Friday, June 1, 2012

City of Houston v. Esparza progeny: Another interlocutory appeal by the City in a car wreck case goes nowhere, but back to the trial court


The City of Houston v. Lackey, NO. 01-11-00248-CV (Tex.App. – Houston [1st Dist.] May 31, 2012) (City’s jurisdictional defense in suit brought under the Texas Tort Claims Act rejected; trial court’s denial of city’s plea to the jurisdiction affirmed)


City of Houston - City Hall

MEMORANDUM OPINION

The City of Houston brings this interlocutory appeal from the trial court’s order denying its plea to the jurisdiction on the negligence claims of appellee, Rachel Lackey. [1]  In its sole issue, the City contends that, because Lackey chose to file suit against both the City and its employee, Will Reynolds, regarding the same subject matter, Lackey’s claims against the City are barred by section 101.106(b) of the Texas Tort Claims Act.[2]  We affirm.



Background

Lackey filed suit against both the City and Reynolds, alleging personal injuries sustained when the City vehicle operated by Reynolds backed into her vehicle as a result of Reynolds’ negligence while in the course and scope of his employment with the City and, as such, the City is liable under the doctrines of negligent entrustment and respondeat superior.
  
The City filed a general denial and asserted governmental immunity.  The City further asserted that it could not be held vicariously liable for acts of its agents and employees who are entitled to official immunity.  Reynolds filed a separate answer in which he generally denied Lackey’s allegations and claimed both governmental and official immunity.
    
Pursuant to the Texas Tort Claims Act,[3] the City subsequently moved to dismiss all of Lackey’s claims against Reynolds.  Lackey’s motion to “non-suit” her claims against Reynolds were granted.[4]  Thereafter, the City filed a plea to the jurisdiction, contending that because Lackey sued Reynolds, she had made an irrevocable election to proceed against Reynolds under section 101.106(b) of the Act’s election-of-remedies provision and was immediately and forever barred from any suit or recovery against the City regarding the same subject matter.[5]  The trial court denied the City’s plea to the jurisdiction and this interlocutory appeal followed.
   
Discussion
  
Standard of Review
  
A plea to the jurisdiction challenges the trial court’s subject-matter jurisdiction to hear a case.  Bland Indep. Sch. Dist. v. Blue, 34 S.W.3d 547, 554 (Tex. 2000); Kamel v. Univ. of Tex. Health Sci. Ctr., 333 S.W.3d 676, 681 (Tex. App.—Houston [1st Dist.] 2010, pet. denied).  The existence of subject-matter jurisdiction is a question of law that we review de novo.  State Dep’t of Hwys. & Pub. Transp. v. Gonzalez, 82 S.W.3d 322, 327 (Tex. 2002); Kamel, 333 S.W.3d at 681.  We may not presume the existence of subject-matter jurisdiction; the burden is on the plaintiff to allege facts affirmatively demonstrating it.  Tex. Ass’n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440, 443–44, 446 (Tex. 1993); Kamel, 333 S.W.3d at 681.
  
Whether a governmental entity is immune from suit is a question of subjectmatter jurisdiction.  Tex. Dep’t of Transp. v. Jones, 8 S.W.3d 636, 638–39 (Tex. 1999).  Determination of that issue here turns on construction of the Act’s election-of-remedies provision.  See Tex. Civ. Prac. & Rem. Code Ann. § 101.106 (West 2011).  In construing a statute, our primary objective is to determine and give effect to the Legislature’s intent.  Gonzalez, 82 S.W.3d at 327.  “[W]e ‘read the statute as a whole and interpret it to give effect to every part.’”  Id. (quoting Jones v. Fowler, 969 S.W.2d 429, 432 (Tex. 1998)).  With respect to a statutory waiver of immunity, as in the Act, we interpret the waiver narrowly, as the Legislature’s intent to waive immunity must be clear and unambiguous.  Mission Consol. Indep. Sch. Dist. v. Garcia, 253 S.W.3d 653, 655 (Tex. 2008) (citing Tex. Gov’t Code Ann. § 311.034 (West Supp. 2011)).
  
Analysis
   
Relying on Garcia, the City argues that the election-of-remedies provision requires Lackey to sue either the City or its employee, and a claimant who sues both loses the opportunity to sue the City under section 101.106(b), or, in the City’s words, because Lackey “chose to file suit against [the City’s] employee, Reynolds, regarding the same subject matter, all her tort claims against [the City] were dead on arrival the moment suit was filed.”  See Garcia, 253 S.W.3d at 655; see also Tex. Civ. Prac. & Rem. Code Ann. § 101.106.  Lackey responds arguing, inter alia, that section (b) is inapplicable to her suit.
   
During the pendency of this appeal, this Court has recently considered—and rejected—the same arguments urged by the City in City of Houston v. Esparza.  No. 01-11-00046-CV, 2011 WL 4925990, at *4 (Tex. App.—Houston [1st Dist.] Oct. 7, 2011, pet. filed) (rejecting City’s contention that 101.106(b) bars suit against governmental unit when suit originally filed against both governmental unit and employee); see also Tex. Dep’t of Aging and Disability Servs. v. Johnson, No. 011100526CV, 2012 WL 27728, at *2–3 (Tex. App.—Houston [1 Dist.] Jan. 5, 2012, no pet.) (mem. op.) (following Esparza; holding trial court did not err in denying plea to jurisdiction).  Thus, we hold that the trial court properly denied the City’s plea to the jurisdiction and we overrule the City’s sole issue.   
  
Conclusion
   
We affirm the order of the trial court.
   
                                                                      Jim Sharp

                                                                      Justice

Panel consists of Justices Keyes, Bland, and Sharp.

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[1]         See Tex. Civ. Prac. & Rem. Code Ann. § 51.014(a)(8) (West Supp. 2011) (permitting interlocutory appeals from court order that grants or denies plea to jurisdiction by governmental unit).

[2]         See Tex. Civ. Prac. & Rem. Code Ann. § 101.106(b) (West 2011). 

[3]         See Tex. Civ. Prac. & Rem. Code Ann. § 101.106(e) (West 2011). 

[4]         Although characterized as a “non-suit,” this was technically a voluntary partial dismissal of claims.  See C/S Solutions, Inc. v. Energy Maint. Servs. Grp. LLC, 274 S.W.3d 299, 306–07 (Tex. App.—Houston [1st Dist.] 2008, no pet.).  Presumably because it granted Lackey’s “non-suit,” the trial court never ruled on the City’s section 101.106(e) motion.

[5]         See Tex. Civ. Prac. & Rem. Code Ann. § 101.106(b).

The City of Houston v. Guzman


More of the same: City of Houston insists on going forward with appeals on immunity issue it has already lost on in several prior cases. Here is the first of two more such tort claims cases decided by the First Court of Appeals on the last day of May:
   
The City of Houston v. Guzman 

NO. 01-11-00234-CV (Tex.App.- Houston May 31, 2012)
(denial of city's plea to the jurisdiction affirmed)


   
MEMORANDUM OPINION
 
The City of Houston brings this interlocutory appeal from the trial court’s order denying its plea to the jurisdiction on the negligence claims of appellee, Enrique Guzman.[1]  In its sole issue, the City contends that because Guzman chose to file suit against both the City and its employee, Brent Foltz, regarding the same subject matter, Guzman’s claims against the City were barred by section 101.106(b) of the Texas Tort Claims Act.[2]  We affirm.

Background

Guzman filed suit against both the City and Foltz, alleging personal injuries when the Houston Police Department patrol car driven by Sgt. Foltz ran into his vehicle.  According to Guzman, Foltz, who was driving the wrong way down a oneway street at 1:30 a.m., ran a red light and struck a citizens vehicle.  His patrol car then rebounded from that collision and smashed into Harris County Deputy Sheriff Guzmans vehicle as it was stopped at a red light.  Guzman asserts that Foltz was in the course and scope of his City employment and, as such, the City is liable under the doctrines of negligent entrustment, negligent hiring, failure to properly train, failure to properly supervise, and respondeat superior.  Foltz, who was never served and never appeared in this case, was later removed as a defendant by Guzman. 

Guzman’s employer, Harris County, filed an original petition in intervention for subrogated interests, seeking to collect for the benefits it had provided Guzman and expenses it had incurred as a self-insured worker’s compensation provider and any related damages to which Guzman was entitled to under the law, plus any property damage losses or loss of revenue sustained by the County.  Guzman subsequently filed his second amended petition, naming only the City as a defendant.


The City’s subsequent plea to the jurisdiction contended that, because Guzman initially filed suit against Foltz for damages arising from the same subject matter as his claims against the City, all his tort claims against the City were barred by section 101.106(b) of the Tort Claims Act.

The trial court denied the City’s plea to the jurisdiction, and this interlocutory appeal followed.

Discussion
   

Standard of Review

A plea to the jurisdiction challenges the trial court’s subject-matter jurisdiction to hear a case.  Bland Indep. Sch. Dist. v. Blue, 34 S.W.3d 547, 554 (Tex. 2000); Kamel v. Univ. of Tex. Health Sci. Ctr., 333 S.W.3d 676, 681 (Tex. App.—Houston [1st Dist.] 2010, pet. denied).  The existence of subject-matter jurisdiction is a question of law that we review de novo.  State Dep’t of Hwys. & Pub. Transp. v. Gonzalez, 82 S.W.3d 322, 327 (Tex. 2002); Kamel, 333 S.W.3d at 681.  We may not presume the existence of subject-matter jurisdiction; the burden is on the plaintiff to allege facts affirmatively demonstrating it.  Tex. Ass’n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440, 443–44, 446 (Tex. 1993); Kamel, 333 S.W.3d at 681.

Whether a governmental entity is immune from suit is a question of subjectmatter jurisdiction.  Tex. Dept of Transp. v. Jones, 8 S.W.3d 636, 638–39 (Tex. 1999).  Determination of that issue here turns on construction of the Tort Claims Act’s election-of-remedies provision.  See Tex. Civ. Prac. & Rem. Code Ann. § 101.106.  In construing a statute, our primary objective is to determine and give effect to the Legislature’s intent.  Gonzalez, 82 S.W.3d at 327.  “[W]e ‘read the statute as a whole and interpret it to give effect to every part.’”  Id. (quoting Jones v. Fowler, 969 S.W.2d 429, 432 (Tex. 1998)).  With respect to a statutory waiver of immunity, as in the Tort Claims Act, we interpret the waiver narrowly, as the Legislature’s intent to waive immunity must be clear and unambiguous.  Mission Consol. Indep. Sch. Dist. v. Garcia, 253 S.W.3d 653, 655 (Tex. 2008) (citing Tex. Gov’t Code Ann. § 311.034 (West Supp. 2011)).

Analysis

Relying on Garcia, the City argues that the election-of-remedies provision requires Guzman to sue either the City or its employee, and a claimant who sues both loses the opportunity to sue the City under section 101.106(b).  See Garcia, 253 S.W.3d at 655; see also Tex. Civ. Prac. & Rem. Code Ann. § 101.106.  Guzman responds arguing, inter alia, that section (b) is inapplicable to his suit.

During the pendency of this appeal, this Court has recently considered—and rejected—the same arguments advanced by the City in City of Houston v. Esparza.  No. 01–11–00046–CV, 2011 WL 4925990, at *4 (Tex. App.—Houston [1st Dist.] Oct. 7, 2011, pet. filed) (rejecting City’s contention that § 101.106(b) bars suit against governmental unit when suit originally filed against both governmental unit and employee); see also Tex. Dep’t of Aging and Disability Servs. v. Johnson, No. 01-11-00526-CV, 2012 WL 27728, at *2–3 (Tex. App.—Houston [1st Dist.] Jan. 5, 2012, no pet.) (mem. op.) (following Esparza; holding trial court did not err in denying plea to jurisdiction).  As such, this Court’s jurisprudence dictates our holding that the trial court properly denied the City’s plea to the jurisdiction with respect to Guzman’s claims and, because the County’s claims are derivative of Guzman’s claims, properly denied the City’s plea to the jurisdiction with respect to those claims as well.  See generally City of Hous. v. Twin City Fire Ins. Co., 578 S.W.2d 806, 808 (Tex. Civ. App.—Houston [1st Dist.] 1979, writ ref’d n.r.e.) (holding employee’s failure to comply with notice requirement barred his claim against city, as well as insurer’s subrogation suit, which was derivative of employee’s and dependent upon employee’s recovery).

We overrule the City’s sole issue.

Conclusion

We affirm the order of the trial court.

                                                                      Jim Sharp

                                                                      Justice

Panel consists of Justices Keyes, Bland, and Sharp.

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[1]         See Tex. Civ. Prac. & Rem. Code Ann. § 51.014(a)(8) (West Supp. 2011) (permitting interlocutory appeals from court order that grants or denies plea to jurisdiction by governmental unit).

[2]         See Tex. Civ. Prac. & Rem. Code Ann. § 101.106(b) (West 2011).   
  

Thursday, May 24, 2012

Enforceability of Rule 11 Settlement Agreement – Important opinion issued - General Metal Fabricating Corporation v Stergiou

Agreed interlocutory appeal of two summary judgment orders: one concluding that the rule 11 agreement executed by appellants/cross-appellees—Arnold Curry, General Metal Fabricating Corporation, and GMF Leasing, Inc. (collectively the GMF Companies)—and appellees/cross-appellants—John Stergiou and Main Marine Repair and Industrial Cleaning Company (collectively, Stergiou)—was an enforceable settlement agreement, and the other finding that the rule 11 agreement did not confer any right to prepay the future payments owed under that agreement.[1]

Stergiou appeals the first order on the issue of enforceability, and the GMF Companies appeal the second order on the issue of prepayment.

The First Court of Appeals affirms both summary judgment orders.

Texas of Rule 11 verbatim

General Metal Fabricating Corporation, G. M. F. Leasing Inc., and Arnold Curry v. John Stergiou and Main Marine Repair and Industrial Cleaning Co. (Tex.App.- Houston [1st Dist.] May 24, 2012)


OPINION BY JUSTICE HARVEY BROWN
[...]

Background

The GMF Companies and Stergiou have been embroiled in litigation over the ownership of certain shares of the GMF Companies’ stock for more than a decade. This case has been tried, appealed, reversed and remanded, and tried again.See Stergiou v. General Metal Fabricating Corp., 123 S.W.3d 1 (Tex. App.—Houston [1st Dist.] 2003, pet. denied); see also General Metal Fabricating, Inc. v. Stergiou, No. 01-08-00921-CV, 2009 WL 3673112, at *1 (Tex. App.—Houston [1st Dist.] Nov. 5, 2009, no pet.) (mem. op.).

While the jury deliberated during the second trial, Curry, as the representative of the GMF Companies, announced to the trial court that the parties had reached a settlement, put the settlement terms on the record, and executed arule 11 agreement. After counsel for Stergiou read the rule 11 agreement on the record, the trial court inquired of each party whether he understood and approved the terms of the “proposed settlement.”Each party indicated his agreement, and the trial court approved the settlement.

The specific details of the rule 11 agreement were contingent upon the jury’s answers. If the jury found infavor of the GMF Companies, Stergiou would assign all of the stock at issue to Curry and the parties would execute a mutual release of all claims.If the jury found in Stergiou’s favor, however, Curry would pay Stergiou$300,000 for the return of the stock.Payment would be in the form of a promissory note, with a $20,000 down payment being due “on or before May 3, 2006” and, “[c]ommencing on June 1, 2006” and “continuing monthly on the same day of each month thereafter,” an “installment of $4,000.00 of principal and interest [would be] due and payable until the Note ha[d] been paid in full.”

The note would be “secured by a first lien Deed of Trust and Security Agreement covering all furniture, fixtures, equipment, receivables (from the ordinary course of business), inventory, and real property owned by the GMF Companies’ known [as] (the White Buildings and the empty lot) (excluding the four lots the ‘Blue Building’ resides upon and the ‘Blue Building’)of General Metal Fabrication, Inc. and GMF Leasing, Inc.”The parties agreed “to execute all documents necessary to effectuate [their] agreement including all financing statements and deed(s) of trust” and to file a joint notice of non-suit with prejudice within ten days of the trial court’s acceptance of the jury’s verdict.

The jury returned a verdict for Stergiou. Although drafts of the additional documents contemplated by the rule 11 agreement (i.e., the promissory note, the deeds of trust, the security agreements, and the financing statements) were circulated between them, the GMF Companies and Stergioudid not agree as to the specific terms to be included in those documents.The agreed deadline for dismissing the case pursuant to the settlement was twice extended to allow the parties additional time to agree on the additional documents, but the additional documents were never consummated.The GMF Companies eventually tendered to Stergiouan executed motion to dismiss the lawsuit, one cashier’s check in the amount of $20,000 for the down payment required by their settlement, and a second cashier’s check for the remaining $280,000 owed.Stergiou rejected the tender and moved for entry of judgment on the jury’s verdict.

After the trial court entered judgment on the verdict, the parties continued to dispute the effect and terms of the rule 11 agreement.They sought to resolve their dispute by summary judgment.The GMF Parties and Stergioueach filed motions asserting their competing interpretations of the agreement.The first set of summary judgment motions concerned the enforceability of the rule 11 agreement.The GMF Companies contended the rule 11 agreement was an enforceablecontract; Stergiou contended it was not.The second set of summary judgment motions addressed the issue of prepayment.The GMF Companies asked the trial court to find that Curry could pay the entire amount owed under the rule 11 agreement at once; Stergiou asked the trial court to require Curry to make monthly installment payments.After the trial court determined that the rule 11 agreement was enforceable but did not permit prepayment, the parties agreed to this interlocutory appeal to resolve the controlling questions of law.

Both the trial court’s order permitting this interlocutory appeal and the parties’ joint notice of appeal raise two issues:(1) whether the rule 11 agreement is an enforceable agreement and (2) whether Curry had the right to prepay his debt under the rule 11 agreement.

Standard of Review

Our review of a summary judgment is de novo.See Tex. Mun. Power Agency v. Pub.Util. Comm’n of Tex., 253 S.W.3d 184, 192 (Tex. 2007); City of Galveston v. Tex. Gen. Land Office, 196 S.W.3d 218, 221 (Tex. App.—Houston [1st Dist.] 2006, pet. denied).Under the traditional summary judgment standard, the movant must show that no genuine issue of material fact exists and judgment should be rendered as a matter of law.Tex. R. Civ. P. 166a(c); City of Galveston, 196 S.W.3d at 221.We view all evidence in a light favorable to the nonmovant and indulge every reasonable inference in the nonmovant’s favor.City of Galveston, 196 S.W.3d at 221.When both parties move for summary judgment and the trial court grants one motion and denies the other, we consider both motions, their evidence, and their issues, and we may render the judgment that the trial court should have rendered.Mann Frankfort Stein &Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844, 848 (Tex. 2009); City of Galveston, 196 S.W.3d at 221.

Enforceability of the Rule 11 Agreement

In his sole issue on appeal, Stergiouchallenges the trial court’s determination that the rule 11 agreement was enforceable.He asserts three reasons why the trial court erred:(1) he and the GMF Companies never achieved anything more than an “agreement to agree,” (2)compliance with the agreement could not be ordered because its terms are too indefinite, and (3) the agreement does not satisfy the statute of frauds.[2]Finding these reasons unpersuasive, we hold that the rule 11 agreement was enforceable and the trial court did not err in rendering summary judgment against Stergiou on this issue.

A.      Agreement to Agree

None of the parties dispute that the rule 11 agreement required them to execute additional documents—i.e., a promissory note, deed of trust, security agreement, and any necessary financing statement.Stergiou arguesin his first sub-issuethat, because the rule 11 agreement does not supply any information as to the specific terms of those documents (e.g., information with respect to any right or obligation to inspect, insure, maintain, or repair the collateral, the notice and cure periods in the event of default, and any right of or prohibition against prepayment), as a matter of law, it is nothing more than an unenforceable “agreement to agree” and not a valid contract.[3]

The GMF Companies dispute that these particular additional terms are material to the issue of whether the parties intended to be immediately bound by the rule 11 agreement. They argueinstead that the rule 11 agreement is enforceable because it contains all terms necessary to resolve the gravamen of the parties’ dispute and the parties indicated their intent to be bound by it when they asked the trial court to approve it, twice extended the deadline for dismissing the case, and attempted to negotiate the terms of the additional documents.According to the GMF Companies, that the rule 11 agreement contemplates the execution of additional, more formal documents at a later date does not preclude its enforcement.

Contract Law governs Rule 11 Settlement Agreements

Contract law governs agreements made in open court pursuant to rule 11. Ronin v. Lerner, 7 S.W.3d 883, 886 (Tex. App.—Houston [1st Dist.] 1999, no pet.). A contract is legally binding only if its terms are sufficiently definite to enable a court to understand the parties’ obligations. See Fort Worth Indep. Sch. Dist. v. City of Fort Worth, 22 S.W.3d 831, 846 (Tex. 2000).“ Each contract should be considered separately to determine its material terms.” T.O. Stanley Boot Co., Inc. v. Bank of El Paso, 847 S.W.2d 218, 221 (Tex. 1992).Although the contract’s material terms must be agreed upon before a court may enforce the contract, a binding settlement contract may exist even if the parties contemplate that a more formal document memorializing their agreement will be executed at a later date. See City of Fort Worth, 22 S.W.3d at 846;Foreca, S.A. v. GRD Dev. Co., 758 S.W.2d 744, 745-46 (Tex. 1988); see also McLendon v. McLendon, 847 S.W.2d 601, 606-07 (Tex. App.—Dallas 1992, writ denied) (“[T]he attempts by the parties to reduce the rule 11 stipulations to writing do not affect the nature and effect of the stipulations dictated at the [hearing in open court.]”).When an agreement leaves material matters open for future adjustment and agreement on the additional matters never occurs, however, the agreement is not binding upon the parties. City of Fort Worth, 22 S.W.3d at846.

Whether the rule 11 agreement is an enforceable settlement agreement—or whether it fails for lack of an essential term—is a question of law. See Ronin, 7 S.W.3d at 888; see also Martin v. Martin, 326 S.W.3d 741, 746 (Tex. App.—Texarkana 2010, pet. denied) (“The question of whether an agreement is an unenforceable agreement to agree is a question of law, not a question for the jury.”).The parties’ intent to be bound, however, generally is a question of fact. See Herring v. Herron Lakes Estates Owners Ass’n, Inc., No. 14-09-00772-CV, 2011 WL 2739517, at *3 (Tex. App.—Houston [14th Dist.] Jan. 4, 2011, no pet.) (mem. op.) (citing Foreca, 758 S.W.2d at 746).We may determine the issue as a matter of law only if an unambiguous writing shows that the parties intended to be bound by the agreement. Herring, 2011 WL 2739517 at *3 (citing Padilla v. LaFrance, 907 S.W.2d 454, 461-62 (Tex. 1995)).

We begin by noting that nothing in the rule 11 agreement indicates the parties did not intend to be bound. Like most settlement agreements, the rule 11 agreement included essential terms for the payment of money in exchange for the performance of some act: Stergiou would return his shares of the GMF Companies’ stock, Curry would pay $300,000, and together the parties would dismiss the lawsuit with prejudice. See Padilla, 907 S.W.2d at 460-61 (noting that material terms of rule 11 settlement agreement include payment and release of claims); see also CherCo Props., Inc. v. Law, Snakard & Gambill, P.C., 985 S.W.2d 262, 266 (Tex. App.—Fort Worth 1999, no pet.) (holding settlement agreement that included terms of payment and statement that parties would execute mutual releases contained all material terms).The rule 11 agreement further detailed when the stock would be returned (“upon payment of the $20,000 down payment . . . and the execution of all documents necessary to provide the security described therein”), how and when the money would be paid (in the form of a “promissory note” with “$20,000 of principal . . . paid on or before May 3, 2006” and monthly installments of $4,000 thereafter), the interest that would accrue (“6.5% per annum”), and the nature of the collateral (“all furniture, fixtures, equipment, receivables (from the ordinary course of business), inventory, and real property owned by the GMF Companies known [as] (the White Buildings and the empty lot) (excluding the four lots the ‘Blue Building’ resides upon and the ‘Blue Building’”)).See T.O. Stanley Boot Co., 847 S.W.2d at 221 (noting that material terms of contract to loan money are amount to be loaned, maturity date of loan, interest rate, and repayment terms).

We acknowledge that the rule 11 agreement required the parties to execute a promissory note, a deed of trust, a security agreement, and a financing statement, and that, as an affidavit included in Stergiou’s summary judgment evidence suggests, the “forms” for those documents include certain standard provisions for things like collateral descriptions; defaults; inspection rights; insurance, maintenance, and repair of collateral; and prepayment of the debt. However, to the extent these particular provisions are missing from the rule 11 agreement, the two cases on which Stergiou primarily relies do not persuade us that those provisions were essential to an enforceable settlement of this case.[4]See Martin, 326 S.W.3d at 741; see also DKH Homes, LP v. Kilgo, No. 03-10-00656-CV, 2011 WL 1811435, at *3-4 (Tex. App.—Austin May 11, 2011, no pet.) (mem. op.).

In Martin, two brothers had a dispute over the management of their closely-held corporation.326 S.W.3d at 743.In an effort to settle their dispute over “corporate control,” the brothers reached a “settlement agreement” that, among other things, required them to negotiate a shareholder agreement. Id. at 743-44.They never agreed as to the terms of the shareholder agreement. The court of appeals concluded that their settlement was not an enforceable agreement because the to-be-negotiated shareholder agreement “would be the foundational document of [the company] and would define the [brothers’] rights vis-à-vis each other and [the company].”Id. at 754.Here, the additional documents do not have the same “foundational” importance to the underlying dispute. The essence of Stergiou and Curry’s rule 11 agreement is the promise to pay $300,000in exchange for the return of the GMF Companies’ stock and the dismissal of the lawsuit. Although the rule 11 agreement requires Curry to make installment payments for a number of years, it does not require Stergiou and Curry to have a relationship akin to the parties in Martin, who continued to be involved in the operation of the same closely-held corporation.

In Kilgo, a homebuilder alleged that the Kilgos failed to comply with a contractual obligation to build a new home.2011 WL 1811435, at *1.The court of appeals determined that the parties’ agreement did not include terms essential to a contract for the construction of a new home. Id. at *3.The agreement did not include any information defining the undertaking, such as the size of the house contemplated, the price of the house on a per-square-foot or other basis, or the time for completing construction. Id. Here, unlike in Kilgo, the terms that Stergiou asserts are essential—i.e., those terms describing the parties’ obligations to insure, maintain, and repair the collateral, the notice and cure periods for default, and the right of prepayment—do not define the undertaking in the rule 11 agreement to pay for the return of Stergiou’s stock in the GMF Companies.

Instead, this case is more analogous to Montanaro v. Montanaro, 946 S.W.2d 428 (Tex. App.—Corpus Christi 1997, no writ). Montanaro was a suit for an accounting, dissolution of a family-owned partnership, fraud, and breach of fiduciary duties. The parties agreed on the general terms of their settlement, including payment obligations and the release of claims. Id. at 429.The payment obligations were to be secured by a to-be-drafted promissory note, but despite having exchanged drafts, the parties could not agree on the promissory note’s terms. Id. at 431.The court of appeals concluded that the record nevertheless established the essential terms of a settlement agreement because, like Stergiou and the GMF Companies, the parties agreed as to the exact amount of the payments and the period over which they were to be made. Id. “Additional terms regarding overdue, or post-maturity, interest and acceleration upon default were not necessary to enable the parties to comply with the terms of the note, or the underlying settlement agreement.”Id. Likewise here, we conclude that the particular terms of the additional documents were not material and therefore did not destroy the rule 11 agreement’s effectiveness, and we hold that the rule 11 agreement is not an unenforceable “agreement to agree.”

To hold otherwise would undermine well-established policy favoring the peaceable resolution of disputes by agreement and would encourage continued litigation of disputes that have already been decided by agreement. See Kennedy v. Hyde, 682 S.W.2d 525, 529 (Tex. 1984) (noting that “[i]n a day of burgeoning litigation and crowded dockets, the amicable settlement of lawsuits is greatly to be desired”). Moreover, the parties behaved as though their settlement was binding. The transcript of the trial court’s proceedings reflects that the parties were entering into a settlement agreement. Stergiou’s counsel dictated the terms of the agreement into the record. Each party, on the record, appeared in open court and expressed under oath that they had reached an agreement, had reviewed and understood its terms, had authority to enter into that agreement, and wished the trial court to approve it. The trial court did so. At no time did either Stergiou or Curry state on the record that the rule 11 agreement was only a preliminary agreement. See Ronin, 7 S.W.3d at 888 (considering lack of statement on record that rule 11 agreement was only preliminary a factor in enforcing the agreement).

The timing and circumstances under which the rule 11 agreement was executed also indicate the parties’ intent to be bound. The specific terms of the settlement were contingent on the jury’s verdict. If the rule 11 agreement was only preliminary, and not intended to be final until the details of the additional documents were agreed upon, the party that prevailed before the jury would prefer the “win” over the compromised settlement and would have little incentive to agree to those details. Stergiou did not present any summary judgment evidence establishing that his intent was otherwise. And, after the trial court approved the rule 11 agreement, the parties exchanged drafts of the additional documents contemplated by the rule 11 agreement, and they twice extended the agreed deadline for dismissing the lawsuit in order to continue negotiating the terms of the additional documents.

On this record, we overrule Stergiou’s first sub-issue.

B.      Definiteness of Terms

Stergiou’s next complaint—that the rule 11 agreement cannot be enforced as written—is closely related to the issue already decided. Stergiou contends that the rule 11 agreement cannot be enforced until the additional documents are actually executed, which is not possible because there has not been any agreement as to the terms of those additional documents and a reviewing court cannot supply the terms not agreed upon. That is, a court cannot force Stergiou or Curry to accept one or the other’s version of the additional documents.

In support of his contention, Stergiou argues this case is analogous to Nash v. Conatser, 410 S.W.2d 512 (Tex. App.—Dallas 1966, no writ).There, the court observed that specific performance of a contract cannot be ordered when the contract is unenforceable for lack of material terms. Id. at 519-21.We have already disapproved of Stergiou’s assertion that the rule 11 agreement lacked material terms by overruling Stergiou’s first issue, so Nash is not controlling here.

Because the rule 11 agreement set out the amounts to be paid for the return of the GMF Companies’ stock and the dismissal of the lawsuit, how those amounts were to be paid and when, and the interest rate, the parties’ obligations are sufficiently defined.We hold that the terms of the rule 11 agreement are not so indefinite so as to preclude its enforcement, and we overrule Stergiou’s second sub-issue.

C.      Statute of Frauds

Part of the dispute on appeal concerns the description of the security for Curry’s promise to pay Stergiou $300,000 for the return of his stock. The rule 11 agreement provides that the promissory note “will be secured by a first lien Deed of Trust and Security Agreement covering all furniture, fixtures, equipment, receivables (from the ordinary course of business), inventory, and real property owned by the GMF Companies known [as] (the White Buildings and the empty lot) (excluding the four lots the ‘Blue Building’ resides upon and the ‘Blue Building’) of General Metal Fabrication, Inc. and GMF Leasing, Inc.”

Stergiou argues that we should reverse the trial court’s summary judgment and render judgment that the rule 11 agreement is not enforceable because it does not sufficiently describe the real property offered as security. This argument rests on the premise that the rule 11 agreement is a contract for the sale of real estate and thus subject to the statute of frauds. See Tex. Bus. & Comm. Code Ann. § 26.01(b)(4) (West 2009) (statute of frauds).Without deciding whether that premise is sound, we conclude that the rule 11 agreement, together with the writings referenced by it, describes the property in a manner sufficient to satisfy the statute of frauds.

The statute of frauds does not require that a complete description of the land to be conveyed appear in a single document. See Padilla, 907 S.W.2d at 460 (holding that series of letters between parties satisfied statute of frauds).A property description is sufficient if the writing furnishes within itself, or by reference to some other existing writing, the means or data by which the particular land to be conveyed may be identified with reasonable certainty. See AIC Mgmt. v. Crews, 246 S.W.3d 640, 645 (Tex. 2008).The description of the land may be obtained from documents that are prepared in the course of the transaction, even if those documents are prepared after the parties’ contract for sale. See Porter v. Reaves, 728 S.W.2d 948, 949 (Tex. App.—Fort Worth 1987, no writ) (description of land as “1/2 of 20-acre tract” satisfied statute of frauds because location of tract was not disputed, the parties referenced a drawing of the tract in their contract, and seller was required to furnish “current survey” of land after contract was executed); see also Adams v. Abbott, 254 S.W.2d 78, 80 (Tex. 1952) (description furnished by exchange of correspondence between the parties)

The GMF Companies’ summary judgment evidence included Curry’s affidavit testimony that they owned three tracts of land, which were commonly referred to as the “Blue Building,” the “White Buildings,” and the “empty lot.”Stergiou’s attorney drafted the rule 11 agreement using those same terms. Although the rule 11 agreement describes the property to be secured by the deed of trust only as the “White Buildings” and “empty lot,” but not “the four lots the ‘Blue Building’ resides upon and the ‘Blue Building,’” the various deeds of trust and the security agreements circulated as drafts between the parties contain sufficient legal descriptions of those properties. The “White Buildings” are described as:

Lots Five (5), Six (6), Fifteen (15) and Sixteen (16), in Block Fifty-Four (54), of KING’S COURT, an addition in Harris County, Texas, according to the map of the plat thereof recorded in Volume 7, Page 65 of the Map Records of Harris County, Texas.

The “empty lot” is described as:

Lots 7, 8, 9 and 10, in Block 54 of KING’S COURT, an addition in Harris County, Texas, according to the map or plat thereof recorded in Volume 7, Page 65 of the Map of Records of Harris County, Texas.

These same legal descriptions appear in the drafts prepared by Stergiou and in the drafts prepared by the GMF Companies. Thus, there was no dispute between the parties regarding the identification of the real estate.

For this reason, we hold that the statute of frauds does not bar enforcement of the rule 11 agreement, and we overrule Stergiou’s third sub-issue.

Interpretation of the Rule 11 Agreement

Having determined that the rule 11 agreement is enforceable, we now consider whether, as argued by the GMF Companies in their appeal, the agreement authorized Curry to pay the entire amount owed under the agreement at one time In four issues, the GMF Companies contend (1) the rule 11 agreement included a right of prepayment, (2) Curry’s tender of the full $300,000 constituted substantial performance of the rule 11 agreement, (3) by refusing that tender, Stergiou waived his right to interest under the rule 11 agreement, and (4) Stergiou’s failure to mitigate his damages by accepting the tender relieves Curry of any continuing burden to make interest payments. For reasons discussed below, only the GMF Companies’ first issue is properly within the scope of this agreed interlocutory appeal.

A.      Right to Prepay

The rule 11 agreement provided that the GMF Companies will pay Stergiou $300,000, in the form of a promissory note and on the following terms:

There is no dispute that, pursuant to these provisions, the GMF Companies tendered the full $300,000 owed to Stergioubefore the down-payment deadline.

In their first issue, the GMF Companies argue that the trial court erred in determining that they had no right to prepay the full $300,000 because the agreement included language permitting payment of the $20,000 down “on or before” a certain date.They assert that, “when an instrument permits a payment “on or before” a certain date, the maker—while required to make the minimum payment due by that date—also has the right to prepay any other amount, so long as he does so by the due date.And, the right to prepay is not simply a right to pay early, but a right to avoid paying unearned interest.”Stergiou responds that the “on or before” language applied only to the $20,000 down payment and did not confer any general right to prepay the future payments owed.According to Stergiou, the interpretation urged by the GMF Companies would vitiate his right to receive interest and a long-term payout under the settlement. 

None of the parties argue that the rule 11 agreement’s payment provisions are ambiguous.When a contract is not ambiguous, we construe it according to the plain meaning of its express wording and enforce it as written.Chapman v. Abbot, 251 S.W.3d 612, 616−17 (Tex. App.—Houston [1st Dist.] 2007, no pet.).Extrinsic evidence may not be used to create an ambiguity.See Balandran v. Safeco Ins. Co. of Am., 972 S.W.2d 738, 745.We may, however, examine the contract as a whole in light of the circumstances present when the contract was entered.See Transcontinental Gas Pipeline Corp. v. Texaco, Inc., 35 S.W.3d 658, 666 (Tex. App.—Houston [1st Dist.] 2000, pet. denied).

The words “on or before” have a particular meaning in Texas case law.Over one hundred years ago the Texas Supreme Court wrote:“The words ‘on or before’ are of such common use in promissory notes as to be well understood to mean, ‘immediately or at any time in advance of,’ ‘a period named.’”Lovenberg v. Henry, 140 S.W. 1079, 1080 (Tex. 1911).The GMF Companies rely on this well-established definition to support their assertion of a right to prepay the entire amount owing under the rule 11 agreement.But there is a critical distinction in the authorities cited by the GMF Companies:in each casethe “on or before” language immediately preceded the payment at issue or the contract included an express right of prepayment.See Cmty.Sav.& Loan Ass’n v. Fisher, 409 S.W.2d 546, 547 (Tex. 1966) (note included express provision for prepayment of “entire balance before maturity”);Novosad v. Svrcek, 102 S.W.2d 393, 394 (Tex. 1937) (involving three payment obligations, each using “on or before” language); Lovenberg, 140 S.W. at 1080 (involving single payment obligation using “on or before” language); Karam v. Ballou, 673 S.W.2d 643, 643 (Tex. App.—Texarkana 1984, writ ref’dn.r.e.) (involving two payment obligations, each using “on or before” language); Fortson v Burns, 479 S.W.2d 722, 723 (Tex. App.—Waco 1972, writ ref’dn.r.e.) (involving monthly installment obligations, each installment being due “on or before” certain date).

To apply these authorities here, we would have to presume that, by including the “on or before” language in the down payment provision, the parties intended it to apply to all of the payment provisions even though that language is not included in the provision for the future payments that are at issue.We note that thestructure of the rule 11 agreement counsels against making such a presumption.The down-payment provision and the future-payment provision are separately stated in separate bullet-pointed paragraphs using complete punctuation.

The GMF Companies argue that giving too much weight to the structure of the rule 11 agreement ignores their undisputed intent to provide a mechanism by which they could avoid paying Stergiou interest on the balance owed.Curry explained in his affidavit that “[he] did not believe [he] would have access to $300,000, which would be required in the event the jury’s verdict went against GMF.[He] therefore sought to include a provision in the [rule 11 agreement] that would allow GMF to pay the $300,000 settlement amount if the jury’s verdict required GMF to pay that amount.”But this is evidence that Curry was concerned the GMF Companies could pay the $300,000 owed at all, not that his concern was for the avoidance of interest.

A plain, literal reading of the words used in the rule 11 agreement compels a conclusion that the agreement did not confer any right of prepayment with respect to the GMF Companies’ future payment obligations. Consequently, the trial court did not err in granting summary judgment against the GMF Companies on this issue, and we overrule their first issue.

B.      Substantial Performance, Waiver, and Mitigation

In their remaining issues, the GMF Companies argue that they substantially performed under the rule 11 agreement, that Stergiou waived his right to collect interest on the settlement amount by refusing the GMF Companies’ tender of full payment under the rule 11 agreement, and that Stergiou failed to mitigate his damages. Thetrial court, however, authorized this interlocutory appeal only from to “two orders … on the parties’ cross motions for summary judgment on the issues of whether (1) their Rule 11 settlement agreement is enforceable, granted in favor of [the GMF Companies], and (2) [the GMF Companies] had the right to prepay the amount due under the Rule 11 settlement agreement, granted in favor of [Stergiou].”See Act of May 27, 2005, 79th Leg., R.S., ch. 1051, § 1, 2005 Tex. Gen. Laws 3512, 3513, amended by Act of May 25, 2011, 82nd Leg., R.S., ch. 203, § 3.01, 2011 Tex. Gen. Laws 759, 761 (current version at Tex. Civ. Prac. & Rem. Code § 51.014(d) (West Supp. 2011).[5]The two orders referenced were attached to the joint notice of appeal signed by counsel for the GMF Companies and Stergiou.Consistent with the trial court’s order permitting the appeal, the summary judgment orders make clear that they are decisions on the issues of enforceability and prepayment.The joint notice of appeal raises these same two issues, and only these two issues.

Given that the trial court’s orders and the parties’ joint notice of appeal frame the issues to be decided in the same narrow manner, we conclude that the GMF Companies’ arguments regarding theirsubstantial performance of the rule 11 agreement, Stergiou’s waiver of the right to receive interest, and Stergiou’s alleged failure to mitigate damages are outside the scope of this appeal.We therefore overrule the GMF Companies’ second, third, and fourth issues.
Conclusion

Having concluded that the trial court did not err in determining that the Rule 11 Agreement was enforceable but that it did not provide for prepayment of the obligations thereunder, we affirm the trial court’s summary judgments.

                                                                   Harvey Brown

                                                                   Justice

Panel consists of Justices Jennings, Sharp, and Brown.

Justice Sharp, dissenting.

--------------------------------------------------------------------------------

[1]           See Tex. Civ. Prac. & Rem. Code Ann. § 51.014(d) (West 2011).

[2]           Although Stergiou frames his appeal as raising a single issue challenging the trial court’s enforceability ruling, we consider each of the reasons he asserts for error as a separate sub-issue in the order set out above. 

[3]           In the alternative, Stergiou asserts that there is a fact issue as to whether the execution of the additional documents was a condition precedent to the formation of a binding rule 11 agreement. Stergiou did not make this argument in either his motion for summary judgment on enforceability or his response to Curry’s competing motion on that issue, so we cannot conclude that the trial court should have rendered summary judgment in his favor on that ground. Travis v. City of Mesquite, 830 S.W.2d 94, 100 (Tex. 1992) (issues on appeal “must have been actually presented to and considered by the trial court”). But we note that nothing in the rule 11 agreement indicates that the parties did not intend to be bound by the terms of their settlement until such time as the additional documents were actually executed. At the most, the language providing that Stergiou was to return his shares of the stock upon “execution of all documents necessary to provide the security described” can be construed as a condition precedent to Stergiou’s performance under the agreement, not as a condition precedent to the formation of a binding contract. If we were to hold as Stergiou suggests, trial courts would have difficulty approving settlements entered on the eve of trial or, as here, during the jury’s deliberations because the parties generally will require additional time to prepare the formal documents memorializing their agreement.  

[4]           We do not agree that all of the “standard” terms noted by Stergiou’s real estate expert were missing from the rule 11 agreement. For instance, Stergiou complains that the rule 11 agreement does not identify the specific personal and real property that is collateral, but the agreement does. It specifically identified the security as being “all furniture, fixtures, equipment, receivables (from the ordinary course of business), inventory, and real property owned by the GMF Companies known [as] (the White Buildings and the empty lot) (excluding the four lots the ‘Blue Building’ resides upon and the ‘Blue Building’)[.]”

[5]           The former version of section 51.014(d) is still in effect as to cases filed in the trial court before September 1, 2011. Act of May 25, 2011, 82nd Leg., R.S., ch. 203, § 6.01, 2011 Tex.Gen. Laws 758, 761.

SOURCE: HOUSTON COURT OF APPEALS - 01-11-00460-CV – 5/25/12 

CASE STYLE: General Metal Fabricating Corporation, GMF Leasing, Inc., and Arnold Curry vs.  John Stergiou and Main Marine Repair Industrial Cleaning Company   


Another appeal in City of Houston car wreck litigation


Since it offers a nice compilation of the prior decisions on the same issue -- the city's effort to get immunity both for itself and its employee -- first the concurring opinion by Justice Brown:
City of Houston v. Vellejo 
(Tex.App.- Houston [1st Dist.] May 22, 2012)



CONCURRING OPINION

This Court has already decided the issue presented in this case: whether the Tort Claims Act’s election-of-remedies provision bars a plaintiff’s tort claims against a governmental unit when the plaintiff initially sued both the governmental unit and its employee. See City of Houston v. Esparza, No. 01–11–00046–CV, 2011 WL 4925990, at *5–10(Tex. App.—Houston [1st Dist.] Oct. 7, 2011, pet. filed).[1] I would follow this Court’s controlling precedent and affirm the trial court’s denial of the city’s plea to the jurisdiction.
I therefore concur in the Court’s opinion.
Harvey Brown
Justice
FOOTNOTE:

Since its issuance, this Court has consistently followed Esparza.See, e.g.,City of Houston v. Gwinn, No. 01-11-00524-CV, 2012 WL 1068591, at *1–2 (Tex. App.—Houston [1st Dist.] Mar. 29, 2012, no. pet. h.) (mem. op.) (following Esparza); Metro. Transit Auth. v. Light, No. 01-11-00747-CV, 2012 WL 252187, at *1–2 (Tex. App.—Houston [1st Dist.] Jan. 26, 2012, no pet.) (mem. op.) (same); City of Houston v. Tsaig, No. 01-11-00432-CV, 2012 WL 170606, at *2–3 (Tex. App.—Houston [1st Dist.] Jan. 19, 2012, no pet.) (mem. op.) (same); Tex. Dep’t of Aging & Disability Servs. v. Johnson, No. 01-11-00526-CV, 2012 WL 27728, at *2 (Tex. App.—Houston [1st Dist.] Jan. 5, 2012, no pet.) (mem. op.) (same); City of Houston v. Marquez, No. 01-11-00493-CV, 2011 WL 6147772, at *2–3 (Tex. App.—Houston [1st Dist.] Dec. 8, 2011, no pet.)(mem. op.) (same); City of Houston v. McClain, No. 01-11-00194-CV, 2011 WL 6015697, at *2–3 (Tex. App.—Houston [1st Dist.] Dec. 1, 2011, pet. filed) (mem. op.) (same); City of Houston v. San Miguel, No. 01–10–01071–CV, 2011 WL 5429048, at *2–3 (Tex. App.—Houston [1st Dist.] Nov. 10, 2011, no. pet. h.) (mem. op.) (same). Several other courts of appeals have also followed Esparza. See, e.g., Tex. Tech Univ. Health Scis. Ctr. v. Villagran, No. 07-11-0257-CV, 2012 WL 967366, at *7 (Tex. App.—Amarillo Mar. 22, 2012, no. pet. h.); Tex. Dep’t of Pub. Safety, No. 04-11-00271-CV, 2012 WL 726916, at *4–7 (Tex. App.—San Antonio March 7, 2012, no pet. h.).

SOURCE: HOUSTON COURT OF APPELAS – FIRST DISTRICT - 01-11-00133-CV– 5/22/12
CASE STYLE: The City of Houston v. Blanca A. Vellejo and Anjel Flores

City of Houston car wreck litigation - Another unnecessary appeal from a PI suit under the Tort Claims Act


Since it offers a  nice compilation of the prior decisions on the same issue -- the city's effort to get immunity both for itself and its employee -- first the concurring opinion by Justice Brown:
City of Houston v.  Vellejo  
(Tex.App.- Houston [1st Dist.] May 22, 2012)


 
CONCURRING OPINION
  
This Court has already decided the issue presented in this case: whether the Tort Claims Act’s election-of-remedies provision bars a plaintiff’s tort claims against a governmental unit when the plaintiff initially sued both the governmental unit and its employee. See City of Houston v. Esparza, No. 01–11–00046–CV, 2011 WL 4925990, at *5–10(Tex. App.—Houston [1stDist.] Oct. 7, 2011, pet. filed).[1] I would follow this Court’s controlling precedent and affirm the trial court’s denial of the city’s plea to the jurisdiction.


I therefore concur in the Court’s opinion.
                                                                    Harvey Brown
                                                                   Justice
FOOTNOTE:

Since its issuance, this Court has consistently followed Esparza.See, e.g.,City of Houston v. Gwinn, No. 01-11-00524-CV, 2012 WL 1068591, at *1–2 (Tex. App.—Houston [1st Dist.] Mar. 29, 2012, no. pet. h.) (mem. op.) (following Esparza); Metro. Transit Auth. v. Light, No. 01-11-00747-CV, 2012 WL 252187, at *1–2 (Tex. App.—Houston [1st Dist.] Jan. 26, 2012, no pet.) (mem. op.) (same); City of Houston v. Tsaig, No. 01-11-00432-CV, 2012 WL 170606, at *2–3 (Tex. App.—Houston [1st Dist.] Jan. 19, 2012, no pet.) (mem. op.) (same); Tex. Dep’t of Aging & Disability Servs. v. Johnson, No. 01-11-00526-CV, 2012 WL 27728, at *2 (Tex. App.—Houston [1st Dist.] Jan. 5, 2012, no pet.) (mem. op.) (same); City of Houston v. Marquez, No. 01-11-00493-CV, 2011 WL 6147772, at *2–3 (Tex. App.—Houston [1st Dist.] Dec. 8, 2011, no pet.)(mem. op.) (same); City of Houston v. McClain, No. 01-11-00194-CV, 2011 WL 6015697, at *2–3 (Tex. App.—Houston [1st Dist.] Dec. 1, 2011, pet. filed) (mem. op.) (same); City of Houston v. San Miguel, No. 01–10–01071–CV, 2011 WL 5429048, at *2–3 (Tex. App.—Houston [1st Dist.] Nov. 10, 2011, no. pet. h.) (mem. op.) (same). Several other courts of appeals have also followed Esparza. See, e.g., Tex. Tech Univ. Health Scis. Ctr. v. Villagran, No. 07-11-0257-CV, 2012 WL 967366, at *7 (Tex. App.—Amarillo Mar. 22, 2012, no. pet. h.); Tex. Dep’t of Pub. Safety, No. 04-11-00271-CV, 2012 WL 726916, at *4–7 (Tex. App.—San Antonio March 7, 2012, no pet. h.).

SOURCE: HOUSTON COURT OF APPELAS – FIRST DISTRICT - 01-11-00133-CV – 5/22/12 
CASE STYLE: The City of Houston v. Blanca A. Vellejo and Anjel Flores

City Hall


PANEL OPINION BY JUSTICE JENNINGS



In this interlocutory appeal,[1] appellant, the City of Houston (the “City”), challenges the trial court’s order denying its plea to the jurisdiction on the tort claims made against it by appellees, Blanca Vallejo and Anjel Flores (collectively, “Vallejo”). In its sole issue, the City contends that the trial court erred in denying its plea to the jurisdiction in which the City asserted that, by filing suit against both it and its employee regarding the same subject matter, Vallejois “immediately and forever barred from any suit or recovery against [the City] regarding the same subject matter.”[2]



We affirm.



Background



 In her original petition, Vallejo alleges that she sustained personal injuries when the car in which she was traveling was struck by another car owned by the City and driven by Joshua Anderson, a City employee.  Vallejo further alleges that Anderson was operating the car in a negligent manner by failing to keep a proper lookout, driving at an excessive rate of speed, and failing to timely brake.  Vallejo asserts that Anderson is an agent or employee of the City and, as such, the City is liable under the doctrine of respondeat superior. Vallejo further asserts that the City negligently entrusted the car to Anderson and that the City’s car experienced “brake failure” at the time of the accident.



In its answer, the City generally denies Vallejo’s allegations and asserts that it is entitled to governmental immunity from Vallejo’s claims under the Texas Tort Claims Act.[3]In his separate answer, Anderson also generally denies Vallejo’s allegations and invokes the “exceptions from and limitations on liability” set forth in the Tort Claims Act. Vallejo subsequently non-suited her claims against Anderson, and the trial court signed an Order on Partial Non-Suit, dismissing without prejudice Vallejo’s claims against Anderson. 



Shortly thereafter, the City filed its plea to the jurisdiction, arguing that because Vallejo had simultaneously brought suit against both it and Anderson, Vallejois“ immediately and forever barred from any suit or recovery against [the City] regarding the same subject-matter.”[4] The City also contends that even though Vallejo non-suited her claims against Anderson, any suit against him is “forever bar[red].”[5]



The trial court denied the City’s plea. 



Standard of Review



We review de novo a trial court’s ruling on a jurisdictional plea.  See Kalyanaram v. Univ. of Tex. Sys., 230 S.W.3d 921, 927 (Tex. 2007). When reviewing a trial court’s ruling on a challenge to its jurisdiction, we consider the plaintiff’s pleadings and factual assertions, as well as any evidence in the record that is relevant to the jurisdictional issue.  City of Elsa v. Gonzalez, 325 S.W.3d 622, 625 (Tex. 2010). We construe pleadings liberally in favor of the plaintiffs, look to the pleader’s intent, and determine whether the pleader has alleged facts affirmatively demonstrating the court’s jurisdiction.  Id.  Allegations found in pleadings may affirmatively demonstrate or negate the court’s jurisdiction.  City of Waco v. Kirwan, 298 S.W.3d 618, 622 (Tex. 2009). 



We review the trial court’s interpretation of a statute de novo. Galbraith Eng’g Consultants, Inc. v. Pochucha, 290 S.W.3d 863, 867 (Tex. 2009).  In construing statutes, our primary objective is to give effect to the legislature’s intent as expressed in the language of the statute.  Id.; see also Tex. Gov’t Code Ann. § 312.005 (Vernon 2005) (“In interpreting a statute, a court shall diligently attempt to ascertain legislative intent and shall consider at all times the old law, the evil, and the remedy.”).  If the words of a statute are clear and unambiguous, we apply them according to their plain and common meaning.[6]Galbraith Eng’g Consultants, Inc., 290 S.W.3d at 867; City of Rockwall v. Hughes, 246 S.W.3d 621, 625–26 (Tex. 2008).



Election of Remedies



In its sole issue, the City argues that the trial court erred in denying its plea to the jurisdiction because, by filing suit against both it and its employee regarding the same subject matter, Vallejo is “immediately and forever barred from any suit or recovery against [the City] regarding the same subject matter.”SeeTex. Civ. Prac. & Rem. Code Ann. § 101.106(b) (Vernon 2011).



Governmental immunity exists to protect subdivisions of the State, including municipalities like the City, from lawsuits and liability for money damages. Mission Consol. Indep. Sch. Dist. v. Garcia, 253 S.W.3d 653, 655 & n.2 (Tex. 2008).  We interpret statutory waivers of governmental immunity narrowly, as the legislature’s intent to waive immunity must be clear and unambiguous.  Id.; seeTex. Gov’t Code Ann. § 311.034 (Vernon Supp. 2011).



The Texas Tort Claims Act provides a limited waiver of governmental immunity for certain suits against governmental entities.  SeeTex. Civ. Prac. & Rem. Code §§ 101.021, 101.023, 101.025 (Vernon 2011).  And it generally waives governmental immunity to the extent that liability arises from the “use of a motor-driven vehicle or motor-driven equipment” or from “a condition or use of tangible personal or real property.”  Id. § 101.021.   



The City does not dispute that section 101.021 generally waives its immunity for negligence claims like those brought by Vallejo for damages resulting from a car collision allegedly caused by a City employee.  Rather, the City argues that a plaintiff like Vallejo who simultaneously pleads claims against both the City and its employee regarding the same subject matter is barred from obtaining relief against either the City or its employee.   



Section 101.106, entitled “Election of Remedies,” provides, in full,



(a)     The filing of a suit under this chapter against a governmental unit constitutes an irrevocable election by the plaintiff and immediately and forever bars any suit or recovery by the plaintiff against any individual employee of the governmental unit regarding the same subject matter.



(b)     The filing of a suit against any employee of a governmental unit constitutes an irrevocable election by the plaintiff and immediately and forever bars any suit or recovery by the plaintiff against the governmental unit regarding the same subject matter unless the governmental unit consents.



(c)      The settlement of a claim arising under this chapter shall immediately and forever bar the claimant from any suit against or recovery from any employee of the same governmental unit regarding the same subject matter.



(d)     A judgment against an employee of a governmental unit shall immediately and forever bar the party obtaining the judgment from any suit against or recovery from the governmental unit.



(e)      If a suit is filed under this chapter against both a governmental unit and any of its employees, the employees shall immediately be dismissed on the filing of a motion by the governmental unit.



(f)      If a suit is filed against an employee of a governmental unit based on conduct within the general scope of that employee’s employment and if it could have been brought under this chapter against the governmental unit, the suit is considered to be against the employee in the employee’s official capacity only. On the employee’s motion, the suit against the employee shall be dismissed unless the plaintiff files amended pleadings dismissing the employee and naming the governmental unit as defendant on or before the 30th day after the date the motion is filed.

 

Tex. Civ. Prac. & Rem. Code Ann. § 101.106 (emphasis added).

 

The City’s argument concerning the operation of the election-of-remedies provision is based upon language contained in the Texas Supreme Court’s opinion in Mission Consolidated Independent School District v. Garcia, wherein the court sought to “determine the scope of the Tort Claims Act’s election-of-remedies provision.”[7]  253 S.W.3d 653, 655 (Tex. 2008).  In Garcia, three school-district employees whose employment was terminated by the district sued for violations of the Texas Commission on Human Rights Act (“TCHRA”)[8] and for common-law intentional infliction of emotional distress.  Id. at 654–55.  The employees also sued the superintendent of the district for common-law claims of defamation, fraud, and negligent misrepresentation.  Id.  The district, citing section 101.106(b), filed a plea to the jurisdiction, arguing that the employees’ decision to sue both the district and its superintendent barred recovery against the district.  Id. at 655.  The trial court denied the district’s plea, and the court of appeals affirmed, reasoning that section 101.106 did not apply to the employees’ claims.  Id.  The court of appeals interpreted subsection (a) of section 101.106 “to only apply when [a] governmental unit alone is sued, subsection (b) to only apply when the employee alone is sued, and subsection (e) to apply when both are sued simultaneously.”  Id. at 657–58.  The court of appeals also interpreted subsection (e)’s reference to suits “filed under this chapter” to mean that section 101.106 applied only to suits for which the Tort Claims Act waived immunity.  Id. at 658.

 

The supreme court “disagree[d] with the court of appeals’ narrow interpretation,” and it discussed the potential application of both subsections (b) and (e) to the suit.  Id.  In regard to subsection (e),[9] the court concluded that because the Tort Claims Act is the “only, . . . limited[] avenue for common-law recovery against the government, all tort theories alleged against a governmental unit, whether it is sued alone or together with its employees, are assumed to be under the Tort Claims Act for purposes of section 101.106.”[10]Id. at 659 (citation omitted).  The court stated that if the district had filed, pursuant to subsection (e), a motion to dismiss the claims against the superintendent, he would have been entitled to dismissal of the employees’ suit against him.[11]Id.  The court also stated that “if the [district] had obtained [the superintendent’s] dismissal from the suit under subsection (e), all of [the employees’] tort claims against [the district] would [also have been] barred because . . . all tort theories of recovery alleged against a governmental unit are presumed to be “under the [Tort Claims Act].”[12]Id. (citing Tex. Civ. Prac. & Rem. Code Ann. § 101.106(e)).  In regard to the employees’ TCHRA claims against the district, the court explained that these discrimination claims did not constitute a “suit filed under this chapter” and “would not come within subsection (e)’s purview because the Tort Claims Act expressly provides that the remedies it authorizes ‘are in addition to any other legal remedies.’” Id. (citing Tex. Civ. Prac. & Rem. Code Ann.§ 101.003). 

 

The supreme court then turned to consider subsection (b), which the district argued operated to bar the employees’ “entire suit,” including the TCHRA claims, “because [the superintendent] was sued as well, which is all that subsection (b) requires.”  Id.  The court agreed that, “to the extent subsection (b) applies, it bars any suit against the governmental unit regarding the same subject matter, not just suits for which the Tort Claims Act waives immunity or those that allege common-law claims.”  Id.  The court then noted that, unlike subsections (a), (c), (e), and (f), subsection (b) does not contain the limiting phrase “under this chapter,” and, “by subsection (b)’s literal terms, it applies to ‘any suit’ brought against the governmental unit, provided the other subsection (b) requirements are met.”  Id. at 559–60.  Noting that subsection (b) expressly operates to bar suit or recovery against a governmental unit “unless the governmental unit consents,” the court concluded that because the legislature consented to suit under the TCHRA, the TCHRA claims would survive the application of subsection (b), provided the plaintiff met the procedures outlined in that statute.  Id.  



In summarizing its holding concerning the scope of section 101.106, the supreme court stated,



We hold that the Tort Claims Act’s election-of-remedies provision applies to bar Garcia’s common-law claims against the ISD, but does not bar her TCHRA claims.



 Id. at 660.

  

Based upon the above language in Garcia, governmental units, like the City, have argued that section 101.106 creates a “harsh” fatal-filing rule that immunizes both the governmental unit and its employee when a plaintiff, who has an otherwise valid immunity-waived tort claim, files suit against both.  Courts of appeals, in addressing these arguments, have endeavored to interpret the plain language of section 101.106 in a manner that is both consistent with our supreme court’s precedent and does not lead to absurd results.  See City of Houston v. Esparza, No. 01-11-00046-CV, 2011 WL 4925990, at *5–10 (Tex. App.—Houston [1st Dist.] Oct. 7, 2011, pet. filed); see alsoAmadi v. City of Houston, No. 14-10-01216-CV, 2011 WL 5099184, at *4–8 (Tex. App.—Houston [14th Dist.] Oct. 27, 2011, pet. filed); Barnum v. Ngakoue, No. 03-09-00086-CV, 2011 WL 1642179, at *11 (Tex. App.—Austin Apr. 29, 2011, pet. filed); City of N. Richland Hills v. Friend, 337 S.W.3d 387, 392–93 (Tex. App.—Fort Worth 2011, pet. granted).

 

The City’s argument for a harsh fatal-filing rule is not entirely without merit considering certain language in the Garcia opinion.  However, in addition to the language in Garcia that favors the City’s argument, which we have detailed above, there is also language suggesting that the supreme court did not intend to interpret section 101.106 in such a way as to create a fatal-filing trap that would bar plaintiffs like Vallejo from court entirely.  For example, in discussing the general purposes of the election-of-remedies provision, the court stated that the “election scheme is intended to protect governmental employees by favoring their early dismissal when a claim regarding the same subject matter is also made against the governmental employer.”  Id. at 657 (emphasis added).  More significantly, the court stated,

 

Under the Tort Claims Act’s election scheme, recovery against an individual employee is barred and may be sought against the governmental unit only in three instances: (1) when suit is filed against the governmental unit only, id. § 101.106(a); (2) when suit is filed against both the governmental unit and its employee, id. § 101.106(e); or (3) when suit is filed against an employee whose conduct was within the scope of his or her employment and the suit could have been brought against the governmental unit, id. § 101.106(f).

 

Id. (emphasis added).  In this passage, the court expressly recognized that a plaintiff, like Vallejo, who simultaneously files suit against a governmental unit and its employee for common law tort claims for which immunity has been waived under the Tort Claims Act is not left without any remedy merely as the result of the simultaneous filing.  See id.  This is the only reasonable interpretation of the election-of-remedies provision in the Tort Claims Act because it is actually in accord with the plain language used by the legislature:



(e)      If a suit is filed under this chapter against both a governmental unit and any of its employees, the employees shall immediately be dismissed on the filing of a motion by the governmental unit.



Tex. Civ. Prac. & Rem. Code Ann. § 101.106(e) (emphasis added).

 

Presented with the conflicting language in Garcia, we follow the precedent of our Court in Esparza, which is in accord with the plain language used by the legislature in section 101.106(e).  Accordingly, we hold that subsection (b) does not bar Vallejo from pursuing her common law tort claims against the City.  See id. § 101.106(b), (e);Esparza, 2011 WL 4925990, at *10.  We further hold that the trial court did not err in denying the City’s plea to the jurisdiction.[13]

 

We overrule the City’s sole issue.   

 

Conclusion

 

We affirm the order of the trial court.



                                                                    Terry Jennings



                                                                   Justice







Panel consists of Justices Jennings, Sharp, and Brown.



Justice Brown, concurring.





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