Brownsville Independent School District v. Arthur Rendon ( 2018 )

NUMBER 13-17-00628-CV
COURT OF APPEALS
THIRTEENTH DISTRICT OF TEXAS
CORPUS CHRISTI - EDINBURG
BROWNSVILLE INDEPENDENT
SCHOOL DISTRICT, Appellant,
v.
ARTHUR RENDON, Appellee.
On appeal from the 444th District Court
of Cameron County, Texas.
MEMORANDUM OPINION
Before Justices Rodriguez, Longoria, and Hinojosa
Memorandum Opinion by Justice Rodriguez
Appellant Brownsville Independent School District (Brownsville) appeals the denial
of its plea to the jurisdiction. By one issue, Brownsville asserts that appellee Arthur
Rendon failed to exhaust his administrative remedies. We reverse and remand.
I. BACKGROUND
According to Rendon’s petition, Brownsville has a lengthy history of mishandling
his pay and position as a school administrator for Brownsville. The most recent
allegation of mismanagement—and the subject of this suit—is Brownsville’s deduction of
certain fees from Rendon’s paycheck.
The source of the fees is chapter 825 of the Texas Government Code, which deals
with situations in which a school board reemploys a retiree who is drawing benefits from
the Teacher Retirement System of Texas (TRS). TEX. GOV’T CODE ANN. § 825.4092(b)
(West, Westlaw through 2017 1st C.S.). When a school district rehires a TRS retiree,
chapter 825 requires the school district to make contributions to TRS based on the
retiree’s salary. Id.
Rendon alleges that he was forced to retire from Brownsville, but was
subsequently rehired. He further alleges that Brownsville made the required
contributions to TRS through the end of the 2015–2016 school year pursuant to chapter
825 and a school district policy that mirrored chapter 825. However, Brownsville
subsequently sent him a letter notifying him of a change in policy: Brownsville’s board
of trustees voted to begin passing on the TRS fees to him and other rehired retirees. The
letter directed Rendon to sign a consent form for the deductions, but Rendon refused.
Rendon claims that he protested Brownsville’s actions, but Brownsville continued
to deduct the TRS fees from his paycheck without his consent—deducting roughly $1,800
from his September 2016 paycheck alone. Rendon disputes whether the Brownsville
school board validly adopted a new policy, alleging irregularities in the adoption process,
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including a lack of a formal vote and a discrepancy in the date of the supposed
amendment. Finally, assuming that the school board validly adopted a new policy on
TRS fees, Rendon asserts that the policy violates Brownsville’s legal obligations.
Rendon’s suit against Brownsville alleges retaliation and breach of contract, for
which he seeks damages and attorney’s fees. Rendon also prays for declaratory relief
to determine his rights under his employment contract as well as “the legality of
Defendant’s actions with regards to deducting his payment without written consent.”
Brownsville filed a plea to the jurisdiction asserting that Rendon failed to exhaust
his administrative remedies for his retaliation and breach of contract claims. According
to Brownsville, Rendon filed the required grievances, but he did not fulfill the next step of
exhaustion by appealing to the Commissioner of Education. Brownsville did not
challenge Rendon’s claim for declaratory relief.
Rendon amended his petition and nonsuited his retaliation claim. However, he
claims that exhaustion was not required for his contract claim because it fell within
exceptions to the exhaustion requirement.
After a hearing, the trial court denied Brownsville’s plea to the jurisdiction. This
interlocutory appeal followed.
II. EXHAUSTION OF ADMINISTRATIVE REMEDIES
By its sole issue, Brownsville asserts that Rendon’s failure to exhaust
administrative remedies before filing suit deprived the trial court of subject matter
jurisdiction to hear Rendon’s breach of contract claim. Brownsville also challenges, for
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the first time in its reply brief to this Court, whether Rendon exhausted his remedies
concerning his declaratory action.
A. Standard of Review and Applicable Law
Whether a court has subject matter jurisdiction is generally a question of law. Tex.
Dep’t of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 226 (Tex. 2004). Whether a
pleader has alleged facts that affirmatively demonstrate a trial court’s subject matter
jurisdiction is a question of law reviewed de novo. Id. In our review, we construe the
pleadings liberally in favor of the plaintiffs and look to the pleaders’ intent. Id. Dismissal
is appropriate if the pleadings or record conclusively negate the existence of jurisdiction.
Rusk State Hosp. v. Black, 392 S.W.3d 88, 96 (Tex. 2012). Dismissal is also appropriate
if the defendant establishes either that the plaintiff failed to show jurisdiction despite
having had full and fair opportunity to develop the record and amend the pleadings, or
that the plaintiff would be unable to establish jurisdiction even if given the opportunity on
remand. Id.
A person may appeal in writing to the Commissioner of Education if the person is
aggrieved by:
(1) the school laws of this state; or
(2) actions or decisions of any school district board of trustees that
violate:
(A) the school laws of this state; or
(B) a provision of a written employment contract between the
school district and a school district employee, if a violation
causes or would cause monetary harm to the employee.
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TEX. EDUC. CODE ANN. § 7.057(a) (West, Westlaw through 2017 1st C.S.). The “school
laws of this state” consist of titles 1 and 2 of the Texas Education Code and the
administrative rules adopted under them. Id. § 7.057(f)(2). Courts have interpreted this
statute as creating an exclusive set of administrative remedies, which must be exhausted
for any “complaint that the Legislature has authorized the Commissioner to resolve.”
Clint Indep. Sch. Dist. v. Marquez, 487 S.W.3d 538, 545–46 (Tex. 2016).
Typically, if an agency has exclusive jurisdiction, a party must exhaust all
administrative remedies before seeking judicial review. Subaru of Am., Inc. v. David
McDavid Nissan, Inc., 84 S.W.3d 212, 221 (Tex. 2002) (op. on reh’g). Until then, the trial
court lacks subject matter jurisdiction and must dismiss the claims within the agency’s
exclusive jurisdiction. Id. This rule honors the Legislature’s intent that the appropriate
body adjudicate the dispute first, and thereby ensures an orderly resolution that is guided
by the agency’s expertise and discretion, free from the expense and delay of litigation.
Clint, 487 S.W.3d at 544. Also important, it affords the opportunity “to develop a
complete factual record if the courts later get involved.” Id.
There are multiple exceptions to the rule of exhaustion. For one, exhaustion of
administrative remedies is generally not required where the cause of action involves pure
questions of law and the facts are undisputed. Id. at 557; Garcia-Marroquin v. Nueces
Cty. Bail Bond Bd., 1 S.W.3d 366, 375 (Tex. App.—Corpus Christi 1999, no pet.). For
another, exhaustion is not required where an administrative body acts outside of its
authority. Indus. Commc’ns, Inc. v. Ward Cty. Appraisal Dist., 296 S.W.3d 707, 715
(Tex. App.—El Paso 2009, pet. denied); Dotson v. Grand Prairie Indep. Sch. Dist., 161
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S.W.3d 289, 291–92 (Tex. App.—Dallas 2005, no pet.); MAG-T, L.P. v. Travis Cent.
Appraisal Dist., 161 S.W.3d 617, 625 (Tex. App.—Austin 2005, pet. denied); see Garcia-
Marroquin, 1 S.W.3d at 375. In those circumstances, the aggrieved party may proceed
directly to the courts without administrative appeal. MAG-T, 161 S.W.3d at 625.
B. Application
Brownsville argues that Rendon’s breach of contract claim falls within the
Commissioner’s exclusive jurisdiction. We agree. Rendon complained that the
Brownsville school board violated his employment contract—a matter reserved for the
Commissioner’s resolution on administrative appeal. See TEX. EDUC. CODE ANN.
§ 7.057(a)(2)(B). Rendon has not affirmatively alleged that he exhausted his
administrative remedies before the Commissioner. See Miranda, 133 S.W.3d at 226.
Rendon raises two potential exceptions to the exhaustion requirement. First, he
argues that his complaint only involves undisputed facts and pure questions of law. See
Clint, 487 S.W.3d at 557. We disagree. In Clint, our supreme court offered guidance
as to the sorts of disputes that fall within this exception. Id. There, parents of Clint ISD
students protested the way school finances were distributed, and Clint ISD responded
that the parents failed to exhaust their administrative remedies. See id. at 543. The
parents asserted that their claim only involved a pure question of constitutional law, but
the Clint court disagreed:
But the parents’ claims here do not present pure questions of law; they
present questions of historical fact (such as what has happened up until
now in the district and its individual schools with respect to funding and
student performance), questions of law (such as what the students’
constitutional rights are with respect to public education funding), and mixed
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questions of law and fact (such as whether the students’ constitutional rights
have been violated by the district’s distribution of educational funding).
Id. at 557–58.
Under the controlling guidance of Clint, Rendon’s contract claim does not rest
solely on a pure question of law. See id. Instead, Rendon’s claim rests on an involved
set of historical facts: a six-year history of attempted job reassignments, reductions of
Rendon’s salary, and policy changes by the Brownsville school board and other personnel
in the school district. Rendon alleges that some of Brownsville’s attempted changes
were successful, some were not, and still others were apparently put into effect on a
deferred basis the following school year. Rendon’s contract claim concerns the latest of
these attempted changes, and he disputes the facts surrounding the board’s purported
amendment to the policy, including the date and the validity of the voting process that
supposedly led to it.
Brownsville has not stipulated to any of these facts, but has instead filed a general
denial and a plea to the jurisdiction alleging a different account of the operative facts. Cf.
Mission Indep. Sch. Dist. v. Diserens, 188 S.W.2d 568, 570 (Tex. 1945) (concluding that
a breach of contract claim qualified for this exception, where the claim was predicated on
an unambiguous contract and both parties stipulated to all facts involved). These
aspects of the case would certainly benefit from development of “a complete factual
record,” conducted by an agency with expertise in “school laws” and breaches of
“employment contract[s]” with school district employees. See Clint, 487 S.W.3d at 544.
We conclude that Rendon’s contract claim involves disputed and “mixed questions
of law and fact.” See id. at 557–58; Grounds v. Tolar Indep. Sch. Dist., 707 S.W.2d 889,
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892 (Tex. 1986) (“The interpretation of the rights of the [school district and its teachers]
pursuant to these contracts is not a pure question of law.”); Gutierrez v. Laredo Indep.
Sch. Dist., 139 S.W.3d 363, 368–69 (Tex. App.—San Antonio 2004, no pet.) (op. on
denial of reh’g) (holding that a dispute over salary and contract enforceability—as well as
a debate concerning whether a school board validly enacted a policy regarding an
administrator—involved “disputed fact issue[s]” that removed the case from this
exception); Mercedes Indep. Sch. Dist. v. Munoz, 941 S.W.2d 215, 218 (Tex. App.—
Corpus Christi 1996, writ denied) (holding that a dispute over breach of an employment
contract was not a pure question of law due to remaining fact questions). Therefore,
Rendon’s contract claim does not fall within this exception to the exhaustion requirement.
Rendon raises another exception: that exhaustion is not required where an
administrative body acts wholly outside of its statutory authority. See Indus. Commc’ns,
296 S.W.3d at 715. However, the education code provides a school board with a general
grant of authority to “adopt a policy providing for the employment and duties of district
personnel,” see TEX. EDUC. CODE ANN. § 11.1513(a) (West, Westlaw through 2017 1st
C.S.), manage school finances and adopt a budget, see id. § 44.001 et seq. (West,
Westlaw through 2017 1st C.S.), and to pay employees of the district, see id. § 45.105(b)
(West, Westlaw through 2017 1st C.S.). Rendon does not explain how Brownsville
exceeded its general authority under the education code. We find this exception
inapplicable.
Rendon has neither pleaded an exhaustion of remedies, see Miranda, 133 S.W.3d
at 226, nor shown that his contract claim falls within any exception to the exhaustion
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requirement. See Clint, 487 S.W.3d at 557; Indus. Commc’ns, 296 S.W.3d at 715. We
sustain Brownsville’s first and only issue.
Beyond its sole issue, though, Brownsville also challenges Rendon’s declaratory
action. Brownsville did not contest this cause of action in its plea to the jurisdiction in the
trial court or in its initial brief to this Court, but instead asserts for the first time in its reply
brief that Rendon failed to exhaust administrative remedies for his declaratory claims.
Ordinarily, an appellant must preserve error by presenting its complaint to the trial court
in a timely, specific manner and obtaining a ruling thereon. See TEX. R. APP. P. 33.1(a).
Also, a party may not ordinarily present arguments for the first time in its reply brief.
Cebcor Serv. Corp. v. Landscape Design & Constr., Inc., 270 S.W.3d 328, 334 (Tex.
App.—Dallas 2008, no pet.); see TEX. R. APP. P. 38.3; Anderson Producing Inc. v. Koch
Oil Co., 929 S.W.2d 416, 424 (Tex. 1996).
However, exhaustion of administrative remedies is an issue of subject matter
jurisdiction. Clint, 487 S.W.3d at 558. Subject matter jurisdiction cannot be created by
the parties’ consent or waiver, and parties may challenge subject matter jurisdiction for
the first time on appeal. Id. Moreover, “we are obligated to review sua sponte issues
affecting jurisdiction.” M.O. Dental Lab v. Rape, 139 S.W.3d 671, 673 (Tex. 2004) (per
curiam); see Rusk, 392 S.W.3d at 95 (approving review of sovereign immunity on
interlocutory appeal from challenge of an expert report, even though no plea to the
jurisdiction had been filed). Accordingly, we address Brownsville’s argument concerning
Rendon’s declaratory claims.
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Rendon first requested a declaration determining his “contractual rights” against
Brownsville. As with his breach of contract claim, Rendon’s request for a declaration
concerning his contract dispute certainly falls within the exclusive jurisdiction of the
Commissioner. A party cannot circumvent an agency’s exclusive jurisdiction by filing a
declaratory judgment action if the subject matter of the action is one over which the
Legislature intended the administrative agency to exercise exclusive jurisdiction. Blue
Cross Blue Shield of Tex. v. Duenez, 201 S.W.3d 674, 676 (Tex. 2006) (per curiam).
The fact that Rendon “fashioned this suit as a declaratory judgment action does not”
defeat the Commissioner’s exclusive jurisdiction over what is, in substance, a contract
dispute between a school district and its employee. See Thomas v. Long, 207 S.W.3d
334, 342 (Tex. 2006). To the extent Rendon’s declaratory judgment action restates the
parties’ contract dispute, it is subject to exhaustion. See Miranda, 133 S.W.3d at 226.
However, Rendon also requested a declaration concerning the “legality of
Defendant’s actions with regards to deducting his payment without written consent,”
which is of a different substance than his contract action. Rendon’s petition questioned
the legality of Brownsville’s actions in a variety ways: (1) alleging that the school board
did not follow the proper steps to achieve a valid amendment in policy; (2) alleging that
Brownsville violated its statutory obligation to pay the TRS fees; and (3) alleging that
Brownsville was illegally deducting the TRS fees from his paycheck without consent.
None of these complaints bear a likeness to his contract action.1 The mere fact that
1 While we have held that Rendon’s contract claim—and the declaratory action that duplicates it—
are subject to exhaustion, this does not necessarily require exhaustion for other declaratory requests that
are substantively distinct from the contract claim. Thomas v. Long, 207 S.W.3d 334, 338 (Tex. 2006) (“[I]t
is proper for a trial court to dismiss claims over which it does not have subject matter jurisdiction but retain
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Rendon’s claims “involve” an employment contract does not mean he must exhaust
administrative remedies. See McIntyre v. El Paso Indep. Sch. Dist., 499 S.W.3d 820,
826 (Tex. 2016).
Because these claims do not fall within the Commissioner’s contract jurisdiction,
we proceed to determine whether these claims fall within any other area of the
Commissioner’s jurisdiction. The education code does not provide a “general appeal
clause for persons aggrieved by school board actions.” Id. at 825. For administrative
remedies to be available, Rendon’s declaratory action must show that he is aggrieved by
either the school laws themselves or a school board’s violation of the school laws. See
id. at 826.
First, Rendon alleged that the Brownsville board did not follow the proper steps to
achieve a valid amendment in policy. In substance, Rendon is complaining that
Brownsville has violated the school laws empowering school boards to adopt policy, and
his complaint therefore falls within the Commissioner’s jurisdiction. See TEX. EDUC.
CODE ANN. § 11.151 et. seq. (West, Westlaw through 2017 1st C.S.).
Second, Rendon alleges that Brownsville violated its statutory obligation to pay the
TRS fees. This does not describe a violation of school laws found in the education code.
See Clint, 487 S.W.3d at 546. Instead, this allegation relates to the portions of the
government code that control the administration of TRS. Section 825.4092 of the
government code provides that the school district employer “shall contribute to the
claims in the same case over which it has jurisdiction.”); see Schmitz v. Denton Cty. Cowboy Church,
__S.W.3d__, __, No. 02-16-00114-CV, 2017 WL 3821886, at *6 (Tex. App.—Fort Worth Aug. 31, 2017, no
pet.) (distinguishing between different groups of requests for declaratory relief concerning a supposedly
invalid city ordinance, and applying different analysis to the groups).
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retirement system” for each rehired retiree, and section 824.603 provides that certain
rehired retirees are “not required to make contributions” to TRS. TEX. GOV’T CODE ANN.
§§ 825.4092(b), 824.603 (West, Westlaw through 2017 1st C.S.). As such, Rendon has
implicated the expertise of another agency: TRS, and not the Texas Education Agency
or its Commissioner. See Acts 1981, 67th Leg., p. 2063, ch. 453, § 3(1), eff. Sept. 1,
1981 (repealing former education code title 1, chapter 3, and thereby removing TRS from
the portion of the education code which, today, falls under the Commissioner’s
jurisdiction).
Third, Rendon protests the deduction of TRS fees from his paycheck without his
consent. Brownsville does not identify any way in which this complaint relates to school
laws. Instead, this question of labor law better relates to the expertise of yet another
agency: the Texas Workforce Commission, rather than the Commissioner. Cf. TEX.
LABOR CODE ANN. §§ 61.002, .003, .018(3) (West, Westlaw through 2017 1st C.S.)
(prohibiting non-government employers from withholding or diverting “any part of an
employee’s wages unless the employer . . . has written authorization from the employee
to deduct part of the wages for a lawful purpose,” a rule under the workforce commission’s
administration).
We conclude that these latter two complaints—concerning Brownsville’s supposed
violation of the government code and deductions from his paycheck without his consent—
do not directly relate to school laws, violation of school laws, or violation of Rendon’s
employment contract. See Clint, 487 S.W.3d at 545. These requests for declaratory
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relief therefore do not fall within the Commissioner’s exclusive jurisdiction and are not
subject to exhaustion of administrative remedies. See id. at 546.
The remainder of Rendon’s claims—including his contract claim and requests for
declaratory relief concerning the contract and the validity of Brownsville’s policy—are
subject to exhaustion. See id. Rendon did not plead an exhaustion as to these claims,
and he therefore failed to fulfill his burden to affirmatively demonstrate the trial court’s
jurisdiction. Miranda, 133 S.W.3d at 226. However, Brownsville has not conclusively
established a lack of exhaustion, such as through evidence that Rendon did not file an
administrative appeal within the required time. See Rusk, 392 S.W.3d at 96.
Brownsville also has not demonstrated that Rendon squandered a full and fair opportunity
to cure the defect. See id. Because the pleadings and record neither demonstrate
jurisdiction nor conclusively negate it, the issue is one of pleading sufficiency, and Rendon
must be afforded the opportunity to amend. See Miranda, 133 S.W.3d at 226.
III. CONCLUSION
We reverse the trial court’s denial of Brownsville’s plea to the jurisdiction and
remand to the trial court for further proceedings consistent with this opinion.
NELDA V. RODRIGUEZ
Justice
Delivered and filed the
12th day of April, 2018.
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