Posted by Rich Phillips, Melissa Davis, Stephanie Dooley Nelson, Emily Fitzgerald, and Connor Bourland
On Friday, May 17, 2019, the Supreme Court of Texas issued opinions in four argued cases, including Justice Busby's first signed opinion as a member of the Court. The Court also issued two per curiam opinions. The Court now has 16 argued cases remaining to be decided before the summer recess. Access the complete order list here.
The Court issued the following opinions:
No. 17-0733, McAllen Hospitals, L.P. v. Lopez — In this employment dispute, the Court analyzed whether sufficient evidence supported the jury’s finding that McAllen Hospitals impliedly contracted to pay certain nurse employees an annual salary rather than an hourly wage. The nurses relied on several factors, including their performance reviews, which listed their “Annual Rate” instead of base pay “per hour,” certain payroll forms, provisions in the employee handbook, and policies circulated by the hospital. The jury found for the nurses; the Hospital challenged the legal sufficiency of the evidence to support the finding of an implied contract, but the court of appeals affirmed. In a unanimous opinion authored by Justice Busby, the Court held that there was legally insufficient evidence to find an implied contract for an annual salary. Specifically, the Court determined that the parties’ course of dealing failed to show the Hospital’s intent to pay fixed salaries because the Hospital paid the nurses hourly wages since the nurses first began working at the Hospital (which, for some of the nurses, was a period of over 20 years); the performance reviews were “susceptible to multiple, equally probable inferences, requiring the factfinder to guess in order to reach a conclusion,” which amounts to legally insufficient evidence of the Hospital’s intent to pay the fixed salaries; and the Hospital’s handbook was legally insufficient evidence of the Hospital’s intent because the handbook contained an explicit disclaimer of any contractual intent.
No. 17-0840, Time Warner Cable Texas LLC v. CPS Energy — This appeal from an administrative proceeding in the Public Utilities Commission (PUC) addressed the rates a municipal utility can charge telecommunications providers for attaching their wires or cable to the utility's poles. Section 54.204(b) of the Public Utility Regulatory Act (PURA) prohibits municipalities and municipally owned utilities from discriminating among telecommunications providers with respect to rates charged for utility pole attachments. A municipal utility in San Antonio was billing Time Warner and AT&T the same amount for pole attachments, but AT&T was not paying the full amount billed, and the utility did not take action to collect the outstanding balance. Time Warner complained, and in a final order, the PUC determined that the utility had violated PURA by failing to take “meaningful,” “serious,” and “timely action to ensure that all pole attachers actually paid the uniform rate it invoiced.” The court of appeals reversed the PUC order, reasoning that the statute required the utility to “charge” uniform rates, not to “collect” uniform rates. In a unanimous opinion by Chief Justice Hecht (Justice Busby did not participate), the Supreme Court disagreed, holding that the PUC’s decision was reasonable because the statute prohibited discrimination and the fact that the utility had collected substantially more from Time Warner than AT&T had a discriminatory effect on Time Warner.
No. 17-0850, KMS Retail Rowlett, LP v. City of Rowlett, Texas — In this eminent-domain dispute, the Court considered whether converting a private-road easement to a public road violated the Texas Constitution or Government Code chapter 2206, which prohibits takings for economic-development purposes. The City of Rowlett condemned the private-road easement and additional land to connect the private road to an adjacent tract. The landowner argued that the taking was not for a public use and was solely for economic development because it's purpose was to give more convenient access to the adjacent tract to facilitate construction of a grocery store. The trial court rejected the landowner's arguments and the court of appeals affirmed. In an opinion by Justice Brown (joined by Chief Justice Hecht, Justice Green, Justice Guzman, Justice Devine, and Justice Busby), the Court affirmed. The Court first held that chapter 2206 does not apply because it expressly excludes from its coverage the use of eminent domain for "transportation projects, including, but not limited to railroads, airports, or public roads or highways." The Court rejected the landowner's argument that this exception applies only to "legitimate" road projects. The Court reasoned that if every project has to be scrutinized to determine whether it is a pretext to confer an economic benefit before applying the exception, then the exception would have not real operation. The Court then concluded that the taking was for a constitutional public use. The Court noted that the landowner's argument was essentially that even if the taking might be for a public use under different circumstances, the alleged motive to benefit a private landowner made the taking improper. The Court emphasized that this is not a case in which a taking is "packaged as a public use but actually conferred only a private benefit." In short, a taking does become fraudulent "if the alleged private benefit does not negate the ostensible public use but simply suggests an additional motive behind the taking." In response to the dissent's arguments about the impact of amendments to the constitutional taking provision, the majority notes that the landowner did not ask the Court to consider the effect of the amendments. The majority specifically invites parties to present these issues in future cases: "we would welcome the opportunity [this] position in a future case in which the issue is directly presented."
Justice Blacklock dissented (joined by Justice Lehrmann and Justice Boyd). The dissenters argue that the Court's taking jurisprudence is too deferential to condmenors. In light of amendments to the takings provision of the Texas Constitution, the dissenters conclude that deference to legislative determinations of "public use" should be discontinued and that condemning authorities should be required to prove their compliance with the constitutional provision rather than shifting the burden to negate public use to the landowner. The dissenters would also expand the possible defenses for landowners beyond fraud, bad faith, and arbitrariness.
No. 18-0059, Dallas/Fort Worth Int'l Airport Board v. Vizant Technologies, LLC — In this case, the Court considered whether governmental immunity applies to a suit against the Dallas/Fort Worth International Airport Board alleging breach of contract and whether Local Government Code chapter 271 waives the Board’s immunity from suit. The Board contracted with Vizant to review the airport’s payment-processing costs. The contract provided that Vizant’s fee would be calculated based on the amount of money the airport saved based on Vizant’s recommendations, capped at $50,000. The contract also provided that if Vizant’s fee exceeded $50,000, then the Board would “make a good faith effort to receive board authorization to increase compensation.” Vizant exceeded the $50,000 fee, the Board denied their request for additional compensation, and Vizant sued for breach of contract, fraud, and fraudulent inducement, alleging that no good faith effort was made to increase compensation. The trial court denied the Board's plea to the jurisdiction asserting governmental immunity.The Dallas Court of Appeals reversed as to the fraud claims, but affirmed as to the breach of contract claim, finding that chapter 271 waived the Board’s immunity on the contract claim.
In a unanimous opinion by Justice Boyd, the Supreme Court reversed as to the contract claim and rendered judgment dismissing all claims. The Court noted that the legislature has unambiguously declared that maintaining, operating, and regulating an airport are governmental functions, meaning that the Board was entitled to immunity unless the legislature clearly and unambiguously waived that immunity. The Court found that chapter 271 applies only if there is (1) a written contract (2) stating the essential terms of the agreement, which (3) requires the contractor to provide goods or services to the governmental entity, and was (4) properly executed on the entity’s behalf. Examining the good-faith-effort clause, the Court reasoned that it was a promise to negotiate towards a future bargain in good faith and that, while some jurisdictions suggest that such a promise is legally enforceable, Texas precedent states that such promises are not enforceable. Because the promise to negotiate a future contract in good faith was not enforceable, the contract did not state the essential terms of a legally enforceable agreement that formed the basis of Vizant’s cause of action. The Court also found that even if the promise was legally enforceable, Vizant’s breach of contract claim sought consequential damages, which are not authorized under chapter 271. The Court found that the additional compensation Vizant sought may have “result[ed] naturally, but not necessarily, from the [Board’s] breach,” meaning the damages were consequential as opposed to actual. Therefore, the Court found that chapter 271 does not clearly waive the Board’s immunity.
No. 18-0508, In re N.G. — In this case, the Court considered an intermediate appellate court’s review of a parental termination judgment under Family Code section 161.001(b), which allows for involuntary termination of parental rights if clear and convincing evidence supports the finding that a parent engaged in one or more of twenty-one grounds set forth in the statute and that termination is in the best interest of the child. On appeal, the intermediate court can affirm the trial court’s judgment by upholding only one ground, as well as the best-interest finding, even if the trial court based the termination on more than one ground.
Here, the trial court based its parental termination order on three grounds – sections 161.001(b)(1)(D), (E), and (O) of Family Code. The appellate court held that the evidence was legally and factually sufficient to support the trial court’s judgment under section 161.001(b)(1)(O) and therefore declined to review the sufficiency of the evidence under section 161.001(b)(1)(D) or (E). In granting the petition for review, the Texas Supreme Court considered whether the mother was entitled to appellate review of the section 161.001(D) and (E) grounds because of the consequences those grounds could have on her parental rights to other children. In particular, section 161.001(b)(1)(M) provides that parental rights may be terminated if clear and convincing evidence supports the finding that a parent had her parental rights terminated with respect to another child based on a finding that the parent’s conduct violated paragraph (D) or (E). Thus, when a parent has her parental rights terminated under either section 161.001(b)(1)(D) or (E), that becomes a basis to terminate the parent’s rights to other children. For this reason, the mother argued she was entitled to appellate review of those grounds as a matter of due process and due course of law. In a per curiam opinion, the Court agreed, reasoning that an appellate court that declines to review a section 161.001(b)(1)(D) or (E) finding deprives the parent of a meaningful appeal and eliminates the parent’s only chance for review of a finding that will be binding as to parental rights to other children. The Court accordingly held that due process “requires a heightened standard of review of a trial court’s finding under section 161.001(b)(1)(D) or (E), even when another ground is sufficient for termination, because of the potential consequences for parental rights to a different child.” Further, if the court of appeals affirms termination on either of these grounds, it must provide a detailed analysis to support its holding. The Court therefore reversed and remanded the case to the intermediate appellate court.
No. 18-0734, In re Z.M.M. — This parental-termination case addresses the same issue as In re N.G., discussed above – i.e., whether an intermediate appellate court must review the sufficiency of a section 161(b)(1)(D) ground for termination, even if the court of appeals could affirm the order on a different ground. Based on its holding in In re N.G., in a per curiam opinion, the Court remanded this case to the intermediate court of appeals.
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