Opinion issued September 24, 2015
In The
Court of Appeals
For The
First District of Texas
————————————
NO. 01-14-00990-CV
———————————
MANFRED FINK, Appellant
V.
JOANN D. ANDERSON, BETTY BAILEY, DOUG BIRD, ANN BROWN,
BRAD BULLOCK, M.D., JIM BYRON, MIKE CLANN, CLAIRE
CROWDER, EVAN QUIROS, PAUL FULMER, M.D., ERIC GEIBEL,
MARK GRIFFIN, STEVE GERGUIS, STACEY HARVEY, BILL
HENDERSON, ALLEN HOLT, LINDA HUDSON, CULLEN KAPPLER,
RALPH KIRKLAND, SAM LO, M.D., THOMAS LU, M.D., GAILER
MILLER HOLD, MARY QUIROS, LARRY SAMS, BOB SOLBERG, LYNN
WHITT, AND CLARISSA WILLIS, M.D., Appellees
On Appeal from the 152nd District Court
Harris County, Texas
Trial Court Case No. 2014-22740
OPINION
Manfred Fink is a physics professor at The University of Texas at Austin.
He invented a technology that UT patented and licensed to a private entity,
IsoSpec, for development and marketing. UT obtained an equity interest in
IsoSpec.
Some of the IsoSpec investors sued Fink, alleging common-law fraud and
securities fraud, for statements he allegedly made regarding the efficacy of an
instrument he and his co-inventors created that utilized their newly discovered
technology. Fink moved for dismissal under the election-of-remedies provision of
the Texas Tort Claims Act. His motion was denied.
Fink asserts that the trial court erred by denying his motion because (1) he
established that he was within the scope of his employment when he spoke at
IsoSpec meetings about his invention and (2) the claims asserted against him could
have been brought under the Texas Tort Claims Act and, therefore, are subject to
dismissal under Section 101.106(f) of that statute.
We reverse the trial court’s order denying Fink’s motion to dismiss and
render judgment in his favor.
Background
Manfred Fink has been a physics professor at The University of Texas at
Austin for more than 40 years. One of his assigned duties is to conduct research.
2
Along with fellow UT professor, Philip Varghese, and Michigan professor, Jacek
Borysow, Fink utilized the concepts underlying Raman Spectroscopy technology
to invent a new technology he termed ANDRaS. According to an affidavit filed by
Fink, the professors created prototype machines that utilizes ANDRaS technology.
The patent for the technology is not held by the individual professors, but by
their institutional employers. As Professor Varghese explained: “Pursuant to UT
policy, I conveyed my rights as an employee of the University to our invention and
allowed UT to file patent applications for the technology on behalf of the
University.” See Regents’ Rules and Regulations, Rule 90102, sec. 2 (providing
that intellectual property developed by UT System employee within course and
scope of employment is owned by UT). Though the university owned the patent
rights, its rules gave Fink a right to provide input regarding his invention’s
commercialization. See id., Rule 90101, sec. 7 (stating that creator of intellectual
property “may give reasonable input on commercialization of inventions” but that
UT has final decision authority “concerning whether and how to develop and
commercialize an invention”). 1
UT licensed the technology to a private company for development. The
Patent License Agreement is between UT and InnoSpec Technologies, LP. It states
that UT, as licensor, “owns or controls the entire right, title, and interest in and to
1
Fink asked us to take judicial notice of these rules and regulations. The investors
filed no objection and in oral argument confirmed that they had no objection.
3
the Patent Rights,” and InnoSpec, as licensee, “desires to secure the right and
license to use, develop, manufacture, market, and commercialize the Patent
Rights.” The agreement lists Fink, Varghese, and Borysow as the “inventors.” The
inventors are not parties to the agreement. The Agreement grants UT a 5% equity
interest in the venture. No equity interest is extended to any of the inventors.
IsoSpec later became the designated licensee of the ANDRaS technology in
place of InnoSpec. IsoSpec issued a Private Placement Memorandum (PPM) that
sought $1,000,000 in investments in exchange for limited partnership interest in
the company. The PPM named Fink as a member of its “Technology and Business
Advisory Group” and listed his relationship to IsoSpec as “Co-Inventor and
Scientific Developer of the Technologies.” Fink did not receive any compensation
from Isospec. He averred that he refused Isospec’s offer of a written consultation
agreement. IsoSpec’s PPM disclosed, under the heading “Risk Factors,” the
following:
IsoSpec is dependent on key relationships.
IsoSpec intends to look to the Technology Advisors as a source of
counsel and development of new technologies. The Technology
Advisors have been developed as a result of personal and business
relationships with the General Partners, the inventors of the
technologies licensed by IsoSpec, and the Research Institutions.
IsoSpec is dependent upon the involvement and contribution of the
inventing scientists. The loss of these relationships could have a
materially adverse impact upon IsoSpec.
4
The PPM informed potential investors that “ANDRaS is rugged,
inexpensive, small and portable providing onsite analytical capabilities.” Further,
“[t]wo operating prototype instruments have proven the accuracy and operating
capabilities of ANDRaS.”
IsoSpec held various meeting with potential investors, including at least
some of the plaintiffs. Fink attended at least one of these meetings. Professor
Varghese also attended at least one meeting along with Fink and established,
through documentation attached to his affidavit, that UT reimbursed some of his
travel expenses to meet with IsoSpec. The UT travel voucher form states that
Professor Varghese was being reimbursed for travel to IsoSpec in Houston to
discuss “commercializing their technology.” The UT travel addendum states that
he “is driving to Houston, TX to meet with [IsoSpec] to discuss their collaboration
on the commercialization of their technology” and to “[h]elp accomplish research
objectives.”
The role Fink played at the meetings he attended is contested. He averred
that “the purpose of the meeting was only to answer technical questions about
ANDRaS technology.” While there, he “answered very specific scientific questions
that certain individuals had about Raman Spectroscopy and ANDRaS technology.”
Professor Varghese described his role similarly, stating that he attended the
5
meeting to answer technical questions about the technology they developed as UT
employees.
Fink averred that he did not participate in drafting the PPM or other
marketing materials or receive any compensation from IsoSpec. Additionally, he
stated that all of his involvement with IsoSpec was “a result of the work [he was]
doing as a professor of physics at UT and UT’s licensing of [his] technology to
IsoSpec.” Accordingly, when he attended the IsoSpec meetings, he “thought it was
in the scope and course of [his] responsibilities as a UT professor.” Professor
Varghese stated the same belief in his affidavit.
The investors describe Fink’s role and relationship differently. In their
unverified response to Fink’s motion to dismiss, they allege that Fink was involved
in the development and issuance of the PPM, Fink intentionally engaged in
conduct “designed to obtain investments for IsoSpec, a private company,” and such
actions were not in the scope of his employment at the university. They argue that
Fink’s involvement at the IsoSpec meeting was not on UT’s behalf and did not
further any interest of the university. The investors contend that Fink’s role was,
instead, to solicit investors for the benefit of IsoSpec and his son, Dr. Rainer Fink,
who was IsoSpec’s Chief Technology Officer.
6
The investors asserted that Fink must have realized the actual nature of his
role:
It is inconceivable to me that Dr. Manfred Fink would not have
known the purpose of the meeting was to obtain investors in IsoSpec
specifically based upon what was said at the meeting by IsoSpec
representatives, the marketing materials distributed at the meeting, the
fact that Dr. Manfred Fink’s son was part of the management team of
IsoSpec and Dr. Manfred Fink’s own detailed discussion of the
potential uses of the ANDRaS prototype, if commercialized by
IsoSpec.
The investors further claimed that Fink made specific representations to
them at IsoSpec meetings, indicating that an ANDRaS prototype had already been
created, was fully functional, and had multiple commercial applications. While
Fink has confirmed by affidavit that he and his co-inventors created functional
prototypes, the investors allege in their unverified response that his assertions are
untrue.
After investing in IsoSpec and becoming dissatisfied with the company’s
performance, the investors sued Fink and his son. They asserted several causes of
action: violation of the Texas Securities Act, fraud, misrepresentation, conspiracy,
and aiding and abetting securities fraud and common-law fraud.
Fink moved for dismissal under the election-of-remedies provision of the
Texas Tort Claims Act, alleging that dismissal was mandatory because he was a
governmental employee, he was acting in the scope of his employment at the
relevant time, and suit could have been brought under the Act against his employer
7
instead. See TEX. CIV. PRAC. & REM. CODE ANN. § 101.106(f) (West 2011). The
trial court denied the motion, and Fink has appealed that order. 2
The University of Texas has filed an amicus brief to support Fink’s
contention that he was acting in the scope of his employment when he discussed
ANDRaS technology at the IsoSpec meetings. However, to the extent the brief
relies on an affidavit submitted after the trial court ruled on Fink’s motion, we do
not consider it. See TVMAX Holdings, Inc. v. Spring Indep. Sch. Dist., No. 01-14-
00304-CV, 2015 WL 1967596, at *4 (Tex. App.—Houston [1st Dist.] Apr. 30,
2015, no pet.) (mem. op.) (affidavit submitted to appellate court after trial court
ruled held to not be part of appellate record and, therefore, was not considered on
appeal).
Standard of Review
Generally, we review a trial court’s order on a motion to dismiss under an
abuse of discretion standard. Am. Transitional Care Ctrs. of Tex., Inc. v. Palacios,
46 S.W.3d 873, 878 (Tex. 2001). However, the proper standard of review is not
necessarily determined by the caption of the motion to which the order relates,
rather it is determined by the substance of the issue to be reviewed. Singleton v.
Casteel, 267 S.W.3d 547, 550 (Tex. App.—Houston [14th Dist.] 2008, pet.
2
Interlocutory appeal is available for the denial of a state employee’s motion for
summary judgment asserting immunity. TEX. CIV. PRAC. & REM. CODE ANN.
§ 51.014(a)(5) (West 2015).
8
denied). Here, the motions to dismiss raised the issue of immunity. See id.; see also
Franka v. Velasquez, 332 S.W.3d 367, 371 n.9 (Tex. 2011) (stating that Section
101.106 confers immunity in some instances to employees of governmental units).
If immunity applies, the trial court lacks subject-matter jurisdiction over the case.
See Tex. Dep’t of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 224 (Tex. 2004);
see also Univ. of Tex. Health Sci. Ctr. at San Antonio v. Webber–Eells, 327 S.W.3d
233, 240 (Tex. App.—San Antonio 2010, no pet.). Subject-matter jurisdiction is a
question of law which we review de novo. Miranda, 133 S.W.3d at 226. Likewise,
matters of statutory construction are reviewed under a de novo standard. Entergy
Gulf States, Inc. v. Summers, 282 S.W.3d 433, 437 (Tex. 2009); City of San
Antonio v. City of Boerne, 111 S.W.3d 22, 25 (Tex. 2003).
We may not presume the existence of subject-matter jurisdiction; the burden
is on the plaintiffs to allege facts affirmatively demonstrating the trial court’s
subject-matter jurisdiction over the case. Tex. Ass’n of Bus. v. Tex. Air Control Bd.,
852 S.W.2d 440, 443–44, 446 (Tex. 1993); Anderson v. Bessman, 365 S.W.3d 119,
123–24 (Tex. App.—Houston [1st Dist.] 2011, no pet.). In deciding whether the
court has subject-matter jurisdiction, we consider the plaintiffs’ pleadings and the
evidence pertinent to the jurisdictional inquiry, without regard to the case’s merits.
Cnty. of Cameron v. Brown, 80 S.W.3d 549, 555 (Tex. 2002); Anderson, 365
S.W.3d at 124.
9
Sovereign Immunity and Section 101.106(f) Dismissal
The investors have alleged various tort-based claims against Fink. First, they
alleged that Fink violated the Texas Securities Act because he “engaged in fraud
by intentionally failing to disclose material facts related to the operation and
performance of ANDRaS and the future development of it into a commercial
product,” and also by “misrepresent[ing] one or more material facts . . . in
connection with the offer for sale and sale of limited partnership interests” in
IsoSpec. Second, they asserted common-law fraud claims for the same failures to
disclose and misrepresentations. Third, they alleged that Fink conspired with the
IsoSpec founders “to create IsoSpec and engage in securities fraud and common-
law fraud by developing and issuing the PPM and making numerous other verbal
misrepresentations in an effort to unlawfully appropriate financial contributions
from investors in exchange for limited partnership interests.” And fourth, they
alleged that Fink aided and abetted the IsoSpec founders “to commit securities
fraud and common law fraud.”
In reviewing the trial court’s order denying Fink’s motion to dismiss under
the election-of-remedies provision of the Tort Claims Act, we consider whether he
conclusively proved that he met all three of the statute’s requirements: (1) he was a
governmental unit employee at the relevant time; (2) the complained-of conduct
was within the general scope of his employment with a governmental unit; and
10
(3) the plaintiffs’ suit could have been brought under the Tort Claims Act against
Fink’s governmental employer. TEX. CIV. PRAC. & REM. CODE ANN. § 101.106(f);
Franka, 332 S.W.3d at 369; Anderson, 365 S.W.3d at 124; Mauk v. Pipe Creek
Water Well, LLC, No. 04-14-00906-CV, 2015 WL 2405338, at *2 (Tex. App.—
San Antonio May 20, 2015, no pet.) (mem. op.). It is undisputed that the
University of Texas is a governmental unit and that it was Fink’s employer at the
relevant time. Accordingly, we turn to whether Fink has established the two
remaining statutory requirements for dismissal under Section 101.106(f).
A. General scope of employment
The Tort Claims Act defines “[s]cope of employment” as “the performance
for a governmental unit of the duties of an employee’s office or employment and
includes being in or about the performance of a task lawfully assigned to an
employee by competent authority.” TEX. CIV. PRAC. & REM. CODE ANN.
§ 101.001(5) (West Supp. 2014); City of Lancaster v. Chambers, 883 S.W.2d 650,
658 (Tex. 1994) (“An official acts within the scope of her authority if she is
discharging the duties generally assigned to her.”).
1. Conduct may serve any purpose of employer
The Texas Supreme Court has looked to the Restatement for “additional
clarity” on the term “scope of employment.” See Alexander v. Walker, 435 S.W.3d
789, 792 (Tex. 2014) (referring to RESTATEMENT (THIRD) OF AGENCY § 7.07(2)
11
(2006)); Franka, 332 S.W.3d at 381 n.63 (citing same). The Restatement provides
a negative definition: “An employee’s act is not within the scope of employment
when it occurs within an independent course of conduct not intended by the
employee to serve any purpose of the employer.” RESTATEMENT (THIRD) OF
AGENCY § 7.07(2).
Thus, when an employee engages in conduct “for the sole purpose” of
furthering someone else’s interests and not his employer’s, the conduct is outside
the employee’s scope of employment. See id., cmt. b; see also Arbelaez v. Just
Brakes Corp., 149 S.W.3d 717, 722–23 (Tex. App.—Austin 2004, no pet.)
(holding that employer failed to prove as matter of law that employee’s “breakfast
run” was for purely personal purposes and not meant to further the employer’s
interest to any appreciable extent).
2. Conduct may escalate but not deviate
Conduct that serves any purpose of the employer is within the scope of
employment even if the conduct escalates beyond that assigned or permitted. See
RESTATEMENT (THIRD) OF AGENCY § 7.07(2), cmt. b. So, for example, when an
employee’s job duties include making statements to prospective customers to
induce them to buy from the employer, intentional misrepresentations may be
within the scope of employment. Id.; cf. Celtic Life Ins. Co. v. Coats, 885 S.W.2d
96, 99 (Tex. 1994) (noting that insurance agent had authority to make
12
representations about insurance policies and misrepresentations did not take
conduct outside scope of authority).
Similarly, “if the employer places his employee in a position that involves
the use of force, so that the act of using force is in the furtherance of the
employer’s business, the employer can be found liable . . . even if the employee
uses greater force than is necessary.” Knight v. City Sts., L.L.C., 167 S.W.3d 580,
583–84 (Tex. App.—Houston [14th Dist.] 2005, no pet.) (concluding that plaintiff
failed to raise fact issue on whether employees were authorized to use force); see
ANA, Inc. v. Lowry, 31 S.W.3d 765, 770 (Tex. App.—Houston [1st Dist.] 2000, no
pet.) (stating that “an employer will be held liable for its employee’s assault on a
third party only if that assault stems directly from the employee’s exercise
(however inappropriate or excessive) of a delegated right or duty.”).
But conduct that is better viewed as a deviation from an assigned task
instead of an escalation beyond what was authorized is not within the employee’s
scope of employment. See Zarzana v. Ashley, 218 S.W.3d 152, 159–60 (Tex.
App.—Houston [14th Dist.] 2007, pet. struck) (automotive service station
employee who sold counterfeit inspection sticker held not within scope of
employment because service station did not conduct inspections and act of selling
counterfeit stickers was not “of the same general nature as [the conduct] authorized
or incidental to the conduct authorized” by the employer).
13
3. Intentional torts can fall within scope of employment
As an initial matter, the investors argue that a fraud claim should not be
subject to Section 101.106(f) dismissal because intentionally tortious conduct is
“almost never” held to be within the scope of authority granted an agent by his
principal. At oral argument, through hypotheticals, they gave two examples of
intentional torts they assert would not be subject to immunity: assault and theft.
Yet both of those intentional torts have been held to involve conduct within a
governmental employee’s scope of employment when they take place while the
employee is engaged in conduct to further an interest of his employer and the
tortious act is more of an escalation of—rather than a deviation from—his job
duties.
a. Intentional tort of assault
In Alexander v. Walker, police officers were sued for assault, conspiracy,
slander, false arrest, false imprisonment, and malicious prosecution. 435 S.W.3d at
790. The claims arose from the officers’ conduct while arresting the plaintiff on
two separate occasions. Id. The Texas Supreme Court reversed the denial of the
police officers’ Section 101.106(f) motion to dismiss, holding that engaging in an
arrest is conduct that is generally within an officer’s scope of employment; it is not
an independent course of conduct that fails to serve any purpose of the employer.
14
See id. at 792. Accordingly, the Court rendered judgment in the officers’ favor on
the assault and other tort claims. See id.3
3
In assault cases outside of the context of governmental immunity, the results have
been the same. In these cases, the issue is whether the employer can escape
liability under normal respondeat superior principles by arguing that intentional
torts do not fall within the scope of employment. Courts have held that the
employer is liable if the tortious conduct “is of the same general nature as that
authorized or incidental to the conduct authorized.” Durand v. Moore, 879 S.W.2d
196, 199 (Tex. App.—Houston [14th Dist.] 1994, no writ) (holding that evidence
supported conclusion that doorman’s “overzealous enforcement” of nightclub’s
admittance policies, which led to assault of patron, was conduct within doorman’s
scope of employment); Cowboys Concert Hall-Arlington, Inc. v. Jones, No. 02-12-
00518-CV, 2014 WL 1713472, at *9–10 (Tex. App.—Fort Worth May 1, 2014,
pet. denied) (mem. op.) (affirming that nightclub is vicariously liable for assault
by bouncer after concluding that bouncer was within scope of employment
because bouncer was instructed to restrain patrons if necessary and to “handle”
fights, which occurred nightly). An assault “committed in the accomplishment of
a duty entrusted to the employee, rather than because of personal animosity, may
render the employer liable.” Wrenn v. G.A. T.X. Logistics, Inc., 73 S.W.3d 489,
494 (Tex. App.—Fort Worth 2002, no pet.)
However, an assault that is unrelated to the assigned duties of the employee is not
within the scope of employment. See Ogunbanjo v. Don McGill of W. Houston,
Ltd., No. 01-13-00406-CV, 2014 WL 298037, at *3–4 (Tex. App.—Houston [1st
Dist.] Jan. 28, 2014, no pet.) (mem. op.) (concluding that car salesman who
offered to drive service-department customer back to her home was not within
scope of his employment when he assaulted her in his personal vehicle); Int’l &
G.N.R. Co. v. Anderson, 17 S.W. 1039, 1040–41 (Tex. 1891) (stating that train
passenger suing train company for tortious conduct of its employee who forcibly
removed him from train could prevail on argument that employee was in scope of
employment only if it was within employee’s duties to remove passengers, but
evidence presented in that particular case was that brakeman did not have that
authority and, therefore, was not acting within scope of employment); Galveston
H. & S. A. Ry. Co. v. McMonigal, 25 S.W. 341, 342 (Tex. Civ. App. 1893).
In sum, “an employer will be held liable for its employee’s assault on a third party
only if that assault stems directly from the employee’s exercise (however
inappropriate or excessive) of a delegated right or duty.” ANA, Inc. v. Lowry, 31
S.W.3d 765, 770 (Tex. App.—Houston [1st Dist.] 2000, no pet.).
15
b. Intentional tort of theft
Employees alleged to have committed theft have also been held to be acting
within scope of employment. In Lopez v. Serna, 414 S.W.3d 890, 894–95 (Tex.
App.—San Antonio 2013, no pet.), the appellate court held that jail officials acted
within their scope of employment because they were performing duties generally
assigned to them when they confiscated an inmate’s property. Whether they
intentionally and unlawfully appropriated the property did not change the
conclusion that the general nature of their duties included confiscating inmate
property. See id.
c. Intentional tort of fraud
In addition to these cases involving dismissal of theft and assault claims, this
Court has held that fraud claims brought against university administrators were
subject to Section 101.106(f) dismissal as well. In Anderson v. Bessman, UTMB
medical school faculty members who had been fired following post-hurricane
budget cuts brought suit against various school officials, alleging tortious
interference with their employment relationships, negligent misrepresentation,
negligence, fraud, and civil conspiracy. 365 S.W.3d at 123. They alleged that the
school officials did not make the firing decision based on applicable rules and
regulations but, instead, on “financial incentives and personal animosities” and in
bad faith. See id. The school officials sought dismissal under Section 101.106(f),
16
but their motions were denied. See id. at 126. We reversed because it was within
the school officials’ generally assigned duties to evaluate faculty members’
performance and the school officials had been specifically asked to make
recommendations regarding which faculty should be fired as part of the post-
hurricane budget-cut process. See id. at 125. Thus, the fraud claim was subject to
Section 101.106(f) dismissal because the actions taken by the governmental
employees—even though pleaded as an intentional tort—were within their scope
of employment. See id.
d. Other intentional torts
This Court, likewise, has held that a mayor accused of slander and malicious
prosecution—two other intentional torts—acted within his scope of employment
when he made negative comments about a city employee’s job performance to
another mayor because it was undisputed that responding to employment
verification requests was a task generally assigned to the mayor. Hopkins v.
Strickland, No. 01-12-00315-CV, 2013 WL 1183302, at *3 (Tex. App.—Houston
[1st Dist.] Mar. 21, 2013, no pet.) (mem. op.) (stating that “an act may still be
within the scope of the employee’s duties even if the specific act that forms the
basis of the civil suit was wrongly or negligently performed, so long as the action
was one related to the performance of his job.” (citing Chambers, 883 S.W.2d at
658)).
17
Most telling, the Texas Supreme Court has rendered judgment for a
governmental employee after concluding that claims against him for intentional
infliction of emotional distress and conspiracy to intentionally inflict emotional
distress were subject to dismissal under Section 101.106(f). Newman v.
Obersteller, 960 S.W.2d 621, 622–23 (Tex. 1997); see also Mission Consol. Indep.
Sch. Dist. v. Garcia, 253 S.W.3d 653, 659 (Tex. 2008) (stating that “all tort
theories,” including these intentional torts, “are assumed to be ‘under [the Tort
Claims Act]’ for purposes of Section 101.106.” (brackets in original)).
Thus, we reject the investors’ argument that an allegation of an intentional
tort forecloses the possibility that Fink was acting within his scope of employment,
for purposes of Section 101.106(f) dismissal analysis. We next consider whether
Fink’s alleged conduct fell within his scope of employment.
4. What conduct is being evaluated
In arguing that Fink acted outside his scope of employment, the investors
describe his conduct as “soliciting investments for a private company and
committing fraud in the course of such solicitations . . . .” The investors rely on
older cases for the proposition that “unlawful or unauthorized actions” cannot be
within the scope of a governmental employee’s official duties. These cases,
including Bagg v. University of Texas Medical Branch, 726 S.W.2d 582, 585 (Tex.
18
App.—Houston [14th Dist.] 1987, writ ref’d n.r.e.), predate the Texas Supreme
Court’s Alexander opinion and our Anderson and Hopkins opinions.
Fink described his conduct quite differently. He contended that, “[a]s the
inventor of the ANDRaS prototypes, [he] from time to time assisted IsoSpec in
answering certain questions that they had about the technology and [his] research.”
These were “very specific scientific questions that certain individuals had about
Raman Spectroscopy and ANDRaS technology.” He averred that “the purpose of
the meeting was only to answer technical questions” about his invention. Professor
Varghese averred similarly. He stated that he attended IsoSpec meetings, at least
partially at UT’s expense, “to assist IsoSpec, the University’s licensee, in
answering very specific scientific questions related to our invention.”
Thus, we are presented with two very different characterizations of Fink’s
involvement: answering specific scientific questions about a technology developed
as a UT research professor versus intentional, fraudulent solicitation of investments
for the benefit of a private company where a close family member worked.
The Texas Supreme Court has noted the difficulty in analyzing immunity
when the challenged conduct is phrased in terms tied to the specific wrong alleged.
See Chambers, 883 S.W.2d at 653–54. In that case, the plaintiffs’ son was severely
injured during a high-speed police chase, and the parents sued the police officers
for negligence. Id. at 652. The officers moved for summary judgment based on an
19
assertion of official immunity. Id. The court of appeals held that the officers did
not have discretion “to drive without due regard for the safety of all persons using
the highway.” Chambers v. City of Lancaster, 843 S.W.2d 143, 149 (Tex. App.—
Dallas 1992), rev’d, 883 S.W.2d 650 (Tex. 1994). The Texas Supreme Court
disagreed with the appellate court’s analysis and held that the focus should have
been on whether the police officers were performing a discretionary function
(when they allegedly acted wrongfully), not on whether they had discretion to do
an allegedly wrongful act while discharging that function. Chambers, 883 S.W.2d
at 653.
The Texas Supreme Court described the officer’s conduct broadly. Instead
of asking whether the officers had discretion to driving unsafely, as the appellate
court had done, the Court considered whether “engaging in a high-speed chase”
was a discretionary act and held that it was. See id. at 653–55. The Court explained
that the appellate court’s use of a more specific description linked to the alleged
wrong “frustrates official immunity’s very function” because it “inexorably leads
to the [at times incorrect] conclusion that an officer is not entitled to immunity if
the officer is negligent.” Id. at 655.
More recent cases likewise have broadened the focus to ask whether the
general conduct was within the scope of employment instead of whether the
specific act was somehow wrongful. We have already discussed several of these
20
cases while analyzing whether intentional tort claims can fall within the scope of
employment. See Alexander, 435 S.W.3d at 790, 792 (in evaluating whether
officers sued for assault were acting within scope of employment, generally
considering act of securing an arrest instead of tort-based act of assaulting
arrestee); Anderson, 365 S.W.3d at 125–26 (in evaluating whether school officials
were acting within general scope of employment, considering their act to be
general act of evaluating faculty performance instead of tort-specific act of
fraudulently removing faculty); Lopez, 414 S.W.3d at 894–95 (concluding that jail
officials acted within scope of employment when they confiscated inmate’s
property because confiscation was within general nature of duties even if they
intentionally and unlawfully appropriated this particular property); cf. Cantey
Hanger, LLP v. Byrd, No. 13-0861, 2015 WL 3976267, at *6–7 (Tex. June 26,
2015) (rejecting argument that intentional misrepresentations are outside retained
attorney’s scope of employment and holding that general type of conduct engaged
in was within scope even if defendant performed in wrongful manner); Lenoir v.
Marino, No. 01-13-01034-CV, 2015 WL 4043248, at *12–13 (Tex. App.—
Houston [1st Dist.] July 2, 2015, no pet. h.) (holding that physician overseeing
medical care provided by resident was within general scope of employment
although alleged to have committed Medicaid fraud related to that care).
21
Here the pertinent question is not, as the investors state, whether fraudulent
solicitation was within Fink’s scope of employment. Rather, it is whether his
general conduct—speaking about his invention at the IsoSpec meeting—was
conduct that served any purpose of his employer. See Alexander, 435 S.W.3d at
792 (analyzing whether government employee was engaged in conduct intended
“to serve any purpose of” his employer to determine whether such conduct was
within scope of employment); cf. Chambers, 883 S.W.2d at 658 (“An official acts
within the scope of her authority if she is discharging the duties generally assigned
to her.”).
5. Fink established that conduct was within general scope of
employment
Fink spoke at a business meeting about a technology he co-discovered and a
device he co-invented. The investors argue that speaking at investor meetings is
not within the range of a university professor’s duties, but their assertion is not
verified or supported by evidence. Fink’s unrebutted evidence demonstrated that
his job duties included research, creating new intellectual property, and assisting in
the commercialization of such UT-owned technology. The alleged fraud occurred
while he was discussing the invention he co-created as a UT professor at meetings
held by a company of which his employer, UT, held partial equity ownership. Fink
was not paid by IsoSpec to participate in the meetings or to perform any services
for it. Fink’s co-inventor, another UT professor, also attended a meeting. Both
22
answered technical questions about their invention. And the colleague’s travel
expenses were reimbursed by UT with this stated justification: “Help accomplish
research objectives.”
We conclude that speaking at such a meeting was conduct within the general
scope of Fink’s employment. Commenting on the efficacy of a UT-patented device
was not “an independent course of conduct” that failed to “serve any purpose of
[his] employer.” See Alexander, 435 S.W.3d at 792; see also RESTATEMENT
(THIRD) OF AGENCY § 7.07(2). Rather, Fink’s actions served a purpose of his
employer because UT held an equity interest in IsoSpec, which was developing
and marketing UT’s patented technology.
Next, the investors contend that it is “inconceivable” that Fink would not
have realized that the true purpose of speaking at the meeting was to obtain
investors, not to provide scientific insight. Even assuming Fink spoke at the
meeting with the intent to assist IsoSpec in garnering investments, given UT’s
partial ownership of IsoSpec, it remained within his employer’s interest that he
speak at the meetings. See Morrow v. Daniel, 367 S.W.2d 715, 718 (Tex. App.—
Dallas 1963, no writ) (fraudulent misrepresentations made by promoter of
corporate stock to induce others to purchase shares were made within scope of
employment); Alexander, 435 S.W.3d at 792.
23
Finally, the investors contend that Fink acted outside of the scope of his
employment because his efforts to solicit investors were in furtherance of his
personal goals and those of his son, an IsoSpec officer. But co-existing motivations
do not remove an employee’s actions from the scope of his employment so long as
the conduct also serves a purpose of the employer. See Anderson, 365 S.W.3d at
125–26. An activity may serve the employer’s purposes while simultaneously
benefitting the employee or even a third party and still qualify as conduct within
the scope of employment. See id.; Arbelaez, 149 S.W.3d at 722 (employee sent on
errand by employer to buy breakfast for himself and co-workers held within scope
of employment); Dictaphone Corp. v. Torrealba, 520 S.W.2d 869, 872 (Tex.
App.—Houston [14th Dist.] 1975, writ ref’d n.r.e.) (“Conduct may be within the
scope of employment, although done in part to serve the purposes of the servant or
of a third person.” (citing RESTATEMENT (SECOND) OF AGENCY § 236 (1958)));
Golgon, Inc. v. Hart, 893 S.W.2d 562, 568 (Tex. App.—Corpus Christi 1994, writ
denied) (stating that employee’s actions may be within scope of employment even
if private matters are mixed with business errand); Josey-Miller Co. v. Sheppard,
357 S.W.2d 488, 490 (Tex. App.—Beaumont 1962, no writ) (stating that employee
may be within scope of employment even when “there is a mingling of the
master’s business with the servant’s business”).
24
In conclusion, the evidence establishes that both UT professors who created
the patented technology attended IsoSpec meetings. UT was a part-owner of
IsoSpec. Fink’s discussions of the efficacy of his invention at the IsoSpec meetings
served a purpose of his equity-interest employer, even if they also served his
interests or those of his son. See Anderson, 365 S.W.3d at 125. Accordingly, we
hold that Fink has established that he acted within the general scope of his
employment. We turn next to the third requirement for Section 101.106(f)
dismissal—that the action could have been brought against Fink’s employer under
the Tort Claims Act.
B. Claims could have been brought under Tort Claims Act
The investors brought common law tort claims against Fink, as well as a
claim under the Texas Securities Act. While apparently conceding that the
common-law tort claims are claims that “could have been brought under the [Tort
Claims] Act,” the investors present two arguments why their Securities Act claim
is different. First, they contend that Section 101.106(f) refers only to common-law
tort actions, not statutory claims like violations of the Texas Securities Act.
Second, they argue that the Securities Act independently waives immunity and, as
a result, a claim brought under it could not have been brought under the Tort
Claims Act.
25
The Texas Supreme Court has held that a claim is considered one that “could
have been brought” under the Tort Claims Act if it (1) “is in tort” and (2) is not
brought “under another statute that independently waives immunity,” even if the
particular tort alleged is one for which immunity has not been waived. Franka, 332
S.W.3d at 379, 381.
1. Securities Act violation is a tort claim
The Section 101.106(f) requirement that the claim be a “tort claim” is not
limited to negligence and other common law torts. See Tex. Adjutant Gen.’s Office
v. Ngakoue, 408 S.W.3d 350, 356–57 (Tex. 2013) (stating that claim could have
been brought under Tort Claims Act if “plaintiff had a tort claim to assert against
the government”); Williams v. Nealon, 394 S.W.3d 9, 11 (Tex. App.—Houston
[1st Dist.] 2012, pet. denied) (noting that “any tort action” is one that could have
been brought under Tort Claims Act). As the Texas Supreme Court stated in
Franka, any tort claim against the government is brought “under” the Act for
purposes of Section 101.106(f), even if the Act does not waive immunity. 332
S.W.3d at 375. A “tort claim” can include intentional torts. Alexander, 435 S.W.3d
at 792. A “tort claim” can also include claims that are tort based but pleaded as
statutory violations. Lopez, 414 S.W.3d at 894.
The focus is on whether the claim “sounds in tort,” not the mechanism for
prosecuting the claim. See Rodriguez v. Christus Spohn Health Sys., 628 F.3d 731,
26
735–37 (5th Cir. 2010) (rejecting argument that Tort Claims Act is limited to
“common law torts only” and holding that various statutory claims “sound in tort”
and, therefore, may be subject to Section 101.106(f) dismissal, including claims
under Medical Liability Act, Sexual Exploitation by Mental Health Services
Provider Act, and Patient’s Bill of Rights). Thus, for example, statutory theft
claims have been held to constitute claims that could have been brought under the
Tort Claims Act. Lopez, 414 S.W.3d at 894 (holding that claim brought under
Texas Theft Liability Act is one that could have been brought under Tort Claims
Act); Mason v. Wood, No. 09-12-00246-CV, 2013 WL 1088735, at *2 (Tex.
App.—Beaumont Mar. 14, 2013, no pet.) (mem. op.) (same); cf. TEX. CIV. PRAC. &
REM. CODE ANN. § 101.021 (West 2011) (waiving immunity for certain categories
of damages proximately caused by conduct described broadly to include “wrongful
act or omission”).
Artful pleading will not change the tort nature of the claim. See Mason, 2013
WL 1088735, at *2 (while analyzing whether theft claim was one that could have
been brought under Tort Claims Act, stating that “plaintiff cannot, through artful
pleading, make a common law tort claim a statutory claim under the Theft Liability
Act.”).
The investors sued Fink for misrepresentation and fraud, which are tort
theories of liability. They also sued for violation of the Securities Act based on the
27
same misrepresentations and omissions. We conclude that the allegation that Fink
violated the Securities Act by making material misrepresentations about the
ANDRaS technology “sounds in tort” and is, therefore, considered a tort claim, for
purposes of Section 101.106(f) dismissal analysis, even though the allegation is
pleaded as a statutory violation. Cf. Navarro v. Grant Thornton, LLP, 316 S.W.3d
715, 718 (Tex. App.—Houston [14th Dist.] 2010, no pet.) (characterizing claims
brought under Texas Securities Act as “tort claims”).
2. Securities Act does not independently waive immunity
The second requirement for a Securities Act violation to be a claim that
could have been brought under the Tort Claims Act is that the statute not contain
an independent waiver of immunity. Alexander, 435 S.W.3d at 792; Franka, 332
S.W.3d at 381 (holding that claim brought “under another statute that
independently waives immunity” is not subject to Section 101.106(f) dismissal);
Kelemen v. Elliott, 260 S.W.3d 518, 522 (Tex. App.—Houston [1st Dist.] 2008, no
pet.) (holding that alleged violations of Texas Whistleblower Act and Texas
Commission on Human Rights Act were not claims that could have been brought
under Tort Claims Act because each contained independent waiver of immunity);
Hamilton v. Pechacek, No. 02-12-00383-CV, 2014 WL 1096018, at *5 n.7 (Tex.
App.—Fort Worth Mar. 20, 2014, no pet.) (mem. op.) (stating that “‘under this
28
chapter’ language does not include claims based on alternate, independent statutes
that waive sovereign or governmental immunity”).
The Texas Supreme Court has consistently maintained that it is within the
Legislature’s sole province to waive sovereign immunity. Tex. Natural Res.
Conservation Comm’n v. IT-Davy, 74 S.W.3d 849, 854 (Tex. 2002); Fed. Sign v.
Tex. S. Univ., 951 S.W.2d 401, 409 (Tex. 1997). Legislative consent to sue the
State must be expressed in “clear and unambiguous language.” Wichita Falls State
Hosp. v. Taylor, 106 S.W.3d 692, 696 (Tex. 2003); Univ. of Tex. Med. Branch at
Galveston v. York, 871 S.W.2d 175, 177 (Tex. 1994). This requirement is codified
in Government Code Section 311.034, which provides that “a statute shall not be
construed as a waiver of sovereign immunity unless the waiver is effected by clear
and unambiguous language.” TEX. GOV’T CODE ANN. § 311.034 (West 2013).
At times the Legislature has clearly stated its intent to waive immunity. See,
e.g., TEX. CIV. PRAC. & REM. CODE ANN. § 110.008 (West 2011) (providing that
“sovereign immunity to suit and from liability is waived . . . .”). But “magic
words” are not required. Taylor, 106 S.W.3d at 697. The Texas Supreme Court has
provided four “aids” to inform our analysis of whether the Legislature has clearly
and unambiguously waived immunity in the absence of a succinct statement
affirmatively stating so:
29
1) An indication that the Legislature requires that the State be joined in a
lawsuit for which immunity would otherwise attach indicates a waiver
of immunity;
2) The Legislature often enacts measures that provide an objective
limitation on the State’s potential liability when waiving immunity;
3) Waiver must be “beyond doubt” even if it is not “a model of ‘perfect
clarity’”; and
4) Ambiguities are resolved to retain immunity.
Id. at 697–98; see Magnolia Petroleum Co. v. Walker, 83 S.W.2d 929, 934 (Tex.
1935) (stating that “ambiguity or obscurity” in a statute will operate in favor of the
State).
The Securities Act does not contain a provision requiring that the State be
joined in a suit brought under the Act. Neither does the statute contain a provision
limiting the amount of damages that may be recovered from a governmental entity.
See Taylor, 106 S.W.3d at 701–02 (noting absence of liability limits in Patient’s
Bill of Rights statute). The absence of a liability cap for governmental entities in
the Securities Act is particularly relevant given that there is a limit on liability for a
different category of potential defendant: small business issuers. See TEX. REV.
CIV. STAT. ANN. art. 581-33(N).
Further, the Act provides that any rights and remedies it provides are in
addition to other existing remedies, including exemplary or punitive damages. Id.
art. 581-33(M). The Texas Supreme Court has expressed “skepticism that the
Legislature intended to waive sovereign immunity by mere implication” when the
30
statute being analyzed provides for exemplary damages. Taylor, 106 S.W.3d at
701–02 (analyzing Patient’s Bill of Rights statute). Thus, the first two areas of
analysis support the conclusion that the Securities Act does not independently
waive immunity.
The two remaining factors consider whether waiver is established “beyond
doubt” or, instead, if there is an ambiguity in the statute. The investors argue that
the Securities Act clearly waives immunity through incorporation of a defined
term. The Act provides that a “person” who sells securities can be liable for
misrepresentations of material facts. TEX. REV. CIV. STAT. ANN. art. 581–33(A)(2).
The Act defines “person” to include “a government, or a political subdivision or
agency thereof.” Id. art. 581–4(B). However, Government Code Section 311.034
strongly negates this definition’s relevance by providing that inclusion of a
governmental entity within a “person” definition “does not indicate legislative
intent to waive sovereign immunity unless the context of the statute indicates no
other reasonable construction.” TEX. GOV’T CODE ANN. § 311.034 (West 2013).
The Section 4 “person” definition does not establish a waiver “beyond doubt”
under the third Taylor factor. At most, it creates an ambiguity and, under the final
Taylor factor, counsels against a conclusion of waiver. See Taylor, 106 S.W.3d at
697, 701 (stating that ambiguity precludes finding of unmistakable legislative
31
intent to waive sovereign immunity and requiring that waiver be unambiguous and
“beyond doubt”).
Because a violation of the Securities Act “sounds in tort” and the four Taylor
factors do not support the conclusion that the Legislature waived immunity under
the statute, we conclude that a violation of the Securities Act is a claim that “could
have been brought under [the Tort Claims Act]” for purposes of analyzing a
Section 101.106(f) motion to dismiss, just like the investors’ other claims.
Conclusion
Having concluded that Fink established that he was within the scope of his
employment and that the claims against him are ones that could have been brought
under the Tort Claims Act, we sustain his first and second issues. Because the
evidence established Fink’s right to dismissal and the investors failed to raise a fact
issue on that issue, the proper rendition is to reverse the trial court’s judgment and
render judgment for Fink. See Lund v. Giauque, 416 S.W.3d 122, 124 (Tex.
App.—Fort Worth 2013, no pet.); Leonard v. Glenn, No. 04-08-00200-CV, 2011
WL 3610420, at *1 (Tex. App.—San Antonio Aug. 17, 2011, no pet.) (mem. op.).
Accordingly, we reverse the trial court’s order denying Fink’s motion to dismiss,
dismiss the claims against him, and render judgment in his favor.
32
Harvey Brown
Justice
Panel consists of Justices Jennings, Brown, and Lloyd.
33