Harris County Housing Authority v. Guy Rankin, IV ( 2013 )


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  • Opinion issued January 31, 2013
    In The
    Court of Appeals
    For The
    First District of Texas
    ————————————
    NO. 01-12-00870-CV
    ———————————
    HARRIS COUNTY HOUSING AUTHORITY, Appellant
    V.
    GUY RANKIN, IV, Appellee
    On Appeal from the 190th District Court
    Harris County, Texas
    Trial Court Case No. 2012-24968
    OPINION
    The Harris County Housing Authority appeals the trial court’s denial of its
    motion to dismiss for lack of jurisdiction after Guy Rankin, IV sued it for breach of
    contract, anticipatory breach of contract, and fraud. In three issues, the Housing
    Authority argues the trial court lacked subject-matter jurisdiction over each of
    Rankin’s claims.
    We affirm, in part, and reverse, in part.
    Background
    Rankin served as the chief executive officer for the Housing Authority for a
    number of years. Rankin had an employment contract with the Housing Authority
    for the work he performed as chief executive officer. Under the employment
    contract, the Housing Authority could terminate Rankin without cause by paying
    him a full year’s salary.
    The Housing Authority set a board meeting for March 21, 2012. One topic
    set for the board meeting was whether the Housing Authority would buy out
    Rankin’s employment contract.       There is no indication in the record that the
    Housing Authority, at that time, considered Rankin to have breached his
    employment contract. Ultimately, Rankin and the Housing Authority began to
    negotiation a new contract that would buy out Rankin’s employment contract for a
    lesser amount than a full year’s salary. The parties entered into the new contract
    on March 21, 2012.
    The new contract was titled “Amended Employment and Buy-Out
    Agreement Between the Harris County Housing Authority and Guy Rankin, IV.”
    The contract provided that the Housing Authority “now buys-out the remainder of
    2
    Rankin’s employment contract and Rankin agrees to relinquish his position as
    CEO and Executive Director of” the Housing Authority. As a result, the contract
    required the Housing Authority to pay a one-time severance payment within seven
    days of the date that the Housing Authority’s board approved the agreement. The
    parties also agreed in the buy-out agreement to “mutually release each other from
    any claims, demands, and causes of action they may ever have had against the
    other and no litigation against the other Party may be brought or pursued.”
    The Housing Authority’s board approved the agreement on March 21, 2012.
    It did not pay the amount for severance under the new contract, however. Rankin
    filed suit on April 30, 2012, alleging breach of contract, anticipatory breach of
    contract, and fraud. The Housing Authority answered, asserting governmental
    immunity.
    The Housing Authority subsequently filed a motion to dismiss for lack of
    jurisdiction based on its claim of governmental immunity. The trial court denied
    the motion, and the Housing Authority brought this appeal.
    Governmental Immunity
    In three issues, the Housing Authority argues the trial court erred by denying
    its motion to dismiss for each of Rankin’s claims.
    3
    A.    Standard of Review
    Subject-matter jurisdiction is essential to the authority of a court to decide a
    case. Tex. Ass’n of Bus. v. Tex. Air Control Bd., 
    852 S.W.2d 440
    , 443 (Tex. 1993).
    The plaintiff bears the burden of alleging facts affirmatively showing that the trial
    court has subject-matter jurisdiction. 
    Id. at 446.
    The absence of subject-matter
    jurisdiction may be raised in various procedural vehicles such as a motion to
    dismiss for lack of jurisdiction. See Bland Indep. Sch. Dist. v. Blue, 
    34 S.W.3d 547
    , 554 (Tex. 2000).
    Whether a trial court has subject-matter jurisdiction is a question of law and
    is reviewed de novo. See Mayhew v. Sunnyvale, 
    964 S.W.2d 922
    , 928 (Tex. 1998).
    When conducting a de novo review, the appellate court exercises its own judgment
    and re-determines each legal issue, giving no deference to the trial court’s decision.
    Quick v. City of Austin, 
    7 S.W.3d 109
    , 116 (Tex. 1998).
    In deciding a plea to the jurisdiction, a court may not weigh the claims’
    merits, but must consider only the plaintiff’s pleadings and the evidence pertinent
    to the jurisdictional inquiry. Cnty. of Cameron v. Brown, 
    80 S.W.3d 549
    , 555
    (Tex. 2002). The court of appeals must take the allegations in the petition as true
    and construe them in favor of the pleader. See Tex. Dep’t of Parks & Wildlife v.
    Miranda, 
    133 S.W.3d 217
    , 228 (Tex. 2004).
    4
    B.    Analysis
    Like its counterpart of sovereign immunity, governmental immunity protects
    political subdivisions of the state, including counties and its agencies, from liability
    and lawsuits.     See Ben Bolt-Palito Blanco Consol. Indep. Sch. Dist. v. Tex.
    Political Subdivisions Prop./Cas. Joint Self-Ins. Fund, 
    212 S.W.3d 320
    , 324 (Tex.
    2006).    Governmental immunity is waived only by clear and unambiguous
    language indicating the Legislature’s intent do so. Kirby Lake Dev., Ltd. v. Clear
    Lake City Water Auth., 
    320 S.W.3d 829
    , 838 (Tex. 2010); Wight Realty Interests,
    Ltd. v. City of Friendswood, 
    333 S.W.3d 792
    , 796 (Tex. App.—Houston [1st Dist.]
    2010, no pet.).
    Governmental immunity consists of immunity from suit and immunity from
    liability. Harris Cnty. Hosp. Dist. v. Tomball Reg’l Hosp., 
    283 S.W.3d 838
    , 842
    (Tex. 2009). “A political subdivision enjoys governmental immunity from suit to
    the extent that immunity has not been abrogated by the Legislature.” Ben 
    Bolt, 212 S.W.3d at 324
    . Immunity from suit is jurisdictional and bars suit. Harris Cnty.
    Hosp. 
    Dist., 283 S.W.3d at 842
    . Immunity from liability is not jurisdictional and,
    accordingly, is not at issue in this appeal. See 
    id. The parties
    agree that the Housing Authority is a governmental entity to
    which governmental immunity generally applies. See TEX. LOC. GOV’T CODE
    ANN. § 392.006 (Vernon Supp. 2012) (identifying a housing authority as a unit of
    5
    government for all purposes). The issues in this appeal, then, concern whether the
    Legislature has waived the Housing Authority’s immunity from suit for each of
    Rankin’s claims.
    In its third issue, the Housing Authority argues that the trial court erred by
    not dismissing Rankin’s claim of fraud. On appeal, Rankin concedes that his fraud
    claim is barred by governmental immunity. We agree. See LTTS Charter Sch.,
    Inc. v. Palasota, 
    362 S.W.3d 202
    , 209 (Tex. App.—Dallas 2012, no pet.) (holding
    governmental immunity from suit has not been waived for fraud claims).
    Accordingly, we sustain the Housing Authority’s third issue.
    In its first and second issues, the Housing Authority argues that the trial
    court erred by not dismissing Rankin’s claims of breach of contract and
    anticipatory breach of contract.    Rankin argues that the Housing Authority’s
    immunity from suit was waived by a combination of section 271.152 of the Texas
    Local Government Code, and the Supreme Court of Texas’s opinion in Lawson.
    See TEX. LOC. GOV’T CODE ANN. § 271.152 (Vernon 2005); Tex. A&M Univ.—
    Kingsville v. Lawson, 
    87 S.W.3d 518
    (Tex. 2002).
    Section 271.152 of the Texas Local Government Code provides,
    A local governmental entity that is authorized by statute or the
    constitution to enter into a contract and that enters into a contract
    subject to this subchapter waives sovereign immunity to suit for the
    purpose of adjudicating a claim for breach of the contract, subject to
    the terms and conditions of this subchapter.
    6
    TEX. LOC. GOV’T CODE ANN. § 271.152. It is undisputed by the parties that the
    Housing Authority is a “local governmental entity that is authorized by statute or
    the constitution to enter into a contract.” See 
    id. At issue
    is whether the Housing
    Authority entered “into a contract subject to” subchapter I of chapter 271 of the
    Texas Local Government Code. See 
    id. Section 271.151—also
    in subchapter I of
    section 271—defines a “contract subject to this subchapter” as “a written contract
    stating the essential terms of the agreement for providing goods or services to the
    local governmental entity that is properly executed on behalf of the local
    governmental entity.” 
    Id. § 271.151(2)
    (Vernon 2005).
    It is undisputed that Rankin’s original employment agreement was a contract
    subject to subchapter I of chapter 271. It was a written contract; it stated the
    essential terms of Rankin’s employment; it was for providing services to the
    Housing Authority, specifically Rankin’s acting as chief executive officer of the
    Housing Authority; and it was properly executed on behalf of the Housing
    Authority. See id.; Wight 
    Realty, 333 S.W.3d at 796
    –97 (holding term “services”
    under section 271.151 encompasses a wide array of activities, including generally
    any act performed for the benefit of another under some agreement).
    Rankin argues that the Housing Authority could not regain immunity by
    superseding a contract for which immunity had been waived with a contract for
    7
    which immunity had not been waived. Rankin relies on Lawson as authority for
    this argument.
    In Lawson, a faculty member of the university brought a Whistleblower Act
    claim against the university after it terminated his 
    employment. 87 S.W.3d at 518
    .
    The suit ended when the parties entered into a settlement agreement. 
    Id. at 519.
    Lawson subsequently brought another suit, claiming breach of the settlement
    agreement. 
    Id. The university
    filed a plea to the jurisdiction, claiming to be
    immune from suit for breach of contract. 
    Id. The matter
    was ultimately brought to
    the Supreme Court of Texas. 
    Id. at 520.
    The court recognized that the Legislature had waived immunity for
    Whistleblower Act claims but not for the type of breach of contract action that
    Lawson had brought in the second suit. 
    Id. at 521.
    A plurality of the court held
    “when a governmental entity is exposed to suit because of a waiver of immunity, it
    cannot nullify that waiver by settling the claim with an agreement on which it
    cannot be sued.” 
    Id. It reasoned,
    “We do not think the Legislature intended by
    waiving the bar of immunity for claims under the Whistleblower Act that
    settlements would be prevented or delayed by a revival of the bar in the form of
    immunity from suit for breach of settlement agreements.” 
    Id. Finally, it
    held that,
    “having waived immunity from suit in the Whistleblower Act, the State may not
    8
    now claim immunity from a suit brought to enforce a settlement agreement reached
    to dispose of a claim brought under that Act.” 
    Id. at 522–23.
    The Housing Authority argues that, because Lawson is a plurality opinion, it
    is not binding. See Univ. of Tex. Med. Branch at Galveston v. York, 
    871 S.W.2d 175
    , 177 (Tex. 1994) (holding plurality opinion is not “authority for determination
    of other cases, either in this Court or lower courts”). While this is generally true,
    this Court has subsequently applied Lawson. Porretto v. Patterson, 
    251 S.W.3d 701
    , 712 (Tex. App.—Houston [1st Dist.] 2007, no pet.). We further note that
    Lawson has been applied by a number of other appellate courts.             See, e.g.,
    Kalyanaram v. Univ. of Tex. Sys., 
    230 S.W.3d 921
    , 927 (Tex. App.—Dallas 2007,
    pet. denied) (Kalyanaram I); City of Carrolton v. Singer, 
    232 S.W.3d 790
    , 796
    (Tex. App.—Fort Worth 2007, pet. denied); Kalyanaram v. Univ. of Tex. Sys., No.
    03-05-00642-CV, 
    2009 WL 1423920
    , at *3 (Tex. App.—Austin May 20, 2009, no
    pet.) (mem. op.) (Kalyanaram II). Finally, while some opinions from other courts
    found Lawson to be factually distinguishable, no court has declined to apply
    Lawson under the applicable facts.
    The Housing Authority also argues that Lawson is distinguishable from the
    present case because there was no original suit and the second contract in the
    present case was not a settlement agreement. Other courts, however, have not
    limited Lawson to the specific facts of the case. For example, in Kalyanaram I, the
    9
    plaintiff’s claims in the first suit were identified as “largely Whistleblower Act-
    type 
    claims.” 230 S.W.3d at 924
    . The Dallas Court of Appeals held that this was
    sufficient to invoke the waiver of immunity and, subsequently, fall under Lawson.
    
    Id. at 927–28.
    In Kalyanaram II, the Austin Court of Appeals agreed with the Dallas Court
    of Appeals’ analysis. 
    2009 WL 1423920
    , at *3. Kalyanaram II had a further
    distinction, however. In that case, the plaintiff in the second suit had not brought a
    breach of contract claim.      Nevertheless, the court concluded that, “[w]hile
    Kalyanaram here proceeds by petition for bill of review, without a breach-of-
    contract claim, his petition still challenges the settlement agreement with the
    University.” 
    Id. This, the
    court held, was enough to fit the case within the scope
    of Lawson. 
    Id. Perhaps most
    significantly, in Singer, there was no original lawsuit. Instead,
    the City of Carrolton notified the Singers that it intended to condemn a portion of
    their property for the purpose of extending a public road. 
    Singer, 232 S.W.3d at 793
    . No eminent domain proceeding was ever brought. Instead, the Singers
    entered into an agreement with the city to convey the property along with certain
    other agreements. 
    Id. The Singers
    subsequently felt that the city had failed to
    meet all of its obligations under the conveyances and brought suit for breach of
    contract. 
    Id. at 794.
    Even though there was no original suit and, accordingly, no
    10
    settlement over the suit, the court nevertheless held that the case fit within the
    scope of Lawson.
    The court reasoned that the relevant inquiry to fit within the scope of
    Lawson was the subject matter of what the parties resolved in the agreement. 
    Id. at 796.
    The court held that the parties had resolved a takings claim. 
    Id. at 799.
    Because the city would not have been immune from the takings claim, under
    Lawson, it also could not be immune from the resolution of that claim. 
    Id. at 800.1
    Moreover, even in cases where courts have declined to apply Lawson, the
    cases suggest that Lawson applies to situations beyond just when a lawsuit has
    been filed. For example, in Gracia—a case on which the Housing Authority
    relies—a school declined to renew a coach’s contract for the next year after a
    criminal investigation of hazing had been initiated. Donna Indep. Sch. Dist. v.
    Gracia, 
    286 S.W.3d 392
    , 393 (Tex. App.—Corpus Christi 2008, no pet.). Gracia
    requested a hearing pursuant to the Texas Education Code. 
    Id. Before the
    hearing,
    the school district and Gracia entered into a settle agreement.         
    Id. Gracia subsequently
    sued the school district for breach of contract. 
    Id. The Corpus
    Christi court of appeals noted that Gracia settled any claims against the school
    1
    As discussed in more detail below, we recognize that the Waco Court of Appeals
    has reached a different conclusion under similar facts. See City of Midlothian,
    Tex. v. ECOM Real Estate Mgmt., Inc., No. 10-09-00039-CV, 
    2010 WL 311433
          (Tex. App.—Waco Jan. 27, 2010, pet. dism’d by agr.) (judgment vacated by
    agreement).
    11
    district before the hearing. 
    Id. at 395.
    At that time, immunity had not been waived
    because Gracia had not exhausted his administrative remedies. See 
    id. As a
    result,
    “Gracia settled a claim that, at that point in time, had no adjudicative value in our
    court system.”    
    Id. The court’s
    focus, then, was on whether immunity had
    previously been waived, not whether suit had been filed.
    Similarly, in Neal, after the plaintiff had been turned down for a different
    position with the Texas Department of Health, she filed an internal grievance. Tex.
    Dept. of Health v. Neal, No. 03-09-00574-CV, 
    2011 WL 1744966
    , at *1 (Tex.
    App.—Austin May 6, 2011, pet. denied) (memo. op.). She subsequently signed a
    settlement agreement with the department. 
    Id. Later in
    the year, she filed suit,
    including a claim for breach of the settlement agreement. 
    Id. at *2.
    The Austin
    Court of Appeals held that there was no original waiver of immunity because she
    had not exhausted her administrative remedies. 
    Id. at *3.
    Agreeing with Gracia,
    the court held that the lack of any waiver meant that Lawson did not apply. 
    Id. at *4.
    The critical inquiry stemming from Lawson and its progeny, then, is not
    focused on whether a suit has been filed, but is focused, instead, on whether the
    governmental entity had waived its immunity at the time the subsequent agreement
    was reached. See 
    Lawson, 87 S.W.3d at 521
    (holding “when a governmental entity
    is exposed to suit because of waiver of immunity, it cannot nullify that waiver by
    12
    settling the claim with an agreement on which it cannot be sued” (emphasis
    added)); 
    Patterson, 251 S.W.3d at 712
    (holding “[t]he policy supporting [the
    holding in Lawson] is that the government should not regain immunity it
    previously has waived by settling a case”).
    The Housing Authority argues that immunity from suit had not been waived
    because there was no breach of Rankin’s original employment contract. This does
    not mean, however, that immunity had not been waived. Section 271.152, to
    which the employment contract applies, expressly states, “A local governmental
    entity . . . that enters into a contract . . . waives sovereign immunity to suit . . . .”
    TEX. LOC. GOV’T CODE ANN. § 271.152. By the plain language of the statute, then,
    immunity from suit was waived at the time the Housing Authority entered into the
    contract with Rankin. See 
    id. It was
    not dependent on a breach to occur for waiver
    to apply.
    The Supreme Court of Texas has held this as well. “While the mere act of
    self-insuring does not itself constitute a waiver of immunity, . . . entering into a
    ‘written contract stating the essential terms of [an] agreement for providing goods
    or [insurance] services to [a] local governmental entity’ clearly does.” Ben 
    Bolt, 212 S.W.3d at 327
    . Accordingly, we hold that the Housing Authority waived its
    immunity at the moment it entered into the employment contract with Rankin.
    13
    Based on this holding, the Housing Authority’s claim that the buy-out
    agreement superseded the employment contract has no bearing. As the court held
    in Lawson, “The government cannot recover waived immunity by settling without
    defeating the purpose of the waiver in the first 
    place.” 87 S.W.3d at 521
    . To this
    end, the purpose of the subsequent agreement becomes relevant to our analysis.
    In ECOM, the Waco Court of Appeals reached a different holding from the
    Fort Worth Court of Appeals in Singer based on similar facts.           See City of
    Midlothian, Tex. v. ECOM Real Estate Mgmt., Inc., No. 10-09-00039-CV, 
    2010 WL 311433
    (Tex. App.—Waco Jan. 27, 2010, pet. dism’d by agr.) (judgment
    vacated by agreement). While the court in ECOM noted that no eminent domain
    suit had been initiated, the court held that it was more important that “the easement
    agreement itself contains no language suggesting an intent to settle an eminent
    domain claim.” 
    Id. at *6.
    In that situation, the court held the same facts could
    support a conclusion that the conveyance of property constituted a voluntary sale,
    for which immunity was not waived. See 
    id. (holding “[t]o
    say that the easement
    agreement settled an eminent domain claim, when it contains no language to this
    effect and no eminent domain proceeding was pending, further blurs the distinction
    between an entity’s power to purchase and its power to take”).
    Here, however, the buy-out contract came about when the Housing
    Authority set an issue for its board meeting on whether to buy-out Rankin’s
    14
    existing employment contract. The buy-out agreement specifically states that its
    purpose was to “buy[]-out the remainder of Rankin’s employment contract and
    [for] Rankin [to] agree[] to relinquish his position as CEO and Executive Director
    of” the Housing Authority. The parties expressly agreed in the buy-out agreement
    to “mutually release each other from any claims, demands, and causes of action
    they may ever have had against the other and no litigation against the other Party
    may be brought or pursued.”
    In other words, like a settlement agreement, one function of the buy-out
    agreement was to secure a release of all claims Rankin may have had for which the
    Housing Authority’s immunity from suit had already been waived, in exchange for
    a payment of cash. Rankin now alleges that he had a potential claim against the
    Housing Authority which was released by the buy-out agreement, and that the
    Housing Authority breached the buy-out agreement by refusing to pay the cash
    consideration for Rankin’s resignation and release of claims. Like the situation in
    Lawson, the Housing Authority, having waived immunity from suit by contracting
    for services with Rankin, may not now claim immunity from suit brought to
    enforce an agreement that settled claims arising under that contract for services.
    See 
    Lawson, 87 S.W.3d at 522
    –23.
    We overrule the Housing Authority’s first two issues.
    15
    Conclusion
    We affirm the trial court’s order denying the Housing Authority’s motion to
    dismiss for lack of jurisdiction as it applies to Rankin’s breach of contract and
    anticipatory breach of contract claims. We reverse the trial court’s order denying
    the Harris County Housing Authority’s motion to dismiss for lack of jurisdiction as
    it applies to Rankin’s fraud claim. We remand the case to the trial court for
    rendition of an order dismissing Rankin’s fraud claim and for further proceedings.
    Laura Carter Higley
    Justice
    Panel consists of Justices Higley, Massengale, and Brown.
    16