Gay v. City of Wichita Falls

457 S.W.3d 499

Christopher L. GAY and Steven L. Carroll, Appellants

v.The CITY OF WICHITA FALLS, Texas, Appellee.

No. 08–13–00028–CV.

Court of Appeals of Texas, El Paso.

Aug. 13, 2014.

Julia M. Vasquez, First Assistant City Attorney, Wichita Falls, William Andrew Messer, Jennifer W. Decurtis, Messer, Rockefeller & Fort, PLLC, Frisco, for Appellee.

Ken Slavin, Kemp Smith, El Paso, for Appellants.

Before McCLURE, C.J., RIVERA, and RODRIGUEZ, JJ.

OPINION

ANN CRAWFORD McCLURE, Chief Justice.

Christopher L. Gay and Steven L. Carroll challenge the trial court's order granting the City of Wichita Falls' plea to the jurisdiction based on governmental immunity. The underlying controversy arises from the denial of Gay's and Carroll's claims for long-term disability benefits under insurance provided to them by their former employer, the City of Wichita Falls. Because we conclude that the City is immune from suit, we affirm the trial court's order.¹

FACTUAL AND PROCEDURAL BACKGROUND

Prior to their retirement in 2011, Gay and Carroll were police officers for the Wichita Falls Police Department. Before the officers retired, the City of Wichita Falls sought and obtained group long-term disability insurance for its employees through a private insurer, Sun Life Assurance Company of Canada. More specifically, a trust organized by the City, the “City of Wichita Falls Employee Benefits Trust,” obtained the group insurance. The insurance policy, which the City stipulates is contractual in nature, is between the trust and Sun Life. The City is not a party to the contract and the trust is not a party to this action.

Once the trust obtained the insurance, the City paid the monthly premiums for its employees, including Officers Gay and Carroll. The officers' coverage began on January 1, 2011, shortly before they retired. After their retirement, both officers filed claims seeking disability benefits. Sun Life informed the officers that because their claims were filed less than twelve months after coverage began, they would be subjected to a pre-existing condition review. Ultimately, Sun Life denied their claims. The officers filed suit against the City of Wichita Falls on August 1, 2012, alleging breach of contract, promissory estoppel, negligent misrepresentation and fraud. The pleading does not specifically identify the agreement or agreements that are the subject of these causes of action, other than to allege generally that:

Plaintiffs were promised and informed by City of Wichita Falls employees and/or agents that they both would received [sic] long term disability benefits for life. The Plaintiffs were promised and informed by City of Wichita Falls employees and/or agents that the City will take care of the Plaintiffs.

The City responded with a plea to the jurisdiction asserting governmental immunity. It produced evidence that it does not administer the insurance policy at issue, does not make any decisions concerning coverage, and has no discretion as to how benefits are administered by Sun Life. The City also introduced evidence that neither it nor any of its employees made any decisions regarding the officers' disability claims, coverage eligibility, or entitlement to benefits. On November 5, 2012, the trial court granted the City's plea to the jurisdiction and dismissed the suit with prejudice. This appeal follows. We perceive the officers' brief to present a single issue for review concerning the trial court's error in granting the plea. We will address it by subparts relating to specific claims alleged.

STANDARD OF REVIEW

Governmental immunity protects municipalities like the City of Wichita Falls from lawsuits for damages and from liability.² Ben Bolt–Palito Blanco Consolidated Independent School District v. Texas Political Subdivisions Property/Casualty Joint Self–Insurance Fund, 212 S.W.3d 320, 323–24 (Tex.2006). Municipalities have governmental immunity from suit unless the Legislature has expressly waived immunity by statute. City of Houston v. Williams, 353 S.W.3d 128, 134 (Tex.2011). It is the Legislature's sole province to waive or abrogate governmental immunity. Texas Adjutant General's Office v. Ngakoue, 408 S.W.3d 350, 353 (Tex.2013), quoting Mission Consol. Independent School Dist. v. Garcia, 253 S.W.3d 653, 660 (Tex.2008) and Texas Nat'l Res. Conservation Comm'n v. IT–Davy,

74 S.W.3d 849, 853 (Tex.2002). There is a “heavy presumption” in favor of immunity. City of Galveston v. State, 217 S.W.3d 466, 469 (Tex.2007).

Governmental immunity from suit defeats a trial court's subject matter jurisdiction and thus is properly asserted in a plea to the jurisdiction. Texas Dept. of Parks and Wildlife v. Miranda, 133 S.W.3d 217, 225–26 (Tex.2004). To invoke a trial court's jurisdiction, a plaintiff suing a municipality must allege a valid waiver of governmental immunity and plead sufficient facts demonstrating jurisdiction. Id. at 226. In reviewing a ruling on a plea to the jurisdiction, we do not consider the merits of the cause of action, but examine only the plaintiff's pleadings and any evidence relevant to the jurisdictional inquiry. Id. at 227 ; County of Cameron v. Brown, 80 S.W.3d 549, 555 (Tex.2002). Pleadings must be construed liberally in the plaintiffs' favor. Miranda, 133 S.W.3d at 227. The existence of subject matter jurisdiction is a question of law that we review de novo. IT–Davy, 74 S.W.3d at 855. If the suit is barred by governmental immunity, dismissal with prejudice is mandatory. Harris County v. Sykes, 136 S.W.3d 635, 637 (Tex.2004).

BREACH OF CONTRACT AND PROMISSORY ESTOPPEL

The officers contend that the City is not immune from their contract and promissory estoppel claims because it provided insurance to its employees, which the officers contend was a proprietary rather than governmental act. The common law distinction between proprietary and governmental acts (sometimes referred to as the proprietary/governmental “dichotomy”) arose almost 130 years ago. City of Galveston v. Posnainsky, 62 Tex. 118 (1884). Under the dichotomy, governmental immunity exists when a municipality exercises powers “as the agent of the State in furtherance of general law for the interest of the public at large.” Gates v. City of Dallas, 704 S.W.2d 737, 738–39 (Tex.1986). Conversely, when a municipality acts at its own discretion and primarily for the benefit of those within its corporate limits, it performs a proprietary function and has no immunity. Id. In 1987, the Texas Constitution was amended to give the Legislature authority to define governmental and proprietary functions, including the authority to reclassify definitions already existing in the common law. Tex. Const. art. XI, § 13. The Legislature utilized this authority when it enacted Section 101.0215 of the Texas Civil Practice and Remedies Code. Tex.Civ.Prac. & Rem.Code Ann. § 101.0215 (West Supp.2013) (defining several governmental and proprietary functions for purposes of the Texas Tort Claims Act).

In 2005, the Legislature enacted Section 271.152 of the Local Government Code, which unambiguously waives immunity for certain contractual claims against qualifying governmental entities. Tex.Loc.Gov't Code Ann. § 271.152 (West 2005). For this limited waiver to apply, three elements must be established: (1) the party against whom waiver is asserted must be a “local governmental entity,” (2) authorized to enter into contracts, and (3) the entity must have in fact entered into a “contract subject to this subchapter.” Williams, 353 S.W.3d at 134 ; Tex.Loc.Gov't Code Ann. § 271.152. To qualify as a “contract subject to this subchapter,” the contract must satisfy five additional elements: (1) it must be in writing, (2) state the essential terms of the agreement, (3) provide for goods or services, (4) to the local governmental entity, and (5) be executed on behalf of the local governmental entity. Id. at 135 ; Tex.Loc.Gov't Code Ann. § 271.151 (West Supp.2013).

The issue presented in this appeal is whether the City's entitlement to immunity is determinable under Section 271.152 of the Local Government Code or the proprietary/governmental dichotomy. In support of their argument that the dichotomy controls, the officers rely on a line of cases holding that a city's provision of insurance to employees is a proprietary function, thereby subjecting the city to suit on contractual claims. Gates, 704 S.W.2d at 739 ; Temple v. City of Houston, 189 S.W.3d 816, 819 (Tex.App.-Houston [1st Dist.] 2006, no pet.) ; Bailey v. City of Austin, 972 S.W.2d 180, 192 (Tex.App.-Austin 1998, pet. denied) ; Casso v. City of McAllen, No. 13–08–00618–CV, 2009 WL 781863, at *5–7 (Tex.App.-Corpus Christi Mar. 26, 2009, pet. denied) (mem. op.). According to the officers, these cases establish that the City does not have immunity in the first instance such that there is no immunity to be waived. The City counters that the absence of any mention of the proprietary/governmental dichotomy in Chapter 271 means the Legislature decided to abandon application of the dichotomy to contract-based claims.

Our sister courts in San Antonio and Austin have recently addressed the continuing applicability of the dichotomy following the enactment of Chapter 271 and reached opposite conclusions. See City of San Antonio ex rel. City Public Service Board v. Wheelabrator Air Pollution Control, Inc., 381 S.W.3d 597, 603–05 (Tex.App.-San Antonio 2012, pet. denied) ; and City of Georgetown v. Lower Colorado River Authority, 413 S.W.3d 803, 811 (Tex.App.-Austin 2013, pet. dism'd). In Wheelabrator, the San Antonio court analyzed the issue in the context of a quasi-contractual quantum meruit claim asserted against a city in relation to its operation of a public utility. Wheelabrator, 381 S.W.3d at 599. The city hired the plaintiff, Wheelabrator, to design and build emission control equipment at a coal-fired power station, but thereafter refused to release retained funds. Id. In response to Wheelabrator's suit, the city asserted that it...