In RE CITY OF GALVESTON, TEXAS v. the State of Texas, 622 S.W.3d 851

Background

Hurricane Ike (2008) led HUD disaster funds to Texas; the General Land Office (GLO) administered funds via a block‑grant contract with the City of Galveston, which subcontracted program management to CDM Smith.
Payment disputes arose; CDM sued the City (Galveston County), and the GLO sued both the City and CDM (Travis County) for declaratory relief; the City counterclaimed asserting Texas Gov’t Code ch. 2260 applicability.
CDM obtained a judgment; the City settled with CDM for $13.5 million and, in a joint filing in the Travis County case, stipulated it would not add GLO officials or employees as defendants in that case or any “related litigation.”
While the dismissal motion was pending, the City served a ch. 2260 notice on the GLO and later requested referral to the State Office of Administrative Hearings (SOAH); Commissioner George P. Bush refused to refer the claim.
The City sought original mandamus from the Texas Supreme Court to compel the Commissioner to refer the claim to SOAH under ch. 2260; the Court addressed whether referral is a ministerial duty and whether the City’s settlement covenant barred relief.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the GLO Commissioner has a ministerial duty under ch. 2260 to refer a compliant claim to SOAH	"Shall refer" in §2260.102 makes referral mandatory; Commissioner must refer when notice complies	Commissioner must first determine whether ch. 2260 applies before referring; here the contract/federal funding falls outside the statute	Referral is a ministerial duty; agencies may not refuse referral by unilaterally deciding applicability, but Court denied relief on other grounds
Whether the City’s block‑grant/administration role brings its claim within ch. 2260’s definitions	City: its contract‑administration role makes it a contractor under the statute	GLO: federal block‑grant and contract form fall outside ch. 2260 and AG model rules support exclusion	Court declined to decide applicability; left factual/legal validity to SOAH if referral occurred
Whether an agency may condition referral on its own statutory interpretation	City: no—Legislature confined agency discretion to rulemaking for negotiation/mediation, not to withholding referrals	GLO: agency must evaluate applicability before referring	Court: agency lacks authority to withhold referral based on its own interpretation; SOAH may dismiss if statute excludes claim
Whether the City’s settlement covenant not to sue GLO officials in "any related litigation" bars mandamus against Commissioner	City: covenant did not contemplate refusal to refer and should not bar mandamus	GLO: the covenant expressly precludes adding GLO officials in related proceedings, including this one	Covenant bars the City from seeking this mandamus; Court denied the writ because City promised not to hale Commissioner into court

Key Cases Cited

Tilton v. Marshall, 925 S.W.2d 672 (Tex. 1996) (mandamus relief requires a heavy showing of compelling circumstances)
In re Woodfill, 470 S.W.3d 473 (Tex. 2015) (orig. proceeding) (distinguishing ministerial duties that may compel mandamus)
City of Houston v. Hous. Mun. Emps. Pension Sys., 549 S.W.3d 566 (Tex. 2018) (use of “shall” indicates mandatory duty and supports ministerial‑duty analysis)
Gen. Servs. Comm’n v. Little‑Tex Insulation Co., 39 S.W.3d 591 (Tex. 2001) (chapter 2260 provides an administrative process and does not waive sovereign immunity)
In re Brown, 614 S.W.3d 712 (Tex. 2020) (orig. proceeding) (limitations on agency interpretive duties when assessing ministerial obligations)
Bombardier Aerospace Corp. v. SPEP Aircraft Holdings, LLC, 572 S.W.3d 213 (Tex. 2019) (enforcement of contractual waivers/limitations on suing)
ExxonMobil Pipeline Co. v. Coleman, 512 S.W.3d 895 (Tex. 2017) (broad reading of “related to” supports expansive scope of settlement covenants)