Opinion issued May 23, 2013
In The
Court of Appeals
For The
First District of Texas
————————————
NO. 01-12-00511-CV
———————————
JOHN KLUMB, VERONICA MCCLELLAND, VIVIAN MONTEJANO,
JOHN GONZALEZ, ANITA ROBLES, CHARMAINE PILGRIM, AND THE
CITY OF HOUSTON, Appellants
V.
HOUSTON MUNICIPAL EMPLOYEES PENSION SYSTEM, BARBARA
CHELLETTE, DAVID L. LONG, LEONARD POLK, ROY SANCHEZ, AND
LONNIE VARA, Appellees
On Appeal from the 234th District Court
Harris County, Texas
Trial Court Case No. 2011-75492
OPINION
This appeal concerns whether the trial court lacks subject-matter jurisdiction
over a suit brought by John Klumb and five other plaintiffs against the Houston
Municipal Employees Pension System (“HMEPS”) and five members of its board
of trustees. The trial court granted HMEPS’s and the trustees’ plea to the
jurisdiction, dismissing the plaintiffs’ claims and the claims of the City of Houston,
which had intervened in the suit. On appeal, the plaintiffs and the City of Houston
contend that the trial court erred by granting the plea. They assert that the suit is
not barred because it arises from the trustees’ ultra vires acts of violating Article
6243h of the Texas Revised Civil Statutes. Plaintiffs also argue that the trial court
has jurisdiction over the constitutional claims they have raised.
Because we agree with HMEPS and the trustees that the trial court lacks
subject-matter jurisdiction over the pleaded claims, we affirm the trial court’s
judgment.
Background
As a defined benefit pension plan, HMEPS provides retirement, disability,
and survivor benefits for eligible City of Houston employees. Article 6243h of the
Texas Revised Civil Statutes established HMEPS. See TEX. REV. CIV. STAT. ANN.
2
art. 6243h, §§ 1–28 (Vernon 2010). 1 Pursuant to Article 6243h, an eleven member
Board of Trustees, or pension board, has broad authority to administer, manage,
and operate HMEPS. See id. art. 6243h, § 2(a).
With respect to the pension board’s authority, relevant text of Article 6243h,
section 2, provides as follows:
(x) The pension board shall manage the pension fund under this Act
and under the Internal Revenue Code of 1986, as amended, and may:
(1) adopt, for the administration of the pension fund,
written rules and guidelines;
(2) interpret and construe this Act and any summary plan,
descriptions, or benefits procedures, except that each
construction must meet any qualification requirements
established under Section 401, Internal Revenue Code of
1986, as amended;
(3) correct any defect, supply any omission, and
reconcile any inconsistency that appears in this Act in a
manner and to the extent that the pension board considers
expedient to administer this Act for the greatest benefit of
all members;
(4) determine all questions, whether legal or factual,
relating to eligibility for membership, service, or benefits
or relating to the administration of the pension fund to
promote the uniform administration of the pension fund
for the benefit of all members and retirees; and
1
Article 6243h applies only to cities with a population of 1.5 million or more. See
TEX. REV. STAT. CIV. ANN. art. 6243h, § 1(4) (Vernon 2010). Houston is
currently the only city in Texas with a population of more than 1.5 million.
3
(5) establish and maintain records necessary or
appropriate for the proper administration of the pension
fund.
(y) The determination of any fact by the pension board and the
pension board’s interpretation of this Act are final and binding on any
interested party, including members, deferred participants, retirees,
eligible survivors, beneficiaries, and the city.
Id. art. 6243h, § 2(x)–(y).
Article 6243h also provides that the City of Houston (“the City”) must make
periodic payments to HMEPS based on a percentage of the combined salaries of
the pension system members, who are active municipal employees. See id. art.
6243h § 8(d); see also id. art. 6243h, § 1(13).
In July 2011, the City and HMEPS entered into a contract called a “meet and
confer agreement.” The July 2001 meet and confer agreement (hereinafter, “the
Meet and Confer Agreement”) addressed, inter alia, the amount of contribution the
City was required to pay HMEPS for the upcoming fiscal year. Over the years, the
City and HMEPS have entered into a number of meet and confer agreements
regarding various issues. Such agreements are authorized by Article 6243h,
section 3(n). Id. art. 6243h, § 3(n).
The City’s pension obligation relates generally to the amount of its
employees’ salaries. The City devised a plan to reduce such budgetary obligation
by having non-City employees perform services previously performed by City
employees. To this end, the City merged its Convention and Entertainment
4
Facilities Department with an existing local government corporation, the Houston
Convention Center Hotel Corporation. Effective July 1, 2011, the City entered into
an Interlocal Agreement and Lease Agreement with the Houston Convention
Center Hotel Corporation to manage various City-owned facilities, such as
theaters, convention centers, and parking lots.
Houston Convention Center Hotel Corporation then changed its name to
Houston First Corporation, which assumed the obligations under the agreement
with the City. The City planned to transition all but 39 of its employees from its
Convention and Entertainment Facilities Department to Houston First Foundation,
a newly created non-profit corporation. The City planned for the employee
transfer to reduce its total amount of pension obligation based on its position that
the transferred employees would no longer be HMEPS “members.”
Article 6243h, section 1(13) defines “member” as follows: “each active
employee included in the pension system, except for an employee who is ineligible
under Section 4 of this Act.” Id. art. 6243h, § 1(13). Article 6243h, section 1(11)
provides:
“Employee” means any person, including an elected official
during the official’s service to the city, who is eligible under this Act
and:
(A) who holds a municipal position or a position with the
pension system;
5
(B) whose name appears on a regular full-time payroll of a city or of
the pension fund; and
(C) who is paid a regular salary for services.
Id. art. 6243h, § 1(11).
On August 25, 2011, HMEPS’s pension board had a meeting. The minutes
from the meeting reflect that the board passed “a [m]otion to approve the
amendments to the HMEPS Pension Plan Document.” The minutes reflect that
five trustees voted to approve the motion: (1) Barbara Chellette, (2) David L.
Long, (3) Leonard Polk, (4) Roy Sanchez, and (5) Lonnie Vara. Trustee Craig
Mason and another board member voted to deny the motion. Two other trustees
were absent.
Also on August 25, 2011, the board chair signed the Pension Plan Document
“As Amended and Restated Effective July 1, 2011.” The Pension Plan Document
contains a number of definitions, including the definition of “employee.” That
definition restates the definition of “employee” found in Article 6243h:
A person who is eligible under the Act and (a) who holds a municipal
position or a position with the Pension System; (b) whose name
appears on a regular full-time payroll of the City or of the Pension
System; and (c) who is paid a regular salary for services. “Employee”
includes an elected official during the official’s service to the City, if
he is eligible to participate under the terms of the Pension System as it
relates to elected officials.
See id.
6
The pension plan definition, as set out in the Pension Plan Document, further
provides:
“Employee” also includes a full-time employee of a Texas local
government corporation (“LGC”) controlled by the City, upon a
determination by the External Affairs Committee of the Board of
Trustees that such LGC’s employees are Employees for purposes of
the Plan.
Before the Convention and Entertainment Facilities Department transferred
any employees to Houston First Foundation, the Board passed and adopted a
resolution on October 6, 2011 (“the Resolution”). The Resolution provides, “[T]he
requirements for membership in HMEPS are provided under the terms of Article
6243h . . . and the . . . Meet and Confer Agreement dated as of July 2011.” The
Resolution further provides, in part, as follows:
Whereas, the Board of Trustees has previously determined that an
“Employee” for purposes of HMEPS includes a full-time employee of
Texas local government corporation controlled by the City of Houston
(“City”), upon determination by committee of the Board of Trustees
consisting of the elected trustees and the trustee appointed by the
elected trustees (the “External Affairs Committee”) that such entity’s
employees are Employees for purposes of membership in HMEPS;
Whereas, under the interpretations previously adopted by the Board of
Trustees, Houston First Corporation and its wholly owned and
controlled subsidiary, Houston First Foundation, are controlled by the
City, and thus the employees on the payroll of either the Houston First
Corporation or the Houston First Foundation are considered
Employees for purposes of membership in HMEPS;
Now Therefore Be It Resolved, employees of any entity controlled,
directly or indirectly, by the City are considered Employees for
purposes of membership in HMEPS, unless the External Affairs
7
Committee expressly determines otherwise; provided, however that
nothing in this resolution would apply to an individual covered by the
Houston Firefighters Relief Retirement Fund or the Houston Police
Officers Pension System or any otherwise ineligible employee as
determined by the External Affairs Committee . . . .
On October 24, 2011, Convention and Cultural Services, Inc. (“CCSI”), a
Texas nonprofit corporation, was incorporated. Its articles of incorporation state
that CCSI was organized for certain purposes, such as supporting “the operation
and maintenance of public assembly facilities and theaters owned by the City of
Houston.”
An attorney for the City sent a letter to HMEPS, explaining that
“[b]eginning on December 1, 2011, all eligible employees of the Convention and
Entertainment Facilities Department, except for 39 employees who were within
seven years of retirement with HMEPS, would “transition” to CCSI, “which will
operate as an employee leasing company to furnish services to Houston First
Corporation . . . .” The letter continued, “Neither Houston First Corporation nor
Houston First Foundation will have any employees currently employed by
[CCSI] . . . . Neither the City, the Mayor nor City Council will have any
appointment authority or control over the corporation or its board of directors.”
The attorney further explained, “[CCSI] will be contracting for its own employee
benefits, including a 401k plan, and will not participate in any City of Houston
benefit programs.”
8
In other words, the City took the position that, beginning December 1, 2011,
all but 39 of the Convention and Entertainment Facilities Department’s employees
would no longer be City employees; they would be CCSI employees, whose
services would be leased to Houston First, which would then utilize the CCSI
employees to manage and operate City facilities. The employees would be doing
the same job but, according to the City, they would have a different employer and
would be members of a different pension plan. Thus, the City would no longer be
obligated to make contributions to HMEPS based on those employees’ salaries
because they would no longer be City employees.
HMEPS’s External Affairs Committee met on November 17, 2011. A
notation in the meeting minutes indicates that the committee planned to “make
determinations regarding Section 3(n) Meet and Confer issues.” The minutes then
indicate that the committee went into a closed session to consider “the documents
regarding the Houston First Corporation and [CCSI].” The minutes show that,
once back in open session, the External Affairs Committee discussed the
documents and passed a motion that “the employees would be in a control group
and that they remain as members of the plan.” The following pension board
members were members of the External Affairs Committee: Barbara Chellette,
David L. Long, Leonard Polk, Roy Sanchez, and Lonnie Vara.
9
No one disputes that, before November 30, 2011, John Klumb, Veronica
McClelland, Vivian Montejano, John Gonzalez, Anita Robles, and Charmaine
Pilgrim were employees of the City. Before that date, each of these employees
provided notice to the City that he or she was terminating his or her employment
with the City at the end of business on November 30. These employees
transitioned to CCSI, effective December 1, 2011. Klumb, McClelland,
Montejano, Gonzalez, Robles, Pilgrim, and the City claimed that, beginning
December 1, 2011, these individuals were no longer employees of the City but
were employees of CCSI.
Klumb, McClelland, and Montejano each applied to begin receiving
retirement benefits from HMEPS. Under Article 6243h, and as agreed in the Meet
and Confer Agreement, a member of the pension system, who terminates
employment with the City, is eligible for a normal retirement pension, beginning
on the member’s effective retirement date, if the member (1) completes at least
five years of credit service and attains either 62 years of age or (2) the member is at
least 50 years old and, when added together, the member’s age and years of
credited service equal the number 75. See id. art. 6243h, § 10(b). Klumb,
McClelland, and Montejano each took the position that he or she was eligible to
receive retirement benefits from HMEPS because he or she had terminated
10
employment with the City and met one of the retirement criteria of Article 6243h,
section 10.
HMEPS disagreed, denying the applications of Klumb, McClelland, and
Montejano for retirement benefits. HMEPS took the position that these individuals
remained municipal employees, despite their transfer to CCSI. HMEPS based its
decision on the definition of “employee” as found in the July 2011 Pension Plan
Document.
Gonzalez, Robles, and Pilgrim did not contend that they were eligible to
receive retirement benefits from HMEPS after being transferred to CCSI. Rather,
they asserted that they were entitled to defer their retirement status because they
were no longer employees of the City. The City also held this position. HMEPS
disagreed, averring that Gonzalez, Robles, and Pilgrim also remained City
employees. HMEPS asserted that these individuals must continue to make
monthly contributions to HMEPS, and the City must continue to make
contributions to HMEPS based on their salaries.
Klumb, McClelland, Montejano, Gonzalez, Robles, and Pilgrim
(collectively, at times, “Plaintiffs”) filed suit against HMEPS, asserting claims for
constitutional violations and breach of contract. Plaintiffs also sought a
declaratory judgment. 2 They asserted that, by continuing to define them as City
2
The suit was filed as a class action but was never certified as such.
11
employees, HMEPS was violating Article 6243h. Plaintiffs also alleged that, by
treating them as City employees, HMEPS was violating a section of the Internal
Revenue Code. They requested the trial court to declare that they were no longer
City employees. Plaintiffs also sought monetary damages from HMEPS.
HMEPS filed a plea to the jurisdiction, asserting that the trial court lacked
subject-matter jurisdiction over the declaratory judgment action. HMEPS argued
that Article 6243h does not provide for judicial review of its board’s decisions,
particularly those decisions based on an interpretation of Article 6243h. It asserted
that the trial court lacked jurisdiction to review the board’s decision that Plaintiffs
remain city “employees” under Article 6243h. HMEPS also asserted immunity
from suit with respect to Plaintiffs’ breach of contract and constitutional claims.
Plaintiffs filed an amended petition. They sued not only HMEPS, but also
five members of its board of trustees: (1) Barbara Chellette, (2) David L. Long, (3)
Leonard Polk, (4) Roy Sanchez, and (5) Lonnie Vara (collectively, “the Trustees”).
Seeking declaratory and injunctive relief, Plaintiffs alleged that the Trustees had, in
their official capacities, committed the following ultra vires acts in violation of
Article 6243h:
• “[V]oting to approve the motion of August 25, 2011, containing an
unauthorized amendment of the statute and the Pension Plan; viz., a
unilateral change to the definition of ‘employee’ that is totally
inconsistent with the statutory definition contained in Section 1(11) of
Article 6243h.” The “change was made in violation of the statutorily-
12
prescribed procedure set forth in [s]ection 3(n) of Article 6243h for
amending the statute and Pension Plan under such circumstances.”
• “[V]oting to adopt the resolution of October 6, 2011 . . . implement[ing]
the ultra vires amendment to the Pension Plan that unilaterally changed
the statutory definition of ‘employee’ in [s]ection 1(11) of Article
6243h.” Included in this ultra vires act was “an illegal determination that
Plaintiffs were ‘employees’ under the Pension Plan, as that determination
was based on an unauthorized amendment to the Pension Plan that was
adopted in violation of [s]ection 3(n) of Article 6243h.”
• “Adopting the October 6, 2011 resolution which purported to authorize
an External Affairs Committee to determine who would qualify as an
‘employee’ under the illegal Pension Plan Amendment.”
• “Adopting a construction of Article 6243h and the Pension Plan that fails
to meet the qualification requirements of [s]ection 401, Internal Revenue
Code of 1986, as amended, as required by [s]ection 2(x) of Article
6243h.”
• Refusing to pay Klumb, McClelland, and Montejano their retirement
benefits and denying Gonzalez, Robles, and Pilgrim their right to defer
their retirement status.
Plaintiffs requested the trial court to declare that the Trustees (1) “acted
without legal authority in approving the motion of August 25, 2011 . . . illegally
chang[ing] the definition of ‘employee’ contained in ection 1(11) of Article 6243h
without following the prescribed procedures in Section 3(n) of the statute”; (2)
“acted without legal authority in adopting the resolution of October 6, 2011”; and
(3) “acted without legal authority in determining that Plaintiffs and the members of
the putative class are ‘employees’ of the City.” Plaintiffs also sought to enjoin the
Trustees from enforcing the alleged ultra vires acts, including a request that the
13
trial court enjoin “the ultra vires action of adopting an illegal amendment to the
Pension Plan that disqualifies the Pension Plan under the Internal Revenue Code.”
In addition, Plaintiffs asserted constitutional claims against HMEPS.
Klumb, McClelland, and Montejano asserted that they have been denied equal
protection under the Texas Constitution because HMEPS is treating them
differently than it has treated past employees who have left employment with the
City to work for other legal entities and who are now receiving retirement benefits.
They also contended that their right to due course of law under the Texas
Constitution has been abridged because they have a right to receive their vested
retirement benefits. All Plaintiffs asserted a due course of law violation, alleging
that HMEPS’s attempt “to seize” contributions from their salaries is an unlawful
taking in violation of their due course of law rights.
The City filed a petition in intervention. It generally echoed Plaintiffs’
allegations that the Trustees had engaged in ultra vires acts in violation of Article
6243h. The City also sought injunctive and declaratory relief.
HMEPS filed an amended plea to the jurisdiction in which the Trustees
joined. They asserted that the claims in the suit emanate from the pension board’s
interpretation of Article 6243h, specifically its construction of whether Plaintiffs fit
within the statutory definition “employee.” HMEPS and the Trustees argued that
the trial court lacked subject-matter jurisdiction over the suit because the board’s
14
interpretation of Article 6243h, per the statute, is final and binding with no right of
judicial review. HMEPS and the Trustees asserted that the allegations of ultra
vires acts are an attempt to recast claims of statutory misinterpretation solely for
the purpose of creating jurisdiction. HMEPS also alleged that Plaintiffs’
constitutional claims are barred by sovereign immunity.
Plaintiffs and the City responded to the plea. After a hearing, the trial court
granted the plea to the jurisdiction. It rendered judgment dismissing the Plaintiffs’
and the City’s claims for lack of jurisdiction. This appeal followed.
On appeal, Plaintiffs list ten issues in their brief. Issues one through eight
raise both general and specific challenges to the trial court’s grant of the plea to the
jurisdiction. Issue nine addresses the trial court’s evidentiary ruling striking an
affidavit offered by Plaintiffs in support of their response. Issue ten speaks to
Plaintiffs’ challenge to the trial court’s denial of their motion for continuance. In
its brief, the City raises one general issue challenging the trial court’s decision to
grant the plea to the jurisdiction.
Plea to the Jurisdiction
A. Standard and Scope of Review
Subject-matter jurisdiction is essential to the authority of a court to decide a
case. Tex. Ass’n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440, 443 (Tex. 1993).
The plaintiff bears the burden of alleging facts affirmatively showing that the trial
15
court has subject-matter jurisdiction. Id. at 446. The absence of subject-matter
jurisdiction may be raised by a plea to the jurisdiction. Bland Indep. Sch. Dist. v.
Blue, 34 S.W.3d 547, 554 (Tex. 2000).
Whether a trial court has subject-matter jurisdiction is a question of law and
is reviewed de novo. See Mayhew v. Town of Sunnyvale, 964 S.W.2d 922, 928
(Tex. 1998). When conducting a de novo review, the appellate court exercises its
own judgment and re-determines each legal issue, giving no deference to the trial
court’s decision. Quick v. City of Austin, 7 S.W.3d 109, 116 (Tex. 1998).
In deciding a plea to the jurisdiction, a court may not weigh the merits of the
claims; it must consider only the plaintiff’s pleadings and the evidence pertinent to
the jurisdictional inquiry. Cnty. of Cameron v. Brown, 80 S.W.3d 549, 555 (Tex.
2002). The court must take the allegations in the petition as true and construe them
in favor of the pleader. See Tex. Dep’t of Parks & Wildlife v. Miranda, 133
S.W.3d 217, 228 (Tex. 2004).
When reviewing a trial court’s ruling on a challenge to its jurisdiction, we
consider the plaintiff’s pleadings and factual assertions, as well as any evidence in
the record that is relevant to the jurisdictional issue. City of Elsa v. Gonzalez, 325
S.W.3d 622, 625 (Tex. 2010); Bland, 34 S.W.3d at 555. The court must review the
relevant evidence to determine whether a fact issue exists. Miranda, 133 S.W.3d
at 226. If the evidence creates a fact question regarding the jurisdictional issue,
16
then the court cannot grant the plea, and the issue must be resolved by the trier of
fact. Id. at 227–28; see Gonzalez, 325 S.W.3d at 626. On the other hand, if the
evidence is undisputed or fails to raise a fact question, the court must rule on the
plea as a matter of law. Miranda, 133 S.W.3d at 228.
B. Ultra Vires Claims
In their second, third, and fourth issues, Plaintiffs assert that the trial court
erred by granting the plea to the jurisdiction with respect to their ultra vires claims
requesting declaratory and injunctive relief. Plaintiffs also contend in their ninth
issue that the trial court abused its discretion by striking an affidavit they offered as
jurisdictional evidence. The City, in its sole issue, offers arguments aligned with
those of Plaintiffs with respect to the ultra vires claims. Thus, for ease of
reference, we refer collectively to the City and Plaintiffs as “Appellants.”
Appellants contend that the trial court has subject-matter jurisdiction over
their ultra vires claims for declaratory and injunctive relief in which they seek to
require the Trustees to comply with the provisions of Article 6243h. Appellants
cite City of El Paso v. Heinrich for the proposition that ultra vires suits seeking “to
require state officials to comply with statutory or constitutional provisions are not
prohibited by sovereign immunity.” 284 S.W.3d 366, 372 (Tex. 2009).
The Trustees are critical of Appellants’ reliance on Heinrich. They point out
that their plea to the jurisdiction did not seek to dismiss Appellants’ claims for
17
declaratory and injunctive relief based on sovereign immunity. Rather, they
asserted that the trial court lacks subject-matter jurisdiction because the board of
trustees has exclusive authority to interpret Article 6243h and to make benefits
decisions. The Trustees argue that there is no right of judicial review of such
determinations.
In support of their position, the Trustees rely on Houston Municipal
Employees Pension System v. Ferrell, 248 S.W.3d 151 (Tex. 2007). There, the
Supreme Court of Texas dismissed a claim for declaratory and injunctive relief
against HMEPS in which the plaintiffs were challenging a benefits decision by the
board. Id. at 158–59. The plaintiffs asked “the trial court to hold that the statute
requires the pension board to credit each plaintiff’s retirement account with time
served . . . and [to hold] that the pension board was violating the law by refusing to
grant such credit.” Id. at 158. The plaintiffs also “requested that the trial court
issue an injunction directing the pension board to comply with the trial court’s
interpretation of Article 6243h.” Id. at 158–59.
In determining whether the trial court had jurisdiction over the claims, the
Ferrell court reiterated the well-established precept, “There is no right to judicial
review of an administrative order unless a statute explicitly provides that right or
the order violates a constitutional right.” Id. at 158 (citing Gen. Servs. Comm’n v.
Little–Tex Insulation Co., 39 S.W.3d 591, 599 (Tex. 2001); Cont’l Cas. Ins. Co. v.
18
Functional Restoration Assocs., 19 S.W.3d 393, 397 (Tex. 2000); Firemen’s &
Policemen’s Civil Serv. Comm’n v. Kennedy, 514 S.W.2d 237, 239–40 (Tex.
1974); City of Amarillo v. Hancock, 239 S.W.2d 788, 790–92 (Tex. 1951)). The
court further explained that “when an act is either silent on the question of appeal
or expressly denies a right to appeal, a party may appeal only ‘where the
administrative action complained of violates a constitutional provision.’” Id.
(citing Hancock, 239 S.W.2d at 790).
The Ferrell court underscored that Article 6243h provides, “The
determination of any fact by the pension board and the pension board’s
interpretation of this Act are final and binding on any interested party.” Id. (citing
TEX. REV.CIV. STAT. art. 6243h, § 2(y)). The court concluded that the relief sought
by the plaintiffs, “whether labeled a declaratory judgment or review of a pension
board decision, exceeds the power of the trial court as limited by the ‘final and
binding’ language of Article 6243h.” Id. at 159. The court held, “Because the
Legislature has not authorized the trial court to grant the relief sought, the trial
court lacks jurisdiction over the case.” Id.
The Trustees interpret the holding in Ferrell to mean that ultra vires suits
cannot be maintained against members of the pension board. Appellants counter
that Ferrell is inapposite to the instant suit because no ultra vires allegations were
asserted in Ferrell beyond the allegation that the pension board violated the statute
19
by misinterpreting it. Appellants aver that they have not merely alleged that the
Trustees misinterpreted the statute. Rather, they point out that they have alleged
that the Trustees violated Article 6243h by “effectively amending the statute
without following the proper statutory procedure.”
Given the allegations in this case, Heinrich and Ferrell are both instructive.
Heinrich serves to illustrate that a government official may be sued for ultra vires
acts to require the official to comply with statutory or constitutional provisions.
See 284 S.W.3d at 372. Heinrich also defines what constitutes an ultra vires act,
instructing that an ultra vires suit “must allege, and ultimately prove, that the
officer acted without legal authority or failed to perform a purely ministerial act.”
Id. The suit “must not complain of a government officer’s exercise of discretion.”
Id.
We agree with Appellants that an agency’s exclusive authority to decide a
matter, or to take an action authorized by a statute, does not insulate the agency’s
officials from ultra vires claims when they have acted outside of their authority.3
As Heinrich makes clear, ultra vires claims are, by definition, not against the state
agency involved, but are properly brought against the agency official, who is
3
By analogy, courts have held that a party may seek judicial review of an agency
action before administrative remedies are exhausted, at a time when the agency
retains exclusive jurisdiction over the dispute, if the agency has exercised
authority beyond its statutorily conferred powers; that is, when the actions are
ultra vires. See Appraisal Rev. Bd. of Harris Cnty. Appraisal Dist. v. O’Connor &
Assocs., 267 S.W.3d 413, 419 (Tex. App.—Houston [14th Dist.] 2008, no pet.).
20
acting without authority. See id. at 370–72. Ultra vires suits against government
officials are permitted because they “do not attempt to exert control over the
state—they attempt to reassert the control of the state.” See id. at 372. Thus, if the
pension board members have acted outside their statutory authority, or failed to
perform a ministerial act, they can be sued for such action or inaction, as described
in Heinrich. Such a conclusion is not inconsistent with Ferrell, which did not
involve an express assertion of ultra vires claims against the pension board
members. Thus, Ferrell does not prohibit a suit based on properly alleged ultra
vires claims.
Ferrell is, however, instructive to our jurisdictional analysis. If Appellants
are recasting a challenge to a statutorily authorized act by the pension board as an
ultra vires claim, then Ferrell prohibits judicial review of that action. Appellants
do not assert that the Texas Legislature has authorized judicial review of HMEPS’s
actions taken pursuant to Article 6243h. Ferrell makes clear that, save a
constitutional violation, there is no right to judicial review of an agency action
when the legislature has not expressly authorized such review. See 248 S.W.3d at
158–59.
With these principles in mind, we turn to the record to determine whether
Appellants’ factual allegations and the jurisdictional evidence establish as a matter
of law that the Trustees “acted without legal authority or failed to perform a purely
21
ministerial act” or whether, at a minimum, an issue of material fact has been raised
with respect to the jurisdictional issue. See Heinrich, 284 S.W.3d at 372. In other
words, have Appellants sufficiently alleged facts to show that the Trustees acted in
an ultra vires manner?
1. Amending the Statute
Appellants allege that the Trustees acted without authority by unilaterally
amending Article 6243h’s definition of “employee” without entering into a meet
and confer agreement pursuant to Section 3(n). Plaintiffs requested the trial court
to declare that the Trustees “acted without legal authority in approving the motion
of August 25, 2011 that illegally changed the definition of ‘employee’ contained in
[s]ection 1(11) of Article 6243h without following the prescribed procedures in
[s]ection 3(n) of the statute.”
Article 6243h, section 1(11) defines “employee” as follows:
[A]ny person, including an elected official during the official’s
service to the city, who is eligible under this Act and:
(A) who holds a municipal position or a position with the
pension system;
(B) whose name appears on a regular full-time payroll of a city
or of the pension fund; and
(C) who is paid a regular salary for services.
22
TEX. REV. CIV. STAT. ANN. art. 6243h, § 1(11). A majority of the pension board
voted to approve the addition of the following language to the foregoing definition
of “employee”:
“Employee” also includes a full-time employee of a Texas local
government corporation (“LGC”) controlled by the City, upon a
determination by the External Affairs Committee of the Board of
Trustees that such LGC’s employees are Employees for purposes of
the Plan.
Appellants contend that the Trustees were without legal authority to add the
foregoing language to the definition of employee without entering into a meet and
confer agreement under section 3(n) of the act. We disagree.
Article 6243h, section 2(x) expressly provides that, not only may it
“interpret and construe” the statute, the pension board may also “correct any
defect, supply any omission, and reconcile any inconsistency that appears in this
Act in a manner and to the extent that the pension board considers expedient to
administer this Act for the greatest benefit of all members.” TEX. REV. CIV. STAT.
ANN. art. 6243h, § 2(x)(2)–(3) (emphasis added). This provision authorizes the
pension board to augment Article 6243h with additional language as it deems
necessary for the administration of the pension system. For this reason, the
Trustees were not acting without legal authority when they voted to supplement the
definition of “employee.”
23
Appellants argue that the added language is an impermissible amendment,
beyond the scope of a mere interpretation, because it conflicts with the established
statutory definition of employee and effectively changes its meaning. However,
determining the accuracy of Appellants’ assertion would necessarily require
interpreting the statutory definition of employee and reviewing the propriety of the
board’s decision to augment the definition, or “supply an omission,” with
additional language. As indicated in Ferrell, courts are without subject-matter
jurisdiction to conduct such a review or to make such determinations. See Ferrell,
248 S.W.3d at 158.
In addition, Appellants assert that the Trustees were without authority to
supplement the definition of employee without first entering into a meet and confer
agreement with the City. Appellants contend that such an agreement was required
by Article 6243h, section 3(n), which provides,
Notwithstanding any other law, the pension board may enter into a
written agreement with the city regarding pension issues and benefits.
The agreement must be approved by the pension board and the
governing body and signed by the mayor and by the pension board or
the pension board’s designee. The agreement is enforceable against
and binding on the city and the pension system’s members, retirees,
deferred participants, beneficiaries, eligible survivors, and alternate
payees.
TEX. REV. CIV. STAT. ANN. art. 6243h, § 3(n). Although it permits the pension
board to enter into an agreement with the City regarding pension issues and
benefits, section 3(n) does not require the pension board to enter such an
24
agreement when, as discussed above, the statute expressly authorizes the board to
act on the issue. More precisely, the statute authorizes the board, in its discretion,
to interpret and to supplement the statute, that is, “to supply any omission,” for the
expedient administration of the pension system. It does not require a meet and
confer agreement for such action.
Appellants also point to past meet and confer agreements in which the
parties had agreed to modify a statutory definition in some fashion. They assert
that such agreements demonstrate that a meet and confer agreement was required
before the pension board could add language to the definition of employee.
Regardless of past practices, the statute does not require a meet and confer
agreement for the pension board to supplement a definition as it deems necessary
in its statutorily conferred discretion.
Appellants further assert that the pension board has admitted, in certain
documents, that its supplementary language was an “amendment” of the statute.
They cite meet and confer agreements in which the parties agreed to modify a
statutory definition in some manner. They point to language in those documents
stating that the agreements served to amend or to supersede the statute. Appellants
assert that such language demonstrates that any language added to a statutory
definition serves to amend the statute, an act beyond the pension board’s authority
and one reserved for the legislature.
25
Irrespective of the word choice in the meet and confer agreements relating to
other statutory provisions, the Trustees were within their authority when they acted
in this instance to supplement the definition of employee. Whether one labels the
permitted agency action as a supplementation, an addition, an amendment or some
synonym thereof, the agency action was permitted by Article 6243h.
Appellants also point to minutes from the August 25, 2011 board meeting.
The minutes reflect that the board passed “a [m]otion to approve the amendments
to the HMEPS Pension Plan Document.” Appellants contend that amending the
pension plan document is synonymous with amending the statutory definition of
“employee.”
Article 6243h contemplates the preparation of a pension plan document.
The statute provides that the pension board may “adopt, for the administration of
the pension fund, written rules and guidelines” and “may establish and maintain
records necessary as appropriate for the proper administration of the pension
fund.” Id. art. 6243h, § 2(x)(1), (5). The statute further expresses that the pension
board may interpret any “summary plan.” Id. art. 6243h § 2(x)(2).
As the Trustees point out, the pension board has authority to “amend” or to
make revisions to the pension plan document. Because Article 6243h provides the
pension board with the authority to interpret and to supplement any omitted
26
language, it necessarily follows that the board also has authority to update or to
amend the pension plan document to reflect those actions.
In addition, the Trustees offered evidence indicating that the plan document
is a reference guide prepared by the pension system for the use of the Internal
Revenue Service. In her affidavit, trustee Barbara Chellette testified that “The
Plan Document reflects the Board of Trustees’ interpretations of Article 6243h and
the meet and confer agreements with the City as in effect . . . .” She also stated
that “[i]t is routine practice for the full Board of Trustees to amend the Plan
Document as new information becomes relevant for reference purposes such as to
reflect changes in IRS administrative interpretations.”
Appellants also contend that a fact issue has been raised by the affidavits
offered as jurisdictional evidence. The Trustees each offered his or her own
affidavit to support the plea. Each testified that, at the August 25, 2011 meeting,
the board acted to “interpret” whether a City employee remains, for pension
purposes, an employee under Article 6243h, section 1(11) when the employee is
transferred to a local government corporation. Each stated they did not vote to
“amend” the statute.
In response, Plaintiffs offered the affidavit of Craig Mason, who voted at the
August 25, 2011 board meeting to deny the motion to amend the plan document.
Mason testified, in part, as follows:
27
At the August 25, 2011, Regular Meeting, several items were
discussed. After these other items had been considered and voted on
by the Board of Trustees, the Board was asked to consider proposed
amendments to the Houston Municipal Employees’ Pension System’s
Plan. One of those proposed amendments concerned a change to the
definition of the word “employee” contained in [s]ection 1(11) of
Article 6243h.
During the course of the discussion of the proposed amendment to the
definition of “employee,” concern was expressed that employees of a
Local Government Corporation (“LGC”) were not “employees” as
defined in the statute. That is, some members of the Board were
concerned that if employees of the City of Houston transitioned to an
LGC, they would cease to be members of HMEPS. Some members of
the Board believed that the loss of membership would have a
detrimental effect on the funding of the Plan.
Additionally, there was discussion that in order to prevent former City
employees who become employees of an LGC from ceasing to be
members of HMEPS the statutory definition of “employee” needed to
be amended.
There was no discussion about any need to clarify or interpret the term
“employee.” There was no discussion about any concern that the
definition of “employee” was ambiguous, unclear, or incomplete.
There was no discussion that the definition of “employee” already
encompassed the employees of a local government corporation, or any
LGC controlled by the City of Houston and simply needed to be
clarified. There was no discussion about the Board of Trustees
making an interpretation of “employee” as part of the Board of
Trustees’ exercise of discretion under Article 6243h to interpret the
statute. Instead the discussion focused on the need [to] amend the
definition of the term “employee” to include persons who were
excluded under the statutory definition.
The Trustees objected to the admission of Mason’s affidavit and moved to
strike it. They asserted it was not relevant to the determination of the jurisdictional
issues and that it contained inadmissible legal conclusions. The trial court
28
sustained the Trustees’ objections and granted their motion to strike Mason’s
affidavit. The trial court’s order indicates that it sustained the Trustees’ objections
that the affidavit contained impermissible legal conclusions and that Mason’s
testimony was not relevant. See TEX. R. EVID. 401 (defining “relevant evidence”
as evidence having any tendency to make the existence of a fact of consequence
more or less probable than it would be without the evidence); id. 701 (providing
that lay witness’s testimony is limited to opinions or inferences rationally based on
perception of witness).
On appeal, Appellants assert, in their ninth issue, that the trial court abused
its discretion in striking Mason’s affidavit. They contend that the contrast between
Mason’s affidavit and those of the Trustees, regarding whether the pension board
was “interpreting” or “amending” the definition of employee, serves to create a
fact issue, precluding the grant of the Trustees’ plea to the jurisdiction.
As discussed, to determine whether the Trustees engaged in ultra vires
conduct, the inquiry is whether they acted without authority when they
supplemented the statutory definition of employee under the Article 6243h to
include employees of local government corporations. We have determined that
they had such authority because Article 6243h expressly provides that the pension
board may not only “interpret and construe” the statute, but may also “correct any
defect, supply any omission, and reconcile any inconsistency that appears in this
29
Act in a manner and to the extent that the pension board considers expedient to
administer this Act for the greatest benefit of all members.” TEX. REV. CIV. STAT.
ANN. art. 6243h, § 2(x)(2)–(3). We made such legal determination as a matter of
statutory construction, which is a matter and question of law. See City of Garland
v. Dallas Morning News, 22 S.W.3d 351, 357 (Tex. 2000). The board members’
divergent and subjective views of whether the Trustees acted to “amend” the
statutory definition or to “interpret” it are not part of that analysis and do not serve
to create a fact issue. See Johnson v. City of Fort Worth, 774 S.W.2d 653, 656
(Tex. 1989) (holding that “matters of statutory construction are questions of law
for the court to decide rather than issues of fact”). For this reason, Mason’s
affidavit is not material to the legal determination of whether the Trustees acted
without authority, and it was not error for the trial court to exclude it. Moreover,
the trial court’s striking of the affidavit could not have caused the rendition of an
improper judgment because Mason’s testimony did not affect the answer to the
legal determination to be made; thus, any error in the striking of the affidavit was
harmless. See TEX. R. APP. P. 44.1(a)(1).
We conclude that, as a matter of law, the Trustees acted with statutory
authority when they decided to supplement the definition of “employee” contained
in section 1(11), without following the prescribed procedures in section 3(n). It
was not an ultra vires act, as Appellants claim. See Cf. Heinrich, 284 S.W.3d at
30
372. Because the legislature has not authorized the trial court to review the board’s
decision to supplement the definition or to grant the declaratory and injunctive
relief sought, the trial court does not have jurisdiction over the claim as alleged by
Appellants.4 See Ferrell, 248 S.W.3d at 159 (“Because the Legislature has not
authorized the trial court to grant the relief sought, the trial court lacks jurisdiction
over the case.”).
2. Improper Delegation of Authority
Plaintiffs also contend that the Trustees acted without authority when they
adopted the October 6, 2011 resolution, authorizing the External Affairs
Committee to determine who would qualify as an “employee.” 5 Plaintiffs
requested the trial court to declare that the Trustees “acted without legal authority
4
Appellants also contend that the Trustees engaged in ultra vires conduct because
they have not performed purely ministerial acts (1) by failing to pay Klumb,
McClelland, and Montejano their pension benefits and (2) by failing to
acknowledge the deferred retiree status of Gonzalez, Robles and Pilgrim, instead
requiring them to continue to pay into the pension system. Relatedly, Appellants
contend that the Trustees have exceeded their authority by determining that
Plaintiffs remain employees for pension purposes. The City asserts the Trustees
exceeded their authority by requiring Plaintiffs and the City to continue making
contributions to HMEPS based on the salaries that Plaintiffs receive from CSSI.
However, because the pension board was authorized to supplement the statutory
definition of employee to include persons employed by a local government
corporation, the conduct complained of by Appellants were not ultra vires acts.
Rather, they are authorized pension determinations based on the supplemental
language. Such decisions are not subject to judicial review. See Ferrell, 248
S.W.3d at 158.
5
The City does not make this argument in its brief.
31
in adopting the resolution of October 6, 2011 . . . [and] in determining that
Plaintiffs and the members of the putative class are ‘employees’ of the City.”
Appellants acknowledge that Article 6243h, section 3(k) authorizes the
pension board “[to] allocate among the trustees the responsibilities of the pension
board under this Act.” See TEX. REV. CIV. STAT. ANN. art. 6243h, § 3(n).
Nonetheless, they assert that the Trustees had no authority to adopt the October 6,
2011 resolution, permitting the External Affairs Committee to determine whether
“employees of any entity controlled, directly or indirectly, by the City are
considered Employees for purposes of membership in HMEPS.”
Plaintiffs contend that the July 2011 Meet and Confer Agreement amends
Section 3(k), divesting the pension board of the authority to delegate decisions
regarding plan membership. Plaintiffs point to the following provision in the meet
and confer agreement: “Except for meet and confer decisions and personnel
decisions, no committee shall have authority to make final approvals, but shall
only make recommendations to the full Board.”
Plaintiffs also reference text in the Meet and Confer Agreement, providing
that the parties agree that “certain writings within the Agreement will have the
effect of superseding provisions of the Statute.” That agreement and previous meet
and confer agreements contain statements indicating that certain specifically
identified provisions of Article 6243h are “amended” by the agreement. Section
32
3(k) is not specifically identified in the Meet and Confer Agreement as being
amended by any contractual provision.
The Trustees correctly point out that a meet and confer agreement is a
contract. See City of Houston v. Williams, 353 S.W.3d 128, 145 (Tex. 2011)
(characterizing meet and confer agreement as a contract). They cite Town of
Flower Mound v. Rembert Enterprises, Inc., which held that a government
official’s failure to comply with a contractual provision cannot serve as the basis
for an ultra vires claim. 369 S.W.3d 465, 476 (Tex. App.—Fort Worth 2012, pet.
denied); see Heinrich, 284 S.W.3d at 371–72 (“[D]eclaratory-judgment suits
against state officials ‘allegedly act[ing] without legal or statutory authority’” are
permissible, but “‘declaratory-judgment suits against state officials seeking to
establish a contract’s validity, to enforce performance under a contract, or to
impose contractual liabilities are suits against the State’” and are not permissible as
ultra vires suits against individuals in their official capacity) (quoting Tex. Natural
Res. Conservation Comm’n v. IT–Davy, 74 S.W.3d 849, 855–56 (Tex. 2002)).
Plaintiffs respond that the cited case authority is not applicable “to a statute
such as Article 6243h, which allows the parties governed by the statute to amend it
by agreement.” Specifically, Plaintiffs contend that section 3(n) permits the
pension board and the City to amend Article 6243h. As described, section 3(n)
provides, “Notwithstanding any other law, the pension board may enter into a
33
written agreement with the city regarding pension issues and benefits.” TEX. REV.
CIV. STAT. ANN. art. 6243h, § 3(n). That provision does not address whether the
parties may agree to amend the statute; rather, it provides a means for the parties to
resolve issues between them by contractual agreement. Whether the parties have
characterized certain provisions in various meet and confer agreements as having
the effect of amending certain provisions of Article 6243h may be material to the
contractual duties each party owes to the other, but it does not serve to amend
Article 6243h. Had it intended an agreement made under section 3(n) to supersede
or to amend Article 6243h, the legislature could have said as much. See, e.g., TEX.
LOC. GOV’T CODE ANN. § 143.307(a)–(b) (Vernon 2008) (providing that a
collective bargaining agreement between police and firefighter associations and
employers “supersedes a previous statute concerning wages, salaries, rates of pay,
hours of work, or other terms and conditions of employment to the extent of any
conflict with the statute” and such agreement “preempts any contrary statute,
executive order, local ordinance, or rule adopted by the state or a political
subdivision or agent of the state”).
We conclude that, as a matter of law, the Trustees’ alleged violation of the
Meet and Confer Agreement does not serve as a valid basis for an ultra vires claim.
We hold that Appellants have not alleged claims conferring subject-matter
34
jurisdiction on the trial court enabling it to render the declaratory or injunctive
relief sought. See Ferrell, 248 S.W.3d at 159.
3. Non-Compliance with Tax Code
In the trial court, Plaintiffs alleged that the Trustees committed an ultra vires
act by “adopting a construction of Article 6243h and the Pension Plan that fails to
meet the qualification requirements of [s]ection 401, Internal Revenue Code . . . as
required by [s]ection 2(x) of Article 6243h.” They requested the trial court to
enjoin “the ultra vires action of adopting an illegal amendment to the Pension Plan
that disqualifies the Pension Plan under the Internal Revenue Code.”
Article 6243h, section 3(m) provides, “It is intended that this Act be
construed and administered in a manner so that the pension system’s benefit plan
will be considered a qualified plan under Section 401(a), Internal Revenue Code of
1986, as amended.” TEX. CIV. REV. STAT. ANN. art. 6243h, § 3(m). The statute
also provides that any construction of the act by the pension board “must meet the
qualification requirements established under [Internal Revenue Code Section
401(a)].” See id. § 2(x)(2).
To qualify as a “governmental plan” under 26 U.S.C. § 401(a), the plan must
be established and maintained for the employees of a political subdivision of a
state or its agencies or instrumentalities. See 26 U.S.C. § 414(d). Appellants
acknowledge that the pension board has determined that Plaintiffs are government
35
employees for pension purposes, despite their transfer to CCSI. Appellants assert,
however, that because such decision was incorrect, the Trustees have violated
Article 6243h’s provisions requiring compliance as an IRS qualified plan. It
follows that a determination of whether the Trustees have violated the act’s
provisions, requiring compliance as an IRS qualified plan, would necessarily first
require a court to conduct a substantive evaluation of the correctness of the pension
board’s discretionary and statutorily authorized decisions to supplement the
definition of employee and to treat Plaintiffs as City employees for pension
purposes.
As discussed supra, Article 6243h authorized the Trustees to make those
determinations. Because they were authorized, these determinations were not ultra
vires acts but were discretionary decisions made by the pension board. The
substantive correctness of those discretionary determinations is not subject to
judicial review. See Ferrell, 248 S.W.3d at 158 (“There is no right to judicial
review of an administrative order unless a statute explicitly provides that
right . . . .”). As a result, the trial court was without subject-matter jurisdiction to
evaluate whether the Trustees committed an ultra vires act by “adopting a
construction of Article 6243h and the Pension Plan that fails to meet the
qualification requirements of Section 401, Internal Revenue Code.”
36
We hold that the trial court is without jurisdiction to grant the declaratory
and injunctive relief sought by Appellants based on the pleaded ultra vires claims.
The trial court did not err when it granted the Trustees’ plea to the jurisdiction on
those claims.
We overrule the City’s sole issue. We overrule Plaintiffs’ second, third,
fourth, and ninth issues.
Constitutional Claims
In their fifth, sixth, seventh, and eighth issues, Plaintiffs assert that the trial
court erred by granting the plea to the jurisdiction with respect to their claims
regarding violations of their state equal-protection and due-course-of-law rights.
HMEPS asserts that it retains its immunity from suit for these claims because, as
pled, the claims are not viable.
A. Equal-Protection Claim
In their amended petition, Plaintiffs Klumb, McClelland, and Montejano
alleged as follows in support of their equal protection claim:
The Texas Constitution provides that all people “have equal rights,
and no man, or set of men, is entitled to exclusive separate public
emoluments, or privileges, but in consideration of public services.”
TEX. CONST. art. 1, § 3. HMEPS is treating [Plaintiffs Klumb,
McClelland, and Montejano] differently than other individuals such as
those who work for Houston Zoo, Inc., Houston READ Commission,
Miller Outdoor Theater Advisory Board, Inc., and Houston Parks
Board, who have left employment with the City to work with separate
legal entities that had business relationships with the City [and are
now nonetheless receiving retirement benefits from HMEPS]. As a
37
result of the disparate treatment, [Plaintiffs Klumb, McClelland, and
Montejano] have been damaged.
We analyze equal-protection challenges asserted under the state constitution
in the same manner as those claims asserted under the federal constitution. City of
Houston v. Johnson, 353 S.W.3d 499, 503 (Tex. App.—Houston [14th Dist.] 2011,
pet. denied) (citing Bell v. Low Income Women of Tex., 95 S.W.3d 253, 266 (Tex.
2002)). Mirroring the federal constitution, the equal-protection clause of the Texas
constitution directs governmental actors to treat all similarly situated persons alike.
Id.; see TEX. CONST. art. 1, §3. When, as in this case, neither a suspect
classification nor a fundamental right is involved, the alleged disparate treatment
between similarly situated persons survives constitutional scrutiny if it is rationally
related to a legitimate governmental purpose. See Scally v. Tex. State Bd. of Med.
Exam’rs, 351 S.W.3d 434, 448 (Tex. App.—Austin 2011, pet. denied).
If the plaintiff’s constitutional claim is facially invalid, the trial court must
grant a political subdivision’s plea to the jurisdiction asserting governmental
immunity. Johnson, 353 S.W.3d at 504. Thus, if a plaintiff fails to plead a viable
claim, a governmental defendant, such as HMEPS, retains immunity from suit for
the alleged constitutional violations. Id. (citing Andrade v. NAACP of Austin, 345
S.W.3d 1, 10–12 (Tex. 2011)).
Equal protection “does not demand for purposes of rational-basis review that
a legislature or governing decision maker actually articulate at any time the
38
purpose or rationale supporting its classification.” Nordlinger v. Hahn, 505 U.S. 1,
15, 112 S. Ct. 2326, 2334 (1992). A governing decision maker “is not subject to
courtroom fact-finding and [the decision] may be based on rational speculation
unsupported by evidence or empirical data.” F.C.C. v. Beach Commc’ns, Inc., 508
U.S. 307, 315, 113 S. Ct. 2096, 2102 (1993). “For equal protection purposes,
government action has a rational basis if one can be conceived, regardless of
whether the government had it in mind when it took the action complained of.”
Sheffield Dev. Co., Inc. v. City of Glenn Heights, 140 S.W.3d 660, 675 (Tex. 2004)
(citing Owens Corning v. Carter, 997 S.W.2d 560, 581 (Tex. 1999)). A court must
uphold the challenged governmental action if it can conceive of any rational basis
for the action. See Owens Corning, 997 S.W.2d at 581. We need not review each
and every reason that the action is thought to be rational; we need only find one
rational reason. Garay v. State, 940 S.W.2d 211, 217 (Tex. App.—Houston [1st
Dist.] 1997, pet. ref’d).
Here, HMEPS asserts that it had a rational basis for its decision to treat the
plaintiffs as City employees, who are not entitled to begin receiving retirement
benefits and who must continue to contribute to the pension system. It avers that it
has “a legitimate interest in preserving all sources of pension funding by assuring
that the City meets its full obligations to HMEPS.” It asserts that “[t]he Board’s
decision advances that interest.” HMEPS contends, “If the City stops contributing
39
to HMEPS on behalf of Department employees, HMEPS will have less money to
satisfy future benefit obligations. By correctly recognizing that Klumb and his co-
workers are still covered employees, the Board avoided a threat to HMEPS’s
funding.”
We agree with HMEPS that preservation of funding sources is a rational
basis for the alleged disparate treatment in this case. See U.S. R.R. Ret. Bd. v.
Fritz, 449 U.S. 166, 174–75, 101 S. Ct. 453, 459 (1980) (recognizing that
preservation of pension funds is valid reason to treat pensioners differently). For
this reason, we conclude that Plaintiffs Klumb, McClelland, and Montejano have
not pled a viable equal-protection claim. Thus, HMEPS retains its immunity from
suit. We hold that the trial court correctly granted HMEPS’s plea to the
jurisdiction on the equal-protection claim.
We overrule Plaintiffs’ seventh and eighth issues.
B. Due Course of Law
With respect to their due course of law claim, Plaintiffs allege as follows:
The Texas Constitution also provides that “[n]o citizen of this State
shall be deprived of life, liberty, property, privileges or immunities, or
in any manner disfranchised, except by the course of the law of the
land.” TEX. CONST. art. l, § 19. Here, the [Plaintiffs Klumb,
McClelland, and Montejano] have a right to receive payments from
their vested retirement accounts upon their termination of employment
with the City. HMEPS refuses and continues to refuse to pay the
benefits to which the [Plaintiffs Klumb, McClelland, and Montejano]
have a vested right to receive. This is an unlawful taking in violation
of Due Course of Law.
40
Plaintiffs have a right to contribute their salaries only to organizations
and entities of which they are a part. HMEPS is attempting to seize
five percent of their salaries. This is an unlawful taking in violation of
Due Course of Law.
HMEPS contends that Plaintiffs do not have a vested property interest at
stake. Plaintiffs’ due-course-of-law claims require the existence of such a
protected right. See Combs v. City of Webster, 311 S.W.3d 85, 92 (Tex. App.—
Austin 2009, pet. denied) (citing Spring Branch Indep. Sch. Dist. v. Stamos, 695
S.W.2d 556, 560–62 (Tex. 1985) (involving procedural and substantive due
process claims); Dallas Cnty. v. Gonzales, 183 S.W.3d 94, 111 (Tex. App.—Dallas
2006, pet. denied) (same)). If HMEPS is correct in its assertion that Plaintiffs have
failed to allege a vested property interest, Plaintiffs’ due-course-of-law claims have
no merit, and the trial court properly granted HMEPS’s plea to the jurisdiction
regarding those claims. See id.
According to the amended petition, the first property interest at stake for
Plaintiffs Klumb, McClelland, and Montejano is payment from their retirement
accounts on their termination of employment with the City. HMEPS correctly
points out that a pensioner in a statutory pension plan does not have a vested right
to his pension. Reames v. Police Officers’ Pension Bd., 928 S.W.2d 628, 632
(Tex. App.—Houston [14th Dist.] 1996, no writ); see City of Dallas v. Trammell,
101 S.W.2d 1009, 1012–13 (Tex. 1937) (holding that, because state employee
41
pension plans are from purely statutory origins, pensioner’s right to receive
monthly payments from statutory pension fund was subordinate to right of
legislature to completely abolish pension fund or diminish accrued benefits of
pensioner under the plan); see also Duckett v. Bd. of Trs., 832 S.W.2d 438, 442
(Tex. App.—Houston [1st Dist.] 1992, writ denied). Here, Plaintiffs Klumb,
McClelland, and Montejano have no vested property right in the retirement
benefits at issue. The amended petition affirmatively negates the existence of
jurisdiction over their due-course-of-law claim asserted in relation to those
benefits. See Combs, 311 S.W.3d at 94.
Plaintiffs also allege that HMEPS “is attempting to seize five percent of their
salaries” as monthly contributions into the pension fund. They assert that they
have a property right in these contributions. HMEPS explains that the City, not the
employees, pay contributions to HMEPS. HMEPS cites the Benefits Handbook,
which was offered by Plaintiffs into evidence. The handbook explains that
HMEPS members do not pay employee contributions to HMEPS. Rather, the City
pays the contribution directly from its treasury to HMEPS. This is also reflected in
Article 6243h, section 8(c), which provides that “the city shall pay the pickup
contributions to the pension system from the same source of funds that is used for
paying salaries to the members. The pickup contributions are in lieu of
42
contributions [by the members].” TEX. REV. CIV. STAT. art. 6243h, § 8(c) (Vernon
2010).
HMEPS also points to Devon v. City of San Antonio, which explains as
follows:
[D]eductions withheld from [public employees’] wages and paid into
the pension fund never belonged to [them], but remained public
money used for a public purpose. They were not first segregated from
the public funds so as to become [the employees’] private property
and then paid into the pension fund; rather, the deductions were “set
aside from one public fund and turned over to another” and are no less
public money after the payment into the pension fund than before.
443 S.W.2d 598, 600 (Tex. Civ. App.—Waco 1969, writ ref’d) (quoting Trammell,
101 S.W.2d at 1013).
We agree with HMEPS that the jurisdictional evidence shows, as a matter of
law, that the Plaintiffs do not have a property right in the contributions made to the
pension system. See id.; see also Miranda, 133 S.W.3d at 226–28. Accordingly,
Plaintiffs have failed to assert a viable due-course-of law claim, and HMEPS
retains its immunity from suit regarding that claim. We hold that the trial court
properly granted HMEPS’s plea to the jurisdiction on Plaintiffs’ due-course-of law
claims.
We overrule Plaintiffs’ fifth and sixth issues. We also overrule Plaintiffs’
first issue, generally challenging the granting of the plea to the jurisdiction.
43
Motion for Continuance
In their tenth issue, Plaintiffs assert that the trial court abused its discretion
when it denied their motion for continuance. Plaintiffs sought a continuance of the
hearing on the plea to the jurisdiction to permit them to conduct additional
jurisdictional discovery.
We apply an abuse-of-discretion standard of review to a trial court’s
decision on whether to grant a continuance of a plea-to-the-jurisdiction hearing to
allow additional discovery. Garcia v. Kubosh, 377 S.W.3d 89, 113 (Tex. App.—
Houston [1st Dist.] 2012, no pet.). An appellate court may reverse for abuse of
discretion only if it finds that the trial court’s decision was so arbitrary and
unreasonable as to amount to a clear and prejudicial error of law. Joe v. Two
Thirty Nine Joint Venture, 145 S.W.3d 150, 162 (Tex. 2004). There is no abuse of
discretion in a case in which the trial court could reasonably conclude that
additional discovery was unnecessary and irrelevant to the legal issues in the case.
Id. This is such a case.
As seen in the discussion of the preceding issues, the determination of the
jurisdictional issues in this case is based on the statutory language, the allegations
in Plaintiffs’ pleadings, and basic documents, such as the minutes from the board
meetings, the Resolution, the Pension Plan Document, and the Meet and Confer
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Agreement. The Benefits Handbook, mentioned with respect to determining
Plaintiffs’ due-course-of-law claim, was offered by Plaintiffs.
Plaintiffs contend that they sought a continuance so that they could depose
each Trustee about his or her affidavit in which each testified that the board had
interpreted, not amended, the definition of employee. Plaintiffs also indicate that
they wanted a continuance to seek documents and information relating to the
Trustees’ decision-making process with respect to interpreting the definition.
However, as discussed supra, the subjective views of the board members are not
material to the legal determination of whether they acted ultra vires in
contravention of the statute.
Plaintiffs further indicate that they desired to conduct discovery pertaining to
whether employees of other legal entities are similarly situated to them. As
discussed, Plaintiffs’ equal-protection claim fails on the rational-basis analysis
without considering whether other persons receiving retirement benefits are
similarly situated.
None of the discovery mentioned by Plaintiffs could have raised a fact issue
material to the determination of the jurisdictional plea. See id. Plaintiffs failed to
demonstrate that additional discovery was necessary. See id. We hold that the trial
court did not abuse its discretion in denying Plaintiffs’ motion for continuance.
We overrule Plaintiffs’ tenth issue.
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Conclusion
We affirm the judgment of the trial court granting HMEPS’s and the
Trustees’ plea to the jurisdiction and dismissing Appellants’ claims.
Laura Carter Higley
Justice
Panel consists of Chief Justice Radack and Justices Higley and Brown.
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