Harris County Housing Authority v. Guy Rankin, IV , 414 S.W.3d 198 ( 2013 )

Opinion issued January 31, 2013
In The
Court of Appeals
For The
First District of Texas
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NO. 01-12-00870-CV
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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
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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.
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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).
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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
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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.
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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
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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
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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
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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
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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).
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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
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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.
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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
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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.
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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.
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