City of Denton v. Brian Rushing, Calvin Patterson and Kevin Marshall
City of Denton v. Brian Rushing, Calvin Patterson and Kevin Marshall
Opinion
*709
In this interlocutory appeal from an order denying a city's plea to the jurisdiction and alternative motion for summary judgment, we must determine whether Local Government Code section 271.152, which waives a city's immunity from suit on certain contracts, applies to these underlying claims. The Local Government Code provides that a governmental entity that is authorized by law to contract and that enters into a contract waives its "immunity to suit for purposes of adjudicating a claim [under] the contract." TEX. LOC. GOV'T CODE § 271.152. At issue here is whether a contract exists. The court of appeals concluded that the City's Policies and Procedures Manual created a unilateral contract that certain employees could enforce under the statutory waiver and therefore affirmed the trial court's order.
I
Brian Rushing, Calvin Patterson, and Kevin Marshall (collectively "Rushing") are full-time, hourly-paid employees in the City of Denton's Utilities Department. They are all entitled to overtime pay under the Fair Labor Standards Act.
See generally
Policy 106.06 was first adopted by City Council resolution in 1995. In the 1995 policy, on-call time was not "compensated or credited as time worked." In 2013, however, the City Manager modified Policy 106.06. The City Manager's revisions removed the part of the policy stating that on-call time was not compensated and defined an explicit pay schedule for on-call time. These amendments were not approved by the City Council. Rather, the amendments were reviewed by the City's Executive Committee before the City published them in the Manual.
Apart from Policy 106.06, the Manual also contains a general disclaimer that states:
The contents of this manual do not in any way constitute the terms of a contract of employment and should not be construed as a guarantee of continued employment with the City of Denton. Employment with the City of Denton is on an at will basis. This means that the employment relationship may be terminated at any time by either the City or the employee for any reason not expressly prohibited by law. Any oral or written statements by anyone, (except individual written employment agreements specifically authorized by the City Council) to the contrary are invalid and should not be relied upon by any prospective or existing employee. The City of Denton reserves the right to alter or *710 amend the contents of this manual at any time without notice.
Emphasis added. After the City notified Rushing that he would not be compensated for on-call shifts worked between 2011 and 2015, he sued the City for breach of contract, alleging that Policy 106.06 constituted a unilateral contract that the City breached.
II
After Rushing filed suit, the City filed a plea to the jurisdiction. In this plea, the City argued that governmental immunity was not waived because Policy 106.06 did not meet the statutory definition of a contract.
See
TEX. LOC. GOV'T CODE § 271.151(2)(A) (defining what contracts are "subject to this subchapter"). The City's argument focused on the general disclaimer in the Manual to show that the City lacked any contractual intent when drafting the Manual. Rushing argued, however, that Policy 106.06 constituted the terms of a unilateral contract that Rushing accepted and was therefore due compensation.
See
City of Houston v. Williams
,
The court of appeals affirmed the trial court's order denying the jurisdictional plea.
The City also argued that Policy 106.06 was not a contract because the 2013 modifications to the policy were not properly executed by the City Council. The court of appeals disagreed.
III
Cities enjoy governmental immunity when they are performing governmental functions.
Tooke v. City of Mexia
,
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.
TEX. LOC. GOV'T CODE § 271.152. A "contract subject to this subchapter" is "a written contract stating the essential terms of the agreement for providing goods or services
*711
to the local governmental entity that is properly executed on behalf of the local governmental entity." TEX. LOC. GOV'T CODE § 271.151(2)(A). We have broken down section 271.151(2) into five required elements that must be met before immunity is waived: "(1) the contract must be in writing, (2) state the essential terms of the agreement, (3) provide goods or services, (4) to the local governmental entity, and (5) be executed on behalf of the local governmental entity."
Williams
,
The City argues that Policy 106.06 is not a written contract because the Manual containing the policy disclaims contractual intent and, in any event, was not "properly executed" because the City Council never formally approved its revisions. These arguments put in issue two of the elements required to waive the City's immunity: (1) the existence of a written contract and (2) its proper execution. As to the first, the City submits that the Manual's disclaimer of contractual intent prevents Policy 106.06 from being construed as a unilateral contract. Even though a provision by itself might otherwise suggest contractual intent, disclaimers in the document can negate the existence of such intent.
Cty. of Dallas v. Wiland
,
The court of appeals concluded that the disclaimer was only intended to preserve an employees's at-will status. Indeed, the disclaimer rejects any construction of the Manual "as a guarantee of continued employment" or that employment with the City is anything other than "at will." But the disclaimer also provides that "[t]he contents of this manual do not in any way constitute the terms of a contract of employment ...." Interpreting Policy 106.06 to be a unilateral contract regarding Rushing's employment conflicts with this part of the disclaimer.
See
Williams v. First Tenn. Nat'l Corp.
,
Rushing further argues that Policy 106.06 constitutes the terms of a unilateral contract because it mirrors the city ordinance in
Williams
, which we held created a valid unilateral contract between the City of Houston and its firefighters.
See
Policy 106.06, however, is unlike the ordinances at issue in
Williams
.
Williams
dealt with city ordinances, while Policy 106.06 is a provision of a policies and procedures manual.
See
The presence of a disclaimer, however, does not always negate contractual intent. The disclaimer in
Williams
, for instance, simply stated that "[n]o provision of this ordinance shall be construed to create a vested right of compensation for sick leave benefits or, where applicable, for termination benefits."
Williams
,
The City of Denton's disclaimer, however, disclaims contractual intent "in any way" as to the terms of employment. Unlike the waiver in
Williams
, which was a limited waiver of vested compensation rights, the waiver here disclaims any intent to create an employment contract.
See
The City also argues that Policy 106.06 was not subject to section 271.152's waiver of immunity because the 2013 revisions were not "properly executed" by the City Council.
See
Williams
,
* * *
For governmental immunity to be waived under section 271.152 of the Local Government Code, there must first be an enforceable, written contract. Here, the City of Denton's Policies and Procedures Manual does not create such a contract because the Manual effectively disclaims the City's contractual intent. We accordingly reverse the court of appeals' judgment affirming the denial of the City's plea to the jurisdiction and render judgment dismissing the case.
Reference
- Full Case Name
- CITY OF DENTON, Petitioner, v. Brian RUSHING, Calvin Patterson and Kevin Marshall, Respondents
- Cited By
- 9 cases
- Status
- Published