## Facts

- School District No. 8R of Umatilla County (District) hired Robert George (George) as a high school mathematics teacher and head football coach under a written three-year employment contract.
- The contract set George’s compensation at **\$11,300 per year** for teaching and **an additional \$2,000 per year** for coaching football.
- During the first year of the contract, the District relieved George of the football coaching assignment.
- After removing the coaching assignment, the District treated the **\$2,000 coaching amount** as eliminated for the remaining contract term.
- As part of its regular practice, the District sent annual letters asking teachers to confirm whether they would continue; the District’s letter to George referred to a salary of **\$11,300** for the next year.
- George responded that he would teach the next year **if** he received the additional **\$2,000** provided in the three-year contract.
- The District treated George’s response as a rejection and filled his position.
- George sued the District for breach of contract and sought declaratory relief determining his rights under the contract; he also sought specific performance requiring reinstatement.
- While the case was pending, George worked as a substitute teacher in the Reedsport district and earned substitute-teaching income during the second year.
- Reedsport offered George a full-time position; George declined in order to keep open the possibility of court-ordered reinstatement under the three-year contract.
- The trial court found the District breached the contract, awarded second-year damages (contract pay minus substitute earnings), and ordered the District to reinstate George for the third year.
- The District appealed.

## Issues

1. Whether the three-year agreement was divisible so the District could remove the coaching assignment and reduce George’s compensation by \$2,000 during the contract term.
2. Whether George’s conditional response to the District’s annual letter amounted to a rejection or repudiation that excused the District from further performance.
3. Whether the trial court properly awarded second-year damages and ordered reinstatement for the third year, including whether George failed to mitigate damages by declining other full-time employment.

## Decision

- The Oregon Court of Appeals **affirmed**.
- The court held the District **could not unilaterally reduce** George’s promised compensation by removing the coaching assignment and treating the \$2,000 amount as cancelable during the three-year term.
- The court concluded the contract, as construed, reflected a single three-year bargain for teaching and coaching compensation rather than separable obligations that allowed a mid-term pay cut.
- The court ruled George’s response to the District’s letter was **not** a rejection of the contract; it was a request that the District perform according to the existing agreement.
- The court upheld the damages award measured by the difference between what George would have earned under the contract and what he actually earned as a substitute during the second year.
- The court upheld reinstatement for the third year and rejected the District’s mitigation argument based on George’s refusal of the Reedsport full-time offer.

## Legal Principles

- Whether a contract is divisible depends on the **intent of the parties**, determined primarily by interpreting the contract as written in light of the circumstances.
- A public employer that enters a fixed-term employment contract generally may not change assigned duties as a device to **reduce agreed compensation** during the term absent contractual authority to do so.
- A statement that one will continue working only if paid according to the existing contract may be treated as a **demand for performance**, not a repudiation.
- For breach of an employment contract, damages are commonly measured as contract compensation less amounts actually earned (and, in proper cases, amounts that reasonably could have been earned).
- In an appropriate case involving a fixed-term public employment contract, a court may order **reinstatement** when performance remains possible and the equities support that remedy.
- The duty to mitigate does not automatically require acceptance of alternative employment when doing so would materially interfere with obtaining reinstatement under the contract being enforced.

## Conclusion

In *George v. School District No. 8R*, the Oregon Court of Appeals held that a school district breached a three-year teacher-and-football-coach contract by removing the coaching assignment and attempting to cut the teacher’s pay by the \$2,000 coaching amount during the contract term; the court affirmed damages for the second year based on interim substitute earnings and affirmed reinstatement for the third year, rejecting the argument that the teacher’s conditional response or his refusal of a different full-time job barred relief.


George v. School District No. 8R, 490 P.2d 1009 (1971)