Adan Perez Jr. v. Weslaco Independent School District ( 2015 )

ACCEPTED
13-15-00033-CV
THIRTEENTH COURT OF APPEALS
CORPUS CHRISTI, TEXAS
4/1/2015 11:10:14 AM
DORIAN RAMIREZ
CLERK
No. 13-15-00033-CV
FILED IN
13th COURT OF APPEALS
In the Court of AppealsCORPUS CHRISTI/EDINBURG, TEXAS
For the Thirteenth Judicial District of 4/1/2015
Texas 11:10:14 AM
DORIAN E. RAMIREZ
Corpus Christi-Edinburg, Texas Clerk
Adan Perez, Jr.,
Appellant
v.
Weslaco Independent School District,
Appellee
On Appeal from Cause No. C-641-11-F
In The 332nd District Court of Hidalgo County, Texas
The Honorable Judge Mario Ramirez, Jr., Presiding
Brief of Appellant
Hawash Meade Gaston
Neese & Cicack LLP
Andrew K. Meade
Texas Bar No. 24032854
Samuel B. Haren
Texas Bar No. 24032854
2118 Smith Street
Houston, Texas 77002
713-658-9001 (phone)
713-658-9011 (fax)
sharen@hmgnc.com
Attorneys for Appellant
Oral Argument Not Requested
Table of Contents
Table of Contents ........................................................................................................i
Identity of the Parties ................................................................................................ ii
References to the Record ..........................................................................................iv
Index of Authorities ................................................................................................... v
Statement of the Case.............................................................................................. vii
Statement on Oral Argument ................................................................................. viii
Issues Presented ........................................................................................................ix
Legal Standards .......................................................................................................... 1
Statement of Facts ...................................................................................................... 1
Summary of the Argument......................................................................................... 4
Argument.................................................................................................................... 5
I. The District Court has jurisdiction over Perez’s whistleblower claim............ 5
A. Perez alleged sufficient facts to establish the District Court’s
jurisdiction .................................................................................................. 5
1. Perez alleged that he was a public employee ........................................ 6
2. Perez alleged that WISD violated the Texas Whistleblower Act ......... 6
B. WISD’s challenges to Perez’s pleadings are based on mistaken
interpretations of fact and law .................................................................... 7
1. Perez blew the whistle to the TEA prior to his performance
review and subsequent termination ....................................................... 7
2. Perez blew the whistle on illegal activity .............................................. 8
3. Perez had a good-faith belief that the TEA was an appropriate
law enforcement authority ................................................................... 10
4. Perez was not required to exhaust his administrative remedies .......... 13
5. Perez initiated his Whistleblower claim in a timely manner .............. 14
II. The District Court has jurisdiction over Perez’s breach of reasonable
expectation of renewal claim ......................................................................... 15
Conclusion ............................................................................................................... 16
Certificate of Compliance ........................................................................................ 18
Certificate of Service ............................................................................................... 19
Appendix .................................................................................................................. 20
i
Identity of the Parties
Appellant certifies that the following is a complete list of the counsel and
parties to the order from which this appeal is taken.
Appellant
Adan Perez, Jr.
Counsel for Appellant
Andrew K. Meade
Texas Bar No. 24032854
Samuel B. Haren
Texas Bar No. 24032854
Hawash Meade Gaston Neese & Cicack LLP
2118 Smith Street
Houston, Texas 77002
713-658-9001 (phone)
713-658-9011 (fax)
ameade@hmgnc.com
sharen@hmgnc.com
Appellee
Weslaco Independent School District
Counsel for Appellee
Stacy Tuer Castillo
Texas Bar No. 00796322
Walsh, Anderson, Gallegos, Green & Treviño, P.C.
100 NE Loop 410
San Antonio, Texas 78216
210-979-6633 (phone)
210-979-7024 (fax)
scastillo@wabsa.com
ii
Miguel A. Saldaña
Texas Bar No. 17429450
Walsh, Anderson, Gallegos, Green & Treviño, P.C.
1105 East 3rd Street
Weslaco, Texas 78216
956-647-5122 (phone)
956-647-5421 (fax)
msalana@wabsa.com
iii
References to the Record
Reference Meaning
CR x Clerk’s Record at page x
iv
Index of Authorities
Case Page(s)
Canutillo Ind. Sch. Dist. v. Farran,
409 S.W.3d 653 (Tex. 2013) ......................................................................... 13
City of Mesquite v. PKG Contracting, Inc.,
263 S.W.3d 444 (Tex. App.—Dallas 2008, pet. denied) .............................. 16
Clear Lake City Water Auth. v. MCR Corp.,
No. 01-08-00955-CV, 2010 WL 1053057 (Tex. App.—Houston [1st
Dist.] Mar. 11, 2010, pet. denied) ............................................................15–16
Llanes v. Corpus Christi Ind. Sch. Dist.,
64 S.W.3d 638 (Tex. App.—Corpus Christi 2001, pet. denied) ..................... 8
Soliz v. Nueces County,
134 S.W.3d 298 (Tex. App.—Corpus Christi-Edinburg 2003, pet.
denied) ............................................................................................................. 1
State v. Lueck,
290 S.W.3d 876 (Tex. 2009) .................................................................5–6, 14
Tex. Dept. of Criminal Justice v. McElyea,
239 S.W.3d 842 (Tex. App.—Austin 2007, pet. denied) ................................ 8
Tex. Dept. of Mental Health & Mental Retardation v. Olofsson,
59 S.W.3d 831 (Tex. App.—Austin 2001, pet. dismissed) ........................... 14
Univ. of Houston v. Barth,
403 S.W.3d 851 (Tex. 2013) ...................................................................11–12
Univ. of Tex. Sw. Med. Ctr. at Dallas v. Genilello,
398 S.W.3d 680 (Tex. 2013) ......................................................................... 11
Weslaco Ind. Sch. Dist. v. Perez,
No. 13-12-00581-CV, 2013 WL 3894951 (Tex. App.—Corpus
Christi-Edinburg Jul. 25, 2013) (no pet.) .................................................... 1, 6
v
Statute/Rule Page(s)
34 C.F.R. § 80.43 ....................................................................................................... 8
29 U.S.C. § 1104 ........................................................................................................ 9
29 U.S.C. §1106 ......................................................................................................... 9
Tex. Admin. Code § 61.1018 .............................................................................10, 13
Tex. Admin. Code § 61.1032 ................................................................................... 13
Tex. Admin. Code § 61.1093 ................................................................................... 13
Tex. Educ. Code § 7.021 .......................................................................................... 12
Tex. Educ. Code § 41.105 ........................................................................................ 10
Tex. Educ. Code § 44.009 ........................................................................................ 13
Tex. Educ. Code § 44.010 ........................................................................................ 12
Tex. Gov. Code § 554.002 ................................................................................... 7, 11
Tex. Gov. Code § 554.006 ....................................................................................... 13
Tex. Gov. Code § 554.0035 ................................................................................. 5, 14
Tex. Lab. Code 504.072 ............................................................................................. 9
vi
Statement of the Case
Appellant Adan Perez, Jr. is a former non-teacher employee of Appellee
Weslaco Independent School District (“WISD”).
Perez seeks money damages for violation the Texas Whistleblower Act and
for breach of his reasonable expectation of contract renewal. CR 413 ¶¶ 20–22.
Perez seeks non-monetary relief for violation of his rights under the Texas
Constitution. Id. at ¶¶ 23–25.
In June 2012, WISD filed a plea to the jurisdiction with respect to all claims
other than the Texas Whistleblower Act. CR 27. The 332nd District Court of
Hidalgo County, Texas (the “District Court”) denied that plea to the jurisdiction in
September 2012. CR 110. This Court affirmed in part and reversed in part. CR
207.
In October 2014, WISD filed a plea to the jurisdiction (the “Plea”) with
respect to Perez’s claims for violation of the Texas Whistleblower Act and for
breach of his reasonable expectation of contract renewal. CR 94. The 332nd
District Court granted the Plea on December 17, 2015. CR 409. This interlocutory
appeal follows.
vii
Statement on Oral Argument
Given the straightforward factual allegations and legal issues involved in
this case, Perez does not believe that oral argument would materially aid the Court
in deciding this matter.
viii
Issues Presented
1. Whether the trial court lacked jurisdiction over Perez’s claim for violation of
the Texas Whistleblower Act.
2. Whether the trial court lacked jurisdiction over Perez’s claim for breach of
his reasonable expectation of contract renewal.
ix
Legal Standards
Subject matter jurisdiction is a question of law, and a trial court’s ruling on a
plea to the jurisdiction is reviewed de novo. Soliz v. Nueces County, 134 S.W.3d
298, 300 (Tex. App.—Corpus Christi-Edinburg 2003, pet. denied). In making that
determination, this Court has held that:
We construe the pleadings liberally in favor of the plaintiff and look
to the pleaders’ intent. If the pleadings do not contain sufficient facts
to affirmatively demonstrate the trial court’s jurisdiction but do not
affirmatively demonstrate incurable defects in jurisdiction, the issue is
one of pleading sufficiency and the plaintiff should be afforded an
opportunity to amend. . . . Even a failure to allege sufficient facts to
demonstrate jurisdiction does not necessarily authorize immediate
dismissal. It is only where the court can see that, even by amendment,
no cause of action can be stated consistent with the facts alleged that
the court is without jurisdiction.
If the plea challenges the existence of jurisdictional facts, we consider
relevant evidence submitted by the parties when necessary to resolve
the jurisdictional issue raised, as the trial court is required to do so. In
a case in which the jurisdictional challenge implicates the merits of
the plaintiff’s cause of action and the plea to the jurisdiction includes
evidence, the trial court reviews the relevant evidence to determine if
a fact issue exists. If a fact question exists, then the plea cannot be
granted and the fact issue will be resolved by the fact finder.
Weslaco Ind. Sch. Dist. v. Perez, No. 13-12-00581-CV, 2013 WL 3894951, at *1
(Tex. App.—Corpus Christi-Edinburg Jul. 25, 2013) (no pet.).
Statement of Facts
From July 2004 through June 2010, Perez was a risk manager for WISD.
CR 410 at ¶ 6. WISD had a longstanding pattern and practice of automatically
1
renewing all of its employment contracts except in the case of cause, misconduct,
or budgetary problems. CR 411 at ¶ 7. From 2005 through 2005, Perez was
routinely commended for his performance, and his performance reviews were more
than satisfactory. Id. at ¶ 8. True to its de facto policy, WISD renewed Perez’s
employment contract every year until the events giving rise to this litigation. See
id. at ¶ 7. WISD even represented to Perez that it would follow that policy with
him. CR 257 at ¶ 23.
As WISD’s risk manager, Perez managed employee benefit plans, including
WISD’s self-funded workers’ compensation and self-funded employee health
insurance plans. CR 410–11 at ¶ 6. In early 2009, Perez became aware of a scheme
within WISD to siphon money from the self-funded programs into a construction
fund with which to build a new press box at WISD’s football stadium. CR 411
at ¶ 9. Perez understood that such misappropriation of self-funded plan amounts—
especially those which had received state and federal funds—violated state and
federal statutes and regulations. Id.
Perez did not sit idly by while the funds under his charge were illegally
drained. Perez made repeated attempts to warn WISD’s management,
superintendent, and board members of this unlawful misappropriation. Id. In
return, Perez was either rebuked or ignored. Id. at ¶¶ 9–11; CR 255–56 at ¶¶ 5–6.
2
Perez was even told that the shortfall in the employee benefit funds were not a
serious concern as they would be repaid from future bond sales. Id. at ¶ 9.
Tired of fruitlessly complaining to administrators who were either (at best)
willfully ignorant or (at worst) complicit, Perez decided to seek outside help. See
CR 411–12 at ¶ 12. Perez contacted the Texas Education Agency (“TEA”) by
telephone to report WISD’s misuse of funds. CR 256 at ¶¶ 8–9. In order to
substantiate Perez’s accusations, the TEA asked Perez to obtain documentation
showing WISD’s misappropriations. CR 411–12 at ¶ 12. To do so, Perez contacted
the WISD business office and requested certain documents showing the illicit
transfer of funds. See id. Perez believes WISD became aware of his investigation
and his contact with TEA. Id.
WISD did not use Perez’s warnings and the impending TEA investigation to
change their ways. Instead, they doubled-down and decided to punish Perez for
blowing the whistle. After a long string of glowing performance reviews, Perez
was rated poorly in 2010—his first review after contacting the TEA. CR 412 at ¶
14. This review made numerous false accusations about Perez’s work and
recommended that Perez’s contract not be renewed. Id.; CR 389–92, 394. Despite
WISD’s longstanding pattern and practice of renewing all employment contracts,
Perez’s contract was not renewed in and he ceased to be a WISD employee on June
21, 2010. CR 412 at ¶ 15, CR 394.
3
Perez filed an appeal of his termination on July 20, 2010. CR 297. On
October 28, 2010, WISD set a hearing for November 1, 2010. CR 91. That original
hearing date was cancelled. WISD and Perez’s counsel finally met on December 1,
2010. CR 257 at ¶ 19. Although Perez and his counsel were under the impression
that this was to be a settlement discussion, WISD held an unannounced Level 1
complaint hearing. Id. Perez filed suit against WISD on March 8, 2011. Id. at ¶ 21.
Perez was never reinstated by WISD, and the stigma of the false and
disparaging performance review/termination has left Perez unable to find work in
his chosen profession of municipal/school district risk management. Id. at ¶ 19;
CR 257 at ¶ 24.
Summary of the Argument
The District Court has jurisdiction over Perez’s Whistleblower claim. WISD
violated numerous state and federal statutes/regulations by secretly using its
employee benefit funds to pay for stadium improvements. Because the TEA is
charged with regulating and overseeing such transactions, it was an appropriate
law enforcement authority for purposes of the Whistleblower Act. WISD learned
of this whistleblowing and terminated Perez in retaliation.
The District Court likewise has jurisdiction over Perez’s breach of
reasonable expectation of contract renewal. Perez had a written contract with
4
WISD which included an implied expectation of renewal. The mere existence of an
implied term in a written contract did not deprive the District Court of jurisdiction.
Argument
WISD challenged the District Court’s jurisdiction over Perez’s claims for
violation of the Texas Whistleblower Act and breach of the reasonable expectation
of renewal. Perez will show the Court that the District Court has jurisdiction over
his claims and erred by granting WISD’s Plea.
I. The District Court has jurisdiction over Perez’s whistleblower claim.
A. Perez alleged sufficient facts to establish the District Court’s
jurisdiction.
The Texas Whistleblower Act waives sovereign immunity with respect to
“[a] public employee who alleges a violation” of Chapter 554 of the Texas
Government Code. Tex. Gov. Code § 554.0035. The Texas Supreme Court has
interpreted this literally: “there are but two jurisdictional requirements under
section 544.0035. For the government’s immunity to be waived, the plaintiff must
(1) be a public employee and (2) allege a violation of [Chapter 554].” State v.
Lueck, 290 S.W.3d 876, 881 (Tex. 2009) (emphasis removed).
In the context of a plea to the jurisdiction, a court may consider the “merits”
of a plaintiff’s claim only to the extent “necessary to resolve whether a plaintiff has
alleged a violation under the [Whistleblower] Act.” Id. at 881. This “does not mean
that [a plaintiff] must prove [its] claim in order to satisfy the jurisdictional hurdle.”
5
Id. at 884. The statute only requires an “alleg[ation]” of the necessary elements,
and the Texas Supreme Court “ha[s] urged that the burden of proof with respect to
these jurisdictional facts does not involve a significant inquiry into the substance of
the claims.” Id.
Perez’s live pleading (the “Petition”) alleges both of the jurisdictional
prerequisites for waiver immunity under the Texas Whistleblower Act.1 See CR
410–415.
1. Perez alleged that he was a public employee.
The first jurisdictional element is that the plaintiff was a public employee at
the time of the unlawful retaliation. See Lueck, 290 S.W.3d at 881. Perez’s Petition
alleges that he “was employed as the Risk Manager of WISD from July 2004
through June 2010.” CR 410 at ¶ 6. WISD has not challenged that this element has
been adequately pled.
2. Perez alleged that WISD violated the Texas Whistleblower
Act.
The second element for waiver of immunity requires Perez to plead that
WISD violated Chapter 554 of the Texas Government Code. Lueck, 290 S.W.3d at
881. The Whistleblower Act provides Perez with the following protection:
1
Alternatively, the Petition does not allege any facts demonstrating that Perez cannot meet the
elements of the Texas Whistleblower Act, so repleading would be the proper remedy instead of
outright dismissal. See Weslaco Ind. Sch. Dist, 2013 WL 3894951, at *1.
6
A state or local governmental entity may not suspend or terminate the
employment of, or take other adverse personnel action against, a
public employee who in good faith reports a violation of law by the
employing governmental entity or another public employee to an
appropriate law enforcement authority.
Tex. Gov. Code § 554.002(a). Perez has alleged precisely this.
Perez’s theory of the case is simple: WISD misappropriated funds in
violation of state and federal law. Perez blew the whistle internally, and WISD
ignored him. Perez blew the whistle to the TEA, and WISD gave him a false
performance review and fired him. See generally CR 410–15. No more is required
to establish jurisdiction over a whistleblower claim.
B. WISD’s challenges to Perez’s pleadings are based on mistaken
interpretations of fact and law.
WISD’s Plea challenged Perez’s whistleblower allegation in five respects:
(1) the timing of the whistleblowing versus the adverse employment
action, (2) WISD’s violation of law, (3) whether the TEA is an appropriate law
enforcement body, (4) exhaustion of administrative remedies, and (5) the statute of
limitations. As demonstrated below, these arguments do not defeat the District
Court’s jurisdiction.
1. Perez blew the whistle to the TEA prior to his performance
review and subsequent termination.
WISD complains that he notified the TEA about WISD’s misappropriation
of funds after his performance review and termination. CR 118–120. But Perez’s
7
Petition and affidavit show that he initially blew the whistle to TEA prior to his
performance review. CR 256 at ¶¶ 8–9, 411–12 at ¶¶ 12–14.
2. Perez blew the whistle on illegal activity.
WISD next complains that, in his deposition, non-attorney Perez could not
cite an exact statutory provision violated by WISD. CR 120–123. Under Texas
law, however, a whistleblower is not required to “identify a specific law when
making a report . . . .” Llanes v. Corpus Christi Ind. Sch. Dist., 64 S.W.3d 638, 642
(Tex. App.—Corpus Christi 2001, pet. denied). Similarly, the whistleblower is not
required to “prove that a violation of law actually occurred.” Id. “In other words,
when an employee believes and reports in good faith that a violation has occurred,
but is wrong about the legal effect of the facts, he is nevertheless protected by the
whistleblower statute.” Tex. Dept. of Criminal Justice v. McElyea, 239 S.W.3d
842, 850 (Tex. App.—Austin 2007, pet. denied).
Perez’s response to WISD’s Plea pointed-out several statutes and regulations
which were violated by WISD. See CR 239 at ¶ 46. For example, title 34, section
80.43 of the Code of Federal Regulations punishes persons who “materially fail[]
to comply with the terms of an award[ed]” federal grant. 34 C.F.R. § 80.43(a).
Perez has alleged that WISD misused funds which came, in part, from federal
grants and that such use was not in compliance with the terms of those grants. CR
411 at ¶ 9–10.
8
United State Code, title 29, sections 1104 and 1106 prohibit certain
transactions by fiduciaries of various self-funded plans. See 29 U.S.C. §§ 1104(a),
1106(a)–(b). Perez has alleged that WISD engaged in the sort of misallocating and
self-dealing prohibited by these sections. See CR 411 at ¶¶ 9–10. WISD argues that
it is not bound by these provisions. CR 419. Perez respectfully submits that such an
argument on the merits should be brought through a motion for summary judgment
and not in a plea to the jurisdiction.
Section 540.072 of the Texas Labor Code allows a political subdivision to
set-aside funds for workers’ compensation benefits “in a separate account . . .”
Tex. Lab. Code 504.072(b). Funds so set aside must be “sufficient to pay all costs”
associated with the workers’ compensation coverage and are subject to special
segregation, accounting, and disclosure rules. Tex. Lab. Code § 504.072. Perez has
alleged that WISD violated this statute by secretly raiding the workers’
compensation fund and leaving a shortfall. Perez is not alone in his belief that
WISD violated this statute. After an investigation, the TEA’s auditor found that
“the transfer of monies from the workers’ compensation fund to the construction
fund was not allowable under Section 504.072 of the Texas Labor Code.” CR 398.
As stated by the TEA, section 504.072 “provides a list of allowable disbursement
and the use of appropriations for construction purposes is not included in the list.”
Id.
9
Section 41.105 of the Texas Education Code sets forth a variety of
“authorized expenditures” of “public school funds.” Tex. Educ. Code § 41.105(a).
Although the statute authorizes many types of expenditures of school funds, it does
not appear to authorize (1) the use of funds “designated for a specific purpose” to
be used for improving athletic facilities or (2) the use of bond proceeds to repay
secret debits from employee benefits funds. See Tex. Educ. Code § 41.105(c).
Perez has alleged that WISD violated this statute by using and intending use funds
in unauthorized manners.
Finally, section 61.1018 of the Texas Administrative Code allows the TEA
to “distribute staff salary allotment funds” to school districts participating in the
Teacher Retirement System—such as WISD—“for the purpose of making
payments of health care supplementation” to certain full-time employees.2 Tex.
Admin. Code § 61.1018(a), (b)(1)(A). Perez’s Petition shows that WISD violated
this regulation by using health care funds for other purposes. CR 411 at ¶¶ 9–10.
Perez has shown that he blew the whistle on unlawful conduct.
3. Perez had a good-faith belief that the TEA was an
appropriate law enforcement authority.
To take refuge under the Texas Whistleblower Act, the plaintiff must report
the unlawful actions to “an appropriate law enforcement authority . . . that the
2
This violation was not alleged in Perez’s response to WISD’s Plea. It is, however, an example
of the sort of violation which could be alleged if Perez is required to replead.
10
employee in good faith believes is authorized to: (1) regulate under or enforce the
law alleged to be violated in the report; or (2) investigate or prosecute a violation
of criminal law.” Tex. Gov. Code § 554.002(b). The Texas Supreme Court has
clarified that a body will “constitute an appropriate law-enforcement authority
under the Whistleblower Act” if it has the “authority” to “investigate . . . violations
of the law against third parties” or has “authority to promulgate regulations
governing the conduct of such third parties.” Univ. of Houston v. Barth, 403
S.W.3d 851, 857 (Tex. 2013).
An employee’s “good faith belie[f]” must satisfy objective and subjective
standards:
(1) the employee believed the governmental entity was authorized
to (a) regulate under or enforce the law alleged to be violated in
the report, or (b) investigate or prosecute a violation of criminal
law; and
(2) the employee’s belief was reasonable in light of the employee’s
training and experience.
Univ. of Tex. Sw. Med. Ctr. at Dallas v. Genilello, 398 S.W.3d 680, 683 (Tex.
2013). The whistleblower’s “belief can only satisfy the good-faith requirement if a
reasonably prudent employee in similar circumstances would have thought so.” Id.
Perez has averred that he contacted the TEA for several subjective reasons.
First, an attorney at the United States Attorney General’s office suggested it to
him. CR 256 at ¶ 7. This made sense to Perez because, “based on [his] education
11
and experience, [Perez] believed that the TEA was the appropriate entity to [which
he] should make [his] report of the violation of law.” Id. at ¶ 10. Perez further
believed that the TEA would hold authority over WISD because, at “[a]ll times
during [his] employment, WISD held the TEA out as the appropriate regulatory
enforcement agency related to the laws governing the school district.” Id. at ¶ 11.
For purposes of a plea to the jurisdiction, this is sufficient proof of subjective
belief.
Perez’s belief that the TEA was an appropriate body to regulate a school
district’s financial improprieties was objectively reasonable. As stated above, a
body is an appropriate law enforcement authority if it has the power to, inter alia,
investigate third parties or promulgate rules governing third parties. Univ. of
Houston, 403 S.W.3d at 857. The TEA does both.
The TEA is statutorily empowered to “review school district budgets, audit
reports, and other fiscal reports . . . .” Tex. Educ. Code § 7.021(b)(13). In so doing,
the TEA is allowed to “determine whether all legal requirements have been met”
with respect to those budgets/reports. Tex. Educ. Code § 44.010. In fact, the TEA
asserted the authority to “regulate under or enforce the law alleged to be violated”
when it (1) audited WISD’s illicit transfer of the funds and (2) required WISD to
submit a corrective action plan within ten business days. CR 396.
12
The TEA likewise has significant rulemaking authority concerning WISD’s
misconduct. The TEA is statutorily authorized to promulgate the format of school
districts’ budgets and financial reports. Tex. Educ. Code § 44.009(a). Moreover,
the TEA has promulgated rules governing, inter alia, (1) use healthcare funds, (2)
payments for facilities, and (3) spending of other allotted high school funds. Tex.
Admin. Code §§ 61.1032, 61.1093, 61.1018.
In light of these investigatory and rulemaking functions, a reasonably
prudent WISD employee would believe that TEA had the power to promulgate and
enforce statutes and regulations concerning a school district’s misuse of employee
benefit funds.
4. Perez was not required to exhaust his administrative
remedies.
WISD further complains that Perez “fail[e]d to exhaust his administrative
remedies as required by the Texas Whistleblower Act.” CR 127. This too is
incorrect.
The Texas Whistleblower Act requires a complaining employee to “initiate
action under the grievance or appeal procedures” of his employer.3 Tex. Gov. Code
§ 554.006(a). The employee is not, however, required to exhaust those remedies.
Canutillo Ind. Sch. Dist. v. Farran, 409 S.W.3d 653, 657 (Tex. 2013) (“To be sure,
3
For the reasons discussed in infra § I.B.5., even this limited requirement is likely not
jurisdictional.
13
the Whistleblower Act has its own statutory remedies and procedures that do not
require exhaustion . . . .”).
Perez satisfied the Whistleblower Act by initiating the grievance procedure
within thirty days of his termination from WISD. CR 257 at ¶¶ 16, 18. His alleged
subsequent failure to exhaust his administrative remedies is not relevant to his
whistleblower claim.
5. Perez initiated his Whistleblower claim in a timely manner.
The Texas Whistleblower Act identifies specific deadlines by which claims
must be filed. These are not, however, jurisdictional. As plainly stated by the
Legislature and the Supreme Court, sovereign immunity is waived—and a trial
court will have jurisdiction—if “a public employee . . . alleges a violation” of the
Whistleblower Act. Tex. Gov. Code § 554.0035. See also Lueck, 290 S.W.3d at
881 (“[T]here are but two jurisdictional requirements under section 544.0035. For
the government’s immunity to be waived, the plaintiff must (1) be a public
employee and (2) allege a violation of [Chapter 554].”).
As such, failure to comply with the dates and deadlines—called a “limitation
period” by the statute—“gives rise to the affirmative defense of limitations, but it
is not grounds for a plea to the jurisdiction.” Tex. Dept. of Mental Health & Mental
Retardation v. Olofsson, 59 S.W.3d 831, 832–33 (Tex. App.—Austin 2001, pet.
14
dismissed). Simply put, “limitations is not a jurisdictional issue” and should not be
decided in a plea to the jurisdiction. Id.
II. The District Court has jurisdiction over Perez’s breach of reasonable
expectation of renewal claim.
Perez’s claim for breach of his reasonable expectation of renewal is brought
in two forms: (1) as a breach of an implied term of his contract with WISD and
(2) as a breach of Perez’s due process/due course of law rights. WISD did not
challenge the District Court’s jurisdiction to hear the latter.
WISD has a longstanding historical practice of renewing the contracts of its
non-Chapter 21 employees barring good cause or misconduct by that employee.
CR 257 at ¶ 22. Moreover, Perez’s own course of dealings with WISD reinforced
this practice of expected renewals of annual employment contracts. Id. at ¶ 23
(“WISD always represented to me that it would following this policy with me.
WISD followed this policy until I disclosed its misconduct.”). This pattern of
performance and representations that renewal should be expected added an implied
right to reasonable expect renewal to Defendant’s written employment contracts.
The Legislature has waived sovereign immunity for breach of written
contracts. See Tex. Loc. Gov. Code § 271.152. The existence of a written contract
is merely a jurisdictional prerequisite to the types of contracts the Court can
construe and enforce; it is not a substantive limit on how the Court can construe or
enforce a contract. See Clear Lake City Water Auth. v. MCR Corp., No. 01-08-
15
00955-CV, 2010 WL 1053057, at *9 (Tex. App.—Houston [1st Dist.] Mar. 11,
2010, pet. denied) (“The existence of any implied term within the agreement has
no bearing on whether the agreement constitutes a written contract.”) The waiver
of immunity applies “to any claims for breach of a contract falling within the terms
of the statute. Once the trial court determines whether the contract falls within the
provisions of Section 271.152, it need not parse further the pleadings or the
contract to determine whether the legislature has waived immunity for breach of
contract claims.” City of Mesquite v. PKG Contracting, Inc., 263 S.W.3d 444, 447
(Tex. App.—Dallas 2008, pet. denied).
Perez alleges that WISD breached an implied term of a written contract. As
such, this claim falls within Section 271.152’s waiver of immunity.
Conclusion
WISD attempted to misappropriate its employee benefits funds and blame
the shortfall on the only man who tried to stop them. WISD’s vindictive review
and termination of Perez violated the Texas Whistleblower Act and denied him his
reasonable expectation of renewal. Perez prays that the Court reverse the District
Court and grant Perez all other relief to which he is entitled.
16
Respectfully submitted,
Hawash Meade Gaston
Neese & Cicack LLP
/s/ Samuel B. Haren
Andrew K. Meade
Texas Bar No. 24032854
Samuel B. Haren
Texas Bar No. 24032854
2118 Smith Street
Houston, Texas 77002
713-658-9001 (phone)
713-658-9011 (fax)
sharen@hmgnc.com
Attorneys for Appellant,
Adan Perez, Jr.
17
Certificate of Compliance
This brief complies with the length limitations of Texas Rule of Appellate
Procedure 9.4(i)(2)(B) because it contains 3,804 words, excluding the parts of the
brief exempted by Texas Rule of Appellate Procedure 9.4(i)(1).
/s/ Samuel B. Haren
Samuel B. Haren
18
Certificate of Service
I hereby certify that a true and correct copy of the foregoing was served on
the following via electronic service on April 1, 20154:
Stacy Tuer Castillo
Texas Bar No. 00796322
Walsh, Anderson, Gallegos, Green & Treviño, P.C.
100 NE Loop 410
San Antonio, Texas 78216
210-979-6633 (phone)
210-979-7024 (fax)
scastillo@wabsa.com
Miguel A. Saldaña
Texas Bar No. 17429450
Walsh, Anderson, Gallegos, Green & Treviño, P.C.
1105 East 3rd Street
Weslaco, Texas 78216
956-647-5122 (phone)
956-647-5421 (fax)
msalana@wabsa.com
/s/ Samuel B. Haren
Samuel B. Haren
4
This brief is identical to the version filed on March 30, 2015 with the exception of (1) this
certificate of service and (2) the previously-filed Appendix has been incorporated into the brief
as a single .pdf file.
19
Appendix
In accordance with Texas Rules of Appellate Procedure 38.1(k) and
38.2(a)(c), the following items are appended to this brief:
Document Page
Order Granting WISD’s Plea (CR 427) ................................................................ A-1
Perez’s Petition (CR 410–15) ............................................................................... A-2
Perez’s Affidavit (CR 255–58) ............................................................................. A-8
TEA Investigation (CR 396–400) ....................................................................... A-12
20
Electronically Filed
12116/20144:10:10 PM
Hidalgo County District Clerks
Reviewed By: Jassia De La Paz
CAUSE NO. C-641-1I-F
ADAN PEREZ, JR. § IN THE DISTRICT COURT
§
Plaintiff §
§
§ 332'" DISTRICT COURT
WESLACO INDEPENDENT SCHOOL §
DISTRICT §
§
Defendant § RIDALGO COUNTY, TEXAS
ORDER GRANTING DEFEN DANT'S PLEA TO THE JURISDICTION
On the 17TH day of DECEMBER ,2014 came on to be considered Defendant,
Weslaco Independent School District's Plea to the Jurisdiction filed on October 3, 2014 in the
above-entitled and numbered cause. The Court, having cons idered said Motion, finds that it is
meritorious, therefore;
IT [S ORDERED, ADJUDGED and DECREED that Defendant, Weslaco Independent
School District's Plea to the Jurisdiction is hereby GRANTED.
SIGNED this 17TH day of_-=D:..:E=-C=-E=M=B-=E:..:R~. ' " " ~". ,~
cc: Court's file
Miguel A.Saldalia, Walsh, Anderson, Ga llegos, Green & Trevino, P.C.,105 East 3'd Stn~et. Weslaco,
Texlls 78596, fax: (956) 647-5421
Sam D. Harell, Hawash, Meade, Gaston, Neese & C ical{, L.L.P., 2118 Smith Street, Houston, Texas
77002, fax: (71.3) 658-90 II
427
A-1 (TB)
Electronica lly Filed
10/30/20141:42:16 PM
Hidalgo County District Clerks
Reviewed By: Miriam Castillo
CAUSE NO. C-64 1-II -F
ADAN PEREZ, JR. , § IN THE DISTRICT COURT OF
Plaintiff §
§
v. §
§ HIDALG O COUNTY, TEXAS
WESLACO INDEPENDENT §
SC HOOL DISTRI CT and RI CHARD §
RIVERA, §
Defell(/mtts § 332ND JU DICI AL DISTRICT
PL AINTIFF 'S SECOND AMENDED PETITION
I. Plaintiff Adan Perez, Jr. fil es this First Amended Complaint and would
show the Court as foll ows:
D ISCOVERY
2. Plaintiff intends to conduct discovery under Level 3 of the Texas Rules of Civil
Procedure.
PA RTIES
3. Plaintiff Adan Perez Jr. is an individual.
4. Defendant, Weslaco Independent School Di strict (hereinafter "WISD") has
answered and appeared herein.
J URISDICTION AND VENUE
5. This court has jurisdiction and venue in thi s matter because a substantial portion
of the acts and/or incidents giving rise to this action occurred within Hidalgo County, Texas and
because the amount in controversy is within the jurisdictional limits of this COlirt. Tex. Civ. Prac.
& Rem. § 15 .002(a)( I).
BACKGROUND
6. Perez was employed as the Risk Manager of WJSD from July 2004 through June
2010. A part of his responsibility in that position was to manage certain employee benefit plans,
A-2
410
Electronically Filed
10/30120141:42:16 PM
Hidalgo County District Clerks
Reviewed By: Miriam Castillo
including specifically, the district's workers' compensation self-funded program and the se lf
funded employees' health insurance program.
7. WISD has a longstanding practice of renewing all contracts of its employees,
absent cause, misconduct, or budgetary constraints. WISD continued this practice with Perez.
8. From 2005 through 2009, Perez's work was commended by the district and his
perfonnance reviews were more than satisfactory
9. In early, 2009, Perez became aware that WISD wanted to and did unlawfully
remove funds from those self-funded programs for the specific pu'rpose of beginning
conslnlction of a new "Press Box" at the district football stadium. When Perez informed Mr.
Amold Canche, the CFO of WISD, that the withdrawal and use of such funds violated state
insurance law and the covenants of the district's insurance policies (not to mention the misuse of
federal funds contributed), he was rebuked. Perez made several attempts to meet with Rivera
regarding this issue, but was denied access to Rivera. Additionally, he was told that use of the
funds was inconsequential as they wou ld be repaid the following year upon passing of a bond
election.
10. Perez also reported to his supervisor that the withdrawal of fu nds from the
worker's compensation fund to re-fund the health insurance fillld was an improper use of both
state and federal funds . Again he was rebuked by Rivera with the same admonition.
11. Perez continued to present these claims to his supervisor, as well as, other
administrators and members of the Board of Trustees for WISD.
12. Perez further notified the Texas Education Agency ("TEA") by telephone
concerning WISD's misconduct. Pcrez was instructed to obtain documentation to support his
2
A-3
411
Electronically Filed
10/30120141:42:16 PM
Hidalgo County District Clerks
Reviewed By: Miriam Castillo
allegations. As such, Perez contacted WISD's business office and requested documents to show
the misconduct to the TEA. Upon information and belief, WISD was aware of this contact.
13. Perez believed, based on his education and experience, that the TEA was the
appropriate entity to whom he should make his report ofWISD's misconduct.
14. Instead of correcting their improper and unlawful activity; in his 2010 review,
WISD and Rivera repol1ed that up Perez did not work well witb others and had an improper
attitude. This perfornlanee review contained numerous misrepresentations, including attempts to
blame Perez for the misallocated funds.
15. Perez's contract was not renewed upon its expiration in June 2010.
16. Perez filed a fonnal complaint with the TEA concerning WISD's misconduct in
June 20 I O. This formal complaint was a follow-up to his previous telephonic report.
17. WrSD's non-renewal of Perez was the culmination of a pattern of unlawful
activity designed to punish Perez and hide the unlawful conduct of WISD and its board
members/employees.
18. Perez filed a timely appeal of his non-renewal and commenced the grievance
process. WISD ignored these procedures and renlsed to grant Perez a hearing. Due to the delay
by WISD, Perez terminated the grievance process and filed this lawsuit.
19. Perez's tennination has stigmatized Perez in the industry as a bad risk manager
who loses mOlley. This bas deprived him of his freedom to secure employment in his chosen
field of municipaVschool district risk management.
3
A-4
412
Electronically Filed
10/30f20141:42:16 PM
Hidalgo County District Clerks
Reviewed By: Miriam Castillo
CAUSES OF ACTION
I. Breach of ContI'act
20. Due to both WISD's longstanding pattcm of renewals and WISD own
relationship with and represcntations to Perez, Perez's written employment contract included an
implied right of expectation of renewal.
2 1. WlSD breached this implied tenn by refusing to renew Perez's contract despite
the lack of any cause or misconduct by Perez.
II. Texas Whistleblowel' Act
22. Perez was tenl1inated in retaliation for his reporting of WISD's misconduct to
TEA, a body Perez reasonably believed to be an enforcement body with respect to this matter.
UI. Constitutional Rights
23. Perez was punished for his exercise of speech rights protected by the Texas
Constitution. I
24. Perez was denied his property interest in a reasonable expectation of renewal
without due process, due course, or equal protection of law under the Texas Constitution.
25. Perez was denied his liberty interest in serving as a risk manager for another
schooVgovenul1cntal body without due process, duc course, or equal protection of law under the
Texas Constitution.
DAMAGES
26. At the time of thc incidcnts comp laincd of, Perez was gainfully employed. As a
proximatc result of the unlawful acts of WISD, Perez was tenninated and suffcred a loss of
income and benefits for which he now sues. As a further result of the acts of WISD, Perez's
I Plaintiffs First Amended Petition inadvertently listed a claim under the United States Constitution; this was
unintentional and is expressly disclaimed.
4
A-5
413
r Electronically Filed
10/30/20141 :42:16 PM
Hidalgo County District Clerks
Reviewed By: Miriam Castillo
earning, retirement and capacity to earn a livelihood have been severely impaired resulting in a
loss of earning capacity in the future for which he now sues.
27. As a further result of the actions ofW JSD, Perez has lost certain real properly due
his inability to make payments thereon, resulting in the loss of his investment and equity in such
property for which he now sues.
28. Perez seeks statutory damages as detcnnincd appropriate by the court.
29. Perez seeks his reasonable and necessary attorney's fees incurred in the
prosecution of this action as provided by law. Perez seeks these fees for the prosecution, trial
and appeal of this cause.
30. Perez seeks exemplary damages, as the conduct of WISD constituted a knowing
willful or intentional act; and/or was carried out with such a total want of care as to constitute a
conscious indifference to tlle rights or welfare of the Perez.
3 1. Perez further seeks equitable relief in the form of resumption of emp loyment with
WISD with compensation equal to what it would have been but for WISD's constitutional
violations.
CONDI TIONS PRECEDENT
32. All conditions precedcnt have been performed or have occurred as required by
Texas Rule of Civil Procedure 54.
PRAYER
33. Perez prays that the Court grant him a judgment against WISD for: the amount of
actual damages as be proven to the satisfaction of this court; exemplary damages of at least tlu-ee
times the amount of actual damages awarded; statutOlY damages as provided; attomeys fees;
prejudgment and post-judgment interest as allowed by law; costs of suit; and such other relief, in
law and in equity, to which Plaintiff may be justly entitled.
5
A-6
414
Electronically Filed
10/30/20141:42:16 PM
Hidalgo County District Clerks
Reviewed By: Miriam Castillo
Respectfully Submitted,
HA WASH MEADE GASTON
NEESE & ClCACI(LLP
lsi Jake B. McDonald
Andrew K. Meade
Texas Bar No. 24032854
Jake McDonald
Texas Bar No. 24078165
Samuel B. Haren
Texas Bar No. 24059899
2118 Smith Street
Houston, Texas 77002
713-658-9001 (phone)
713-658-9011 (fax)
Attorneys for Plaintiff
Adan Perez, Jr.
CERTIFICATE OF SERVICE
A true and correct copy of the foregoing document has been served on all counsel of
record via facsimile, October 30, 2014.
Via Fac.vimile: (210) 979-7024
Joe A. De Los Santos
Miguel A. Saldana
Wa lsh, Anderson, Gallegos, Green & Trevino, PC
100 NE Loop 410, Suite 900
Houston, TX 782 16
lsi Jake B. McDonald
Jake McDonald
6
A-7
415
CAUSE NO. C-641-11-F
ADAN PEREZ, Jr. § IN THE DISTRICT COURT
Plaintiff §
§ 332"0 JUDICIAL DISTRICT
§
WESLACO INDEPENDENT SCHOOL §
DISTRICT and IUCHARD RIVERA §
Defendants § HIDALGO COUNTY, TEXAS
AFFIDAVIT Oli' A])AN PEREZ
THE STATE OF TEXAS §
§
COUNTY OF ;!AfA!.tJ §
BEFORE ME, the undersigned uuthority. on this day nppcared Adal! Perez, who is
personally know to me and who, being duly worn on oath to tcll the truth, testified us follows:
I. "My name is Adan Perez. I am over the age of eighteen (18) ycms, have never been
cOllvicted of 11 felony or a crime of moral tmpitudc, and lUll competent to make this
affidavit. I have personal knowledge of the facts contained herein, and the fhets are tmc
and corrcct.
2. T have worked for over 30 years in insurance and risk management for private companies,
state bureaucracies, and Weslaco Independent School District ("WIS))").
3. In August of 2004, I began employment with WISD. ] worked as risk manager for
Weslaco for six yeMrs. Dming my first five years of employment, ] consistently received
positive evaluations and was nevel' reprimanded by my superiors,
4, Tn fall of2009, ] attended a WISD board mceting and learned that WISD received eel1uin
state and federal funds thai wcre to he utilized for WTSD's self-funded employee's hcnlth
insurunce and workers' compensation insurance I'CSCI'VC, Instead, these funds were lIsed to ,,
finance construction of an expansion of tile WlSD football sladhlln. I,
,1
5, Upon discovering this infonmltioJl, I alerted my immedintc supervisors, Andres Sallehez
and Arnold Cunche, I told them that] believed the transfer of the cncumbered funds was
illegal. They told me Ihnt at the time that it was not a concern.
A-8
(
6. I became concerned that nothing was being done regard ing the illega l transfer of funds . I
made several attempts to contact WISD's superintendent, Richard Rivera, but Rivera
refused to meet with me. When 1 fi nally was nble to voice my concerns to Rivera, Rivero
expressed his disapproval mul criticized my concern as being m isguided.
7. In early 20 10, r contacted my cousi n Nancy I-Iucrl'cra, an attol'llcy with the U.S. Attorney
General Offi ce, to ask for her advice on the situation. My cOllsin recommended that I
contact the Texas Edllcation Agency ("TEA") to report the illegal activity.
g. Shortly After, I contacted TEA over the phone in effort to make a report of the illega l
activ ity. I informed a representative of TEA that WISD un lawfully removed funds from
self-funded programs fo r the purpose of begi nning constl'llctioll of a new 'press box' at
the District's footba ll stad ium; that the District withdrew funds from the worker's
compensation fund to refu nd the health insurance fund; and that I had prev iously reported
this to my supervisors. The representative of T.EA informed me that he would need to
obtain physical evidence in order for TEA to initiate 0 formol invesl'igation.
9. Tdo not recall the exact date that J contacted TEA, but I do know that it was before I
received my negative performance eval uation and was notified that WISD wus not
i
renewi ng my cont ract. l
II
10. Based on my education and expel'ience, r believed that the TEA wus the appropriate
cntity to whom 1 should make my report of the vio lation of law. I a lso fo llowed the
recommendation of my cOl1sin who was all emp loyee of the U.S. Attorney General
Office.
II . A ll times during my employment, WrSD held the TEA out as the appropriate regu latory
enforcement agency related to laws governing the school district
12. Thereafter, r contacted the District's business department in efTort La obtain physical
evidence to substantiate his claim. 1 requested and received documentation that 1 believe
I,
showed that the fimds were bcing used in an unlawful mannel'. ,
l
13. On Pebl1lary 5, 2010, I was ca lled in fbI' n meeting w ith Dr. A lej andl'O, the District's I
Deputy Superintcndent. At the meeting, J received a negative performance evaluation and
!
!
was in rormed thal the D istrict was not going to renew my contract fo r the next year.
2
I
A-9 256
14. 1 wns shocked by the evaluation because I had rcccived positive reviews for my entirc
employment with WISD. I did not suspect Ihnt I was being retal iated against for my
reports to lhe TEA until after 1 consulted with my attorney.
15. At no time was I l'ccommcnded fol' tC!1nination by WISD, nor was noy action takcn to
initiate a termination ormy employment.
16. I continued working through the term of my em ployment cont ract which expired by its
own terlll on June 2 1, 2010.
17. On June 17,20 10, I scot a Icttcr to the TEA explaining the mi snppropriation of funds by
the District to fo llow up on his prior report in cady 20 1O.
18. On July 20, 2010, Perez initiated his adm inistrativc complaint by sUbmitting II Level
Employee Complaint Form.
19. On Dccembcr 1,20 10, my lawyer and WISD's counsel attcnded a meeting togcther. I
was undcr the imprcssion that the meeting was to be a sett lement discussion, but WISD
appat'cntly believed it was go ing to be a Level I Complaint hearing. , did not attend this
hearing.
20. On Det:ember 15,20 10, WISD sent my lawyer notice that my Level I Grievance was
denied und thnt 1 had ten days to fi le an appcal.
2\. On March 8, 20 11 , r fi led th is lawsuit seeking damages fo r wrongful termination ami
retaliation by WISD against me.
22 . I have personally witnesses II longstand ing unwritten policy by WISD of auto mllticnlly
rencwing contracts of its non-teacher employees ever year, barring cause, misconduct, or
budgetary constraints.
23. WISD a lways represented to me that it would follow this po lky with me. WISD followed
this pol icy until I disclosed its misconduct.
24. WISD's false review of my work ml(1 its refu sa l to renew my eontl'llet hus so thoroughly
stigmatized me in the industry that I am unable to fi nd work as a risk numagel' for a
schooVmunicipality.
I
Further, affiant sayeth not."
3
j
1
,
A-10 257 I
I'
~
Adan Perez, on this the
f office.
Notary Public for the State of Texas
4
A-11 258
" ..
1701 NorthCongfcHAv~ • AII~tm,T~J(as 78701·1>194' 5124639734' :i12463 983IJfAX • www.tea.\ldte.1x U~
September 7, 2012
Ruben Alejandro, SuperIntendent
Weslaco Independent School District
P.O. 80x 266
Weslaco, TX 76599-0266
Dear Dr. Alejandro:
Enclosed are the final results of an invesUgallve visit conducted by Texas Education Agency
(TEA) audllors. The vIsit. conducled March 7, 2011. InvestIgated a complaInt against Weslaco
Independent School District, and also reviewed the dIstrict's compliance with the American
Recovery and Reinvestment Act of 2009 (ARRA) requirements for lhe 2009-2010 and 2010-
2011 school years.
TEA's findings as a result of the InvesUgalion afe given in the enclosed final report, along with
the corresponding required acllons. This report supersedes the preliminary report dated
February 26, 2012. and includes the auditor's analysis of the dlstrlot's response to tho findings
in the preliminary report.
A Corrective Aclior) Plan (CAP) must be submitted to TEA 10 address the findings and required