Mountain State College wins appeal in case brought by graduates

CHARLESTON – Mountain State College succeeded in its appeal before the state Supreme Court of a lower court's judgment in favor of graduates of the college’s legal assisting program.

The plaintiffs had sued the college in Kanawha County Circuit Court, alleging the enrollment agreement they signed was unconscionable and induced by unconscionable conduct. The per curiam opinion was issued on March 28.

Mountain State College is in Parkersburg and is not affiliated with Mountain State University, the troubled institution that has closed permanently.

The plaintiffs and respondents were Sherry Holsinger, a September 1992 graduate, and two December 1992 graduates, Sandra Carpenter and Mary Yeater Murphy.

In June 1998, the graduates filed a complaint against the college and several other parties but by the time the case came to trial in the circuit court in May 2010, the college was the only remaining defendant.

The graduates' primary allegation was that the college had verbally guaranteed legal assistant jobs upon graduation.

The graduates testified to having been told by employees of the college that they would be able to make $30,000 to $40,000 a year as legal assistants and that the job placement office would see that they would get jobs.

There was testimony that they followed the recommendations of the placement office, yet none of the three had success in finding jobs and all three were left with high student loan debt.

The college presented the testimony of several officials who claimed the college did not guarantee jobs to legal assistant graduates in the period in question and that the college did assist students in finding jobs after graduation.

The Kanawha jury found that the college had engaged in both unconscionable and fraudulent inducement and it recommended an award of $30,000 to each respondent as restitution for their student loan debt, as well as recommending awards of $20,000 in actual damages to each respondent.

The circuit court found unconscionable inducement as a matter of law, concluding that:

(1) The initial misrepresentation that there would be a great demand for paralegal jobs in the Parkersburg area; and

(2) The misrepresentation that the College would place students in jobs;

The court awarded the jury’s recommendations of $30,000 on the graduate’s respective student loans and $20,000 on actual damages to each respondent. The college’s subsequent motion for judgment as a matter of law, or alternatively, motion for a new trial, was denied by the circuit court.

The college appealed to the state Supreme Court.

In the appeal, the college asserted that the circuit court erred in finding the enrollment agreement between the college and the graduates unconscionable under the state’s common law of contracts.

The college argued that since the enrollment agreement contained no guarantee of employment then there was no evidence that the agreement was unconscionable and further, that extrinsic evidence of a job guarantee was not admissible and not part of the written agreement.

“The respondents reply that they properly prevailed on three contract actions below: unconscionability, lack of consideration, and inducement by unconscionable conduct. They further contend that extrinsic evidence of the terms of the enrollment agreement was admissible because the agreement was ambiguous, and the extrinsic evidence was admitted to show fraud and lack of consideration,” the opinion says.

“The parties do not dispute that the written enrollment agreement between the respondents and the college does not contain a promise of job placement. Rather, the circuit court’s finding of unconscionability is based on evidence of the verbal promises of job placement allegedly made by representatives of the college.

“Therefore, the correctness of the circuit court’s ruling on this issue hinges on whether extrinsic evidence was properly admitted to add to the terms of the written enrollment agreement."

The opinion adds, “It has long been our law that ‘extrinsic evidence of statements and declarations of the parties to an unambiguous written contract occurring contemporaneously with or prior to its execution is inadmissible to contradict, add to, detract from, vary or explain the terms of such contract, in the absence of a showing of illegality, fraud, duress, mistake or insufficiency of consideration.’

“The respondents failed to show that the enrollment agreement is inconsistent on its face or that parties can have reasonable differences in construing the terms of the agreement. Moreover, the fact that the agreement does not address job placement does not make it ambiguous.

“A guarantee of job placement to college graduates is not a provision that generally appears in a college enrollment agreement, and its absence from the agreement at issue did not render the agreement ambiguous. Consequently, because the enrollment agreement is not ambiguous, extrinsic evidence was not admissible to aid in its construction.

“Second, the respondents contend that ‘extrinsic evidence of a verbal promise of job placement was admissible below to show fraud. However, the circuit court granted the college’s motion for judgment as a matter of law on the fraud claim during the trial. Thus, extrinsic evidence was not admissible to show fraud.

“Finally, the respondents aver that extrinsic evidence was admissible to show a lack of consideration. We disagree. There was no finding below that the written enrollment agreement lacked consideration on its face. Absent such a finding, extrinsic evidence of additional consideration was not admissible to supplement the terms of the written enrollment agreement.

“Therefore, we conclude that the circuit court erred in ruling that the agreement between the parties was unconscionable based on a lack of consideration.

“The circuit court also based its lack of consideration determination on insufficiency of educational services. Specifically, the circuit court determined that the enrollment agreement was unconscionable because ‘the agreement . . . was so one-sided insofar as the [college] received the significant tuition from the [respondents] but provided no educational . . . services in return.’

“[T]he respondents did not show that the college failed to provide the educational services set forth in the written enrollment agreement. Therefore, we conclude that the circuit court’s finding of a lack of consideration based on insufficient educational services is error.

“For the foregoing reasons, this Court concludes that the circuit court erred in granting relief to the respondents and denying the college’s motion for judgment as a matter of law. Therefore, the July 20, 2011, amended judgment order of the Circuit Court of Kanawha County is reversed, and this case is remanded for the entry of judgment as a matter of law in favor of Mountain State College.”