Harbor Am. Cent., Inc. v. Armand

692 S.W.3d 777

HARBOR AMERICA CENTRAL, INC., Appellant

v.Vielka ARMAND, Appellee

No. 04-22-00280-CV

Court of Appeals of Texas, San Antonio.

Delivered and Filed: March 27, 2024

From the 131st Judicial District Court, Bexar County, Texas, Trial Court No. 2018-CI-01895, Honorable Norma Gonzales, Judge Presiding

Jared Greathouse, Austin, Patrick Cory Barnwell, Cory Barnwell, for Appellant.

Soraya Hanshew, El Paso, William J. Grigg, for Appellee.

Sitting: Rebeca C. Martinez, Chief Justice, Irene Rios, Justice, Liza A. Rodriguez, Justice

OPINION

Opinion by: Irene Rios, Justice

This permissive appeal involves an issue of first impression on whether chapter 91 of the Texas Labor Code supersedes the application of chapter 21 of the Texas Labor Code. See Tex. Lab. Code Ann. §§ 21.001-.556, §§ 91.001–.062.

A professional employer organization ("PEO") is a business entity that offers professional employer services to a client. See id. § 91.001(3) ("Client"), (14) ("Professional employer services"), (15) ("Professional employer organization"). Chapter 91 of the Texas Labor Code provides the powers and duties of PEOs. See id. §§ 91.001-.062 Under chapter 91, a coemployment relationship is created between the PEO and the client through a contractual relationship that outlines the sharing or allocation of employment responsibilities to covered employees under the professional employer services agreement and chapter 91. See id. §§ 91.001(3–b), 91.0011, 91.031, 91.032. Chapter 21 of the Texas Labor Code provides employees protection from discriminatory acts and defines an employer to include a person, or its agent, who is engaged in an industry affecting commerce and who has 15 or more employees for each working day for 20 or more calendar weeks. See id. §§ 21.001 (explaining the purposes of chapter 21), 21.002(8)(A), (B) (defining "employer").

In this case, appellant Harbor America Central, Inc. ("Harbor"), a PEO, provides professional employer services to its client, Legal Eats, LLC ("Legal Eats"), for its cafeteria personnel. Appellee Vielka Armand worked at the cafeteria. Armand sued Harbor asserting discriminatory acts under chapter 21. Armand filed a motion for partial summary judgment contending as a matter of law that (1) Harbor was Armand’s employer as defined by section 21.002(8)(A), and (2) Harbor was Armand’s common-law employer. See id. § 21.002(8)(A). The trial court granted Armand’s motion and permitted Harbor to file a permissive interlocutory appeal on the controlling questions of law. See Tex. Civ. Prac. & Rem. Code Ann. § 51.014(d) (providing for a permissive interlocutory appeal when a controlling question of law involves a substantial ground for difference of opinion, and its immediate resolution may materially advance the litigation).

Thus, we must answer the following controlling questions:

1. Whether a PEO licensed under chapter 91, like Harbor, can be an "employer" as defined by chapter 21; and

2. If so, whether (a) Harbor is an "employer," as that term is statutorily defined by chapter 21 and (b) Armand established the existence of an "employment relationship" with Harbor, thereby exposing Harbor to liability for the acts of covered employees?

We answer the first controlling question in the affirmative. The second controlling question contains two subparts more fully explained below: (1) whether Harbor satisfies the statutory definition of employer and (2) whether an employment relationship existed between Harbor and Armand. We hold Armand has established the first subpart, but a fact question exists as to the second subpart. Therefore, we affirm the trial court’s partial summary judgment in part and reverse the trial court’s partial summary judgment in part. We remand the cause to the trial court for further proceedings consistent with this opinion.

Background

Harbor entered into a professional employer service agreement with Legal Eats, wherein Harbor provided professional employer services for Legal Eats’s cafeteria personnel needs. See Tex. Lab. Code Ann. §§ 91.001(3), (14), 91.031. The Client Service Agreement ("the Agreement")¹ set forth the duties and responsibilities of both Harbor and Legal Eats. See id. § 91.031.

In July 2016, Armand signed an employment agreement as required by Harbor and began working at Legal Eats. Both Melissa Rose and Larry Perryman also worked at Legal Eats and executed similar employment agreements with Harbor. According to Armand, Rose and Perryman were managers at Legal Eats, and Perryman directly supervised Armand. Armand alleged Perryman subjected her to a hostile work environment by sexually harassing and sexually assaulting her. After reporting Perryman’s actions to Rose and the owner of Legal Eats, Armand alleged she was retaliated against, and the retaliation increased after she filed a charge of discrimination with the U.S. Equal Employment Opportunity Commission and the Texas Workforce Commission. Armand was terminated in November 2017.

Armand originally sued Harbor, Legal Eats, and several other defendants alleging numerous claims. However, at the time of the proceedings relevant to this permissive appeal, Armand’s lawsuit only involved chapter 21 claims against Harbor.

[1] Armand filed a motion for partial summary judgment. Harbor, a PEO licensed under chapter 91, responded asserting that chapter 91 supersedes chapter 21 and any other law, and thus Harbor cannot be liable for the acts of Rose and Perryman. Id. § 21.002(8)(A); §§ 91.001-.062. In granting Armand’s motion for partial summary judgment, the trial court ruled that: (1) Harbor was² Armand’s em- ployer as defined by section 21.002(8)(A), (2) Harbor was Armand’s, Rose’s, and Perryman’s common-law employer, and (3) Harbor’s defense that it was not Armand’s employer should be struck.

Standard of Review

[2] In a permissive appeal, we limit our review to the controlling legal question on which there is a substantial ground for disagreement and for which immediate resolution may materially advance the litigation. See Tex. Civ. Prac. & Rem. Code § 51.014(d); Tex. R. App. P. 28.3(e)(4); Tex. R. Civ. P. 168.

[3] We review the grant of a summary judgment de novo. BPX Operating Co. v. Strickhausen, 629 S.W.3d 189, 195 (Tex. 2021). To prevail on a traditional motion for summary judgment, the movant must show that there is no genuine issue of material fact and that it is entitled to judgment as a matter of law. Tex. R. Civ. P. 166a(c); Strickhausen, 629 S.W.3d at 196. To the contrary, the evidence raises a genuine issue of material fact, thereby precluding summary judgment, if reasonable and fair-minded jurors could differ in their conclusions in light of all the summary judgment evidence. Goodyear Tire & Rubber Co. v. Mayes, 236 S.W.3d 754, 755 (Tex. 2007). Stated differently, evidence is conclusive only if reasonable people could not differ in their conclusions. City of Keller v. Wilson, 168 S.W.3d 802, 815 (Tex. 2005). We consider the evidence in the light most favorable to the nonmovant, indulging every reasonable inference and resolving any doubts in the nonmovant’s favor. Strickhausen, 629 S.W.3d at 196.

Analysis

In accordance with the two controlling questions presented to us on appeal, Harbor maintains (1) chapter 91 supersedes chapter 21 and any other law, and there-fore Harbor could not be Armand’s employer under section 21.002(8)(A), and (2) even if this court determines a PEO can be an employer under chapter 21, under the facts of this case, it was not Armand’s employer and thereby subject to the liability from the acts of others working at Legal Eats.

1. Can a PEO licensed under chapter 91 be an "employer" as defined by chapter 21, or does chapter 91 supersede the application of other statutes, including chapter 21?

To determine if chapter 91 supersedes the application of other statutes or law outside chapter 91, we must first construe chapter 91.

A. Statutory Construction

[4] "Issues of statutory construction are reviewed de novo." ExxonMobil Pipeline Co. v. Coleman, 512 S.W.3d 895, 899 (Tex. 2017). "In construing a statute, our objective is to determine and give effect to the [l]egislature’s intent." Energen Res. Corp. v. Wallace, 642 S.W.3d 502, 509 (Tex. 2022). The reviewing court may not "judicially amend a statute by adding words that are not contained in the language of the statute." Lippincott v. Whisenhunt, 462 S.W.3d 507, 508 (Tex. 2015). Instead, the court should "presume the [l]egislature chose the statute’s language with care, purposefully choosing each word, while purposefully omitting words not chosen." In re CenterPoint Energy Hous. Elec., LLC, 629 S.W.3d 149, 158-59 (Tex. 2021) (orig. proceeding).

[5–7] "We recognize a fundamental principle of statutory construction that words’ meanings cannot be determined in isolation but must be drawn from the context in which they are used." Willacy Cnty. Appraisal Dist. v. Sebastian Cotton & Grain, Ltd., 555 S.W.3d 29, 39 (Tex. 2018). "In ascertaining legislative intent, we read the entire statute as a whole and do not consider isolated sections, provisions, or terms in a vacuum." EXLP Leasing, LLC v. Galveston Cent Appraisal Dist., 554 S.W.3d 572, 582 (Tex. 2018). "[W]hen the legislature uses certain language in one part of the statute and different language in another, the [c]ourt assumes different meanings were intended." Ineos USA, LLC v. Elmgren, 505 S.W.3d 555, 564 (Tex. 2016) (internal quotation marks omitted). Moreover, the reviewing court may "consider other matters in ascertaining legislative intent, including the objective of the law, its history, and the consequences of a particular construction." State v. Shumake, 199 S.W.3d 279, 284 (Tex. 2006); see also Tex. Gov’t Code Ann. § 311.023(1), (3), (5).

[8–10] Furthermore, we must construe statutes in a way that harmonizes and gives effect to the different provisions when possible, In re Mem’l Hermann Hosp. Sys., 464 S.W.3d 686, 716 (Tex. 2015) (citing Tex, Gov’t Code Ann. §§...