Mallek v. City of San Benito , 121 F.3d 993 ( 1997 )

United States Court of Appeals,
Fifth Circuit.
No. 96-40658.
Barry MALLEK, et al., Plaintiffs,
Barry Mallek, Plaintiff-Appellant,
v.
The CITY OF SAN BENITO, A Local Governmental Body and Political
Subdivision of the State of Texas; The City Commission for the
City of San Benito, Texas, Defendants-Appellees.
Sept. 17, 1997.
Appeals from the United States District Court for the Southern
District of Texas.
Before DUHÉ and BARKSDALE, Circuit Judges, and COBB,1 District
Judge.
DUHÉ, Circuit Judge:
Plaintiff-Appellant Barry Mallek appeals the dismissal—through
two partial summary judgments and one judgment as a matter of
law—of his wrongful termination claim against Defendant-Appellee
City of San Benito, Texas. For reasons that follow, we vacate and
remand.
I.
On 26 March 1992, Barry Mallek received from Carla Schuller,
acting City Manager for the City of San Benito, a telefax letter
confirming Mallek's acceptance of a job offer as Chief of Police
1
District Judge of the Eastern District of Texas, sitting by
designation.
1
for the City of San Benito.2 On 7 April 1992, Mallek was publicly
introduced to the San Benito City Commission as the City's new
Chief of Police. The Commission voiced no objection or disapproval
to Mallek's appointment at that time. After the introduction, the
Commission convened in executive session allegedly to discuss
Mallek's appointment. The Commissioners took no formal vote in
executive session nor did they pass a resolution or ordinance
approving or disapproving of Mallek's appointment.
Mallek assumed his duties as Chief of Police on 22 April 1992,
subsequent to which several newly-elected members of the Commission
took office. In the execution of his duties, Mallek spoke out to
the City Manager, the police officers, the media, and the citizens
of San Benito of alleged violations of law occurring in an area
known as Skid Row. On 30 April 1992, the City Attorney sent Mallek
a letter stating that Schuller, as acting City Manager, had no
authority to extend to him an offer of employment. Nevertheless,
Mallek continued to perform his duties, and the City paid him
accordingly. On 5 May 1992, the reconstituted Commission met for
the first time, and following another executive session, offered
Mallek a contract with terms less favorable than those offered in
2
Pursuant to this offer, Mallek (1) had an indefinite term of
employment with pay guaranteed for two years; (2) was given
$42,500/year in salary; (3) could be terminated only upon
conviction of a felony; and (4) was entitled to severance pay
equal to two years' salary if he was terminated for reasons other
than conviction of a felony.
2
Schuller's letter.3 Mallek rejected the Commission's offer,
believing he already had a valid employment contract pursuant to
the March 26 letter. Thereafter, Mallek was removed from the
City's payroll and was discharged from his position as Chief of
Police.
Mallek filed suit in state court, alleging breach of contract,
violation of the Texas "Whistleblower" Act, V.T.C.A. Gov't Code §
554.002(a) (Vernon 1994) (formerly Tex.Rev.Civ.Stat.Ann. art. 6252-
16(a), § 2), and other state causes of action that he does not
pursue on appeal. The City moved for partial summary judgment on
these claims. Before the state court ruled on this motion, Mallek
amended his complaint to allege causes of action under 42 U.S.C. §
1983, claiming that he was terminated (1) without procedural and
substantive due process of law, in violation of the Fourteenth
Amendment, and (2) in retaliation for exercising his right to free
speech, in violation of the First Amendment. Mallek also seeks
fees under 42 U.S.C. § 1988 for these alleged violations. The
state court thereafter granted the City's motion for partial
summary judgment on Mallek's state causes of action. Mallek moved
for reconsideration, and the state court granted Mallek's motion.
3
Pursuant to the terms of the Commission's offer, Mallek (1)
had an indefinite term of employment with pay guaranteed for one
year; (2) was entitled to $42,500/year in salary; (3) could be
terminated for cause; (4) would receive severance pay equal to one
year's salary if terminated without cause; and (5) was required to
become a certified Texas Peace Officer immediately, and to this
end, (6) would receive three weeks of paid leave to study and
obtain certification.
3
Before a hearing could be held, however, the City removed the case
to federal district court for resolution of Mallek's federal
claims. Following removal, Mallek again moved for reconsideration,
but the federal district court declined to set aside the state
court's summary judgment, erroneously citing res judicata.
Thereafter, the City moved for summary judgment on Mallek's
federal claims. Because the state court granted summary judgment
against Mallek on his contract claim, the federal district court
reasoned that Mallek had no protected property interest in
continued employment, and it thus granted the City's motion for
summary judgment but only as to Mallek's Fourteenth Amendment/ §§
1983 and 1988 claims. After two days of trial, the district court
ordered judgment as a matter of law for the City on Mallek's First
Amendment claims. Mallek timely appeals.
II.
Because all of Mallek's claims stem from his allegation of
breach of contract, we decide first whether the state court
properly dismissed Mallek's contract claim on summary judgment. We
assume appellate jurisdiction over the state court order of summary
judgment in accordance with Resolution Trust Corporation v.
Northpark Joint Venture, 958 F.2d 1313, 1316-17 (5th Cir.1992)
(stating, "A prior state court order is in essence federalized on
removal to the federal court.... If the federal court declines to
reconsider the state court summary judgment [order], then the
4
federal court certifies that the rule is indeed consistent with
Rule 56(c).") (citations omitted). This Court reviews a grant of
summary judgment de novo, viewing the facts and inferences in the
light most favorable to the non-movant. See Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 255, 106 S. Ct. 2505, 2513, 91 L. Ed. 2d
202 (1986); Resolution Trust Corp. v. Northpark Joint Venture, 958
F.2d 1313, 1316 (5th Cir.1992) (stating that where prior state
court order is summary judgment, federal court must ensure that
order complies with the requirements of Fed.R.Civ.Pro. 56(c)).
The City bases its motion for partial summary judgment as to
Mallek's contract claim on three grounds: (1) that Schuller's
March 26 telefax letter cannot form the basis of a valid contract
insofar as it was not made pursuant to the terms of the city
charter; (2) that Article III, § 53 of the Texas Constitution
prohibits payment for any contract "made without authority of law";
and (3) that Mallek failed to mitigate his damages when he refused
the City's offer of employment. We address each in turn.
A.
The City's charter authorizes its Manager to appoint the
Chief of Police, but only with the "advice and consent" of the City
Commission. The City maintains that because it never passed a
resolution or ordinance consenting to Mallek's appointment, it
never gave its "advice and consent", which it insists is synonymous
with formal ratification. We find the City's argument infirm.
5
The City charter states that the City Manager "shall appoint
all appointive officers, except [the] city attorney, and [the]
employees of the city, with [the] advice and consent of the city
commission." Charter of City of San Benito, Art. XXV, § 2
(emphasis added). Unlike the myriad of other charter provisions
that authorize action only by ordinance or formal resolution,4 this
provision authorizes action based more simply on the Commission's
"advice or consent." Where, as here, a city's charter expressly
provides that certain actions shall be accomplished by ordinance,
"[t]he implication is that matters which are not specifically
required to be dealt with by ordinance may be dealt with
otherwise." Barrington v. Cokinos, 339 S.W.2d 330, 337
4
See, e.g., Art. I, § 8 (stating that power to lease, grant,
sell, etc. public property is subject to enacting ordinance); Art.
VIII, § 1 (stating that ordinances relating to City's municipal
court shall be amended or repealed by ordinance); Art. IX, § 1(5)
(stating that enforcement of fire proof roofing prescriptions to be
by ordinance, rules, and regulations); Art. IX, § 1(44) (stating
that regulation of utility rates to be by ordinance); Art. XII, §
1 (stating that creation of equalization and appraisement board to
be by ordinance); Art. XIII, § 3 (stating that grant of franchise
possible only after franchise terms are published "in the form of
an ordinance"); Art. XIX, § 1 (stating that construction of
railroad shall be directed, regulated, and controlled by ordinance,
resolution, or direction of Commission's duly authorized officers);
Art. XXVII, § 17 (stating that warrant for payroll to issue by
ordinance); Art. XXVIII, §§ 14, 17 (stating that regulation of
certain utility-related matters to be controlled by ordinance);
Art. XXXI, § 8 (stating that "Commission shall by ordinance have
power to make a special charge against owners of abutting property
for such cost"); Art. XXXI, § 10 (stating that "Commission by
ordinance shall provide for the issuance of assignable certificates
covering the payment of such assessments"); and Art. XXXII, § 1
(stating that "Commission shall have power by ordinance to levy,
assess, and collect an annual ad valorem tax").
6
(Tex.Civ.App.—Beaumont 1959), aff'd, 161 Tex. 136, 338 S.W.2d 133
(1960); see also City of Kirbyville v. Smith, 104 S.W.2d 564, 566
(Tex.Civ.App.—Beaumont 1937, no writ) (stating that unless city
charter provides that city contracts be authorized by ordinance or
resolution, city may make contract resting in parol). We therefore
conclude that the Commission can lawfully consent to Mallek's
appointment to Chief of Police by means other than a formal
ordinance or resolution.
Even if we assume, arguendo, that Mallek's employment
contract was defective, we recognize that Texas law provides that
municipal contracts defectively executed " "may be ratified by the
acts and conduct of the governing body of such municipality. [Such
body's] agreement [to the contract] may be manifested by its acts
and conduct.' " Interstate Materials Corp. v. City of Houston, 236
S.W.2d 653, 655 (Tex.Civ.App.—Galveston 1951, writ ref'd n.r.e.)
(quoting B.F. Goodrich Rubber Co. v. Town of Collinsville, 101
S.W.2d 583, 584 (Tex.Civ.App.—Dallas 1937, no writ) (holding that
a city that has accepted the benefits of a contract it maintains
was defectively executed is estopped from denying the contract's
validity)). Our review of the summary judgment record reveals that
fact issues exist as to whether the Commission did, in fact,
through its acts and conduct, give its "advice and consent" to
Mallek's appointment. The following summary judgment evidence
indicates that Mallek's claim should proceed: (1) Schuller, as
7
City Manager, and Mallek signed a written employment contract; (2)
Mallek was introduced to several (if not all) of the members of the
Commission as the new Chief of Police, and no member voiced an
objection; (3) thereafter, on the same day, the Commission met in
executive session and did nothing to dispel Mallek's belief that
his employment contract was valid; (4) Mallek assumed the
responsibilities and duties of Chief of Police and performed those
duties for two weeks without objection from any member of the
Commission; (5) Mallek was listed on the city's payroll sheets as
the Chief of Police, and he was paid accordingly during his two
weeks of service; and, (6) the city manager also appointed a fire
chief and a city finance director, without the city council ever
having taken any formal action to approve or disapprove either of
those two appointments.
B.5
The third basis upon which the City bases its motion for
partial summary judgment is Mallek's failure to mitigate his
damages by refusing the City's offer of employment. Mallek's duty
to mitigate, however, does not include the duty to accept a new and
different bargain with terms less favorable than those to which he
had previously agreed. Cf. Hadra v. Herman Blum Consulting Eng'rs,
5
In light of the foregoing discussion, we find unmeritorious
the City's argument that it is entitled to summary judgment on the
ground that Article III, § 53 of the Texas Constitution prohibits
payment for any contract "made without authority of law." As we
have discussed, fact issues remain as to whether the parties formed
an employment contract made with authority of law.
8
632 F.2d 1242, 1245 (5th Cir.1980); Hanna v. Lott, 888 S.W.2d 132,
138 (Tex.App.—Tyler 1994, no writ).
The proposed contract offered by the City indeed offered terms
less favorable than those offered in Schuller's contract. Under
the City's proposed contract, Mallek was guaranteed only one year's
salary, whereas under Schuller's contract, he was guaranteed two
years' salary; under the City's contract, Mallek could be
terminated for cause, whereas under Schuller's contract, he could
be terminated only if convicted of a felony; and, finally, in the
event of his termination, under the City's contract, Mallek was
entitled to severance pay equal only to one year's salary and only
if he was terminated for reasons other than cause, whereas under
Schuller's contract, he was entitled to two years' salary as long
as his termination resulted from reasons other than a felony
conviction.
We conclude, therefore, that the City has failed to offer any
grounds upon which its motion for partial summary judgment on
Mallek's breach of contract claim can survive.
III.
The Texas Whistleblower's Act prohibits a city from taking
adverse action against "a public employee who in good faith reports
a violation of law to an appropriate law enforcement authority."
V.T.C.A. Gov't Code § 554.002 (Vernon 1994) (formerly
Tex.Rev.Civ.Stat.Ann. art. 6252-16(a), § 2). The City's motion for
9
partial summary judgment on Mallek's whistleblower claim is
predicated upon its allegations that (1) Mallek had not reported to
the City any alleged violations of law; and (2) Mallek had no
standing to bring this claim insofar as he is not a public
employee.
The record reveals that fact issues exist as to whether Mallek
reported any violations of law, and as we discussed, fact issues
exist as to whether Mallek is, in fact, a public employee. We thus
vacate the state court's summary judgment on this claim and remand
for additional proceedings.
IV.
Mallek maintains that the City terminated his employment
without procedural and substantive due process and that it
therefore unconstitutionally deprived him of his property interest
in continued employment, in violation of the Fourteenth Amendment
and 42 U.S.C. § 1983. Mallek also seeks fees under 42 U.S.C. §
1988. The City argues that Mallek's claim must fail insofar as
Mallek has not established that the parties formed an employment
contract and has therefore not established a property interest in
continued employment. We are unpersuaded by the City's argument in
light of our conclusion that fact issues exist as to whether Mallek
and the City contracted for Mallek's employment. We therefore
vacate the district court's summary judgment on Mallek's Fourteenth
10
Amendment claims and remand for additional proceedings.6
V.
Finally, Mallek maintains that the district court erred in
granting judgment as a matter of law against him on his First
Amendment claims. We review a judgment as a matter of law de novo.
See Seven-Up Co. v. Coca-Cola Co., 86 F.3d 1379, 1387 (5th
Cir.1996).
An essential element to Mallek's case is his allegation that
he was fired for exercising his First Amendment rights.
Recognizing this, the district court took Mallek's First Amendment
claims away from the jury, reasoning that insofar as Mallek had not
shown that he had been hired by the City, he could not show he had
been fired by the City. In light of our conclusion that fact issues
exist on this question of Mallek's employment status, we vacate the
court's judgment as a matter of law and remand for additional
proceedings.
VI.
In light of the foregoing, we VACATE AND REMAND.
6
The City argues in the alternative that even if Mallek did
have a property interest, his claim still fails insofar as (1) its
termination process did not deny Mallek procedural due process, and
(2) its decision to terminate Mallek was in accord with his
substantive due process rights. Because our review of the record
reveals factual disputes on these issues, we are unpersuaded by the
City's alternative arguments.
11