Beaumont Court of Appeals holds firefighter’s last-chance agreement in collective bargaining city deprived trial court of jurisdiction to hear appeal of indefinite suspension

Quote

 

Michael Scott Nix v. City of Beaumont, 09-18-00407-CV (Tex. App. -Beaumont – Oct. 3, 2019)\

This is an interlocutory appeal in a firefighter suspension case where the Beaumont Court of Appeals affirmed the granting of the City’s plea to the jurisdiction.

Nix filed a petition seeking declaratory and equitable relief against the City based on his indefinite suspension from his position as a firefighter. He asserted the Collective Bargaining Agreement (“CBA”) was invalid because the City allegedly failed to comply with the Texas Open Meeting Act (“TOMA”) requirements when the CBA was negotiated.  He also asserts the “last chance” agreement he entered into with the Fire Chief was invalid. Nix’s last-chance agreement probated part of the suspension, but noted he could be terminated if he violated any terms of the agreement.  Nix’s suspension in 2015 resulted in the last-chance agreement and the Chief determined he violated the sick leave policy in 2017 resulting in an indefinite suspension. Nix asserts in the absence of a valid contract, the suspensions were invalid, depriving him of due process of law and a protected property interest. The City filed a plea to the jurisdiction, which was granted.  Nix appealed.

TOMA has a limited waiver of immunity. An action taken in violation of TOMA is voidable, not void. When a department head suspends a firefighter for violating a civil service rule, the suspension may be for a reasonable period not to exceed fifteen calendar days or for an indefinite period. Tex. Loc. Gov’t Code Ann. § 143.052(b). The firefighter may accept the suspension or appeal to the Civil Service Commission. If the firefighter disagrees with the Commission, the employee may file suit in district court. The question of whether the City posted the CBA 2012-2015 negotiations in accordance with TOMA is not relevant because it is the CBA 2015-2020 CBA applicable to his underlying challenge to his indefinite suspension in 2017.  The City provided evidence showing proper postings for the negotiation of the 2015-2020 CBA.  When Nix accepted the last-chance agreement in 2015, he had the opportunity to refuse the Chief’s offer and appeal his suspension to the Commission; however, Nix agreed to waive his right to appeal, including the right to appeal the Chief’s 2017 decision determining that Nix had violated the Agreement. Nix waived all rights he may have to file suit against the City as to any issue directly or indirectly related to the last-chance agreement or to his indefinite suspension.  As a result, the trial court properly granted the plea.

If you would like to read this opinion click here. Panel consists of Chief Justice McKeithen, Justice Horton and Justice Johnson.  Opinion delivered by Chief Justice McKeithen. The attorneys listed for Nix are Melissa Azadeh and Laurence Watts.  The attorneys listed for the City are Sharae Reed and Tyrone Cooper.

City immune for claims of “general engineering work” since the contract was expressly for a specific project with no generalized work included

Quote

Naismith Engineering, Inc. v. The City of Aransas Pass, 13-18-00402-CV (Tex. App. – Corpus Christi, September 19, 2019)

This is a governmental immunity/contract case where the Corpus Christi court out of Edinburg affirmed the granting of the City’s plea to the jurisdiction.

The City Manager, with council approval, entered into a contract with Naismith Engineering, Inc (NEI) to design improvements to the boat-ramp area of the City’s Conn Brown Harbor (CBH project). The City sued NEI and its surety alleging there were deficiencies related to the CBH project. NEI subsequently counterclaimed to recover outstanding fees for work “general work” performed . NEI alleged that “[NEI] performed work ranging from general project services to general harbor engineering and planning and services for waterline extension….”  The City filed a plea to the jurisdiction as to the counter-claim which was granted.   NEI appealed.

The court declined to “apply the common law of contracts to a governmental immunity question” and held no contract existed for “general services” between the City and NEI. Therefore, no waiver of immunity exists. While NEI attempted to argue its counter-claim included unpaid fees for the CBH project, however, the evidence and statements of counsel made it clear the counter-claim was for other work which was simply near and around the boat ramp. A governmental entity retains immunity from suit as to those claims for monetary damages that are not germane to, connected with, and properly defensive to the entity’s claim. The counterclaim does not arise from the same transaction or occurrence that is the subject matter of the City’s claim and therefore no immunity is waived. The plea was properly granted.

If you would like to read this opinion click here. Panel consists of Chief Justice  Contreras and Justices Longoria and Perkes.  Memorandum Opinion by Justice Longoria. The attorneys listed for the City of Aransas Pass are Matthew B. Cano, James F. McKibben Jr. and Ken Fields.  The attorneys listed for Naismith Engineering are Paul Dodson and John Swallow.

13th Court of Appeals holds no contract necessary for medical providers to sue self-insured school district

Quote

South Coast Spine & Rehabilitation PA v. Brownsville Independent School District,  13-18-00006-CV (Tex. App. – Corpus Christi, September 12, 2019)

This is a governmental immunity/contract case where the Corpus Christi court out of Edinburg reversed the granting of a directed verdict for the school district and remanded the case.

Brownsville Independent School District (BISD) is  a self-insured school district which had a third-party administrator (American Administrative Group [AAG]) handle health benefit claims. South Coast Spine & Rehabilitation, PA, (South Coast) sued seeking payment for out-of-network medical services provided to twenty-seven BISD employees. Each patient executed an “Assignment of Proceeds, Lien, and Authorization,” assigning to South Coast the patient’s benefits under the Plan. South Coast submitted claims for these twenty-seven patients and AAG refused payment. South Coast also named the twenty-seven patients as defendants. BISD subsequently filed a plea to the jurisdiction which was denied, then appealed, and remanded when the appellate court held a written contract between BISD and South Coast was not required in order to establish a waiver of immunity under Tex. Loc. Gov’t Code chapter 271.  On remand and trial, the trial court granted a directed verdict based on an absence of a written contract between South Coast and BISD. South Coast appealed.

The court held that it’s prior interlocutory opinion held  that South Coast could sue BISD as an assignee under the Plan—a contract between BISD and its employees. South Coast Spine & Rehab. PA v. Brownsville Indep. Sch. Dist., No. 13-11-00270-CV, 2014 WL 1789546, at *3–5 (Tex. App.—Corpus Christi–Edinburg Apr. 30, 2014, no pet.). An assignee steps into the shoes of the claim holder—in this case, the patients—and is considered under the law to have suffered the same injury and have the same legal rights as the claim holder. BISD employees are free to choose their own medical providers, and BISD is obligated to pay those medical providers the employee’s assigned benefits to the extent the services are covered by the Plan. The dispositive question, then, was whether and to what extent the Plan covered the out-of-network services provided by South Coast.  Based on the language in the Plan, it specifically covers out-of-network providers to a certain extent.  South Coast only sought from BISD the amount generally paid to out-of-network providers for covered services—60%. The court therefore reversed the directed verdict and remanded.

If you would like to read this opinion click here. Panel consists of Justices Benavides, Hinojosa, and Perkes. Memorandum opinion by Justice Perkes. The attorney listed for South Coast  is Keith Gilbert. The attorney listed for BISD is Baltazar Salazar.

Subcontractor did not contract directly with DFW Airport, so no waiver of immunity exists for breach of contract says Dallas COA

Quote

Ruth Torres v. Dallas/Ft Worth International Airport et. al, 05-18-00675-CV (Tex. App. —  Dallas, August, 29, 2019).

This is a breach of contract case where the Dallas Court of Appeals held the trial court was without jurisdiction to hear the claims.

Torres was to provide human resources consulting services to Pursuit of Excellence (POE), a corporation that contracted with DFW to provide airport operations services. POE filed suit against Torres for breach of contract.  Torres answered, counterclaimed, and attempted to bring in the Dallas/Ft.Worth International Airport (DFW).  DFW filed a plea to the jurisdiction, which was granted. Torres appealed.

DFW is a special purpose governmental entity which possesses immunity as a matter of law.  As a result, Torres must establish a waiver of immunity to proceed. The Texas Tort Claims Act expressly lists the operating and regulation of an airport to be a governmental function, so no proprietary aspects are involved. Although TEX. LOC. GOV’T CODE § 271.152 provides for a

waiver of immunity in certain cases, that waiver is not absolute.  Unfortunately for Torres, she did not contract with DFW, but with an independent contractor of DFW.  The waiver under §271.152 only applies to contracts entered into directly with DFW.  The remaining arguments asserted by Torres (UDJA, TOMA, PIA, etc.) were not raised at the trial court so cannot be raised for the first time on appeal. The plea was properly granted.

If you would like to read this opinion click here. Panel consists of Justices Myers, Osborne, and Nowell.  Opinion by Justice Myers.

Texas Supreme Court holds “good faith” efforts clause to seek future Board approval in contract is unenforceable. Also, damages would be consequential so Board retains immunity

Quote

Dallas/Fort Worth International Airport Board v Vizant Technologies, 18-0059, (Tex. May 17, 2019).

This is a governmental immunity defense in a breach of contract case where the Texas Supreme Court held Chapter 271 of the Texas Local Government Code did not waive immunity for the specific relief required under the contract.

The Dallas/Fort Worth International Airport Board (“Board”) retained Vizant Technologies (“Visant”) by contract to provide recommendations on how the airport could reduce payment-processing costs. The contract contained provisions where the Board would pay Vizant a percentage of savings and/or refunds based on its advice. The contract stated the cap on payments shall not exceed $50,000. The Court commented in a footnote the appearance this was done to avoid competitive bidding limits or authorizations by delegation to staff without Board approval. However, the contract also contained a provision that in the event Vizant’s fee exceeds this cap the Board “will make a good faith effort to receive board authorization to increase the compensation,” and “if approved,” the parties would amend the contract to reflect the higher amount. The Board’s staff paid the $50,000 and ultimately asked the Board to approve an increase to $330,000, but the Board denied that request. Vizant sued.  Vizant asserts its fees should have exceeded $300,000, but the airport failed to use a good faith effort to obtain Board approval. The Board filed a plea to the jurisdiction which was denied, but the court of appeals reversed and dismissed. Vizant filed its petition for review.

The Court first held the Board was acting in a governmental not proprietary capacity. the legislature has unambiguously declared that the “maintenance, operation, [and] regulation” of an airport and the “exercise of any other power granted” for that purpose, whether exercised “severally or jointly” by local governments, “are public and governmental functions, exercised for a public purpose, and matters of public necessity.”  As a result, the Board is immune absent a waiver.

Contract waivers are primarily found in Chapter 271 of the Texas Local Government Code. While it has a waiver of immunity, it has limiting language as to the types of damages allowed and contractual approvals which apply. The “good faith” effort language becomes pivotal for this analysis. A contractual duty to act in good faith does not create a new obligation or independent cause of action; instead, it merely governs the conduct by which the party must fulfill the contractual obligation to which it applies. Under the written terms of the contract, read literally, the Board promised to make a good-faith effort to obtain its own authorization for the higher payments. The parties agreed the Board’s staff negotiated based on delegated authority and executed the contract on the Board’s behalf, with the Board’s authority but without the Board’s express approval. Under these circumstances, the Court held it was reasonable to construe the clause as a promise by the Board’s staff to make a good-faith effort to obtain the Board’s authorization for any higher payment. The staff had no authority to contractually obligate the Board to pay anything more than $50,000. To the extent the staff agreed to make a good-faith effort, that promise is not enforceable against the Board—and even if it were, the remedy could never be to require the Board to pay more than it authorized to staff to negotiate. To the extent the Board made any form of agreement, the Board merely promised to make an effort to agree to the higher payment, but to do so in good faith. “In this sense, its promise was the equivalent of a promise to negotiate towards a future bargain in good faith.”  Agreements to negotiate toward a future contract are not legally enforceable.  However, even if such were enforceable, the listed measure of damages constitutes consequential damages incurred as a result of the defendant’s failure to act in good faith, not as a result of the defendant’s failure to perform under the anticipated contract. And since §271.153 expressly excludes this type of consequential damages, the Board retains immunity.

If you would like to read this opinion click here.  Opinion by Justice Boyd.  The docket page with attorney information can be found here.

Texas Supreme Court holds navigation district retains immunity from suit by State, but ultra-vires claims against commissioners can proceed to trial

Quote

Chambers-Liberty Counties Navigation District, et al. vs. State of Texas, 17-0365 (Tex. May 10, 2019)

This is an interlocutory appeal in a sovereign immunity/regulatory control case where the Texas Supreme Court held the Chambers-Liberty Counties Navigation District (“District”) retained immunity from suit against the claims brought by the State of Texas. However, the District’s commissioners were not immune from the ultra-vires claims.

The District leased part of a navigation stream to Sustainable Texas Oyster Resource Management, LLC (“STORM”) for specific oyster production. The Texas Parks and Wildlife Department (“Department”) asserted the Department had exclusive authority to regulate oyster production in Texas and sued the District to invalidate a lease issued to STORM.  In the 1950s, the State of Texas conveyed more than 23,000 acres submerged land to the District, which as become prime for oyster cultivation. After the lease was issued to STORM, the company sent no-trespass notices to holders of any oyster-production permits. These permits authorize a holder to “plant oysters and make private beds in public waters.”  STORM claimed exclusive use of the leased submerged land. While the District agrees the water above the submerged land belongs to the State, it asserts it owns the fee simple in the land and can lease its exclusive use. The Department sued the District to invalidate the lease and individual District commissioners for ultra-vires acts associated with the lease. The Department also sought monetary damages for “restitution.” The District and commissioners filed a plea to the jurisdiction, which was partially denied.

The Court first addressed the Department’s claim for monetary damages. It held that Under §311.034 of the Government Code (Texas Code Construction Act), the use of the term “person” in a statute does not waive immunity.  And while the Parks and Wildlife Code allows the Department certain rule making authority, the Department cannot waive immunity by rule which is not contained within the statute.  Since nothing in the applicable Parks and Wildlife Code waives immunity, no waiver for declaratory and monetary claims exists. The Department cannot circumvent the immunity by labeling a claim for monetary damages as “restitution.”    Next, the Court held an ultra-vires claim cannot be brought against the District. However, it can be brought against the commissioners. The Court held the Department properly pled the commissioners acted beyond their lawful authority by entering into the lease. The statute creating the District provided it “rights, privileges and functions” but only those conferred by law. Unlike a home-rule municipality which gets its power from the Texas Constitution, the District is a creature of statute and must look to the Legislature for its authority. Considering the entire regulatory system as a whole, the Court held the powers of the District are limited to navigation. While the statute allows the District to lease land and regulate marine commerce, the question of whether  oyster cultivation qualifies may be precluded when comparing the exclusive power granted to the Department. The Department shall regulate the taking and conservation of fish, oysters, and other marine life. The ultra-vires claims against the commissioners to prospectively enjoin the lease are permitted to go forward.  However, the Court was careful to explain that its holding only allows the State’s claims to go to trial, not whether the State will ultimately win on the present facts.

If you would like to read this opinion click here.  Opinion by Justice Blacklock. The docket page with attorney information can be found here.

Fort Worth Court of Appeals hold EDC is not a governmental unit for immunity and contract purposes

Quote

Haltom City Economic Development Corporation v. Kent Flynn,  02-18-00145-CV, (Tex. App. – Fort Worth, March 21, 2019).

This is a breach of contract case where the Fort Worth Court of appeals upheld the denial of an EDC’s plea to the jurisdiction.

Haltom City Economic Development Corporation (HCEDC) and Flynn entered into an contract for services.  When Flynn believed the HCEDC did not properly pay the amounts owed under the contract, he sued. The HCEDC filed a plea to the jurisdiction, which was denied. The HCEDC appealed.

The HCEDC is a Type B economic development corporation. Section 505.106(b) of the Texas Local Government Code provides that for purposes of the Texas Tort Claims Act, a Type B EDC “is a governmental unit and the corporation’s actions are governmental functions.” Tex. Loc. Gov’t Code § 505.106(b). Section 505.106(a) provides that EDCs “are not liable for damages arising from the performance of a governmental function of a Type B [EDC] or the authorizing municipality.” Tex. Loc. Gov’t Code § 505.106(a). The Local Government Code specifically prohibits a municipality from “delegate[ing] to [an EDC] any of the [municipality’s] attributes of sovereignty, including the power to tax, the power of eminent domain, and the police power.” Tex. Loc. Gov’t Code § 501.010. The statute specifies that an EDC “is not a political subdivision . . . for purposes of the laws of this state.” Tex. Loc. Gov’t Code § 501.055(b).  Citing to Rosenberg Development Corp. v. Imperial Performing Arts, Inc., (summary found here) the Court held that EDCs “are not governmental entities in their own right and therefore are not entitled to governmental immunity.”  Essentially, they may only get liability protection in relation to tort claims, not contract claims. As a result, the plea was properly denied.

If you would like to read this opinion click here. Panel consists of Chief Justice Sudderth, Justice Pittman and Justice Bassel. Memorandum Opinion by Justice Pittman. The attorney listed for the EDC is Fredrick ‘Fritz’ Quast.  The attorneys listed for Kent are Stephen L. Tatum and David Fielding.

Texas Supreme Court holds Type B economic development corporations are not entitled to immunity for breach of contract claims

Quote

 

Rosenberg Development Corp. v. Imperial Performing Arts, Inc., No. 17-0660 (Tex. – March 9, 2019).

The Texas Supreme Court holds Type -B EDCs are not entitled to governmental immunity in breach of contract cases.

Rosenberg Development Corporation (RDC) is a Type B economic development corporation created by the City of Rosenberg. RDC executed a contract with Imperial Performing Arts, Inc. (Imperial), a nonprofit organization for performance and visual art activities, including reopening a local arts center and theater. However, the reopening and renovations exceed the agreed amounts by over ten fold. RDC and Imperial filed suit and counterclaims. The immunity issue addressed the breach of contract claims. RDC filed a plea to the jurisdiction, which was denied as to Imperial’s contract claim, and was affirmed by the court of appeals. RDC filed for discretionary review.

The threshold issue for the Court was whether RDC—a municipality’s statutorily authorized corporate creation—is immune from suit under the common law even though RDC is neither a sovereign entity nor a political subdivision of the state. The Development Corporation Act (Title 12, Subtitle C1 of the Local Government Code) authorizes municipalities to create such EDC corporations. The Court analyzed the Act, its purpose, and its language. The Court noted that for the purpose of interlocutory appeals, the RDC qualifies given the specific definition in the Texas Tort Claims Act.  The Court then noted the Development Corporation Act does not speak to governmental immunity directly, but in §505.106, the Legislature has declared that (1) a Type B corporation is “not liable for damages arising from the performance of a governmental function of a Type B corporation or the authorizing municipality,” and (2) “[f]or purposes of Chapter 101, Civil Practice and Remedies Code, a Type B corporation is a governmental unit and the corporation’s actions are governmental functions.” Notably, however, an economic development corporation “is not a political subdivision or a political corporation for purposes of the laws of this state …” and the Legislature has forbidden authorizing municipalities from bestowing on the corporation any “attributes of sovereignty.”   As to the RDC’s argument it obtains statutory immunity from suit and liability, the Court held “[b]ecause section 505.106 merely purports to limit the remedies available when economic development corporations perform governmental functions, we need not consider whether the Legislature can confer immunity by statute or only waive it.”  Where the governing statutory authority demonstrates legislative intent to grant an entity the “nature, purposes, and powers” of an “arm of the State government,” that entity is a government unit unto itself and is entitled to assert immunity in its own right. The Court analyzed cases where governmental self-insurance risk pools have been determined to be governmental entities and determined what is required to qualify as a governmental unit unto itself. While promoting and developing business enterprises and job training is a public purpose merely engaging in such an act does not, ipso facto, make the actor a governmental unit. The common-law rule of immunity is exclusively for the judiciary to define, and in doing so, the Court does not just consider whether the entity performs governmental functions, but also the “nature and purposes of immunity.” Granting immunity to an EDC is not necessary to satisfy the political, pecuniary, and pragmatic policies underlying our immunity doctrines. Further, the Legislature simply did not grant these entities “powers of government” to perform essential governmental functions or activities. Also, since the Act already limits liability and damage’s exposure, the fiscal analysis used to determine if an entity is governmental is not applicable. Ultimately, the Court held “that the Legislature did not authorize municipalities to create economic development corporations as distinct governmental entities entitled to assert immunity in their own right.”

Chief Justice Hecht wrote separately only to point out the highly unusual features of a Type B municipally-created economic development corporation. While he agreed an EDC is not a governmental unit by itself, an EDC is not liable for damages arising from the performance of its governmental functions for purposes of the Texas Tort Claims Act. Since the TTCA only waives immunity, he opines an EDC has immunity from suit and liability for tort claims. In dicta, the Chief Justice noted that since an EDC’s expenditures must be approved by its municipality, a judgment against an EDC in any circumstance may not be enforceable.

If you would like to read this opinion click here. Justice Guzman delivered the opinion of the court.  Chief Justice Hecht filed a concurring opinion, found here.  The docket page with attorney information can be found here.

DA allegedly terminated for refusing to withhold exculpatory evidence cannot bring Sabine Pilot cause of action

Quote

 

Hillman v Nueces County, et al., 17-0588 (Tex. March 15, 2019)

This is an employment related suit where the Texas Supreme Court held the County was immune from a suit brought by a former assistant district attorney

Hillman, a former assistant district attorney, filed suit alleging that the County wrongfully terminated his employment because he allegedly refused his supervisor’s order to withhold exculpatory evidence from a criminal defendant charged with intoxicated assault. Specifically, a witness statement noting the Defendant was not intoxicated at the time of the assault. Hillman was terminated for failing to follow instructions, presumably related to the disclosure. Hillman sued.  The trial court dismissed the case and the court of appeals affirmed. Hillman filed the petition for review.

Hillman essentially brings a Sabine Pilot cause of action, which allows suit against an employer for terminating an employee who refused to perform an illegal act. However, historically, sovereign/governmental immunity is not waived for a Sabine Pilot cause of action. The Court declined to abrogate or clarify the lack of waiver. Alternatively, Hillman asserted immunity was waived under the Michael Morton Act (2017 legislative changes to Tex. Code Crim. Proc. § 39.14(h) on criminal discovery and disclosure). However, the Act does not address governmental immunity. It serves obvious purposes separate and apart from any wrongful-termination issues. Finally, Hillman requested the Court abrogate the immunity doctrine. The Court held that having existed for more than six hundred years, the governmental-immunity doctrine is “an established principle of jurisprudence in all civilized nations.” Although courts defer to the legislature to waive immunity, the judicial branch retains the authority and responsibility to determine whether immunity exists in the first place, and to define its scope. To hold that governmental immunity does not apply to Sabine Pilot claims, the Court would have to trespass across the boundary between defining immunity’s scope (a judicial task) and waiving it (a legislative task).  It declined to do so.

The concurring opinion agreed with the majority opinion, but Justice Guzman wrote separately to emphasize, to the Legislature, more is required if the purposes behind the Michael Morton Act are to have a full impact. But she agreed such additional actions must come from the Legislature.

If you would like to read this opinion click here.  Opinion by Justice Boyd.  Concurring opinion (found here) by Justice Guzman, joined by Justices Lehrmann and Devine.

Texas Supreme Court holds specific performance is available remedy under waiver of immunity for certain contracts

Quote

Hays Street Bridge Restoration Group v City of San Antonio, 17-0423 (Tex. March 15, 2019)

This is a breach of contract case where the Texas Supreme Court held the waiver of immunity found in TEX. LOC. GOV’T CODE §§ 271.151–.160 (as it existed at the time the contract was executed) also applied to specific performance.

The Hays Street Bridge is a historic cultural landmark in San Antonio. In the 1980s, when the City closed the bridge and Union Pacific Railroad sought to demolish it, a group of citizens formed the restoration group to save the bridge. The City obtained a $2.89 million federal grant administered by the Texas Department of Transportation to fund restoration and the Restoration Group promised, through an MOU, to match any funds for restoration. Over the next decade, the Restoration Group raised and transferred to the City more than $189,000 in cash and arranged for significant in-kind donations.  However, in 2012, it adopted an ordinance authorizing the sale of the property to Alamo Beer Company as part of an economic-incentive package. The Restoration Group sued, alleging the transfer would breach the City’s promise in the MOU to use the funds for repair of the bridge. For its breach of contract claim, the Restoration Group sought only specific performance.  The trial court ordered specific performance, but the court of appeals reversed, holding the City was immune. The Texas Supreme Court granted review.

The Court, citing to its recent holding in Wasson Interests v City of Jacksonville (Wasson II), held the MOU was of a governmental nature and not proprietary. The MOU was made to support the City–State funding agreement for restoration of the bridge and revitalization of the surrounding area. Under the Wasson II four-part test, only the first factor (mandatory v discretionary) leans toward proprietary. As a result, the City maintains immunity unless waived. Section 271.152 of the Local Government Code “waives” the City’s immunity, but that waiver is limited by the provisions found in other portions of the Act. Section 271.153 limits damages, not remedies. Damages equates to money, and specific performance equates to equitable remedies. Since the waiver is not limited by §271.153 on the subject of specific performance, such relief is a remedy encompassed within the waiver.

If you would like to read this opinion, click here.  Opinion by Chief Justice Hecht.

City Manager’s change to policy manual is not a unilateral employment contract says Texas Supreme Court

Quote

City of Denton v Brian Rushing, et al, 17-0336 (Tex. March 15, 2019)

This is an interlocutory appeal from an order denying a plea to the jurisdiction in a breach of contract case. The Texas Supreme Court reversed the denial and dismissed the case.

Rushing, Patterson and Marshall were employees of the Denton Utilities Department. All three worked uncompensated on-call shifts between 2011 and 2015. Policy 106.06 of the City’s Policies and Procedures Manual defines the rights and responsibilities of an on-call employee.  On-call time was listed as uncompensated.  In 2013, the City Manager modified Policy 106.06 and defined an explicit pay schedule for on-call time. These amendments were not approved by the City Council.  Rushing and the others sued the City, asserting Policy 106.06 was a unilateral contract and that they were entitled to payment of on-call time dating back to 2011.  The Court of Appeals held the City Manager’s policy adjustments equated to a unilateral contract, and immunity is waived under §271.152. The Texas Supreme Court granted review.

The Court first held interpreting Policy 106.06 to be a unilateral contract regarding Rushing’s employment conflicts with the disclaimer in the manual that nothing in the manual “ in any way” constitutes terms of a contract of employment.  Further, Policy 106.06 is a provision of a policies and procedures manual and not an ordinance adoption of a contract. Although city ordinances may create enforceable contracts, the Court held it has not previously determined that a municipality’s policies and procedures manual can create an enforceable contract. The Court reversed and rendered a decision for the City.

If you would like to read this opinion, click here. Opinion by Justice Devine.

No waiver of immunity exists for lost profits under §271.152 says 13th Court of Appeals

Quote

La Joya Indep. School Dist. v. Alberto Trevino et al., 13-17-00333-CV (Tex. App. – Corpus Christi, February 14, 2019)

This is a breach of contract case where the 13th Court of Appeals reversed the denial of the school district’s plea to the jurisdiction and dismissed the case.

Pursuant to a written agreement between Trevino (an insurance agent/consultant) and LISD, Trevino would provide various services in connection with La Joya LISD’s provision of health care benefits to its employees. After LISD terminated the contract, Trevino filed suit alleging that L ISD terminated it without good cause and without providing an opportunity to cure. LISD filed a plea to the jurisdiction, which was denied. LISD appealed.

The court first noted that Trevino’s argument the contract was proprietary is inapplicable because the proprietary/governmental dichotomy only applies to municipalities. Next, for a Tex. Loc. Gov’t Code §271.152 waiver of immunity to apply, a party must claim damages within the limitations of the chapter (i.e. balance due and owed). Trevino did not sue for non-payment of work actually performed, but for the benefit of the bargain in terms of lost profits. Trevino sought recovery of the fees and commissions he would have earned for future services rendered had the contract continued through the end of its term. Such damages are not permitted under  §271.152  and no waiver of immunity therefore exists. Finally, Trevino amended his petition twice prior to the hearing on the plea, so had a reasonable opportunity to amend and correct any jurisdictional defects.  No further opportunity is required.

If you would like to read this opinion click here. Panel consists of Justice Benavides, Longoria, and Justice Hinojosa. Justice Hinojosa delivered the opinion of the court. The docket page with attorney information is found here.

13th Court of Appeals holds City entitled to damages for beach of contract claims against water treatment and distribution facility

Quote

 

Kempner Water Supply Corp. v. City of Lampasas, Texas, 13-17-00047-CV (Tex. App. Corpus Christi, January 31, 2019)

This is a breach of contract case for water treatment where the Corpus Christi Court of Appeals held as a matter of law the City was entitled to damages in its breach of contract claim, but remanded the case for a determination on a damage amount.

City of Lampasas (City) sued appellant Kempner Water Supply Corporation (Kempner) for a breach of contract claim. The City assigned its raw water reservation right to a third-party named Central Texas in order for Central Texas to treat the water and deliver it to Kempner for final delivery.  Kempner and the City have differing interpretations of the contract, which focused on the City’s payments for water treatment performed by Central Texas and whether the contract intended to cover payment for water treatments performed directly by Kempner. When the parties entered into the contract, Kempner did not have its own water treatment facility, but later built one. Kempner charged the City for water it treated as well as treatments performed by Central Texas which Kempner distributed. The trial court granted the City’s motion for summary judgment and denied Kempner’s.  Kempner appealed.

After a lengthy contract construction analysis, the court held the contract states the City agreed to pay Kempner for costs Kempner incurred for water treated by Central Texas.  It did not obligate the City to pay Kempner for water that Kempner treated. The City conclusively established Kempner breached the contract by charging it for Kempner treated water.  However, when analyzing damages, the court noted the record did not separate out the allowable damages. As a result, the case was remanded back to the trial court for a hearing on damages.

If you would like to read this opinion click here. Panel consists of Chief Justice Valdez, Justice Benavides and Justice Hinojosa. Memorandum Opinion by Justice Benavides. The docket page with attorney information is found here.

December 2018 Condensed Summaries

The problem with December is courts try to get cases off their desk prior to the holiday break. Clients like to get stuff resolved before the holiday break. Which means a lot of stuff happens in December preventing me from keeping up with all of the cases coming out related to governmental entities.  While I do not like to do it very often, I am having to provide a condensed version of the case summaries for December 2018.

  1. 1st District COA holds county courts at law in Harris County are the exception and have exclusive jurisdiction for inverse condemnation claims. San Jacinto River Authority v. Charles J. Argento 01-18-00406-CV (Tex. App. — Houston [1st] Dec. 4, 2018). Opinion click here.  This is 36 page opinion where the First District Court of Appeals in Houston consolidated several cases where homeowners brought takings claims due to flooding. The court held the Legislature gave the Harris County civil courts at law exclusive jurisdiction over inverse-condemnation claims under Texas Government Code § 25.1032(c). Therefore, the district courts lack subject-matter jurisdiction over those claims. The district courts do, however, have subject-matter jurisdiction over the homeowners’ statutory takings claims under Government Code Chapter 2007, the Private Real Property Rights Preservation Act.

 

  1. University’s plea to the jurisdiction granted as to ex-employee subject to RIF. Francisco Sanchez, Jr. v. Texas A&M University- San Antonio 04-17-00197-CV (Tex. App. – San Antonio, Dec. 12, 2018). For opinion click A University employee (Sanchez) was subject to a reduction-in-force and brought discrimination charges after being demoted. Sanchez had two positions, with one being a project lead. He filed his EEOC charge for one position after the 180-day deadline from the date of the adverse action and the other EEOC charge was filed within 180 days for the second position. The court held the continuing violation doctrine did not apply to Sanchez. Further, Sanchez could not establish discrimination through direct evidence. The RIF was a legitimate non-discriminatory reason which was not disputed with competent evidence.

 

  1. Fact that attorney “sent” TTCA claim notice letter is irrelevant; TTCA requires notice to be “received’ within time period. City of San Antonio v. Gabriela Rocha 04-18-00367-CV (Tex App. – San, Antonio, Dec.12, 2018). For opinion click This is a TTCA police vehicle accident case. While the TTCA gives a plaintiff 180 days to provide written notice of claim to waive immunity, the City Charter only provided a 90 day window. And while the affidavit of Rocha’s lawyer notes he “sent” the notice timely, the plain language of the TTCA and Charter require the notice to have been “received” within the time period. So, formal written notice was not received timely. The court then analyzed whether the City had actual notice. After examining the record, the court held nothing indicates the City had actual notice of an injury or property damage. As a result, no waiver of immunity exists.

 

  1. Officer’s F-5 dishonorable discharged sustained since omission of material facts in report qualifies under a discharge for untruthfulness. Patrick Stacks v. Burnet County Sheriff’s Office 03-17-00752-CV (Tex. App. — Austin, 12, 2018). For opinion click here. This is an appeal from an F-5 determination that a sheriff’s deputy was dishonorably discharged. Stacks was terminated after a confidential information who personally observed a stop made by Stacks brought forth testimony of significant omissions by Stacks in his report. Stacks asserted the omissions did not amount to “untruthfulness.” The administrative law judge as the SOAH hearing disagreed and held Stacks was discharged for untruthfulness and therefore the dishonorable discharge should apply. The district court agreed. The court of appeals held the law recognizes the misleading effect of omissions. A failure to disclose a fact “may be as misleading as a positive misrepresentation…” As a result, for F-5 determinations, a discharge for untruthfulness includes a discharge for omitting material information or facts that rendered a statement misleading or deceptive.  The ALJ determination was sustained.

 

  1. Property Owners’ takings claims failed as Authority acted within its federal license under Federal Power Act. Jim Waller, et al v. Sabine River Authority of Texas 09-18-00040-CV (Tex. App. – Beaumont, Dec. 6, 2018). For opinion click This is a flooding/inverse condemnation case. During a federal license renewal process, residents who live downstream of the Toledo Bend Dam presented their suggestions about changing the regulations governing the hydroelectric plant to prevent flooding. The suggestions were not incorporated. Then a historic rainfall event occurred causing flooding and the residents sued for takings claims. The Authority acted within the terms of its license and the flooding was caused by the historic rain levels. Further, Plaintiff’s arguments would impose duties expressly rejected by the federal agency during relicensing. As such, the claims are preempted by the Federal Power Act.

 

  1. Supreme Court remands case to COA to reevaluate based on its holding in Wasson II. Owens v. City of Tyler, 17-0888, 2018 WL 6711522, at *1 (Tex. Dec. 21, 2018). For the opinion click here.  The City of Tyler built Lake Tyler in 1946 and leased lakefront lots to residents in a manner very similar to Wasson. Tenants decided to build a new pier and boathouse extending from their lot onto the water. This caused neighboring tenants to object. The neighboring tenants sued the City after it issued a building permit.  After the intermediate court of appeals issued an opinion, the Texas Supreme Court issued the most recent Wasson decision. As a result, the Supreme Court send remanded the case back to the court of appeals in order analyze the case under the four-part test.

 

 

  1. Declaratory Judgment action was first filed, so later filed negligent action must be abated. In re: Texas Christian University, 05-18-00967-CV, (Tex. App. – Dallas, December 21, 2018). For opinion click here. Two negligent/medical malpractice claims were filed, one in Tarrant County and one in Dallas County. The cases are inherently interrelated. The central facts to both lawsuits involve the circumstances surrounding a student athlete’s injury during the September 2015 football game, the subsequent treatment from JPSPG physicians, and the alleged harassment and pressure he felt from TCU’s coaching staff to return to play. To resolve uncertainties regarding the hospital’s liability regarding the athletic event, TCU filed its declaratory judgment action seeking declarations regarding the construction and validity of the Health Services Contract.  As a result, the “first filed” rule dictates the later filed lawsuit by the student must be abated.

 

  1. Texas Supreme Court details statutory construction to determine emergency medical response exception to liability. Texas Health Presbyterian Hospital of Denton, et al., v D.A., et al. 17-0256 (Tex. December 21, 2018). This is a medical malpractice case, but deals with the emergency medical responder provision of the Texas Medical Liability Act, similar in wording to the emergency responder provision of the Texas Tort Claims Act.  Utilizing statutory construction principals, the court noted punctuation and grammar rules can be crucial to proper construction. The Court focused on the prepositional phrase “in a” hospital, and determined the phrase placed before each contested text indicates the Legislature intended for each phrase to be treated separately. The Plaintiff’s construction argument would require the Court to ignore the second use of the prepositional phrase “in a” and renders that language meaningless. The Court declined to use external aides for construction (including the legislative history). While the Texas Code Construction Act allows a court to rely on such aides, even for unambiguous statutes, the Court held it is the Court, as the high judicial body, who decides when such aides will be used, not the Legislature. Further, statements explaining an individual legislator’s intent cannot reliably describe the legislature body’s intent. By focusing on the language enacted, the Court encourages the legislature to enact unambiguous statutes, it discourages courts from usurping the legislature’s role of deciding what the law should be, and it enables citizens to rely on the laws as published. As a result, based on the language in the statute, the Plaintiffs must establish willful and wanton negligence when their claims arise out of the provision of emergency medical care in a hospital obstetrical unit, regardless of whether that care is provided immediately following an evaluation or treatment in the hospital’s emergency department or at some point later, after the urgency has passed.

 

  1. Dog owner could seek injunction stay of municipal dangerous dog court order in county court at law. The State of Texas by and through the City of Dallas v. Dallas Pets Alive, Nos 05-18-00084-CV and 05-18-00282-CV. For the opinions click here and here. Rusty, a pit bull/terrier mix dog, bit and injured a two-year-old child at an adoption event. The City determined Rusty was a dangerous dog under Texas Health & Safety Code § 822.002 in municipal court. The adoption center filed an appeal but also filed for injunctive relief in county court at law to stop the municipal court’s order, which the county court at law granted. The City filed a plea to the jurisdiction as to injunction order which was denied. The majority opinion held where the state initiates litigation, it has no immunity from suit. Further, the appellate court (i.e. county court at law) has jurisdiction to protect its own jurisdiction (i.e. involving the subject of a pending appeal). The court held the county court at law had jurisdiction to hear the dangerous dog appeal from municipal court and the injunction was propepr. Justice Lang dissented and would have held the county court at law would not have jurisdiction over the appeal.

Order granted County’s plea to the jurisdiction reversed by 13th Court of Appeals in Whistleblower Act case

Quote

Leticia Perez v. Cameron County and Juan A. Gonzalez 13-17-00581-CV (Tex. App. – Corpus Christi & Edinburg, November 15, 2018).

This is a Texas Whistleblower Act case where the Thirteenth Court of Appeals reversed and remanded the order granting the County’s plea to the jurisdiction.

Perez worked as a deputy clerk in the Cameron County Clerk’s Office (“CCCO”). Perez asserts she had witnessed the elected clerk, Rivera, give kickbacks to CCCO vendors. She reported her concerns to the district attorney’s office and the FBI. Later, CCCO was audited for the problems which were the subject of Perez’s report to the district attorney and the FBI. Rivera allegedly “began a campaign of retaliation” against Perez which she believed was due to the report and her refusal to support Rivera’s successor. Perez filed a grievance against Rivera, who later terminated her. Perez filed a whistleblower claim against the County, alleging that she was wrongfully fired after she reported illegal activity by the county clerk. She also brought suit for negligence against the county assistant attorney who advised her to file a grievance.  The County filed a plea to the jurisdiction, which was granted. Perez appealed.

First, Perez did not file a grievance after her termination, but the County’s grievance procedure was applicable only to active employees, not former employees. Many courts have held that when the government has no grievance procedure or a grievance procedure that does not clearly apply to terminated employees, the procedure is not part of the required exhaustion of administrative remedies. The court held a terminated employee should not be obligated to follow a grievance procedure which does not exist or, as is the case here, a grievance procedure which does not apply to terminated employees. Perez’s second point of error essentially stated that she properly plead a good faith reporting. In her petition, Perez claimed that she observed Rivera engaging in potentially illegal activity by awarding “improper and illegal contracts” to CCCO’s vendors. She elaborated in her affidavit that she reported in good faith that Rivera exploited his post as county clerk to engage in “kickbacks and contract rigging.”  Such meets the required elements for bribery and abuse of official capacity, which are both penal provisions. The court held Perez sufficiently alleged a good faith report of a violation of the law. Finally, Perez argued that the trial court accidentally dismissed her claims against Gonzalez (the attorney) as part of its ruling on the County’s plea to the jurisdiction. After granting the plea as to the County, the order then provided, “all requested relief not be granted herein is hereby expressly DENIED.” However, this unambiguous language does not finally dispose of Perez’s claims against Gonzalez. Because the order did not expressly dispose of Perez’s claims against Gonzalez or include a clear and unequivocal finality phrase, it did not dismiss those claims.

If you would like to read this opinion click here. Panel consists of Chief Justice Rodriguez, Justice Contreras and Justice Benavides. The attorney listed for the County is Juan A. Gonzalez. The attorney listed for Perez is Javier Pena.