Case Information

*0 FILED IN 4th COURT OF APPEALS SAN ANTONIO, TEXAS 11/13/2015 6:46:32 PM KEITH E. HOTTLE Clerk *1 ACCEPTED 04-15-00302-CV FOURTH COURT OF APPEALS SAN ANTONIO, TEXAS 11/13/2015 6:46:32 PM KEITH HOTTLE CLERK

No. 04-15-00302-CV _________________________________________________ IN THE TEXAS COURT OF APPEALS FOURTH COURT OF APPEALS AT SAN ANTONIO, TX _______________________________________________________ CITY OF PEARSALL APPELLANT VS.

ROBERT M. TOBIAS APPELLEE ______________________________________________________ Appealed from the 218th Judicial District Court Frio County, Texas, Hon. Donna S. Rayes, Presiding Judge __________________________________________________________ APPELLEE’S RESPONSE TO APPELLANT’S BRIEF __________________________________________________________ REID E. MEYERS

State Bar No. 14003850 Attorney for Robert Tobias 11118 Wurzbach Rd, Suite 206 San Antonio, TX 78230 210.415.1070

reidmeyers@sbcglobal.net *2 IDENTITY OF PARTIES AND COUNSEL Appellee: ROBERT M. TOBIAS

Counsel for Appellee:

Reid E. Meyers

State Bar No. 14003850

Attorney for Robert M. Tobias

11118 Wurzbach Rd., Ste. 206

San Antonio, TX 78230

210.415.1070

reidmeyers@sbcglobal.net

Appellant: CITY OF PEARSALL

Counsel for Appellant:

Albert Lopez

State Bar No. 12562350

14310 Northbrook Dr., Suite 200

San Antonio, TX 78232

210.404.1983

alopezoffice@gmail.com

i *3 TABLE OF CONTENTS INDEX OF AUTHORITIES………………………………… iii.

STATEMENT OF CASE……………………………………. iv.

STATEMENT REGARDING ORAL ARGUMENT……….. v.

ISSUES PRESENTED……………………………………… iv.

STATEMENT OF FACTS AND PROCEDURAL HISTORY. 1.

SUMMARY OF THE ARGUMENT……………………….. 5.

ARGUMENT AND CONCLUSION……………………….. 6.

CERTIFICATE OF SERVICE……………………………… 15.

CERTIFICATE OF COMPLIANCE……………………….. 16.

ii *5 INDEX OF AUTHORITIES STATUTES:

1. Texas Local Government Code, Section 271.151-3………………. 6.

2. Chapter 37, Texas Declaratory Judgment Act…………………….. 11.

CASES:

Ben Bolt-Palito Blanco Consolidated Independent School District v. Texas

Political Subdivisions property/Casualty Joint Self-Insurance Fund, 212 S.W.

3d 320, (Tex. 2006)……………………………………………………… 8.

Lower Colorado River Authority v. City of Boerne , 422 S.W. 3d 60, 67

(Tex. App. - San Antonio 2014. pet. dism’d)…………………………………….. 8.

Nat’l Public Finance Guarantee Corp. v. Harris County-Houston Sports

Authority , 448 S.W. 3d, 472, 484, (Tex. App. Houston [1st Dist.] 2014, no

pet.)……………………………………………………………………………………………. 8.

Tex. Natural Res. Conservation Comm’n v. IT-Davy , 74 S.W. 3d. 389, Tex.

Sup. Ct. (Tex. 2002)…………………………………………………………………….. 10.

Tooke v. City of Mexia , 197 S.W. 3d. 325 at 345 ……………………………. 9.

Wheelabrator Air Pollution Control Inc. v. City of San Antonio Acting

though City Public Service Board of San Antonio , 381 S. W. 3d, at 605. 9.

Zachry Construction Corps. v. Port of Houston Authority of Harris

County , 2014 WL 4472616 (Tex. 2014)…………………………………………. 10.

iii. *6

APPELLEE’S STATEMENT OF THE CASE Nature of the Case: This brief is in response to Appellant’s appeal from the trial court’s final judgment of a breach of contract claim and it’s

award of Declaratory Judgment for the Appellee.

Course of Proceedings:

- The parties filed cross-motions for summary judgment. - Plaintiff filed a Motion for Declaratory Judgment.

- Defendant filed a Motion for Reconsideration.

- Plaintiff filed a Motion to Clarify Judgement and a Motion to Non-suit Additional Defendants.

- Defendant filed a Plea to Jurisdiction a Motion to Dismiss the Breach of Contract Claim.

Trial Court Dispositions:

- The Trial Court DENIED the Parties’ Cross-motions for Summary Judgment without comment.

- The Trial Court GRANTED Plaintiff’s Motion for Declaratory Judgment.

- The Trial Court DENIED the Defendant’s Motion for Reconsideration

- The Trial Court GRANTED Plaintiff’s Motion to Non-Suit Additional Defendants.

- The Trial Court DENIED Plaintiff’s Motion to Clarify the Order Granting Declaratory Judgment.

- The Trial Court DENIED as Moot the Defendant’s Plea to Jurisdiction and Motion to Dismiss Breach of Contract Claim. iv

APPELLEE’S STATEMENT REGARDING ORAL ARGUMENT Appellee disagrees that Oral Argument would be helpful to the Court and opposes taking the Court’s time for such an event. Appellee believes

that the record is clear and the papers speak for themselves. Oral

Argument would be a burden to the Court and to the parties. Appellee

opposes any further delay and expense on this matter.

ISSUES PRESENTED Appellant presented several issues in its Appeal to this Court.

Appellee rejects and opposes all of them and asserts that the Trial Court

was correct in its ruling(s). The Appellee seeks an Order from this Court

which affirms that the trial court did not err in granting the Order that the

underlying contract was clear and unambiguous, and must be complied-

with by the Appellant.

A. The trial court did not err in Granting the Plaintiff’s Declaratory Judgment and Awarding to Plaintiff amounts that were were balances due

under the contract.

1. The trial court GRANTED the Declaratory Judgment based on the specific terms of a contract as permitted under Chapter 37, Declaratory

Judgment, Texas Civil Practice and Remedies Code.

2. The trial court did not grant money damages as Appellant alleges. Instead, it granted the balance due to Plaintiff as provided for in

Section 271.153(a)(1) of the Texas Local Government Code.

3. The trial court Granted Attorney’s Fees that are permitted under Section 271.153(a)(3) and (4) of the TLGC.

4. The trial court had subject matter jurisdiction under Section 271.152, TLGC, to grant those awards.

5. The Appellants waived government immunity under Section 271.152, TLGC.

6. No issues of fact were necessary to consider the Declaratory Judgment.

vi *9 B. Once the additional defendants were non-suited and the trial court concluded that immunity was waived under Section 271.152, it was

not err for the trial court to find as “moot” Defendant’s Plea to Jurisdiction

and Motion to Dismiss.

1. Appellee’s breach of contract was not dismissed.

vii *10 THE APPELLEE’S REPONSE TO APPELLANT’S APPEAL BRIEF TO THE HONORABLE FOURTH COURT OF APPEALS:

NOW COMES Appellee, Robert M. Tobias, and submits his Response to Appellant’s Appeal Brief.

STATEMENT OF FACTS AND PROCEDURAL HISTORY The Contract and Termination of Employment.

In April, 2013, Appellee entered into a written contract of employment to be the Appellant’s City Manager. CR 000002. The

Appellant drafted the terms of the agreement, which included terms that

Appellant claimed in the trial court proceedings and here as illegal. CR

0000059. The Agreement contained a clear and specific provision about

what happens if the Appellant terminated Appellee’s employment during

the term of the contract. Section 3. A. Termination Pay states:

“In the event the Manager is “involuntarily terminated”, or “suspended” for any

reason by action of the Council, as stated in Section B “Term” of this agreement, and Manager is willing and able to perform his duties under this agreement, then in that event, City agrees to pay Manager a cash payment, equal to one year’s salary or the balance term of this agreement, whichever is less, plus any

accrued leave.” (underscore supplied for emphasis) . In mid-September, 2013, four and one-half months after he was hired, Appellant unceremoniously terminated Appellee’s employment and

the Agreement, and refused to comply with the “cash payment” term of

Section 3.A. of the Agreement. CR 000039. Appellee attempted to resolve

the dispute short of litigation but Appellant refused to discuss the matter

and, further, refused to mediate after the litigation began. The Appellant

refused to make any offer of settlement in this matter. Appellee had no

choice but to assert his rights and remedies in this cause of action. CR

00003.

Appellee’s Claims and Appellant’s Defenses.

The record is clear that throughout the litigation, at the hearings and in his papers, Appellee took the unvarnished position that the “for any

reason” provision of Section 3.A. meant just that - for any reason. As stated

over and over by Appellee, nothing else mattered - not the residency clause,

not Appellee’s conduct or performance, not the reasons for the termination

or the legality of any of the Agreement’s other provisions. RR Vol. 1., p. 4-5.

When Appellant realized that it could not get around the clear

language contained in Section 3. A., it contrived the novel proposition and

defense that the residency requirement the Appellant drafted in Section 10.

b. of the Agreement, was ultra vires making the entire employment

agreement null and void. Appellant amended its Answer to assert ultra

vires as a defense and then claimed governmental immunity. CR0000059.

The Trial Court’s December 2, 2014, Order.

In several hearings, the trial court denied every motion Appellant filed in this matter. At the October 23d and December 2d hearings,

Appellee pointed-out to the trial court that the Agreement contained a

severability clause at Section 11. D.. If the residency issue was such a

concern to Appellant, that so-called ultra-vires provision could have been

severed under Section 11. D.. CR 000067. Appellant had no good response

to that notion and did not successfully argued the point further.

As a result, the trial court denied (for the third time) Appellant’s ultra vires defense, it’s claims of sovereign immunity, and granted Appellee’s

simple Motion for a Declaratory Judgement based solely on the language

contained in Section 3.A. of the contract. Id . p.18. The trial court (J.

Saxon) made that decision without comment about Appellant’s defenses,

claims or assertions, including whether there were fact issues to be

considered. She issued the Order fully understanding that the Appellee was

“ready, willing and able to perform his duties under this Agreement”.

The April 7th Order.

At the April hearing (the final hearing in this matter), Presiding District Court Judge Reyes was incredulous to the Appellant’s claims and

Appellee’s request for clarification. Instead, she simply and eloquently

stated that J. Saxon’s December 2d Order stated all that was necessary -

there was no need for clarification of the December 2d Order; she Granted

Appellee’s Motion to Nonsuit the other defendants in the case; and, she

stated that the December 2d Order rendered moot Appellant’s Plea to the

Jurisdiction and Motion to Dismiss Breach of Contract Claim. As Appellant

confirms in its brief, J. Reyes noted that nothing in her April 7th Order

modified the December 2d Order. An Order to that effect was entered on

April 15th, 2015. CR 000277.

SUMMARY OF APPELLEE’S AGRUMENT Appellee sued Appellant under Sections 271.152 and 153 the Texas Local Government Code (TLGC), which specifically provides for waiver of

immunity and a recovery of the balance due under a contract. The trial

court Granted the Declaratory Judgment and awarded no more then the

balance(s) due under the contract, plus attorney fees and interest as

provided under Section 271.153 Texas Local Gov. Code and Chapter 37 .009

Civ. Pract. and Rem. Code. The trial court properly denied Appellant’s Plea

to the Jurisdiction regarding immunity and after Appellee non-suited other

parties to the case. Simply stated, Section 271.152 clearly waives

governmental immunity and the trial court did not exceed its authority

making the award(s). The trial court’s Final Judgment should be affirmed.

ARGUMENT Appellant begins it’s appeal argument by claiming that this case “involves a straightforward application of governmental immunity to

declaratory judgment actions” and that “private parties cannot circumvent

the State’s sovereign immunity from suit by characterizing a suit for money

damages as a declaratory-judgment claim”. In the lower court, the

Appellee successfully argued that Section 271.152 of the Texas Local

Government Code permits just such an action against a municipality when

it breaches a contract. Section 271.152 states:

“ WAIVER OF IMMUNITY TO SUIT FOR CERTAIN CLAIMS. A local

government 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 contract, subject to the terms and conditions of this

subchapter.”

J. Saxon’s October and December, 2014, Orders agreed with Appellee’s position on the immunity issue. CR 00032. J. Reyes then

confirmed that J. Saxon’s Order was clear at the April hearing. CR 000277.

Appellee argued the substance and applicability of Section 271.152

throughout this litigation. In addition, Section 271.153 makes the awards

the court may make clear but limited under a suit for recovery. Section

271.153 states:

LIMITATIONS ON ADJUDICATION AWARDS.

(a) Except as provided by Subsection (c), the total amount of money

awarded in an adjudication brought against a local government entity for

breach of a contract subject to this subchapter is limited to the following:

(1) the balance due and owed by the local government entity under the

contract as it may have been amended, including any amount owed as compensation for the increased cost to perform the work as a direct result of owner-caused delays or accelerations; (2) the amount owed for change orders or additional work the contractor is

directed to perform by the local government entity in connection with the contract;

(3) reasonable and necessary attorney’s fees that are equitable and just;

and,

(4) interest as allowed by law, including interest as calculated under

Chapter 2251, Government Code.

(b) Damages awarded in an adjudication brought against a local government entity arising under a contract subject to this chapter may not

include:

(1) consequential damages, except as expressly allowed under Subsection

(a) (1);

(2) exemplary damages; or,

(3) damages for unabsorbed home office overhead.

(c) Actual damages, specific performance, or injunctive relief my be granted in an adjudication brought against a local governmental entity

for breach of contract described by Section 271.151(2)(B).

The trial court did not grant anything beyond those terms - there were no

“money damages” beyond the balances due awarded by the trial court as

claimed by Appellant. In addition, Section 271.152 (b)(3)(c) provides the

trial court with a mechanism to grant specific performance and injunctive

relief in these circumstances. At the time the Appellee filed his Declaratory

Judgment Motion and it was heard on October 23, 2014, the breach of

contract claim was still before the Court. The declaratory judgment was

granted under the authority of that provision.

Section 271.152 specifically waives immunity for a lawsuit “adjudicating a claim for breach of contract”. In Ben Bolt-Palito Blanco

Consolidated Independent School District v. Texas Political Subdivisions

property/Casualty Joint Self-Insurance Fund , 212 S.W. 3d 320, (Tex.

2006), the supreme court held that immunity had been waived even where

the claims at issue included a declaratory judgment claim. After Ben Bolt-

Palito , some courts of appeals discuss a waiver of immunity for a

declaratory judgment claim that is essentially a mirror-image of a breach of

contact claim. See Nat’l Public Finance Guarantee Corp. v. Harris County-

Houston Sports Authority , 448 S.W. 3d, 472, 484, (Tex. App. Houston [1st

Dist.] 2014, no pet.) (discussing Ben Bolt-Palito ). In this case, the breach of

contract claim was a mirror-image of the declaratory judgment.

This case is distinguished from the Fourth Court’s holding in Lower Colorado River Authority v. City of Boerne , 422 S.W. 3d 60, 67 (Tex. App.

- San Antonio 2014. pet. dism’d). There, the Fourth Court held that “based

upon the plain language of the Section 271.152, the legislature has not

expressly and unambiguously waived immunity from suit for declaratory

judgment”. In this case, the breach of contract claim was made as part of

the declaratory judgment action. The breach of contract claim was argued

throughout the proceedings.

Contrary to this Court’s holding in LCRA , this case only seeks remedies that are specifically set out in Tex. Local Gov’t Code, Section

271.152. See Tooke v. City of Mexia , 197 S.W. 3d. 325 at 345. Here, in

addition to the remedies claimed in the contract (the balances due under

the contract), the breach of contract claim(s) were properly plead by

Plaintiff and still before the trial court when it awarded the declaratory

judgment. The breach of contract claim was not specifically dismissed by

the trial court in any of its orders.

Regarding Section 271.152’s statutory waiver of contractual claims against governmental entities, the Fourth Court has declined to apply

Gates’s prorietary-governmental dichotomy. LCRA at 65. Also see

Wheelabrator Air Pollution Control Inc. v. City of San Antonio Acting

though City Public Service Board of San Antonio , 381 S. W. 3d, at 605. In

LCRA , this Court stated “We reasoned that by restricting section 271.152’s

waiver of immunity for contractual claims to suits for breach of express

written contracts for goods and services, the legislature consciously chose

to exclude other contractual and quasi-contractual claims form the

statutory waiver; as did the Tort Claims Act, the legislature could have

incorporated the proprietary-governmental dichotomy into the statutory

waiver for breach of contact claims, but chose not to do so.” LCRA citing

Wheelabrator at 603-04.

Further, the Fourth Court underscored its position on the immunity issue in Wheelabrator by citing Zachry Construction Corps. v. Port of

Houston Authority of Harris County , 2014 WL 4472616 (Tex. 2014). In

Wheelabrator , the Fourth Court stated “the Texas Supreme Court

examined chapters 271.152 and the other sections in chapter 271, including

section 271.153, and explained that chapter 271’s limitations on recovery

help define and restrict the scope of the waiver of immunity found in

section 271.152. The Texas Supreme Court ultimately concluded that

chapter 271 did not waive immunity from suit on a claim for damages that

was not recoverable under section 271.153”. As noted herein, Appellee only

sued for damages that are specifically set out in chapter 271.153 - the

balances due under Section 3.A. of the employment contract. Accordingly,

the trial court rightfully maintained subject matter jurisdiction in this case.

Appellant asserts that it is “well-established” that there is governmental immunity in this case, citing Tex. Natural Res. Conservation

Comm’n v. IT-Davy , 74 S.W. 3d. 389, Tex. Sup. Ct. (Tex. 2002). Appellant

claims in its brief that “private parties cannot circumvent the State’s

sovereign immunity from suit by characterizing a suit for money damages

as a declaratory-judgment claim”. What Appellant does not note in its brief

is that Chapter 271 of the TLGC was originally enacted by the legislature in

2005, and specifically and unambiguously waived governmental immunity

for this exact kind of suit; hence, IT-Davy was overturned by the

legislature. IT-Davy is no longer good law.

Throughout this litigation Appellee asserted that the breach of contract claim was part of or was a mirror image to the declaratory

judgment action. The breach of contract claim was not specifically

dismissed by the trial court. By arguing that the breach of contract was in

the declaratory judgment, immunity is waived under Chapter 271. See Nat’l

Public Finance Guarantee Corp ., at 484, also see Ben Bolt-Palito, Tooke

and Wheelabrator .

Appellant argues that the trial court cannot grant declaratory judgment and award monetary damages under Rule 37 of the Texas Civil

Practice and Remedies Code. Contrary to that assertion, there are no

extraordinary monetary damages awarded by the Trial Court under the

Order of December 2d. Instead, the Trial Court awarded Appellee specific

performance under the contract’s clear terms. In declaring Appellee’s

“rights” under Section 3.A. of the underlying contract, the trial court

awarded Appellee no more than what was specifically set out in that

provision - the balance due and the accrued vacation. The attorney fees,

costs and interest awarded in the December 2d Order were separate awards

to Appellee provided under the Tex. Civ. Practice and Rem. Code. Sec.

37.009, which states:

Sec. 37.009. COSTS. In any proceeding under this chapter, the court may

award costs and reasonable and necessary attorney’s fees as are equitable

and just.

On page 9 of it’s Appeal Brief, Appellant states that the Appellee asked the trial court for “$40,000.00” in attorney fees. That is a blatant

falsehood. At no time was anything remotely approaching that amount

sought by Appellee. The record reflects that at the October 23d hearing

there was a question about the fees and that Appellee did not provide the

trial court with an “fee affidavit”. On December 2, the matter was clarified

and the trial court (J. Saxon) subsequently awarded the Appellee

$20,000.00 in fees, as provided for and sought by Appellee under Chapter

37.009 of the Declaratory Judgment Act and the TLGC, Section 271-153.

After the December 2d hearing, Appellee asserted that the December 2d Order did not address the then outstanding additional individual

defendants that Appellee had added in the Amended Petition. Accordingly,

that Order could not be a final judgment. In setting the April hearing,

Appellee sought clarification of that issue and filed a motion to non-suit the

outstanding individual defendants. That left only the declaratory judgment

action, which included the breach of contract claim, to be addressed by the

court. J. Reyes understood the sequence, granted the non-suit and clearly

stated that she was not going to change any of the terms in J. Saxon’s

December 2d order concerning the Declaratory Judgment. By doing so, J.

Reyes agreed with Appellee that the Appellant’s Plea to the Jurisdiction was

mooted by the non-suit of the individual defendants and that there was no

immunity. CR 000277. The Appellee’s non-suit of the additional

individual defendants then clarified who was covered by the Declaratory

Judgment action and ended any question about the December 2d Order

being a final judgment. Accordingly, Appellant's Plea to the Jurisdiction

was rendered meritless.

Finally, the trial court did not err or act outside of its jurisdiction in declaring as “moot” the Appellant’s Plea to the Jurisdiction. It was moot

because immunity had been waived and the Appellee had filed a motion to

non-suit the outstanding individual defendants, which the trial court

granted, and because all other matters had been previously addressed in

the December 2 Order.

CONCLUSION Appellee respectfully asks this Court to deny Appellant’s requests and to affirm the trial court’s Order for the Appellant to pay its obligations to

the Appellee as the Agreement requires, as well as the other awards

contained in the Order. Appellee also prays the Court grant it any other

relief to with he may be entitled.

Respectfully submitted, _____/s/ Reid E. Meyers_____ Reid E. Meyers 11118 Wurzbach Rd., Ste. 206 San Antonio, TX 78230 210.415.1070 State Bar No. 14003850 Attorney for Appellee, Robert Tobias *25 CERTIFICATE OF SERVICE I hereby certify that on November 13, 2015, I served a copy of the foregoing according to the rules of the appellate procedure upon Albert

Lopez, 14310 Northbrook Dr., Ste. 200, San Antonio, TX 78232.

__/s/ Reid E. Meyers________ *26 CERTIFICATE OF COMPLIANCE The brief complies with the Court’s work volume limitation requirements. This Response also complies with the typeface (Georgia 14

point) and spacing requirements.

___/s/ Reid E. Meyers_____