kay-davidson-richard-martin-and-michael-jones-v-mclennan-county ( 2012 )

IN THE
TENTH COURT OF APPEALS
No. 10-11-00061-CV
KAY DAVIDSON, RICHARD MARTIN,
AND MICHAEL JONES,
Appellants
v.
MCLENNAN COUNTY APPRAISAL DISTRICT,
AND BILLY HUBERT, RANDY RIGGS, JOHN
EMBRY, IVAN GREEN, AND ALLEN SYKES, IN
THEIR OFFICIAL CAPACITIES AS BOARD MEMBERS
OF THE MCLENNAN COUNTY APPRAISAL DISTRICT,
Appellees
From the 170th District Court
McLennan County, Texas
Trial Court No. 2010-1652-4
MEMORANDUM OPINION
Kay Davidson, Richard Martin, and Michael Jones (the Retirees) had retired from
employment with the McLennan County Appraisal District (MCAD). Since their
retirement, MCAD had allowed them to participate in health insurance coverage
through MCAD by timely paying their own premiums. They found out in 2010 that
they would no longer be allowed to participate in MCAD’s health insurance program.
They brought a declaratory judgment action against MCAD and members of its Board
of Directors1 to keep MCAD from dropping them from the insurance program. They
did not prevail. On appeal, Davidson and Martin, through one attorney, and Jones,
through another attorney, contend the trial court erred in its judgment. We reverse and
remand.
BACKGROUND
In 1997, MCAD’s Board of Directors passed Resolution 1997-1 (R 1997-1) to
encourage MCAD’s employees to keep working for MCAD beyond their minimum
years for retirement. The reward for continued employment was the ability for the
employee and his or her spouse to participate in MCAD’s health insurance programs
after retirement at their own expense. The resolution is set out in its entirety in
Appendix A. The required term of employment was 15 continuous years with MCAD.
Each of the Retirees had begun their employment with MCAD prior to the passing of R
1997-1: Davidson in 1984, Martin in 1981, and Jones in 1991.
In addition to other former employees of MCAD, the Retirees took MCAD up on
this Resolution and did not retire when they originally could have retired. Davidson
retired in 2009 after 25 years with MCAD, Martin retired in 2004 after 23 years with
MCAD, and Jones retired in 2008 after 17 years with MCAD.
1Those members are Billy Hubert, Randy Riggs, John Embry, Ivan Green, and Allen Sykes. They, along
with the McLennan County Appraisal District, are collectively referred to in this opinion as MCAD.
Davidson v. McLennan County Appraisal District Page 2
In 2009, at the recommendation of a new chief appraiser, MCAD rescinded R
1997-1 with Resolution 2009-20. This resolution is set out in its entirety in Appendix B.
It purports to be effective immediately as to all current and future employees and
effective on December 31, 2010 as to the Retirees.
The Retirees filed a declaratory judgment action requesting a declaration from
the trial court that:
(1) the promises made by MCAD in R 1997-1 became enforceable unilateral
contracts between MCAD and each plaintiff when each plaintiff performed the
conditions set forth in R 1997-1;
(2) pursuant to R 1997-1, upon timely payment of their premiums, they were
entitled to the same insurance programs as current MCAD employees, including
reimbursement by MCAD for any part of the year’s deductible, if such benefit is
provided to current employees, until each plaintiff and/or his/her spouse reaches
65 years of age;
(3) their entitlement to the same insurance programs as current MCAD employees
includes receiving the same health care benefits and paying the same amount in
premiums as MCAD pays for its current employees;
(4) if MCAD secures health insurance for plaintiffs which requires monthly
premiums higher than MCAD pays for its current employees or any Retirees
covered by Chapter 175 of the Texas Local Government Code, the unilateral
contract between plaintiffs and MCAD requires each plaintiff to pay the same
monthly premium amount paid by MCAD for each of its current employees, and
that MCAD must pay the difference in such monthly amount and the amount of
the higher premiums secured by MCAD for plaintiffs; and
(5) R 2009-20 impairs the obligation of contract established between MCAD and
plaintiffs in R 1997-1, in violation of Texas Constitution Article I, Section 16.
In addition to these declarations, the Retirees sought relief which included a
permanent injunction and/or mandamus to prevent MCAD from breaching its contract
Davidson v. McLennan County Appraisal District Page 3
with the Retirees pursuant to R 1997-1. After a bench trial, all relief requested by the
Retirees was denied.
ISSUE ON APPEAL
In one issue, Davidson and Martin contend the trial court erred in failing to grant
the relief to which they were entitled. To demonstrate the trial court’s error, they attack
various findings and conclusions made by the trial court. In 23 issues, Jones does the
same thing. The trial court issued findings of fact and conclusions of law, but not in the
traditional sense; that is, the declarations were not categorized specifically as findings of
fact or conclusions of law, are not in short or declarative statements, and were not
numbered. The declarations of the trial court were made in an eight page document
consisting of a series of paragraphs. We have categorized the declarations under attack
by the Retirees and have numbered them to aid us in the disposition of this appeal.
Standard of Review
When a trial court issues findings of fact and conclusions of law following a
bench trial, the trial court's findings of fact are reviewable for legal and factual
sufficiency of the evidence by the same standards as applied in reviewing the legal and
factual sufficiency of the evidence supporting a jury's finding. Anderson v. City of Seven
Points, 806 S.W.2d 791, 794 (Tex. 1991). We review the trial court's conclusions of law de
novo. BMC Software Belgium, N.V. v. Marchand, 83 S.W.3d 789, 794 (Tex. 2002). As the
Davidson v. McLennan County Appraisal District Page 4
reviewing court, we may review the trial court's legal conclusions drawn from the facts
to determine their correctness. Id.In reviewing a finding for legal sufficiency, we credit evidence that supports the
finding if reasonable jurors could, and disregard contrary evidence unless reasonable
jurors could not. See Kroger Tex. Ltd. P'ship v. Suberu, 216 S.W.3d 788, 793 (Tex. 2006);
City of Keller v. Wilson, 168 S.W. 3d 802, 827 (Tex. 2005). In reviewing a factual
sufficiency issue, the court of appeals must weigh all of the evidence in the record.
Ortiz v. Jones, 917 S.W.2d 770, 772 (Tex. 1996). Findings may be overturned only if they
are so against the great weight and preponderance of the evidence as to be clearly
wrong and unjust. Id.FINDINGS OF FACT
Although not presented to us in this order, to aid the clarity of this opinion, we
address the trial court’s findings regarding the Texas Municipal League
Intergovernmental Employee Benefits Pool first.
TML and Group Health Insurance
In its findings of fact and conclusions of law, the trial court found that:
(1) MCAD was unable to locate any insurance carrier willing to include the
Retirees in a group health insurance plan for 2011;
(2) there was no “group health insurance” available to MCAD which would
allow the Retirees to continue to participate;
Davidson v. McLennan County Appraisal District Page 5
(3) the Texas Municipal League Intergovernmental Employee Benefits Pool
(TML) was the only source for coverage found by MCAD that would
include the Retirees;
(4) TML is not an insurance company, but a risk pool, and does not provide,
sell, or offer group health insurance programs; and
(5) participating in TML is significantly more expensive for MCAD as
compared to participating in FirstCare without inclusion of the Retirees.2
The Retirees attack these findings.
R 1997-1 provided that an employee, who at the time of retirement met the stated
criteria and timely paid the required premiums, would “be permitted, along with their
spouse,” “to continue participation in current or future group health insurance
programs provided by the McLennan County Appraisal District for its employees.”
The Retirees argue that R 1997-1 did not limit their participation in “group health
insurance” to that which is provided by an insurance company. We agree with the
Retirees.
The evidence established that there was group health insurance available to
MCAD which could be provided by TML and that TML provided health insurance
programs. It is irrelevant that TML may not be a traditional health insurance company.
R-1997-1 did not limit group health insurance programs to those provided by
traditional health insurance companies; the phrase, “group health insurance programs,”
2We have numbered sequentially only the findings and conclusions we will be discussing in this opinion.
The identification by numbering of the findings and conclusions is solely to assist the Court and the
reader and for no other purpose or meaning.
Davidson v. McLennan County Appraisal District Page 6
is broad and is not defined by the resolution; and the phrase is not modified by the
term, “insurance companies,” or limited to programs provided by insurance companies.
Although the trial court appears to have given it the more restrictive meaning of
“traditional health insurance company,” no testimony was presented at trial to be able
to interpret the phrase “group health insurance programs” as only those programs
provided by traditional health insurance companies.
There was also no testimony from the TML representative that TML was not an
insurance provider; only that it was a risk pool. Even if TML was not a traditional
insurance company, it provided insurance coverage. The TML representative testified
at trial that over 30 years ago, TML was established by a group of municipal leaders
because they were looking for a stable source of insurance coverage. TML is self-
funded and stable, and members include entities such as cities, housing authorities, and
appraisal districts. TML self-insures to $500,000 per claim, and above that, purchases
unlimited lifetime reinsurance. Further, two insurance brokers who sought out
insurance bids for MCAD healthcare coverage considered TML an insurance carrier.
TML provided a quote of $379.92 per month to MCAD for employee health
insurance coverage in 2011 that included the Retirees. FirstCare, who had provided
health insurance coverage for MCAD for 2009 and 2010, provided a quote of $269.74 per
month for 2011 which did not include the Retirees. TML’s quote is higher per month
than FirstCare’s quote but it is the only provider, at the time of trial, which would
Davidson v. McLennan County Appraisal District Page 7
include coverage for the Retirees. TML’s quote was, however, the lowest per month
that would also cover a Chapter 175 retiree,3 Daisy White, who was a plaintiff in the suit
against MCAD but is not a party to this appeal. And, as of the date of the trial, MCAD
had not chosen a carrier for 2011 for its employees’ health insurance coverage and did
not have all the final quotes for its 2011 employee health insurance coverage.
Thus, the evidence is legally insufficient to support the legal significance
attributed to the trial court’s findings 1, 2, 4, and 5.
CONCLUSIONS OF LAW
Rather than the declarations the Retirees wanted, what they got, in a nutshell,
were conclusions from the trial court that:
(1) Any rights plaintiffs might have had after retirement to continue participation in
group health insurance programs was predicated upon the anticipated
continuance of R 1997-1 and was subordinate to the right of the Board to abolish,
rescind or terminate R 1997-1;
(2) Plaintiffs have no vested contract rights in any benefit(s) that might be provided
under R 1997-1;
(3) Plaintiffs have no vested property rights in any benefit(s) that might be provided
under R 1997-1;
(4) R 2009-20 does not breach any contract rights that plaintiffs claim they had;
3Chapter 175 of the Local Government Code requires certain employing political subdivisions to provide
health benefits coverage for Retirees under the group health insurance plan or group health coverage
plan provided by or through the employing political subdivisions to its employees. TEX. LOC. GOV’T
CODE ANN. Ch. 175 (West Supp. 2012). It applies to an employee who retires from an appraisal district on
or after January 1, 2010. Id. § 175.001 (historical and statutory notes) (West Supp. 2012). Thus, Chapter
175 applied to Daisy White.
Davidson v. McLennan County Appraisal District Page 8
(5) R 2009-20 does not impair any contract rights that plaintiffs claim they had;
(6) R 2009-20 does not impair any property rights that plaintiffs claim they had;
(7) R 2009-20 is not unconstitutional;
(8) R 1997-1 does not contractually or otherwise impose any financial requirement or
financial obligation on MCAD to plaintiffs;
(9) MCAD is not legally obligated or required to incur any expense or financial
obligation in connection with plaintiffs being permitted, along with their
spouses, upon timely payment of the required premiums by the plaintiff to
continue participation in current or future group health insurance programs
provided by MCAD for its employees;
(10) If R 1997-1 creates a financial obligation on MCAD, it is a debt in violation
of Article 11, Sec. 7 of the Texas Constitution and is void;
(11) R 1997-1 purports to obligate a future board and is thus, unconstitutional
and void; and
(12) In performing tax assessing functions, one MCAD board cannot bind a
future board.
Unilateral Contract
The Retirees argue that conclusions one through six are incorrect. These
conclusions are predicated on the 1937 opinion in City of Dallas v. Trammell. City of
Dallas v. Trammell, 101 S.W.2d 1009 (Tex. 1937). In Trammell, a retired police officer sued
the City of Dallas after the City, pursuant to a statutory amendment by the Legislature,
reduced the amount paid to retired employees from its pension fund. Id. at 1010. The
Texas Supreme Court framed the question it had to decide as follows:
Does the employee, after retirement, have a vested right to participate in
the pension fund to the extent of the full amount of the monthly
Davidson v. McLennan County Appraisal District Page 9
installments granted to him at retirement; that is, does he have a vested
right in the future installments which cannot be affected by subsequent
legislation tending to diminish the amount of such installments?
Id. at 1011. The court answered in the negative, stating that
[i]n our opinion, the rule that the right of a pensioner to receive monthly
payments from the pension fund after retirement from service, or after his
right to participate in the fund has accrued, is predicated upon the
anticipated continuance of existing laws, and is subordinate to the right of
the Legislature to abolish the pension system, or diminish the accrued
benefits of the pensioners thereunder, is undoubtedly the sound rule to be
adopted.
Id. at 1013.
However, Trammel is not applicable to the situation presented here. First,
Trammel was a fact specific case. It dealt solely with State-created pension funds and
the ability of the State Legislature to modify or abolish that fund. This case, on the
other hand, pertains to a resolution passed by a governmental entity regarding health
insurance coverage of certain retired employees. Further, Trammel is no longer the law
even with regard to State-created pension funds. Article XVI, section 66 of the Texas
Constitution, which was intended to protect retirement benefits of vested employees
and to prohibit subsequent legislative changes that would reduce or impair these
benefits, was proposed and adopted specifically to change the result of the Trammell
decision, albeit 70 years later. Tex. Att’y Gen. Op. No. GA-0615, 2008 Tex. AG LEXIS 27,
*14, 20 (2008). Accordingly, Trammell does not apply to this case.
Davidson v. McLennan County Appraisal District Page 10
The Retirees contend, and we agree, that this case is governed by the recent
Texas Supreme Court opinion of City of Houston v. Williams and its earlier opinion in
Vanegas v. Am. Energy Servs. City of Houston v. Williams, 353 S.W.3d 128 (Tex. 2011);
Vanegas v. Am. Energy Servs, 302 S.W.3d 299 (Tex. 2009). In Williams, 540 former
Houston Firefighters brought suit against the City alleging the wrongful underpayment
of lump sums due upon termination of their employment. Id. at 131. Although the
central issue was whether the Legislature waived immunity so that the firefighters
could sue the City, an issue not raised in this case, the Court had to first determine
whether the firefighters, through certain city ordinances and agreements, had a contract
for goods or services that would bring their suit within the waiver of immunity
provision of Section 271.152 of the Local Government Code.4 LOC. GOV’T CODE ANN. §
271.152 (West 2005). After reviewing the law regarding unilateral contracts and
recognizing that ordinances can be construed as contracts, the Court held that because
the ordinances collectively constituted an offer that was communicated to the
firefighters which the firefighters accepted by performance, the promise was a
4Section 271.152 provides:
A local governmental entity that is authorized by statute or the constitution to enter into
a contract and that enters into a contract subject to this subchapter waives sovereign
immunity to suit for the purpose of adjudicating a claim for breach of the contract,
subject to the terms and conditions of this subchapter.
Id. A "contract subject to this subchapter" is defined as "a written contract stating the essential terms of
the agreement for providing goods or services to the local governmental entity that is properly executed
on behalf of the local governmental entity." Id. § 271.151(2). Here, although MCAD disputes that the
Retirees had a contract, it does not contend that it is immune from suit.
Davidson v. McLennan County Appraisal District Page 11
unilateral contract that became binding when the firefighters performed. Williams, 353
S.W.3d at 138.
In Vanegas, the Court was asked to decide the enforceability of an employer's
alleged promise to pay five percent of the proceeds of a sale or merger of the company
to its original employees who were still employed at the time of the sale or merger.
Vanegas, 302 S.W.3d at 300. Again, after reviewing the law regarding unilateral
contracts, the Supreme Court held that the employer’s promise became enforceable
upon the employee’s performance of continuing their employment with the company
until it was sold. Id. at 304.
The Retirees argue that they have a unilateral contract with MCAD which
became enforceable when they continued working for MCAD until they met the terms
of R 1997-1. Unlike a bilateral contract, in which both parties make mutual promises, a
unilateral contract is created when a promisor promises a benefit if a promisee
performs. City of Houston v. Williams, 353 S.W.3d 128, 135 (Tex. 2011); Vanegas v. Am.
Energy Servs., 302 S.W.3d 299, 303 (Tex. 2009); Hutchings v. Slemons, 174 S.W.2d 487, 489
(Tex. 1943) (bilateral contract). The requirement of mutuality is not met by an exchange
of promises; rather, the valuable consideration contemplated in "exchange for the
promise is something other than a promise," i.e., performance. Williams, 353 S.W.3d at
136 (citing Restatement of Contracts § 12 cmt. a (1932)). A unilateral contract becomes
enforceable when the promisee performs. Vanegas, 302 S.W.3d at 303. The Texas
Davidson v. McLennan County Appraisal District Page 12
Supreme Court has explained that "'[a] unilateral contract occurs when there is only one
promisor and the other accepts . . . by actual performance,'" rather than by the usual
mutual promises. Id. at 302 (quoting 1 Richard A. Lord, Williston on Contracts § 1.17
(4th ed. 2007)).
Here, MCAD, through R 1997-1, recognized that it 1) considered its loyal and
dedicated employees to be among its most valuable assets; 2) had provided a retirement
program for its employees through membership in the Texas County and District
Retirement System; 3) wished to demonstrate its appreciation to its long tenured
employees and to encourage its employees to remain in its employment for the mutual
benefit of it and its employees; and 4) believed that allowing its retired employees and
their spouses to continue to be covered under its group medical insurance program at
the retired employee’s expense would provide added incentive to employees to
continue in its employment beyond the minimum number of years required for service
retirement. It then promised:
That effective January 1, 1998 each employee, who as of that date
meets the following criteria will be permitted, along with their spouse,
upon the timely payment of the required premiums by the employee[,] to
continue participation in current or future group health insurance
programs provided by the McLennan County Appraisal District for its
employees.
The criteria to be met was that at the time of their retirement, the employee must be
eligible for retirement under the Texas County and District Retirement Program; be
covered by MCAD’s group insurance program; and have had continuous service as an
Davidson v. McLennan County Appraisal District Page 13
employee of MCAD for 15 or more years. MCAD does not contest that the Retirees met
the resolution’s criteria. According to the resolution, the benefit of continued
participation in current or future group health insurance programs would terminate on
the employee’s or spouse’s 65th birthday, whichever is later.
By R 1997-1, MCAD, recognizing that it wanted to keep its employees for more
than just a minimum term of employment and as an incentive to keep its employees
beyond that minimum term, promised employees who had 15 or more years of
continuous service with MCAD the benefit of continued participation, past the
employee’s retirement, in “current or future group health insurance programs.” It is
undisputed that the Retirees in this case each continued their employment beyond the
minimum number of years required for service retirement and met the other conditions
of the resolution. Thus, the Retirees accepted MCAD’s promise by performance, i.e., by
continuing employment until they also met the terms of the resolution.
Denial and Defense
MCAD argues that there was no unilateral contract because there was no
meeting of the minds. However, “no meeting of the minds” has no application in a
unilateral contract. See Pace Corp. v. Jackson, 284 S.W.2d 340, 346 (Tex. 1955). Even if it is
applicable, the determination of whether there is a meeting of the minds is based upon
objective standards of what the parties said and did and not on their subjective state of
Davidson v. McLennan County Appraisal District Page 14
mind. City of The Colony v. N. Tex. Mun. Water Dist., 272 S.W.3d 699, 720 (Tex. App.—
Fort Worth 2008, pet. dism’d).
Through R 1997-1, MCAD offered the Retirees the ability to participate in group
health insurance programs if they worked beyond their minimum number of years
required for service retirement and until they qualified under the resolution. It is
undisputed that the Retirees accepted the offer by performance. So firmly were their
minds bound together as to the meaning of R 1997-1 that MCAD honored the
resolution’s terms for seven other former employees over a period of 12 years before the
new chief appraiser, who started with MCAD in 2009, recommended rescission of the
resolution. Those former employees and the time they participated in the health
insurance program provided by R 1997-1 are set out in Appendix C. Accordingly,
objectively there was a meeting of the minds between the parties. The subjective beliefs
of a board member and a former chief appraiser of MCAD as to whether or not it would
cost MCAD any money to perform once the offer was accepted do not factor into the
analysis of whether there was a meeting of the minds.
MCAD also contends that it was excused from performing due to the doctrine of
impossibility or impracticability. According to this doctrine, where a party's
performance is made impracticable by the occurrence of an event the non-occurrence of
which was a basic assumption on which the contract was made, the party’s duty to
render that performance is discharged. Centex Corp. v. Dalton, 840 S.W.2d 952, 954 (Tex.
Davidson v. McLennan County Appraisal District Page 15
1992) (citing RESTATEMENT (SECOND) OF CONTRACTS § 261 (1981)). The event which
MCAD alleges made its performance impractical was its inability to locate a group
health insurance company that would insure both the active and retired employees. As
was discussed earlier, TML offered health care coverage for both the active employees
and the Retirees. As previously discussed, that TML may not have been a traditional
insurance company is irrelevant. MCAD’s performance was not excused by
impossibility or impracticability.
Conclusion
R 1997-1 was a unilateral contract that became enforceable when the Retirees
each accepted MCAD’s promise by performing. The trial court’s conclusions one
through six are erroneous.
Debt
The Retirees next complain about the trial court’s conclusion that, even though it
believed R 1997-1 did not create any financial obligation on the part of MCAD, to the
extent that the resolution does create a financial obligation, it is void because it creates a
debt in violation of the Texas Constitution. The trial court went on to specifically
conclude that requiring MCAD to participate in TML so that the Retirees could
Davidson v. McLennan County Appraisal District Page 16
“continue” under R 1997-1 would create a debt under article XI, section 7 of the Texas
Constitution without the conditions of article XI, section 7 being met.5
Article XI, Section 7 provides:
All counties and cities bordering on the coast of the Gulf of Mexico are
hereby authorized upon a vote of the majority of the qualified voters
voting thereon at an election called for such purpose to levy and collect
such tax for construction of sea walls, breakwaters, or sanitary purposes,
as may now or may hereafter be authorized by law, and may create a debt
for such works and issue bonds in evidence thereof. But no debt for any
purpose shall ever be incurred in any manner by any city or county unless
provision is made, at the time of creating the same, for levying and collecting a
sufficient tax to pay the interest thereon and provide at least two per cent (2%) as
a sinking fund, except as provided by Subsection (b); and the condemnation of the
right of way for the erection of such works shall be fully provided for.
TEX. CONST. ART. XI, § 7. (Emphasis added). It is this last sentence that is the source of
the trial court’s conclusion.
We construe Texas constitutional provisions in the same manner as we construe
statutes. Harris County Hosp. Dist. v. Tomball Reg'l Hosp., 283 S.W.3d 838, 842 (Tex.
2009); Doody v. Ameriquest Mortgage Co., 49 S.W.3d 342, 344 (Tex. 2001). The guiding
rule is to discern and give effect to the intent (or purpose) of the provision's drafters.
Harris County Hosp. Dist., 283 S.W.3d at 842; City of El Paso v. El Paso Cmty. Coll. Dist.,
729 S.W.2d 296, 298 (Tex. 1986). We rely heavily on the literal text of a constitutional
provision to give effect to its plain language. Harris County Hosp. Dist., 283 S.W.3d at
5By this opinion we do not hold that MCAD must utilize TML. The bid process had not closed for 2011
at the time of trial and another year has begun. This presents additional issues not presented in the
original proceeding which must be dealt with on remand and which also impairs our ability to render a
dispositive judgment.
Davidson v. McLennan County Appraisal District Page 17
842; Doody, 49 S.W.3d at 344. If the plain language of a constitutional provision is clear
and unambiguous, resort to extrinsic aids and rules of construction is inappropriate,
and we give the language of the provision its common everyday meaning. City of
Rockwall v. Hughes, 246 S.W.3d 621, 625-26 (Tex. 2008); State v. Shumake, 199 S.W.3d 279,
284 (Tex. 2006). This rule provides an objective guidepost to discern the drafter's intent
and ensures that ordinary citizens may "rely on the plain language . . . to mean what it
says." Fitzgerald v. Advanced Spine Fixation Sys., Inc., 996 S.W.2d 864, 866 (Tex. 1999).
Assuming without deciding that Art. XI, § 7 generally applies to this particular
situation, R 1997-1 is not a debt within the meaning of the Constitution. See McNeal v.
City Of Waco, 33 S.W. 322, 324 (Tex. 1895) (“debt” as used in the Constitution means
“any pecuniary obligation imposed by contract….”). MCAD’s payment of health
insurance premiums for active employees was a matter of ordinary expenditure. Id.The premium expense for active employees’ insurance benefits was budgeted for each
year by MCAD. The Retirees in this case paid their own insurance premiums. The
possibility that the premiums for active employees may be higher when the Retirees are
included in the group health insurance program is of no constitutional consequence. 6
Conclusion 10 is erroneous.
6 At the time of trial, TML was the only entity to provide a quote for health insurance coverage which
included the Retirees and the bid process had not closed. Like most premiums for group insurance, the
quote was based on the claims expenses MCAD had for the previous year.
Davidson v. McLennan County Appraisal District Page 18
Obligate a Future Board
Next, the Retirees take issue with conclusions 11 and 12 that R 1997-1 purports to
obligate a future board and is thus, unconstitutional and void; and that in performing
“tax assessing functions,” one MCAD board cannot bind a future board. This concept
of not obligating or binding a future board in performing its governmental functions is
referred to as the “reserved powers doctrine.” As the Texas Supreme Court has
explained about this doctrine,
Certain powers are conferred on government entities "for public purposes,
and can neither be delegated nor bartered away." Jasper, 189 S.W.2d at 698.
Government entities cannot "cede . . . away [such powers] through
contracts with others so as to disable them from the performance of their
public duties." Id.; see also Brenham v. Brenham Water Co., 67 Tex. 542, 4
S.W. 143, 149 (Tex. 1887) ("[Municipal] corporations may make authorized
contracts, but they have no power, as a party, to make contracts or pass
bylaws which shall cede away, control or embarrass their legislative or
governmental powers, or which shall disable them from performing their
public duties.").
Kirby Lake Dev., Ltd. v. Clear Lake City Water Auth., 320 S.W.3d 829, 843 (Tex. 2010).
In Kirby Lake, the Clear Lake City Water Authority argued that previous
agreements with Kirby Lake violated the reserved powers doctrine because the
agreements imposed an ongoing obligation to submit bond proposals in future bond
elections, such being the exercise of the Water Authority’s political power. Id. The
Supreme Court, however, held that the doctrine did not apply because 1) the Water
Authority did not contract to bargain away a future power but contracted to pay
invoices if and when funds become available through a bond election, and because 2) a
Davidson v. McLennan County Appraisal District Page 19
contractual obligation to include a bond reimbursement proposition in future elections
does not affect the performance of the Water Authority’s public duties, such as the
manner in which it holds elections or its power to determine how and to whom it will
extend water services. Id.The Retirees argue that this case is controlled by Kirby Lake. MCAD disagrees
and argues that this case is more like, and is thus controlled by, the Texas Supreme
Court’s decision in Clear Lake City Water Authority v. Clear Lake Utilities Company, 549
S.W.2d 384 (Tex. 1977). In Clear Lake, the Water Authority had the governmental power,
the “public duty,” to determine whether, on any particular date, it would be in the best
interests of all of its customers and the public in general, to extend water and sewer
service to a particular person or entity. Id. at 392. The agreement at issue between the
Water Authority and the Utilities obligated the Water Authority to meet all water and
sewage treatment needs for Utilities and precluded the Water Authority from extending
these services directly to a certain group of landowners, under terms and rates that it
deemed best. Id. The Texas Supreme Court found that by the agreement, the Water
Authority had attempted to bargain away its governmental power to determine
"whether, on any particular date, it is in the best interests of all of its customers and the
public in general, to extend water and sewer service to a particular person or entity." Id.
We believe the situation presented here is more like Kirby Lake rather than Clear
Lake. Generally, an appraisal district “is responsible for appraising property in the
Davidson v. McLennan County Appraisal District Page 20
district for ad valorem tax purposes of each taxing unit that imposes ad valorem taxes
on property in the district.” TEX. TAX CODE ANN. § 6.01(b) (West 2008). R 1997-1 in no
way bargains away MCAD’s ability to appraise property. In this context, the contract
with the Retirees does not, in any way, prohibit MCAD from performing its public
duties. Accordingly, conclusions 11 and 12 are erroneous.
Financial Obligation
The trial court also concluded:
(13) MCAD is not legally obligated to incur any expense or financial obligation
in connection with the Retirees being permitted to continue participation in
current or future group health insurance programs provided to MCAD’s
employees;
(14) becoming a member of TML and incurring expense to permit continued
participation in something that is not a group health insurance program is not
required by R 1997-1; and
(15) if the Retirees contend R 1997-1 contractually imposes any financial
obligation on MCAD, they are incorrect.
By its conclusions, the trial court has determined, and MCAD has, in effect,
argued, that it would be unlawful for MCAD’s budget to fluctuate because of or be
affected by R 1997-1. There is nothing in the record to support this determination. Also
by its conclusions, the trial court has determined that R 1997-1 created some expense or
“financial obligation” above and beyond MCAD’s ordinary expenditures to be included
in its budget. There is nothing in the record to support this determination. Further, we
Davidson v. McLennan County Appraisal District Page 21
have already held that R 1997-1 was not limited to traditional health insurance
companies.7
R 1997-1 was a unilateral contract that became enforceable when the Retirees
each accepted MCAD’s promise by performing. Once the Retirees performed, MCAD
became obligated to provide them with the ability to participate in current or future
group health insurance programs if they timely paid the premiums. It does not require
MCAD to provide any health insurance programs but does require that if MCAD
provides a health insurance program for active employees, it must provide the same
benefit to its qualifying former employees. The Retirees had always timely paid their
premiums. MCAD paid their active employees’ healthcare premiums which had been
the same amount as the Retirees’ premiums. Health care premiums had fluctuated
through the years. In 2008, the health care premium was $363.15. In 2009, the premium
dropped to $251.75, and in 2010, it rose to $272.91. And, just as premiums fluctuated, so
did MCAD’s budget.
Accordingly, the trial court’s conclusions 13 through 15 are erroneous.
CONCLUSION
To the extent the challenged findings and conclusions are insufficient or
erroneous, Davidson’s and Martin’s sole issue and Jones’s issues one through nine and
fourteen are sustained. Because of our disposition of these issues, we find it
7 See Footnote 5 that by this opinion we do not hold MCAD must contract with TML.
Davidson v. McLennan County Appraisal District Page 22
unnecessary to address the remainder of the issues presented for review. TEX. R. APP. P.
47.1.8
The trial court’s judgment is reversed and this case is remanded to the trial court
for further proceedings.
TOM GRAY
Chief Justice
Before Chief Justice Gray,
Justice Davis, and
Justice Scoggins
Reversed and remanded
Opinion delivered and filed August 30, 2012
[CV06]
8 There are a number of Jones’s issues that are inadequately briefed; but given our disposition of the
controlling issues, that shortcoming has no effect on our judgment.
Davidson v. McLennan County Appraisal District Page 23
APPENDIX A
NO. 1997-1
WHEREAS, the McLennan County Appraisal District considers its loyal and
dedicated employees to be among its most valuable assets; and,
WHEREAS, the McLennan County Appraisal District has provided a retirement
program for its employees through membership in the Texas County and District
Retirement System; and,
WHEREAS, the McLennan County Appraisal District wishes to demonstrate its
appreciation to its long tenured employees and to encourage its employees to remain in
its employment for the mutual benefit of the appraisal district and its employees; and,
WHEREAS, the McLennan County Appraisal District believes that allowing its
retired employees and their spouses to continue to be covered under its group medical
insurance program at the retired employee’s expense would provide added incentive to
employees to continue in its employment beyond the minimum number of years
required for service retirement,
NOW, THEREFORE BE IT RESOLVED BY THE BOARD OF DIRECTORS OF
THE McLENNAN COUNTY APPRAISAL DISTRICT:
That effective January 1, 1998 each employee, who as of that date meets the
following criteria will be permitted, along with their spouse, upon the timely payment
of the required premiums by the employee to continue participation in current or future
group health insurance programs provided by the McLennan County Appraisal District
for its employees.
Each employee must at the time of their retirement:
a. Be eligible for retirement under the Texas County and District
Retirement Program;
b. Be covered by the McLennan County Appraisal District’s group
insurance program;
Davidson v. McLennan County Appraisal District Page 24
c. Have had continuous service as an employee of the McLennan County
Appraisal District of fifteen (15) years or more; and,
d. This benefit will terminate on the employee’s or spouse’s sixty-fifth
birthday whichever is later.
That it is hereby officially found and determined that the meeting at which this
resolution is passed is open to the public as required by law and that public notice of
the time, place, and purpose of said meeting was given as required.
PASSED AND APPROVED this 4TH day of JUNE, 1997.
/s/
Rhea Cromwell, Chairman
McLennan County Appraisal District
ATTEST:
/s/
Rick Smith, Secretary
Davidson v. McLennan County Appraisal District Page 25
APPENDIX B
RESOLUTION NO. 2009-20
WHEREAS, the Board of Directors of the McLennan County Appraisal District had
previously adopted Resolution 1997-1, which allowed certain retirees from the
McLennan County Appraisal District to participate in the appraisal district’s group
medical insurance policy, and;
WHEREAS, the Board of Directors of the McLennan County Appraisal District has
determined that increased costs in providing group medical insurance to the employees
of the appraisal district has made it financially infeasible to continue to extend this
benefit, and;
WHEREAS, the Board of Directors of the McLennan County Appraisal District believes
that to continue to extend to its retirees the option to participate in the appraisal
district’s group medical insurance policy may jeopardize the ability of the appraisal
district and the taxing units that support the appraisal district to provide group health
insurance and otherwise adequately compensate the current employees of the appraisal
district, and;
WHEREAS, the Board of Directors of the McLennan County Appraisal District has
determined that it would be in the public interest to terminate the option previously
provided to its retirees to participate in the appraisal district’s group health insurance
policy,
NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF DIRECTORS OF THE
McLENNAN COUNTY APPRAISAL DISTRICT:
That effective immediately upon approval of this Resolution 2009-20, the option
granted to retirees of the McLennan County Appraisal District to participate in the
appraisal district’s group medical insurance policy as provided for in Resolution 1997-1
is terminated and is no longer of force and effect as to all current and future employees
of the McLennan County Appraisal District and as to all existing retirees of the
McLennan County Appraisal District that are not as of the date of this Resolution 2009-
20 currently participating in the McLennan County Appraisal District’s group medical
insurance policy.
That effective December 31, 2010, the option granted to retirees of the McLennan
County Appraisal District to participate in the appraisal District’s group medical
insurance policy as provided for in Resolution 1997-1 shall terminate and be of no force
Davidson v. McLennan County Appraisal District Page 26
and effect as to retirees that as of the date of this Resolution 2009-20 are participating in
the appraisal district’s group medical insurance policy.
That it is officially found and determined that the meeting at which this
Resolution is passed is open to the public as required by law and that public notice of
time, place, and purpose of said meeting was given as required.
RESOLVED, this the 2 day of December, 2009
/s/
Billy Hubert, Chairman
Board of Directors
ATTEST:
/s/
Randy Riggs, Secretary
McLennan County Appraisal District
Davidson v. McLennan County Appraisal District Page 27
APPENDIX C
PRIOR RETIREE HEALTH ELECTION WITH MCCAD
Name DOB Start date Years of Service as of Break in Date of How long they
1998 service? retirement participated in
the program
ALVIN ADAMS 5/20/1938 2/8/1982 16 YEARS NA 1/31/2001 2 YRS 4 MNTS
(REACHED 65)
MAROLYN CORBIN 7/27/1940 10/1/1981 17 YEARS NA 2/28/2003 2 YRS 4 MTHS
(REACHED 65)
DIANNA CUMMINGS 6/29/1946 6/17/1985 13 YEARS NA 2/16/2007 5 MTHS-
DECEASED
DIANE FEHLER 3/10/1946 10/1/1981 17 YEARS NA 1/31/2007 9 MTS
SADIE HILL 8/2/1937 10/1/1981 17 YEARS NA 6/19/1998 4 YRS 4 MTHS
(REACHED 65)
KYTHA RIVAS 11/8/1951 9/21/1981 24 YEARS NA 7/8/2005 2 MTHS
SHIRLEY 7/23/1943 10/1/1981 17 YEARS NA 1/31/2001 7 YRS 7 MTHS
YARBROUGH (REACHED 65)
Davidson v. McLennan County Appraisal District Page 28