to define their rights, the appeal no longer represents an actual controversy, and the case will be dismissed as moot. Bank of Washington v. McAuliffe, 676 S.W.2d 483, 487 (Mo. banc 1984). “Lapse of time may create a condition which may cause the controversy involved in a case to become a mere moot question.” Fugel v. Becker, 2 S.W.2d 743, 746 (Mo. banc 1928). Indeed, during the stay, the General Assembly passed S.B. 380. Among its numerous provisions was an unconditional repeal of § 163.031, RSMo 1986, and the enactment of provisions reforming Missouri’s school funding scheme.

Here the circuit court’s order anticipated that during the stay, there were three possible results: legislative inaction, enactment of a constitutionally sufficient plan, or passage of a constitutionally insufficient plan. In the case of legislative inaction, the stay would expire, by its terms, and the order would become final and appealable at the expiration of the stay.

However, in this case, the legislature clearly acted, leaving only two possibilities, a sufficient plan or an insufficient plan. Of course, the new plan was never subject to judicial scrutiny to determine its constitutional sufficiency. Thus, the passage of S.B. 380 moots the original order as to § 163.031, RSMo 1986, and would require new evidence and new pleadings before the circuit court regarding S.B. 380. Only then could the circuit court determine if the new plan for school funding is sufficient or insufficient.

In sum, by the terms of the stay order, absence of a “just reason for delay” of the appeal could only come into being after (1) legislative inaction and (2) the expiration of the stay. Because the first event did not and will not occur, the predicate to a determination of “no just reason for delay” of the appeal never existed, and the judgment is not final under Rule 74.01(b).

The issues in this case are clearly of great public significance. However, it is not within the province of courts “to decide abstract, hypothetical or moot questions, disconnected from the granting of actual relief.” Fugel v. Becker, 2 S.W.2d at 746. It is unwise for courts to shortcut procedural requirements necessary to fully and fairly address the substantive issues in cases of great public significance, when those same procedures would be required without pause in cases of lesser magnitude. To say a partial appeal is permissible due to the importance, infrequency or harshness of the case is neither workable nor reliable as a benchmark for appellate review. Curtiss-Wright Corp. v. General Electric Co., 446 U.S. at 10,100 S.Ct. at 1466. The circuit court abused its discretion in determining its order to be final under Rule 74.01(b). Since the circuit court order was not a final judgment, this Court lacks jurisdiction and the appeal must be dismissed.

CONCLUSION

The state requests that this Court vacate the judgment below, as opposed to merely dismissing the appeal, fearing the effects of res judicata in future proceedings. The judgment here is not final but is, at most, interlocutory in nature. A judgment that is to be used as the basis for the application of res judicata must be final and not an interlocutory judgment. Noll v. Noll, 286 S.W.2d 58, 60-61 (Mo.App.1956); Restatement (Second) of Judgments § 13 (1982). Because the judgment here is subject to modification, and because the state has done all within its power to seek appellate review, res judicata principles will not apply to make the trial court’s decision, as it now exists, preclusive of issues in future litigation.

The appeal is dismissed. Although invited to do so, the Court makes no decision regarding the constitutionality of S.B. 380. Neither do we pass on any issue other than the absence of finality of the judgment entered by the trial court. Other issues necessarily await future determination. However, in subsequent proceedings in this case or in new litigation, the trial court and the parties should be cognizant of the jurisdictional problems that have infected the earlier proceedings in this case.

COVINGTON, C.J., BENTON, THOMAS and PRICE, JJ., concur.

ROBERTSON, J., concurs in result in separate opinion filed.

LIMBAUGH, J., concurs in opinion of ROBERTSON, J.

. The use of the confusing phrase “and/or” has been widely criticized in legal writing and has caused one judge of this Court to state in exasperation "I confess I do not know what is meant by the use of the phrase ‘and/or.’ ” State ex rel. Adler v. Douglas, 339 Mo. 187, 95 S.W.2d 1179, 1180 (banc 1936). The references to Mo. const.' art. Ill, §§ 40(24) and 40(30) are apparently supplied gratuitously by the trial judge. Those sections are not mentioned in the pleadings. No party argues here that § 163.031, RSMo 1986, is special legislation.

. The intervenor-defendant school districts have appealed. The judgment appears to operate only against the General Assembly by declaring that it must supply "adequate funds” for education. No redistribution of funds by a different formula is required by the judgment. For these reasons, it is difficult to comprehend how any school district is "aggrieved” by the judgment as is required in order to maintain an appeal. § 512.020, RSMo 1986. However, that issue need not be reached.

. Standing is a jurisdictional matter antecedent to the right to relief. State ex rel. Williams v. Marsh, 626 S.W.2d 223, 227, n. 6 (Mo. banc 1982). The primary claim in the plaintiffs’ pleadings is that students are being denied equal protection of the law in access to public education. Here there is a serious question whether school districts and taxpayers have standing to prosecute the students' equal protection claims. Generally speaking, political subdivisions, such as school districts, lack such standing because they are not considered "persons” having a constitutional right to due process or equal protection of the law. City of Chesterfield v. Director of Revenue, 811 S.W.2d 375, 377 (Mo. banc 1991); State ex rel. Brentwood Sch. Dist. v. State Tax Comm’n, 589 S.W.2d 613, 615 (Mo. banc 1979). Similarly, the students’ claims to equal protection may not be raised by third parties. State ex rel. Reser v. Rush, 562 S.W.2d 365, 369 (Mo. banc 1978). School districts have a potential, if not inherent, conflict of interest with students claiming the right to equal protection of the law in education. Such rights are enforceable not only against the state at large but against the school district. See Brown v. Board. of Educ., 347 U.S. 483, 74 S.Ct. 686, 98 L.Ed. 873 (1984). Nevertheless, we make no decision here regarding standing or the propriety of school districts expending resources to prosecute claims belonging to individual students, and no decision is made regarding the conflict of interest issue.

. Whether the claim that the General Assembly owes a duty to provide adequate funding under Missouri Constitution article DC, § 1(a) is distinct from the claim that the General Assembly owes a duty to allocate 25% of revenue to education pursuant to Missouri Constitution article DC, § 3(b), is not critical to the analysis here. Obviously, if the two provisions are only aspects of but one legal claim, a failure to address the article DC, § 3(b), aspect would prevent the "adequacy of funding" claim from being a final judgment.