the Board of Trustees of the Houston Firefighters' Relief and Retirement Fund v. the City of Houston, Texas ( 2015 )

Opinion issued January 27, 2015
In The
Court of Appeals
For The
First District of Texas
————————————
NO. 01-12-01167-CV
———————————
THE BOARD OF TRUSTEES OF THE HOUSTON FIREFIGHTERS’
RELIEF AND RETIREMENT FUND, Appellant
V.
THE CITY OF HOUSTON, TEXAS, Appellee
On Appeal from the 189th District Court
Harris County, Texas
Trial Court Case No. 2012-28760
O P I N I O N1
1
The Honorable Jim Sharp, a former justice on this court, was on the panel and
present for argument, but having left office on December 31, 2014, did not
participate in this decision. Thus, the two remaining justices may decide the case if
they agree on a judgment. See TEX. R. APP. P. 41.1(a), (b).
This appeal concerns the construction of Texas Government Code section
802.1012. See TEX. GOV’T CODE ANN. § 802.1012 (West 2012). This section
became effective September 1, 2007 and governs audits of the actuarial valuations,
studies, and reports of certain public retirement systems, including appellant, the
Board of Trustees of the Houston Firefighters’ Relief and Retirement Fund (“the
Board”). The City of Houston filed a petition for writ of mandamus and a motion
for summary judgment in the trial court seeking to compel the Board to disclose
information pursuant to section 802.1012. The Board filed a cross-motion for
summary judgment.
The trial court granted the City’s motion and issued a writ of mandamus
against the Board but suspended enforcement of its order. The Board appeals the
grant of the City’s motion for summary judgment, issuance of the writ of
mandamus, and the denial of its cross-motion for summary judgment. We reverse
and render judgment in favor of the Board.
Background
A. Government code provisions
The Board is the governing body of the Houston Firefighters’ Relief and
Retirement Fund, the public retirement system for the City’s firefighters. 2 The
2
Section 802.001(2) defines the “[g]overning body of a public retirement system”
as “the board of trustees . . . that has the fiduciary responsibility for assets of the
2
Board is statutorily required to employ an actuary, and the actuary is required to
make a valuation of the system’s assets and liabilities at least once every three
years. TEX. GOV’T CODE ANN. § 802.101(a) (West 2012). An actuarial valuation
requires economic and demographic assumptions in order to estimate future
liabilities. Based on this valuation, the actuary makes recommendations to the
Board to ensure the actuarial soundness of the system. See id. § 802.101(b) (West
2012).
In addition to the periodic audits by the Fund’s auditor, a second audit is
required by an independent auditor hired by the City, which makes retirement
contributions to the Fund. Section 802.1012 requires that “[e]very five years, the
actuarial valuations, studies, and reports . . . most recently prepared for the
retirement system . . . must be audited by an independent actuary who . . . is
engaged for the purpose of the audit by the governmental entity.” Id.
§ 802.1012(c). Following completion of the audit, the independent actuary
prepares a report, and the governmental entity ultimately submits a copy of the
final audit report to the Board and the State Pension Review Board (“the PRB”).
system and has the duties of overseeing the investment and expenditure of funds
of the system and the administration of benefits of the system.” TEX. GOV’T CODE
ANN. § 802.001(2) (West Supp. 2014). Under Texas Civil Statutes article
6243e.2(1), “Board” means “the board of trustees of a firefighters’ relief and
retirement fund.” TEX. REV. CIV. STAT. ANN. art. 6243e.2(1) (West 2010).
3
See id. § 802.1012(f)–(j). The City’s ability to perform an appropriate audit is an
important safeguard to the public.
B. Parties’ dispute
The City’s auditor first conducted an audit in 2008 based upon the Fund’s
valuations, studies, and reports as of July 1, 2007. 3 In November 2011, Houston
Mayor Annise Parker sent a letter to the Board Chairman stating that the City is
required, under section 802.1012, to have an independent audit performed “at least
every 5 years.” The Mayor advised that the City had engaged an actuarial firm “to
conduct a more thorough audit by replicating the . . . results of the July 1, 2011
actuarial valuations” and requested the Board to provide detailed information
relative to the July 1, 2011 valuations. 4
Two months later, the Board responded that section 802.1012’s statutorily
specified five-year interval had yet to elapse. The Board further objected to the
level of information requested by the Mayor, stating that it did not consider a
3
There are different levels of actuarial audits. A “high-level” audit evaluates the
most recent available actuarial valuation and other related studies and reports
without access to the detailed employee census data underlying the valuation. A
“replication” audit, on the other hand, is a comprehensive and detailed
independent actuarial valuation utilizing the same census data, assumptions, and
actuarial methods used by the plan actuary. This was a high-level actuarial audit.
4
While the Mayor requested specific categories of census information, she stated
that in order to protect members’ identity, the data should not include the
individual’s name, Social Security number, employee number, or member number,
but instead a unique record identification number assigned by the actuary.
4
“replication audit” to be the usual and customary practice of audits performed by
Texas municipalities.
Addressing concerns expressed by the Board regarding the confidentiality of
member data, the Mayor sent a letter in February 2012 advising the Board that the
City had amended its request and now sought group rather than individual data.
Mayor Parker also stated that the timing of the City’s request to audit the July 1,
2011 actuarial valuation was “in compliance with the law’s timing requirement, as
interpreted by the [PRB].” The Board, however, continued to assert that the next
audit pursuant to section 802.1012 was required to commence no sooner than five
years from the 2008 audit and, therefore, the City’s request was premature.
In May 2012, pursuant to Government Code section 802.003, 5 the City filed
an original petition for writ of mandamus to compel the Board “to provide to
Houston all underlying documents, information, and/or electronic data for all the
Fund’s valuations, studies, and reports for each year since at least 2000.” The
5
Section 802.003 provides, in relevant part:
(a) Except as provided by Subsection (b), if the governing body of a
public retirement system fails or refuses to comply with a requirement of
this chapter that applies to it, a person residing in the political subdivision
in which the members of the governing body are officers may file a motion,
petition, or other appropriate pleading in a district court having jurisdiction
in a county in which the political subdivision is located in whole or in part,
for a writ of mandamus to compel the governing body to comply with the
applicable requirement.
TEX. GOV’T CODE ANN. § 802.003(a) (West 2012).
5
information sought included “census data,” i.e., individual pension member and
survivor information such as gender, date of birth, hire date, compensation,
pension contributions, and pension account balances.6 Specifically, the City
alleged that “the Board has a ministerial duty to release the underlying materials
for the Fund’s valuations, studies, reports, and audits to Houston” and, therefore,
“has no discretion to refuse to comply with Houston’s request for these materials.”
Shortly thereafter, the City moved for summary judgment, arguing that it
was entitled to mandamus relief because (1) section 802.1012 imposes a
nondiscretionary duty to disclose the requested materials, (2) the City had
requested the Board to do so, and (3) the Board had refused. The Board responded
to the City’s motion and filed a cross-motion for summary judgment, in which it
argued that (1) the statute creates no ministerial duty for which mandamus relief is
available; (2) the Board neither failed nor refused to comply with the statute; and
(3) the City failed to comply with its own statutory obligations in various ways
before beginning the audit, including that it retained an auditor who assisted the
City with lobbying activities instead of the required “independent auditor,” had not
signed a confidentiality agreement (and neither had its retained actuary), and failed
to meet with the Fund’s manager to discuss the assumptions for the audit. The City
6
While Mayor Parker’s letters to the Board limited the scope of the materials
sought to the “information related to the July 1, 2011 actuarial valuations,” the
City’s petition did not.
6
amended its summary-judgment motion, and various responses and replies were
exchanged by the parties.
After several hearings, the trial court granted the City’s summary-judgment
motion and denied the Board’s cross-motion. It further ordered that
a writ of mandamus issue directing the Board to provide and disclose
to the independent actuary . . . all information and/or electronic data
(including all “census data”) requested by the independent actuary in
the audit pursuant to section 802.1012(c) of the actuarial valuations,
studies, and reports most recently prepared for the Fund pursuant to
Chapter 802.
The trial court subsequently suspended enforcement of its summary judgment and
mandamus order pending appeal.7
The Duty at Issue Was Not Ministerial,
Precluding Summary Judgment and Mandamus for the City
The Board argues that the trial court erred in granting the City summary
judgment and issuing a writ of mandamus because (1) the City never established as
a matter of law that the Board failed to perform a ministerial duty; (2) no effective
demand for performance was made or refused; and (3) the preconditions for an
audit under section 802.1012 have yet to occur. The Board also argues that the trial
court erred by denying its cross-motion for summary judgment because (1) the
statute creates no ministerial duty for which mandamus is available; (2) the Board
7
By order dated May 13, 2013, this Court granted the Board’s motion to continue
suspension of enforcement of the trial court’s judgment and order of mandamus
pending the resolution of this appeal.
7
neither failed nor refused to comply with the statute; and (3) the City failed to
comply with its own statutory obligations before beginning an audit.
A. Standard of review
We review a trial court’s grant of summary judgment de novo. Mann
Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844, 848 (Tex.
2009). Rule of Civil Procedure 166a(c) provides that a movant is entitled to
summary judgment if the summary judgment evidence establishes that “there is no
genuine issue of material fact and the moving party is entitled to judgment as a
matter of law on those issues expressly set out in the motion or in an answer or in
any other response.” TEX. R. CIV. P. 166a(c); Am. Tobacco Co., Inc. v. Grinnell,
951 S.W.2d 420, 425 (Tex. 1997). When, as here, both parties move for summary
judgment, each bears the burden of establishing that it is entitled to judgment as a
matter of law. City of Garland v. Dall. Morning News, 22 S.W.3d 351, 356 (Tex.
2000). The reviewing court should render the judgment that the trial court should
have rendered or reverse and remand if neither party has met its summary
judgment burden. Id.
B. Requirements for mandamus relief
An original proceeding in a trial court for a writ of mandamus is a civil
action subject to trial and appeal on substantive law issues and rules of procedure
as any other civil action. See Anderson v. City of Seven Points, 806 S.W.2d 791,
8
792 n.1 (Tex. 1991). Texas law generally authorizes mandamus relief to compel a
public official or body to either perform a ministerial duty or to correct a clear
abuse of discretion. See Walker v. Packer, 827 S.W.2d 833, 840 (Tex. 1992) (orig.
proceeding). The movant typically must establish that (1) a public official or body
failed to perform a ministerial duty or committed a clear abuse of discretion and
(2) there is no adequate remedy at law. See Republican Party v. Dietz, 940 S.W.2d
86, 88 (Tex. 1997) (orig. proceeding). However, when mandamus relief is
provided by statute, the petitioner is relieved of the burden to prove that there is no
adequate remedy at law. See In re Transcon. Realty Investors, Inc., 271 S.W.3d
270, 271 (Tex. 2008) (per curiam). Here, section 802.003 of the Government Code
authorizes trial courts to grant mandamus relief when the governing body of a
public retirement system fails or refuses to comply with statutory requirements.
TEX. GOV’T CODE ANN. § 802.003. Accordingly, to obtain mandamus relief, the
City was required to establish that a public official or body failed to perform a
ministerial duty or committed a clear abuse of discretion.
An act is ministerial, or nondiscretionary, when “the law clearly spells out
the duty to be performed with sufficient certainty that nothing is left to the exercise
of discretion.” See Anderson, 806 S.W.2d at 793. A writ of mandamus may issue
when the facts and circumstances dictate only one rational decision under
unequivocal, well-settled, and clearly controlling legal principles. In re Amos, 397
9
S.W.3d 309, 312 (Tex. App.—Dallas 2013, orig. proceeding); In re Dacus, 337
S.W.3d 501, 504 (Tex. App.—Fort Worth 2011, orig. proceeding). When the
public official or body has a legal duty to perform a nondiscretionary act, a demand
for performance of that act has been made, and the official or body refuses to
perform, a party is entitled to mandamus relief against the official or body. See id.;
Sheppard v. Thomas, 101 S.W.3d 577, 581 (Tex. App.—Houston [1st Dist.] 2003,
pet. denied). Whether a statute creates a ministerial duty is a question of law.
Associated Press v. Cook, 17 S.W.3d 447, 461 (Tex. App.—Houston [1st Dist.]
2000, no pet.).
C. Section 802.1012 requires non-ministerial action by the Board
While conceding that the statute “does not expressly say so,” the City
contends that the Board has a nondiscretionary duty to disclose any materials that
an independent actuary requests in connection with an audit under section
802.1012(c). The Board maintains that, while section 802.1012 may imply a duty
on its part to cooperate with an independent actuary and produce information
reasonably necessary for conducting an audit, it does not impose a ministerial duty
to provide all materials requested by the City because the statute does not define
what are reasonably necessary documents for an independent actuarial audit.8
8
In addition to compelling the performance of a nondiscretionary duty, mandamus
may be issued to correct a clear abuse of discretion. See Anderson, 806 S.W.2d at
10
 Section 802.1012, entitled “Audits of Actuarial Valuations, Studies, and
Reports,” provides, in relevant part:
(c) Every five years, the actuarial valuations, studies, and reports of a
public retirement system most recently prepared for the retirement
system as required by Section 802.101 . . . must be audited by an
independent actuary who:
(1) is engaged for the purpose of the audit by the governmental
entity[.]
...
(d) Before beginning an audit under this section, the governmental
entity and the independent actuary must agree in writing to maintain
the confidentiality of any nonpublic information provided by the
public retirement system for the audit.
(e) Before beginning an audit under this section, the independent
actuary must meet with the manager of the pension fund for the public
retirement system to discuss the appropriate assumptions to use in
conducting the audit.
TEX. GOV’T CODE ANN. § 802.1012. Taken together, these three subsections
require that (1) the materials underlying the Fund’s valuations, studies, and reports
most recently prepared for the Fund for its own section 802.101 valuation be
audited every five years by an independent actuary hired by the City for the
purpose of conducting the audit, (2) before beginning the audit, the independent
793. The Board argues, “Unreasonable negotiating positions might subject the
Board to mandamus under an abuse of discretion standard, but that is not the
City’s case before this Court.” We do not determine whether mandamus relief
might be appropriate for a clear abuse of discretion because that issue was not
presented to the trial court.
11
actuary and the City must agree in writing to maintain the confidentiality of any
nonpublic information provided by the Fund, and (3) the independent actuary must
meet with the Fund’s manager to discuss assumptions to be used in the audit.
It is undisputed that the language of section 802.1012 does not expressly
require the Board to disclose the underlying materials requested by the City. 9 The
City, however, argues that “where a statute expressly commands or grants
anything, courts must construe it to also impliedly authorize whatever is necessary
for executing its commands or whatever is indispensable to the enjoyment or
exercise of its grant, and to prevent frustration of its purpose and function.” See
Warner v. Glass, 135 S.W.3d 681, 684–85 (Tex. 2004). Thus, the City reasons,
“the only reasonable construction of Chapter 802 is that it necessarily imposes a
duty on the Board to disclose the underlying materials for the Fund’s valuations,
studies, and reports that the City must have audited.”
The Board acknowledges that section 802.1012 implies a duty to cooperate
with the independent actuary but disputes that such an obligation is “ministerial.”
9
In fact, section 802.1012’s requirements are not directed to public retirement
systems but rather to independent actuaries and the governmental entity that
employs the system’s members. See TEX. GOV’T CODE ANN. § 802.1012(c)–(j)
(stating that actuary and governmental entity “must” or “shall” take specified
actions). Section 802.1012 significantly differs from every other subsection in
Chapter 802, each of which imposes administrative requirements on public
retirement systems. See, e.g., TEX. GOV’T CODE ANN. §§ 802.101–.102,
802.1024–.1025, 802.103–.107 (West 2012 & Supp. 2014) (stating that public
retirement systems “shall” take specified actions).
12
The Board contends that, because section 802.1012’s language does not preclude it
from exercising its discretionary authority to negotiate the terms and scope of the
production and the protections to be afforded its members’ confidential
information, the Board’s disclosures cannot be merely “ministerial.” Further, the
Board is statutorily charged with protecting the confidentiality of the Fund
members’ and beneficiaries’ non-public information. See TEX. REV. CIV. STAT.
ANN. art. 6243e.2(1) § 17 (West 2010); TEX. GOV’T CODE ANN. § 552.0038(i) (“To
the extent of a conflict . . . the prevailing provision is the provision that provides
the greater substantive and procedural protections for the privacy of information
concerning that individual . . . .”). Thus, the Board contends, it has some discretion
in determining the scope of the disclosure.
The City relies on this Court’s decision in In re Robinson, 175 S.W.3d 824
(Tex. App.—Houston [1st Dist.] 2005, orig. proceeding), for authority that the
Board has a ministerial duty to disclose whatever information the auditor requests.
In Robinson, registered voters sought writs of mandamus to compel the Houston
City Council and the Mayor to enter an order declaring the adoption of three
propositions as new amendments to the city charter and to certify the new
amendments to the Texas Secretary of State. Id. at 826–27. After concluding that
13
the word “shall” in Local Government Code section 9.007 10 imposed a
nondiscretionary duty on the mayor to certify the amendments to the secretary of
state, the Court considered whether section 9.005(b) 11 imposed a nondiscretionary
duty on the city council to enter an order declaring the adoption of the three
propositions passed by voters. Id. at 830–31. The Robinson court noted that, while
section 9.005(b) does not contain mandatory language, it “concerns when an
amendment to the city charter becomes effective.” Id. at 832 (“A charter
amendment ‘does not take effect until the governing body of the municipality
10
Section 9.007 of the Local Government Code, entitled “Certification of Charter or
Amendment,” provides, in relevant part:
(a) As soon as practicable after a municipality adopts a charter or
charter amendment, the mayor or chief executive officer of the
municipality shall certify to the secretary of state an authenticated
copy of the charter or amendment under the municipality’s seal
showing the approval by the voters of the municipality.
TEX. LOC. GOV’T CODE ANN. § 9.007(a) (West 2008) (emphasis added).
11
Section 9.005, entitled “Adoption of Charter or Amendment,” provides as follows:
(a) A proposed charter for a municipality or a proposed amendment
to a municipality’s charter is adopted if it is approved by a majority
of the qualified voters of the municipality who vote at an election
held for that purpose.
(b) A charter or an amendment does not take effect until the
governing body of the municipality enters an order in the records of
the municipality declaring that the charter or amendment is adopted.
TEX. LOC. GOV’T CODE ANN. § 9.005(a), (b) (West 2008) (emphasis added).
14
enters an order in the records . . . .’”) (quoting TEX. LOC. GOV’T CODE § 9.005(b)
(West 1999)). After reviewing the legislative intent, the Court concluded that
section 9.005(b) did impose a nondiscretionary duty on the city council to declare
the propositions adopted. See id. The City submits that the issue of statutory
construction in Robinson and that presented here are sufficiently similar to
conclude that the statute imposes a nondiscretionary duty on the Board. The City’s
reliance on Robinson is misplaced.
Unlike Robinson, neither the language of section 802.1012(c) nor the
legislative intent prescribe or define a specific duty to act and, to the extent it
implies a duty, it fails to do so with the “precision” and “certainty” necessary to
make the action ministerial. See Heard, 603 S.W.2d at 832 (“ministerial duty”
exists when law defines duty “‘with such precision and certainty as to leave
nothing to the exercise of discretion or judgment.’”) (quoting Smith, 5 Tex. at 479).
Whether the scope of the information requested by the City’s actuary extends
beyond information “reasonably necessary” for the purposes of the audit is a
question of degree. It is not specified in the statute with sufficient detail to remove
all exercise of discretion by the Board.
In his affidavit, Mickey McDaniel, the actuary engaged by the City,
explained that there are different levels of actuarial audits and that each level
requires different information. While a “replication-level” audit requires the census
15
data used by the system’s actuary, “a high-level audit” involves “evaluation of the
most recent available actuarial valuation and other related studies and reports
without access to the detailed employee census data [] underlying them.”
McDaniel stated that, due to time constraints, the City only performed a “high-
level review audit” of the Fund’s actuarial valuations in 2008 and, therefore, did
not seek access to participant census data. But for its second audit, the City
requested information to conduct a “replication-level” audit. The differences
between the two audits suggest that the statute permits the actuary and the public
retirement system discretion to negotiate the scope of the audit.
Further, assuming that section 802.1012 requires public retirement systems
to disclose some participant information, it does not require a replication-level
audit, which would require the disclosure of the individual participants’ personal
data reviewed by the Board’s auditor. Because section 802.1012 does not direct,
with precision and certainty, that such information be provided, some level of
discretion exists.
Finally, the City’s reliance on section 802.1012(d) to contend that all
requested information be produced is also misplaced. Section 802.1012(d) requires
the City and the independent actuary to “agree in writing to maintain the
confidentiality of any nonpublic information provided by the [Fund] for the audit.”
See TEX. GOV’T CODE ANN. § 802.1012(d). This provision addresses the issue of
16
confidentiality (i.e., prohibiting unauthorized disclosure to third parties) rather than
the scope of the document production. Contrary to the City’s interpretation,
subsection (d) is not evidence of a duty to disclose information to the auditor;
rather, it merely provides that the City and its retained auditor must agree in
writing to keep any produced information confidential. To ensure that such
information will remain protected, the relevant parties must enter into a
confidentiality agreement before the disclosure of the information. The terms of a
confidentiality agreement must be “agree[d]” upon, which suggests an exercise of
judgment, rather than a clear and precise directive. Without such an agreement, the
Board’s duty to disclose is not invoked. Hawkins v. Cmty. Health Choice, Inc., 127
S.W.3d 322, 327 (Tex. App.—Austin 2004, no pet.) (“‘[M]andamus will not issue
to enforce a right which is contingent or incomplete by reason of condition
precedent which is still to be performed . . . .’”) (quoting Tex. Mexican R.R. Co. v.
Jarvis, 15 S.W. 1089 (Tex. 1891)).
Accordingly, we conclude that the summary judgment evidence does not
demonstrate, as a matter of law, that the Board has a ministerial (i.e.,
nondiscretionary) duty “to provide and disclose to the independent actuary . . . all
information and/or electronic data (including all ‘census data’) requested by the
independent actuary” for a replication-level audit, as stated in the trial court’s
December 21, 2012 order. See Anderson, 806 S.W.2d at 793. Having failed to
17
establish this element of its claim for its requested mandamus relief, the City was
not entitled to summary judgment. See Rhone-Poulenc, Inc. v. Steel, 997 S.W.2d
217, 223 (Tex. 1999). Because the Board disproved an essential element of the
City’s cause of action, i.e., that the Board has a legal duty to perform a ministerial
act under section 802.1012, it was entitled to summary judgment on the City’s
claim.
Conclusion
We reverse the trial court’s December 21, 2012 order (1) granting the City’s
amended motion for summary judgment and issuing a writ of mandamus and
(2) denying the Board’s cross-motion for summary judgment, and we render
judgment in favor of the Board.
Harvey Brown
Justice
Panel consists of Justices Jennings and Brown.
18