Affirmed and Opinion filed November 18, 2021.
In the
Fourteenth Court of Appeals
NO. 14-18-00896-CV
CITY OF HOUSTON; MAYOR SYLVESTER TURNER; CONTROLLER
CHRIS BROWN; COUNCIL MEMBERS AMY PECK, TARSHA
JACKSON, ABBIE KAMIN, CAROLYN EVANS-SHABAZZ, DAVE
MARTIN, TIFFANY D. THOMAS, GREG TRAVIS, KARLA CISNEROS,
ROBERT GALLEGOS, EDWARD POLLARD, MARTHA CASTEX-
TATUM, MIKE KNOX, DAVID ROBINSON, MICHAEL KUBOSH,
LETITIA PLUMMER, AND SALLIE ALCORN; AND DIRECTOR OF
FINANCE TANTRI EMO, Appellants
V.
HOUSTON MUNICIPAL EMPLOYEE PENSION SYSTEM; BOARD
CHAIRMAN SHERRY MOSE; BOARD VICE-CHAIRMAN LENARD
POLK; BOARD SECRETARY RHONDA SMITH; AND BOARD
TRUSTEES RODERICK J. NEWMAN, ROY W. SANCHEZ, LONNIE
VARA, BARBARA CHELETTE, DENISE CASTILLO-RHODES, DAVID
DONNELLY, EDWARD J. HAMB II, AND ADRIAN PATTERSON,
Appellees
On Appeal from the 333rd District Court
Harris County, Texas
Trial Court Cause Nos. 2015-35252 & 2015-35252A
OPINION
This case is a continuation of the dispute between the Houston Municipal
Employee Pension System and its board of trustees, on one hand, and the City of
Houston and various city officials, on the other. The Pension System brought this
suit seeking a writ of mandamus from the district court to compel the City to make
payments to the Pension System that the Pension System contends are statutorily
required. The Pension System also asserted ultra vires claims against the members
of the City Council and certain other officials for failure to allocate and make the
payments. The City asserted counterclaims against the Pension System and
third-party claims against the Pension System’s board of trustees. The trial court
denied the City Parties’ plea to the jurisdiction and granted the Pension System
Parties’ motion for summary judgment. The City Parties challenge both rulings on
appeal. We affirm.
I. BACKGROUND
The Pension System is a defined-benefit pension plan administered by a board
of trustees and organized and operated under what is designated as Texas Revised
Civil Statutes article 6243h (the Act), which applies only to cities with a population
exceeding two million people—that is, to the City of Houston. See TEX. REV. CIV.
STAT. art. 6243h, § 1(4). The board has broad powers to “interpret and construe” the
Act; to “correct any defect, supply any omission, and reconcile any inconsistency”
in the Act in the manner and to the extent that the board considers expedient for the
greatest benefit of the Pension System’s members; and to “determine all questions,
whether legal or factual, relating to eligibility for membership, service, or benefits
or relating to the administration of the pension fund to promote the uniform
administration of the pension fund for the benefit of all members and retirees.” Id.
2
§ 2(x). The board’s determinations of fact and its interpretation of the Act “are final
and binding on any interested party,” and thus, largely insulated from judicial
review. Klumb v. Hous. Mun. Emps. Pension Sys., 458 S.W.3d 1, 4 (Tex. 2015);
Hous. Mun. Emps. Pension Sys. v. Ferrell, 248 S.W.3d 151, 158–59 (Tex. 2007).
In 2011, the City announced plans to remove employees from its Convention
and Entertainment Facilities Department and to outsource these services and
employees to a local-government corporation, Houston First Corporation. In
response, the Pension System’s board adopted a resolution that, for the purposes of
the statutory pension plan, the Act’s definition of “employee” includes full-time
employees of local-government corporations controlled by the City, upon such a
determination by the board’s External Affairs Committee. The board revised the
pension-plan documents to incorporate this definition.
The City then formed the nonprofit corporation Houston First Foundation and
indicated that this entity would employ all the City employees who were to have
joined Houston First Corporation. The Pension System’s board adopted another
resolution reiterating its construction of “employee” and announcing that employees
of any entity controlled directly or indirectly by the City are considered employees
for purposes of membership in the Pension System unless the External Affairs
Committee expressly determines otherwise; “provided, however, that nothing in this
resolution would apply to . . . any otherwise ineligible employee as determined by
the External Affairs Committee.”
Thereafter, the City formed another nonprofit corporation called Convention
and Cultural Services, Inc. (“CCSI”), to employ the workforce, which CCSI then
leased to Houston First Corporation, CCSI’s only client. The External Affairs
Committee issued a resolution that these leased workers remain members of the
3
Pension System as part of a control group. We refer to all employees of Houston
First Corporation, Houston First Foundation, and CCSI as the CCSI Employees.
A. Klumb v. Houston Municipal Employees Pension System
Following this nominal transfer of the workforce, two groups of CCSI
Employees sued the Pension System and those members of its board who had voted
to amend the pension-plan documents incorporating the board’s construction of the
term, “employee.” See Klumb, 458 S.W.3d at 6. The claims of both groups rested on
the premise that they were employed only by CCSI and were no longer employed
by the City. The first of these groups was composed of CCSI Employees who were
eligible to retire and who maintained that they were entitled to receive retirement
benefits from the Pension System even though they were still actively performing
the same duties. See id. The other group of CCSI Employees were not yet eligible to
retire, and they argued that they were entitled to defer retirement status and to require
the Pension System to stop deducting a percentage of their salaries for contribution
to the pension fund. See id. The Klumb plaintiffs alleged breach of a meet-and-confer
agreement (MCA) between the City and the Pension System, violations of the state
and federal constitutions, and ultra vires claims. See id. at 7. The City intervened,
aligning itself with the plaintiff-employees. Id. at 7. The Pension System and the
board members challenged the trial court’s subject-matter jurisdiction on the
grounds of immunity and of the Act’s denial of the right to judicial review of the
board’s construction and application of the term, “employee.” See id. The trial court
granted the plea, and both the intermediate appellate court and the Supreme Court
of Texas affirmed. See id. at 4.
The court held that the board’s actions in construing the Act’s terms, applying
those interpretations, and delegating authority to an External Affairs Committee
were not ultra vires but were within the board’s broad discretionary authority under
4
the Act. Id. at 10–11. As for the breach-of-contract claims, the court held that
noncompliance with a contract such as the MCA does not give rise to an ultra vires
claim but presents only a claim for breach of contract, and no waiver of
governmental immunity from contract claims was alleged or supported. See id. at
12. Regarding the constitutional claims, the court explained that immunity from suit
was not waived because the claims were facially invalid. See id. at 13–17.
B. City of Houston v. Houston Municipal Employees Pension System
Shortly after Klumb was decided, the Pension System’s board asked various
City officials and the leadership of the Houston First and CCSI entities to designate
a person to provide employee and payroll information about the CCSI Employees.
The requests’ recipients refused. The City also failed to allocate or pay the City’s
statutorily required contributions to the pension fund and “pick up” contributions,
that is, the City’s additional contribution to the pension fund in lieu of direct
contributions by the members. See City of Houston v. Hous. Mun. Emps. Pension
Sys., 549 S.W.3d 566, 571 (Tex. 2018) (“Pension System I”); see also TEX. REV.
CIV. STAT. art. 6243h, § 8(a), (c).
The Pension System sued the City and, in their official capacities, the mayor,
the controller, the members of the city council, and the director of the finance
department (the City Officials; we refer to collectively to the City and the City
Officials as the City Parties). The Pension System filed a mandamus proceeding in
the district court seeking issuance of a writ compelling the City Parties to provide
information about CCSI Employees1 and “to allocate funding in the current City
1
The parties later settled these claims, which had been asserted under the Texas Public
Information Act (TPIA). At the parties’ request, we dismissed a separate petition for writ of
mandamus filed in this court before the settlement that asserted those claims. See In re City of
Houston, No. 14-19-00142-CV, 2019 WL 4021961 (Tex. App.—Houston [14th Dist.] Aug. 27,
5
budget to provide the statutorily required payments of 27.36% of the payroll of the
[CCSI] employees”; to pay the allocated funds to the Pension System; to make such
allocations and payments part of all future proposed City budgets; and to make “pick
up” contributions on behalf of the CCSI Employees. See TEX. GOV’T CODE ANN.
§ 24.011 (writ power of district-court judge). The Pension System alleged that the
City Parties had a ministerial duty to do these things, and that the City Officials’
conduct in failing to do so was ultra vires.
The City filed counterclaims against the Pension System and third-party
claims against the members of the Pension System’s board of trustees in their official
capacities.2 Many of the City’s allegations repeated the claims raised in Klumb: the
City alleged that the Pension System and its board members breached an MCA,
improperly delegated authority to the External Affairs Committee, and committed
ultra vires acts by their interpretation of the term “employee.” The City also asserted
that the Pension System Parties violated the Open Meetings Act, and the City sought
declaratory and injunctive relief requiring the Pension System Parties to correct their
alleged statutory violations and prohibiting them from enforcing any obligation
based thereon. In the alternative, the City asked for declaratory and injunctive relief
to prevent inverse condemnation. The City also asked the trial court to invalidate
and correct actions the City characterized as arbitrary and capricious, or as adversely
affecting the City’s vested property rights, or as violating the City’s constitutional
rights. Finally, the City sought mandamus relief to correct the alleged abuses of
discretion by the Pension System and its board.
2019, orig. proceeding) (per curiam) (mem. op.). We likewise do not address the TPIA issues
included in the City Parties’ pre-settlement briefing in this appeal as those issues are now moot.
2
Pursuant to Texas Rule of Appellate Procedure 7.2(a), we have substituted the names of
the current City Officials and the current members of the Pension System’s board of trustees.
6
Regarding the Pension System’s affirmative claims, the City Parties filed a
plea to the jurisdiction in which they argued that the Pension System lacked standing
to bring claims under the Act and that governmental immunity barred the claims.
The trial court denied the City Parties’ plea.
On interlocutory appeal of the denial of the jurisdictional plea, we rejected the
challenge to the Pension System’s standing. City of Houston v. Hous. Mun. Emp.
Pension Sys., 513 S.W.3d 114, 135 (Tex. App.—Houston [14th Dist.] 2016, pet.
granted), rev’d in part on other grounds, Pension System I. Regarding governmental
immunity, the City Parties argued that immunity remained intact because the
Pension System had not pleaded a valid ultra vires claim. The City Parties pointed
out that the Pension System sought to compel payment of a 27.36% contribution rate
as specified in a 2011 MCA rather than the higher contribution rate required by
statute; thus, the City Parties reasoned that the Pension System was really trying to
enforce a contract rather than to compel compliance with a statutory duty. We agreed
and held that the Pension System should have the opportunity to amend its pleading
to seek compliance with the statute. Id. at 128–29. We also agreed with the City
Parties’ argument that ultra vires claims could be asserted only against the City
Officials, and not against the City itself. Id. at 134. In all other respects, we affirmed
the trial court’s denial of the City Parties’ plea to the jurisdiction.
On further appeal, the Supreme Court of Texas held that the Pension System
need not amend its pleading because it already had stated a valid ultra vires claim
for payments required by statute. Pension System I, 549 S.W.3d at 580. The court
pointed out that even though the Pension System pleaded for relief based on the
lower contribution rate specified in the MCA rather than the higher statutory rate, a
litigant need not pursue all of the relief to which it is entitled. Id. Because payments
7
of at least the amount sought were statutorily required, the Pension System had
pleaded a valid ultra vires claim. See id.
C. On Remand
On remand, the Pension System and its individual board members moved for
summary judgment, and the City Parties filed a second plea to the jurisdiction.
The Pension System and its board sought (1) traditional summary judgment
on the Pension System’s claims for mandamus relief compelling the City Parties to
comply with their pension-contribution obligations, an argument for which they
relied primarily on Klumb and on the previous appeal in this case; and
(2) no-evidence and traditional summary judgment rejecting the City Parties’
affirmative defenses, counterclaims, and third-party claims.
The trial court denied the City Parties’ plea to the jurisdiction and rendered
summary judgment in favor of the Pension System and its board members.
Regarding the Pension System’s affirmative claims, the trial court granted the
Pension System’s requested mandamus relief to compel the City Officials (1) to
include CCSI Employees in the pensionable payroll for fiscal years 2017–2019
“such that the excess liability as calculated by the [Pension System] actuary based
on the correct and updated information for [CCSI Employees] is a current obligation
of the City”; and (2) to make contribution payments and pick-up payments for CCSI
Employees in the then-current, and all future, fiscal years. As part of the summary
judgment, the trial court also expressly ruled in favor of the Pension System and its
board members and against the City Parties on the latter’s affirmative defenses,
counterclaims, and third-party claims.3 The trial court allowed the City Parties’
3
The trial court severed the Pension System’s claim for attorney’s fees in connection with
its TPIA claims into a separate cause number and expressly stated in its summary-judgment order
that the summary judgment finally disposed of all remaining claims and parties. The City Parties
included both trial court cause numbers in this appeal and initially argued that the trial court erred
8
combined motion for new trial, for reconsideration, and for modification of the
judgment to be overruled by operation of law.
In two issues, the City Parties challenge the trial court’s judgment denying
their plea to the jurisdiction and granting the summary-judgment motion of the
Pension System and its board.
II. PLEA TO THE JURISDICTION
The state generally has sovereign immunity from suit and liability. See
Wasson Interests, Ltd. v. City of Jacksonville, 489 S.W.3d 427, 429–30 (Tex. 2016).
When political subdivisions of the state act in a governmental capacity, they share
in the state’s immunity, which is then referred to as governmental immunity. See id.
Unless waived, governmental immunity from suit defeats a trial court’s
subject-matter jurisdiction. See Harris County v. Sykes, 136 S.W.3d 635, 638 (Tex.
2004).
A trial court’s subject-matter jurisdiction is properly challenged in a plea to
the jurisdiction. Tex. Dep’t of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 224
(Tex. 2004). We review the trial court’s ruling on a plea to the jurisdiction de novo.
Chambers-Liberty Ctys. Navigation Dist. v. State, 575 S.W.3d 339, 345 (Tex. 2019).
The movant may challenge whether the plaintiff has pleaded facts showing the trial
court’s jurisdiction or may challenge the existence of jurisdictional facts. Miranda,
133 S.W.3d at 226–27. If the movant challenges the plaintiff’s pleading, we look to
the plaintiff’s intent and construe the pleading liberally in the plaintiff’s favor to
determine whether the facts alleged affirmatively demonstrate the trial court’s
jurisdiction to hear the matter. Klumb, 458 S.W.3d at 8. If the movant challenges the
in severing the issue of attorney’s fees; however, the parties later settled that dispute, rendering
that issue moot.
9
existence of jurisdictional facts, parties may submit evidence supporting or opposing
the plea, which we review under the same standard applicable to a traditional motion
for summary judgment. Chambers-Liberty Ctys., 133 S.W.3d at 224 (citing Sampson
v. Univ. of Tex. at Austin, 500 S.W.3d 380, 384 (Tex. 2016)). We take as true all
evidence favorable to the plaintiff, indulging every reasonable inference and
resolving any doubts in the plaintiff’s favor. Sampson, 500 S.W.3d at 384. If the
relevant evidence fails to raise a fact question on the jurisdictional issue, the court
rules on the plea to the jurisdiction as a matter of law. Miranda, 133 S.W.3d at 228.
But if the evidence creates a fact question regarding jurisdiction, then the trial court
must deny the plea to the jurisdiction and allow the factfinder to resolve the issue.
Id. at 227–28.
Even if a political subdivision’s governmental immunity has not been waived,
a claim may be brought against a governmental official for ultra vires conduct.
Pension Sys. I, 549 S.W.3d at 576. Conduct is ultra vires if the official acted without
legal authority or failed to perform “a purely ministerial act.” Id. For an act to be
considered ministerial, the law must prescribe and define the duty to be performed
with such precision and certainty that nothing is left to the official’s exercise of
discretion or judgment. Id.
A. Eligibility for Pension-System Membership
The City Parties first assert that, pursuant to sections 4(4) and (5) of the Act,
the CCSI Employees are ineligible for pension-system membership. Those statutory
provisions state as follows:
Notwithstanding any other provision of this Act, the following
employees of the city or of the pension system are not eligible to
become members of the pension system:
...
(4) independent contractors, including consultants; and
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(5) employees in positions covered by any other pension plan of the
city to which the city contributes . . . except to the extent that
they are covered in another pension plan only as a beneficiary.
TEX. REV. CIV. STAT. ANN. art. 6243h, § 4(4) and (5). We address each subsection
in turn.
1. The City Parties did not establish that CCSI Employees are
independent contractors.
To prove that CCSI Employees are independent contractors, the City Parties
relied in their jurisdictional plea solely on the affidavit of Frank Wilson, who, at the
time of his affidavit, was both CCSI’s president and Houston First Corporation’s
chief financial officer. Wilson attested that the Services Agreement between CCSI
and Houston First Corporation stipulates that each employee of CCSI is an
independent contractor with respect to the employee’s duties at Houston First
Corporation. The Pension System responded that binding authority establishes that
these personnel are employees rather than independent contractors. The Pension
System is correct.
As the Supreme Court of Texas explained in Klumb, it is the province of the
Pension System’s board to construe the Act, and the board’s decision is beyond
judicial review so long as the board’s construction “neither inherently nor patently
conflicts” with the Act’s terms. Klumb, 458 S.W.3d at 10. The Pension System
resolved in October 2011 that
[E]mployees of any entity controlled, directly or indirectly, by the City
are considered Employees for purposes of membership in [the Pension
System], unless the External Affairs Committee expressly determines
otherwise; provided, however that nothing in this resolution would
apply to . . . any otherwise ineligible employee as determined by the
External Affairs Committee.
Id. at 12. In November 2011, the External Affairs Committee further resolved that
the personnel nominally employed by CCSI and leased to Houston First Corporation
11
“remain as members of the plan.” Id. at 6. The Klumb court held that the board’s
construction of the term “employee” did not present a “conspicuous and
irreconcilable conflict” with the Act, and thus, the board’s actions were not subject
to judicial review. Id. at 11. The court further held that the Act authorized the pension
board to delegate decision-making to the External Affairs Committee as it had done.
Id.
The City Parties have neither disputed that CCSI Employees are among the
“employees of any entity controlled, directly or indirectly, by [the City],” nor
produced evidence that “the External Affairs Committee [has] expressly
determine[d] otherwise.” They do not contend that the External Affairs Committee
has determined that CCSI Employees are ineligible for membership in the Pension
System or that the Act conspicuously requires the Pension System’s board to give
dispositive effect to a stipulation by City-controlled entities that CCSI Employees
are independent contractors. Thus, the trial court correctly rejected this argument.
2. The City Parties did not establish that the CCSI Employees’
participation in the City’s 401(k) program renders them statutorily or
constitutionally ineligible for membership in the Pension System.
The City Parties next contend that, pursuant to section 4(5) of the Act, CCSI
Employees are ineligible for membership in the Pension System because they
already are covered by a 401(k) program to which the City contributes. In a related
argument, the City Parties argue that the Texas Constitution bars CCSI Employees
from receiving benefits from both the 401(k) program and the Pension System for
the same service. Thus, the City Parties conclude that the Pension System has failed
to assert true ultra vires claims because the City is not required by law to contribute
to the Pension System or to make pick-up payments with respect to those employees.
The Pension System responds that it is the City’s creation of the 401(k)
program that violates the Texas Constitution, and that the question of the CCSI
12
Employees’ membership in the Pension System has already been decided in favor
of membership.
To resolve this dispute, we must construe both the Texas Constitution and the
pension statute. These are questions of law, which we review de novo. In re M.G.N.,
441 S.W.3d 246, 248 (Tex. 2014) (per curiam).
(a) The City’s creation of the 401(k) program is not
unconstitutional.
Because both sides argue that the other side’s position violates the Texas
Constitution, we begin with these arguments. We construe constitutional provisions
to give effect to the intent of the provision’s makers and adopters, relying heavily on
the literal text. Harris Cty. Hosp. Dist. v. Tomball Reg’l Hosp., 283 S.W.3d 838, 842
(Tex. 2009). We presume the language was carefully selected, and we interpret the
words as they are generally understood. Id.
Article XVI, section 67(a)(2) of the Texas Constitution provides,
A person may not receive benefits from more than one system for the
same service, but the legislature may provide by law that a person with
service covered by more than one system or program is entitled to a
fractional benefit from each system or program based on service
rendered under each system or program calculated as to amount upon
the benefit formula used in that system or program. . . .
TEX. CONST. art. XVI, § 67(a)(2) (emphasis added).4 Although both sides rely on the
italicized language, they reach opposing incorrect conclusions.
4
The proposition on the ballot which the adopters, i.e., the voters, approved did not
summarize this specific subsection but instead described the measure as a whole as, “[t]he
constitutional amendment revising and consolidating provisions relating to state and local
retirement systems and programs and providing for a maximum state contribution to state systems
of 10 percent of the aggregate compensation paid to individuals.” Tex. S.J. Res. 3, § 3, 64th Leg.,
R.S. (1975) (inadvertently not published in General and Special Laws of Texas).
13
The Pension System maintains that the City’s creation of a 401(k) program
covering CCSI Employees is illegal and that the Texas Attorney General issued an
opinion “holding that the second pension plan would be unconstitutional.” The
Pension System is mistaken on both points.
The language of the constitutional provision is unambiguous. It simply
prohibits a person whose service is covered by more than one system from receiving
benefits from more than one system unless the legislature authorizes the person to
receive fractional benefits from each.5 Far from prohibiting the creation of multiple
benefit systems potentially applicable to the same service, this provision expressly
acknowledges that it is possible for a governmental employee to be “a person with
service covered by more than one system or program.” Id. Moreover, municipalities
are expressly authorized to create retirement systems. See TEX. GOV’T CODE ANN.
§ 810.001 (authorizing municipalities and other political subdivisions to create
public retirement systems).6 Thus, the Pension System is mistaken in arguing that
the City violated the Texas Constitution by creating a 401(k) program, because
rather than restricting the creation of more than one benefit system, this
constitutional provision restricts only the receipt of benefits from multiple systems.
Consistent with this provision’s plain meaning, the Texas Attorney General
opinion cited by the Pension System is a response to a question as to whether this
constitutional provision “would preclude a retired City employee from receiving
benefits from both the existing municipal pension system, established under article
6243h of the Revised Civil Statutes, and a separate retirement system that the City
is contemplating establishing.” Tex. Att’y Gen. Op. No. GA-0221, at *1 (2004)
5
Although inapplicable here, the same provision also permits the legislature to authorize
transfer of service credit between certain retirement systems.
6
The Act also permits the Pension System and the City to enter into a written agreement
to offer alternative retirement plans. See TEX. REV. CIV. STAT. ANN. art. 6243h, § 1C(b).
14
(emphasis added).7 The Attorney General concluded that article XVI, section 67 of
the Texas Constitution forbids a person from receiving benefits from both the
Pension System and from a separate retirement system established by the City. Id.
at *6. But for the reasons we have explained, the City’s establishment of a retirement
system that is separate from the Pension System does not itself violate this
constitutional provision, nor did the Attorney General suggest otherwise.
(b) Nevertheless, the City Parties did not establish that the
401(k) program necessarily bars CCSI Employees’
membership in the Pension System.
The City Parties likewise err in assuming that CCSI Employees for whom
401(k) contributions have been made are constitutionally barred from membership
in the Pension System. Again, the provision only bars a person from receiving
benefits from more than one system for the same service; it does not identify the
system from which an employee will receive benefits when more than one system
potentially applies.
The real question is, when two systems of retirement benefits apply to the
same service by CCSI Employees, and the legislature has not authorized a CCSI
Employee or beneficiary to receive fractional benefits from both systems, which
system is the one from which that employee or beneficiary can receive benefits?
The Texas Constitution does not provide the answer, but the Act tells us who
makes that decision: “The pension board . . . may . . . determine all questions,
whether legal or factual, relating to eligibility for membership, service, or benefits
or relating to the administration of the pension fund to promote the uniform
7
The separate retirement system contemplated by the City in 2004 is not the 401(k)
program the City established for CCSI Employees in 2011. The system considered in 2004, but
never enacted, would have provided retirement benefits consisting entirely of the lump-sum
payment of the departing employee’s unused sick leave and vacation leave accumulated over the
course of that person’s employment by the City.
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administration of the pension fund for the benefit of all members and retirees . . . .”
TEX. REV. CIV. STAT. ANN. art. 6243h, § 2(x)(4). And as discussed above, it was
decided in Klumb that the pension board acted within its authority in determining
that CCSI Employees are members of the Pension System unless the External Affairs
Committee expressly determines otherwise or determines that the employee is
ineligible for membership. The City Parties do not contend that the External Affairs
Committee has made such determinations.
This ineligibility argument therefore appears to rest on the implicit
assumption that the Act requires the External Affairs Committee to determine that
the City’s creation and funding of a 401(k) program covering CCSI Employees
renders those employees ineligible for membership in the Pension System. But the
Act’s terms do not dictate that result. To illustrate why this is so, one need only
consider the terms that make up the ineligibility provision on which the City Parties
rely.
Section 4(5) of the Act states that the City employees ineligible for
membership in the Pension System are those “employees in positions covered by
any other pension plan of the city to which the city contributes.” Id. § 4(5) (emphasis
added). The City Parties construe this provision by relying on the expression
“pension plan” as it is used in the Employee Retirement Income Security Act of
1974.8 But article 6243h supplies its own definitions, and “[c]ourts must adhere to
legislative definitions of terms when they are supplied.” Youngkin v. Hines, 546
S.W.3d 675, 680 (Tex. 2018). As used in the Act, “‘[p]ension’ means a benefit
payable to a retired member out of the pension fund based on a disability or service
retirement.” TEX. REV. CIV. STAT. ANN. art. 6243h, § 1(15) (emphasis added). And
8
See, e.g., 29 U.S.C. § 1002(2)(A), (34), and (35).
16
“‘[p]ension fund’ means assets consisting of the contributions made by the city,
contributions made by any member, and any income, profits, or other amounts
resulting from the investment of those contributions.” Id. § 1(17).
If we knew nothing more about the term “pension fund” as used in the Act,
then the term might apply equally to the funds that are part of the Pension System
and those that are part of the City’s 401(k) program. But the Act goes on to commit
the management and administration of “the pension fund” to the Pension System’s
board. See id. § 2(o) (“The pension board shall receive, manage, and disburse the
pension fund as provided by this Act and rules adopted by the pension board.”)
(emphasis added); id. § 2(x) (“The pension board shall manage the pension fund
under this Act . . . .”) (emphasis added). And the Pension System’s board is
instructed to conduct its “administration of the pension fund to promote the uniform
administration of the pension fund for the benefit of all members and retirees.” Id.
§ 2(x)(4). “‘Member’ means each active employee included in the pension system,
except for an employee who is ineligible under Section 4 of this Act,” and “retiree”
is “a former member of the pension system who . . . has separated from service” and
who has met the eligibility requirements for, and is receiving, “a deferred retirement
pension, normal retirement pension, or disability pension under this Act based on
service that was credited to the person.” Id. § 1(13), (22).
In effect, then, section 4(5) of the Act would render an employee ineligible
for membership in the Pension System if the employee is covered by “any other
pension plan” to which the City contributes and in which benefits are paid from the
pension fund administered by the Pension System’s board for the benefit of the
Pension System’s members and retirees.
The City does not contend that its 401(k) program pays benefits from a
pension fund that is so administered. Indeed, it would make no sense for a pension
17
fund benefiting those ineligible for membership in the Pension System to be
administered by the Pension System’s board for the benefit of the Pension System’s
current and former members.
The legislature, however, has committed the redress of the Act’s defects and
inconsistencies to the Pension System’s board:
The pension board . . . may . . . interpret and construe this Act . . . ;
correct any defect, supply any omission, and reconcile any
inconsistency that appears in this Act in a manner and to the extent that
the pension board considers expedient to administer this Act for the
greatest benefit of all members; [and to] determine all questions,
whether legal or factual, relating to eligibility for membership, service,
or benefits or relating to the administration of the pension fund to
promote the uniform administration of the pension fund for the benefit
of all members and retirees . . . .
Id. § 2(x). The board therefore could permissibly construe the Act in a manner that
maintains the CCSI Employees’ eligibility for membership in the Pension System,
and it already has determined that all CCSI employees are members unless the
External Affairs Committee determines otherwise. We note parenthetically, for
example, that assuming that the receipt of benefits from both the Pension System
and the City’s 401(k) program would be impermissible, the Act itself permits the
pension board to “offset amounts received wrongly or in error . . . from future
pension or benefit payments payable to the person or the person’s beneficiaries.”
TEX. REV. CIV. STAT. art. 6243h, § 3(h). Thus, the board could use the power of
offsetting benefits to effectively cancel out “amounts received wrongly” from the
401(k) program—and indeed, the City Parties pleaded the right of offset as an
affirmative defense.
We overrule this sub-issue.
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B. Retrospective Relief
Although the Supreme Court of Texas rejected this argument during the
earlier appeal in this case, the City Parties again assert that the Pension System failed
to assert proper ultra vires claims because the Pension System seeks retrospective
relief.
Unless abrogated by the legislature, political subdivisions generally retain
governmental immunity from suits for money damages. City of El Paso v. Heinrich,
284 S.W.3d 366, 369–70 (Tex. 2009). Thus, immunity generally bars suits for
retrospective monetary relief. Id. at 368–69. But, “where statutory or constitutional
provisions create an entitlement to payment, suits seeking to require state officers to
comply with the law are not barred by immunity merely because they compel the
state to make those payments.” Id. at 371. To fall within this exception for ultra vires
claims, the claimant “must allege, and ultimately prove, that the officer acted without
legal authority or failed to perform a purely ministerial act.” Id. at 372.
As the Supreme Court of Texas has explained, the Act imposes a ministerial
duty on the City to contribute to the Pension System, and that by “seeking payments
for what it is owed on the date of judgment and in the future,” the Pension System
pleaded for prospective relief. Pension System I, 549 S.W.3d at 582. The Pension
System did not amend its petition after the Supreme Court of Texas decided the
issue. Based on the law of the case as established in Pension System I, this sub-issue
is without merit. See Briscoe v. Goodmark Corp., 102 S.W.3d 714, 716–17 (Tex.
2003) (“The ‘law of the case’ doctrine is defined as that principle under which
questions of law decided on appeal to a court of last resort will govern the case
throughout its subsequent stages.” (quoting Hudson v. Wakefield, 711 S.W.2d 628,
630 (Tex. 1986))).
19
C. Recovery of Amounts under the MCA
The City Officials also assert that the trial court erred in denying their plea to
the jurisdiction because the Pension System did not allege and prove an ultra vires
claim inasmuch as the Pension System sought to recover under a contract rather than
under a statute. See Pension Sys. I, 549 S.W.3d at 576 (“[M]erely failing to comply
with a contract does not give rise to an ultra vires claim.”).
This argument was asserted by, and resolved against, the City Officials in
Pension System I. While it is true that the Pension System did not seek in this suit to
recover the higher contribution rate required by the Act and instead asked only to
recover the lower contribution rate specified in the MCA, “litigants can seek less
than the maximum amount that could be claimed by law.” Id. at 579. Thus, the
Supreme Court of Texas held that the Pension System pleaded a valid ultra vires
action for the failure to make payments to the pension fund. Id. at 580.
We overrule this sub-issue.
D. Res Judicata
The City Parties also assert that, based on the judgment in Klumb, the Pension
System’s “claims are barred (by immunity) because they are barred by res judicata.”
Res judicata—or more precisely, claim preclusion—is a doctrine precluding
relitigation of claims that have been finally adjudicated and claims that could have
been litigated in the prior action.9 Amstadt v. U.S. Brass Corp., 919 S.W.2d 644, 652
(Tex. 1996). It is an affirmative defense10 requiring proof of (1) a prior final
judgment on the merits by a court of competent jurisdiction; (2) identity of parties
9
“Res judicata” has sometimes been used generically to refer not only to claim preclusion
but also to issue preclusion, also known as collateral estoppel. See Barr v. Resolution Tr. Corp. ex
rel. Sunbelt Fed. Sav., 837 S.W.3d 627, 628 (Tex. 1992).
10
See Tex. R. Civ. P. 94.
20
or those in privity with them; and (3) a second action based on the same claims as
were raised, or could have been raised, in the first action. Id.
The first element has not been satisfied. A dismissal due to governmental
immunity constitutes a final determination on the merits only as to whether
governmental immunity was waived on the facts of the case presented. See Sykes,
136 S.W.3d at 640. The judgment in Klumb dismissed the claims against the Pension
System for want of subject-matter jurisdiction due to the Pension System’s
governmental immunity; thus, the judgment was a final judgment on the merits only
regarding the issue of the trial court’s lack of jurisdiction over the claims against the
Pension System. Klumb accordingly could preclude certain claims against the
Pension System on jurisdictional grounds, but it does not present a similar
jurisdictional bar as to claims by the Pension System.
We overrule this sub-issue.
E. Recovery of Lump-Sum Payments
The City Parties further argue that the Pension System’s ultra vires claims are
barred by immunity because the Pension System seeks to recover lump-sum
payments for “liability layers” that the Act does not require the City to pay.
In fact, the Pension System’s live pleading does not mention lump-sum
payments or “liability layers.” The Pension System pleaded for mandamus relief
compelling the City Parties “to allocate funding in the current City budget to provide
the statutorily required payments,” “to make such payments to [the Pension System]
in accordance with the allocation,” “to include in all future proposed City budgets
the contributions owed for [CCSI Employees],” and “to pick up and pay any
biweekly contributions made on their behalf.” That pleading was filed in 2015 under
an earlier version of the Act; the Act did not address “liability layers” until 2017,
21
when the legislature amended the Act while the petition for review in the earlier
appeal in this case was pending before the Supreme Court of Texas. The appeal was
decided after the Act’s amendment, and the court explained that “[u]nder the statute,
the City must make contributions to the pension fund and pick up payments on behalf
of employees.” Pension System I, 549 S.W.3d at 571. Because this is the relief the
Pension System sought in its pleading, it pleaded for relief authorized by the Act.11
We overrule this sub-issue. Having overruled all of the sub-issues of the City
Parties’ challenge to the denial of their plea to the jurisdiction, we overrule this issue
in its entirety.
III. SUMMARY JUDGMENT
We turn now to the summary judgment in favor of the Pension System Parties.
They moved for traditional summary judgment on the Pension System’s affirmative
claims and moved for both no-evidence and traditional summary judgment on the
City Parties’ affirmative defenses, counterclaims, and third-party claims. We review
both traditional and no-evidence summary judgments de novo. See Boerjan v.
Rodriguez, 436 S.W.3d 307, 310 (Tex. 2014) (per curiam).
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); see Provident Life & Accident Ins. Co.
v. Knott, 128 S.W.3d 211, 215–16 (Tex. 2003). If the movant carries this burden, the
burden shifts to the nonmovant to raise a genuine issue of material fact precluding
summary judgment. Lujan v. Navistar, Inc., 555 S.W.3d 79, 84 (Tex. 2018) (citing
Centeq Realty, Inc. v. Siegler, 899 S.W.2d 195, 197 (Tex. 1995)). On review, we
11
It was unnecessary for the Pension System to amend its petition on remand because its
live pleading already encompassed “statutorily required payments,” including payments required
under the Act as amended.
22
construe the evidence in the light most favorable to the non-movant, crediting
evidence favorable to the nonmovant if a reasonable juror could and disregarding
contrary evidence unless a reasonable juror could not. Mann Frankfort Stein & Lipp
Advisors, Inc. v. Fielding, 289 S.W.3d 844, 848 (Tex. 2009).
In a no-evidence motion for summary judgment, the movant asserts that there
is no evidence of one or more essential elements of the claim or defense for which
the nonmovant bears the burden of proof at trial. TEX. R. CIV. P. 166a(i); see Timpte
Indus., Inc. v. Gish, 286 S.W.3d 306, 310 (Tex. 2009). The burden then shifts to the
nonmovant to present evidence raising a genuine issue of material fact as to the
elements specified in the motion. See Mack Trucks, Inc. v. Tamez, 206 S.W.3d 572,
582 (Tex. 2006). We will affirm a no-evidence summary judgment when (a) there is
a complete absence of evidence of a vital fact, (b) the court is barred by rules of law
or of evidence from giving weight to the only evidence offered to prove a vital fact,
(c) the evidence offered to prove a vital fact is no more than a mere scintilla, or
(d) the evidence conclusively establishes the opposite of the vital fact. See City of
Keller v. Wilson, 168 S.W.3d 802, 816 (Tex. 2005).
A. The Pension System’s Affirmative Claims
The Pension System moved for traditional summary judgment on its
affirmative claims on the ground that, “[a]s a result of Klumb, it became undisputable
that [CCSI Employees] are, as a matter of law, ‘employees’ of the City and thus
‘members’ of the [Pension System] Plan” for whom the City must make statutorily
required contributions and “pick up” payments.
In their summary-judgment response, the City Parties asserted all the same
arguments raised in their plea to the jurisdiction, each of which was properly rejected
by the trial court. Of course, the City Parties were the movants regarding the
jurisdictional plea and the Pension System Parties were the summary-judgment
23
movants; thus, the burden of proof was largely reversed. As the summary-judgment
respondents, the City Parties needed only to raise a genuine issue of material fact to
defeat the Pension System Parties’ claims. Given this difference, we will briefly
explain why the City Parties failed to do so.
1. The City Parties failed to raise a fact question about whether the
CCSI Employees’ membership in the Pension System violates the Act
or the Texas Constitution.
As in their plea to the jurisdiction, the City Parties asserted in their
summary-judgment response that CCSI Employees are ineligible for membership in
the Pension System because they are independent contractors and are covered by the
City’s 401(k) program.
Regarding the employees’ alleged status as independent contractors, the
Supreme Court of Texas held in Klumb that the Pension System acted within its
authority in defining the CCSI Employees as “Employees for purposes of
membership in [the Pension System]” and in subsequently reaffirming that the
employees “remain as members of the plan.” Klumb, 458 S.W.3d at 6, 12. Contrary
to the City Parties’ assertion, a stipulation between two City-controlled entities that
CCSI Employees are independent contractors does not change this, for as previously
discussed, the authority to define the term “employee” belongs to the Pension
System’s board.
As for the 401(k) program, we have explained at length that the Pension
System is free to construe the Act so as to maintain the CCSI Employees’ eligibility
for membership in the Pension System without violating either the Act or the Texas
Constitution. Thus, summary judgment could not be defeated on these grounds.
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2. The Pension System did not pursue contract claims or seek
retrospective relief or lump-sum payments.
The City Parties also again argued that the Pension System was not pursuing
proper ultra vires claims because the Pension System sought (a) to enforce a
contract—the MCA—rather than to compel performance of non-discretionary
duties, (b) retrospective relief, and (c) lump-sum payments.
For the reasons previously discussed, each of these arguments fails. The
argument that the Pension System was seeking to enforce the MCA or pleaded for
retrospective relief was decided against the City Parties in Pension System I.
Moreover, the Act was amended in 2017 to address “legacy liability,” carrying
forward unpaid amounts due from the City and incorporating them into the City’s
current liabilities. This relief therefore is not retrospective. Finally, the Pension
System neither pleaded for, nor was awarded, lump-sum payments not required by
the Act.
3. The Pension System did not seek, and was not awarded, specific
amounts; rather, the judgment prescribes payment in accordance
with the Act at specified percentages.
Finally, the City Parties argue that the Pension System failed to offer evidence
for the amounts it sought to recover. But the Pension System did not seek, and was
not awarded, a specific amount. The Pension System asked in its motion that the
City Parties be compelled to make, in accordance with the Act, (a) contribution
payments of 29.36% of the pensionable payroll for CCSI Employees for fiscal year
2017 (i.e., July 1, 2016, to June 30, 2017); (b) contribution payments of 8.17% of
the pensionable payroll for CCSI Employees for fiscal year 2018; (c) contribution
payments of 8.27% of the pensionable payroll for CCSI Employees for fiscal year
2019; (d) all future contribution payments owed for CCSI Employees under sections
8–8F of the Act, with payments to be made in accordance with those sections;
25
(e) “pick up” payments owed for CCSI Employees for fiscal year 2019; and (f) all
future “pick up” payments owed for CCSI Employees under section 8 of the Act,
with payments to be made in accordance with that section. When the Pension System
Parties filed their summary-judgment motion, they still were trying to obtain from
the City information about the CCSI Employees needed to calculate the pensionable
payroll, so the total amounts owed were not calculated. Moreover, the Act requires
unfunded past liabilities, referred to as “liability layers,” to be amortized and
included in future contribution amounts. Thus, in the final judgment, the trial court
ordered the City Officials to provide the Pension System information about CCSI
Employees and to include those employees in the pensionable payroll for fiscal years
2017 and 2018 “such that the excess liability as calculated by the [Pension System]
actuary based on the correct and updated information for [CCSI Employees] is a
current obligation of the City.”
The trial court rendered judgment in fiscal year 2019, so for that fiscal year,
the trial court ordered the City Officials to cause the City to make “pick up”
payments for CCSI Employees and to contribute to the pension fund 8.27% of the
pensionable payroll for CCSI Employees.
The City Parties assert that the Pension System Parties produced no evidence
supporting the contribution rates discussed in its summary-judgment motion and in
the supporting affidavit of the Pension System’s executive director, and that the
Pension System Parties failed to “offer any actual risk sharing valuation study at all.”
But the City Parties have overlooked the Pension System Parties’ summary-
judgment reply, in which they pointed out that the contribution rates discussed in
their summary-judgment motion are the same rates that the City has paid for all
members of the Pension System except CCSI Employees. This statement was
supported by actuarial valuations, including risk-sharing valuations, that were
26
attached to the summary-judgment reply. The trial considered the
summary-judgment reply and its accompanying evidence, as is shown by the
statement in the final judgment that the trial court considered “the Motion, the Plea,
all supporting and opposing papers, summary-judgment evidence, pleadings on file,
the applicable law, and the arguments of counsel.” The City Parties do not contend
that the trial court acted impermissibly in doing so. See Stiles v. Resolution Tr. Corp.,
867 S.W.2d 24, 26 (Tex. 1993) (the effect of Texas Rule of Civil Procedure
166a(c)’s language “is to unequivocally restrict the trial court’s ruling to issues
raised in the motion, response, and any subsequent replies”) (emphasis added).
We overrule the City Parties’ challenges to the summary judgment on the
Pension System’s claims.
B. The City Parties’ Affirmative Defenses,12 Counterclaims, and
Third-Party Claims
The Pension System Parties moved for both no-evidence and traditional
summary judgment regarding the City Parties’ affirmative defenses, counterclaims,
and third-party claims. Because the trial court granted summary judgment on these
issues without specifying the grounds, we will affirm the ruling if it may have been
rendered, properly or improperly, on a ground not challenged on appeal. See Collins
v. D.R. Horton-Tex. Ltd., 574 S.W.3d 39, 44 (Tex. App.—Houston [14th Dist.] 2018,
pet. denied).
12
To successfully move for summary judgment, a claimant is not required to negate the
non-movant’s affirmative defenses. See, e.g., Exxon Mobil Corp. v. Rincones, 520 S.W.3d 572,
593 (Tex. 2017); Nichols v. Smith, 507 S.W.2d 518, 520 (Tex. 1974) (sub. op.). Nevertheless, the
Pension System Parties preemptively sought summary judgment rejecting the City Parties’
affirmative defenses. We have grouped the City Parties’ affirmative defenses, counterclaims, and
third-party claims together simply because we dispose of all three for the same reason: failure to
challenge all grounds on which summary judgment may have been granted.
27
Here, the City Parties have challenged only the Pension System Parties’
grounds for traditional summary judgment on the City Parties’ affirmative defenses,
counterclaims, and third-party claims. Because they have not challenged the
no-evidence grounds for summary judgment on these subjects, we overrule these
sub-issues, and thus, we overrule the entirety of the City Parties’ issue challenging
the summary judgment.
IV. CONCLUSION
Having overruled the two issues that survived for our consideration, we affirm
the trial court’s judgment.
/s/ Tracy Christopher
Chief Justice
Panel consists of Chief Justice Christopher and Justices Spain and Wilson.
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