City of Dallas v. Albert (Tex. 2011)(Opinion by Justice Johnson)
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OPINION OF THE COURT OF APPEALS BELOW
214 S.W.3d 631 (2006)
CITY OF DALLAS, Appellant,
Kenneth E. ALBERT, et al., Appellees.
City of Dallas, Appellant,
David L. Barber, et al., Appellees.
City of Dallas, Appellant,
Anthony Arredondo, et al., Appellees.
City of Dallas, Appellant,
Kevin Michael Willis, et al., Appellees.
Nos. 05-03-01297-CV to 05-03-01300-CV.
Court of Appeals of Texas, Dallas.
December 21, 2006.
Rehearing Overruled February 22, 2007.
Madeleine B. Johnson, City Attorney, James B. Pinson, Assistant City Attorney, Dallas, for appellant.
Bill Boyd, John R. Stooksberry, Boyd & Veigel, P.C., McKinney, for appellees.
Before Justices MORRIS, FITZGERALD, and FRANCIS.
OPINION ON REHEARING
Opinion by Justice MORRIS.
We issued our original opinion in the above referenced cases on August 10, 2004. See City of Dallas v. Kenneth E. Albert, 140 S.
W.3d 920 (Tex.App.-Dallas 2004, no pet.). In that opinion, we concluded the Texas Supreme Court's holding in Reata
Construction Corp. v. City of Dallas, 47 Tex. Sup.Ct. J. 408, 2004 WL 726906 (Tex. Apr. 2, 2004) (per curiam) compelled us to
decide that the City of Dallas had waived its sovereign immunity in these suits by filing counterclaims for affirmative relief. We
therefore affirmed the trial court's orders denying the City's pleas to the jurisdiction. The City filed motions for rehearing in each
cause. We held the motions under advisement because of the supreme court's announced reconsideration of its Reata opinion
upon which we relied.
On June 30, 2006, the Texas Supreme Court withdrew its original opinion in Reata and substituted a new opinion in its place.
See Reata Constr. Corp. v. City of Dallas, 197 S.W.3d 371 (Tex.2006). In its new opinion, the supreme court limited the extent of
the waiver of sovereign immunity caused by the City's filing claims for affirmative relief. See id. at 377. Because the Texas
Supreme Court significantly changed its analysis on which we relied when deciding the issue of waiver of sovereign immunity in
our original opinion, we grant the City's motion for rehearing and withdraw our opinion issued August 10, 2004. This is now the
opinion of this Court.
These cases arose out of an ordinance adopted by the City of Dallas in 1979 in accordance with a voter-approved pay
referendum. The ordinance stated, among other things, that each sworn police officer, fire fighter, and rescue officer employed by
the City would receive a pay raise and that "the current percentage pay differential between grades in the sworn ranks of the
Dallas Police Force and the Fire Fighter and Rescue Force shall be maintained." Appellees contend the ordinance amended
their alleged employment contracts with the City to add a requirement that the City maintain the percentage pay differential
between the grades in all future salary adjustments. Appellees filed suits claiming the City breached its contracts with them by
repeatedly raising the pay of the highest ranking officers without making corresponding increases to the salaries received by the
lower ranks. Appellees asserted claims for breach of contract seeking back pay, benefits, and prejudgment and post-judgment
interest. Appellees also sought a declaratory judgment to establish that their construction of the ordinance was correct.
In response to appellees' claims, the City filed answers and counterclaims for alleged overpayments of salaries. According to the
City, if appellees' construction of the ordinance was correct, then all salary adjustments made after the ordinance was adopted
were void and unenforceable. The City argued that if the salary adjustments 634*634 were unenforceable, appellees were
required to return to the City any additional money paid to them pursuant to the allegedly void salary adjustments.
On June 4, 2003, the City filed pleas to the trial court's jurisdiction contending that its governmental immunity from suit had not
been waived and, therefore, the trial court lacked subject matter jurisdiction over each case. Appellees responded that the City's
immunity from suit was expressly waived in both section 51.075 of the Texas Local Government Code and chapter II of the Dallas
City Charter. Specifically, the Local Government Code states that a municipality may "plead and be impleaded in any court." See
TEX. LOCAL GOV'T CODE ANN. § 51.075 (Vernon 1999). The Dallas City Charter states that the City has the power to "sue and
be sued" and to "implead and be impleaded in all courts." DALLAS CITY CHARTER ch. II, § 1(2), (3) (Aug. 1999). Appellees
additionally argued the City was collaterally estopped from asserting sovereign immunity because the City litigated the same
issue in another case and the Fifth Circuit Court of Appeals decided the issue adversely to the City. The trial court denied the
City's pleas to the jurisdiction, and the City appealed.
During the pendency of the City's appeal, the Texas Supreme Court issued its original opinion in Reata Construction Corp. v. City
of Dallas. In Reata, the supreme court held that a city's intervention in a lawsuit to assert claims for affirmative relief constituted a
waiver of governmental immunity. See Reata Constr. Corp. v. City of Dallas, 47 Tex. Sup.Ct. J. 408, 2004 WL 726906 (Tex. Apr. 2,
2004) (per curiam). Following issuance of the Reata decision, appellees in these cases supplemented their briefing to argue
that the City's counterclaims for alleged overpayments were claims for affirmative relief invoking the trial court's jurisdiction much
like the City's intervention in Reata. According to appellees, Reata provided another basis to affirm the trial court's denial of the
City's plea to the jurisdiction. The City responded by voluntarily dismissing its counterclaims. It then argued that the dismissal of
the counterclaims rendered appellees' supplemental argument moot.
Approximately two years after issuing its original opinion in Reata, the Texas Supreme Court withdrew its opinion and issued a
new opinion limiting the waiver of governmental immunity caused by a governmental entity's assertion of claims for affirmative
relief. See Reata, 197 S.W.3d at 377. The supreme court also on the same day issued its opinion in Tooke v. City of Mexia, 197 S.
W.3d 325 (Tex.2006). In Tooke, the court addressed the impact of phrases such as "sue and be sued" and "plead and be
impleaded" on governmental immunity. The court concluded such phrases did not reflect, in and of themselves, a clear
legislative intent to waive immunity. In light of the Texas Supreme Court's recent decisions in Reata and Tooke, we must re-
examine the trial court's orders denying the City's pleas to the jurisdiction.
It is well established that sovereign immunity from suit protects the State of Texas, its agencies, and its officials from lawsuits for
damages unless it is waived by clear and unambiguous legislative consent to suit. See Fed. Sign v. Tex. S. Univ., 951 S.W.2d
401, 405 (Tex.1997). A city, such as the City of Dallas, is deemed an agent of the state for sovereign immunity purposes when
exercising its powers for a public purpose. See Reata, 197 S.W.3d at 377. Appellees' suit against the City is a lawsuit arising out
of the City's exercise of its power to adopt public ordinances. Accordingly, 635*635 sovereign immunity from suit protects the City,
and the court lacks subject matter jurisdiction over these cases unless unambiguous consent to be sued has been granted.
Appellees contend that consent was granted by the legislature in section 51.075 of the Texas Local Government Code where the
legislature stated that municipalities "may plead and be impleaded in any court." See TEX. LOCAL GOV'T CODE ANN. § 51.075.
Appellees further argue that consent to suit can be found also in chapter II of the Dallas City Charter, which states that the City
has the power to "sue and be sued" and to "implead and be impleaded in all courts." DALLAS CITY CHARTER ch. II, § 1(2), (3)
In Tooke, the supreme court held the phrases "sue and be sued" and "plead and be impleaded" mean different things in different
statutes and do not, by themselves, waive immunity. See Tooke, 197 S.W.3d at 342. The court also specifically stated that neither
section 51.075 of the Texas Local Government Code nor a city charter provision addressing the capacity of the City of Mexia to
"sue and be sued" and "plead and be impleaded" is a clear and unambiguous waiver of immunity. See id. at 342-43. The court
followed its Tooke ruling in Reata v. City of Dallas and held that, as with the charter for the City of Mexia, the "sue and be sued"
and "plead and be impleaded" language in the Dallas City Charter did not waive the City's immunity from suit. See Reata, 197 S.
W.3d at 378. Accordingly, we must likewise conclude that neither section 51.075 of the Texas Local Government Code nor the
Dallas City Charter grants the trial court jurisdiction over appellees' claims in these cases.
As an alternative basis for finding jurisdiction and affirming the trial court's orders, appellees argue that the City's counterclaims
seeking affirmative monetary relief against them waived the City's sovereign immunity from suit. For the purposes of our analysis,
we will assume the City's decision to bring counterclaims waived its immunity from suit for appellees' claims in these cases to
the extent set forth in Reata. What we determine is the effect, if any, of the City's decision to withdraw its counterclaims. Applying
Reata and its underlying rationale, we conclude that, to the extent the City may have waived its immunity from suit in these cases
by filing counterclaims, it reinstated its immunity from suit when it dismissed its counterclaims.
In Reata, the Texas Supreme Court held that a "decision by the City of Dallas to file suit for damages encompassed a decision to
leave its sphere of immunity from suit for claims against it which are germane to, connected with and properly defensive of
claims the City asserts." Id. This waiver of immunity is 636*636 limited, however. The government continues to have immunity
from suit for affirmative damage claims against it for monetary relief exceeding amounts necessary to offset its own claims. Id. at
377. The government only waives immunity, therefore, to the extent the opposing party's claims could offset any recovery against
it. Id. at 378.
At the heart of the decision in Reata is the seminal idea that sovereigns should be, and traditionally have been, protected from
the expense of litigation because governmental functions would be hampered by requiring tax resources to be expended on
defending lawsuits and paying judgments rather than on their intended purposes. See id. at 375. Where the government brings
its own affirmative claims, however, it has obviously concluded that the expense of litigation is worthwhile in light of its potential
recovery in that case. See id. at 383 (Brister, J., concurring). Once the government asserts its affirmative claims, it must
participate as any other litigant and is subject to all proper defensive matters, including offset. See id. at 377.
A government's decision to expend resources in pursuit of a potential recovery, however, does not encompass the unrelated
issue of putting public funds at risk of a potentially costly judgment. It is for this reason that any waiver of immunity is limited to the
extent of the government's affirmative claim. See id. Although under Reata an opposing party may assert an offset claim against
the government, the opposing party cannot recover damages against the governmental entity. See id. The trial court's jurisdiction
to render judgment is limited to deciding the government's entitlement to a particular sum and any appropriate offset of that sum.
See id. at 383 (Brister, J., concurring). In this way, the government can control the amount of public funds it is willing to subject to
the often unpredictable litigation process.
Because the City's waiver of immunity by filing counterclaims in these cases was limited to a determination of whether it could
recover any of the amounts it alleged it was owed, the trial court's jurisdiction was necessarily dependent upon the continued
existence of the City's counterclaims. Once the City dismissed its affirmative claims, appellees' claims for damages were no
longer "germane to," "connected with," or "properly defensive of" any claims being made by the City. Because appellees' claims
for damages were no longer in the nature of an offset, they no longer fell within the limited waiver of immunity described in Reata.
Therefore, the City's now withdrawn counterclaims cannot form the basis of the trial court's jurisdiction over appellees' claims.
Although the supreme court's opinions in Tooke and Reata limited the potential bases for waiver of sovereign immunity, during
the same time those opinions were being issued and while this case was pending on rehearing, the Texas Legislature enacted
sections 271.151-60 of the Texas Local Government Code. Sections 271.151-60 waive immunity from suit for certain claims
against local governmental entities. See TEX. LOCAL GOV'T CODE ANN. § 271.152 (Vernon 2005). The sections apply
retroactively to claims that arise under a written contract for goods or services if sovereign immunity has not been waived with
respect to the claims before the effective date of the subchapter. See Act of May 23, 2005, 79th Leg., R.S., ch. 604, § 2, 2005 Tex.
Gen. Laws 1548, 1549. Appellees have pleaded claims for breach of contract. The appropriate action in cases such as these is
to remand the claims to the trial court to allow appellees the opportunity to argue that the legislature has 637*637 waived the
City's immunity from suit by these new statutory provisions. See City of Houston v. Clear Channel Outdoor, Inc., 197 S.W.3d 386,
386-87 (Tex.2006); McMahon Contracting, L.P. v. City of Carrollton, 197 S.W.3d 387, 387 (Tex.2006).
In addition to their breach of contract claims, appellees also brought a declaratory judgment action. Under the Uniform
Declaratory Judgments Act, persons "affected by a statute, municipal ordinance, contract, or franchise may have determined any
question of construction or validity arising under the instrument, statute, ordinance, contract, or franchise and obtain a declaration
of rights, status, or other legal relations thereunder." TEX. CIV. PRAC. & REM.CODE ANN. § 37.004 (Vernon 1997). Governmental
entities must be joined in suits to construe their legislative pronouncements. See Tex. Educ. Agency v. Leeper, 893 S.W.2d 432,
446 (Tex.1994). Accordingly, there is no governmental immunity in suits to construe legislation. See id.; Tex. Natural Res.
Conservation Comm'n v. IT-Davy, 74 S.W.3d 849, 859-60 (Tex.2002).
Sovereign immunity cannot be circumvented, however, by characterizing a suit for damages as a declaratory judgment action.
See IT-Davy, 74 S.W.3d at 856. Parties cannot frame a breach of contract cause of action as a declaratory judgment action to
determine a contract's validity, enforce performance under a contract, or impose contractual liabilities against a governmental
entity. Id. at 855. In these cases, appellees have claimed the ordinance at issue is part of alleged contracts between them and
the City. Appellees have also claimed damages based on breaches of these alleged contracts. Although sovereign immunity
does not protect the City from appellees' request for a declaratory judgment construing the ordinance at issue, the Declaratory
Judgments Act does not waive the City's immunity from suits for money damages. See Leeper, 893 S.W.2d at 445 (DJA allows
courts to declare relief whether or not further relief is or could be claimed.). We conclude, therefore, that the trial court was correct
in denying the City's plea to the jurisdiction to the extent appellees' claims for a declaratory judgment are limited to declaring the
rights, status, and legal relations of the parties under the ordinance.
Finally, appellees contend that sovereign immunity is not a defense to their contract claims because the City cannot use the
doctrine of sovereign immunity against itself. Appellees suggest that by seeking to enforce the alleged contractual benefits
granted them as City employees in the referendum process, they are bringing suit not as private third parties but rather as agents
of the City itself. We disagree.
The cases cited by appellees in support of their argument involve citizens suing municipalities to compel initiative and
referendum acts. See Blum v. Lanier, 997 S.W.2d 259 (Tex.1999); City of Canyon v. Fehr, 121 S.W.3d 899 (Tex.App.-Amarillo
2003, no pet.). The court held in each case that citizens who exercise their rights under initiative provisions act not as third parties
but as the legislative branch of the municipal government. See Blum, 997 S.W.2d at 262; Fehr, 121 S.W.3d at 902-03. In Fehr, the
court concluded that such suits were not barred by sovereign immunity because the doctrine cannot be used by the municipality
against itself. See Fehr, 121 S.W.3d at 902. In the cases before us, appellees are not seeking to compel an initiative or
referendum, nor are they in any other way acting as the legislative branch of the municipal government. They are, instead,
seeking to recover personal and individual damages for breaches of alleged employment contracts with the City. Because
appellees are not acting as a 638*638 political subdivision in bringing these suits, the rationale of Blum and Fehr does not apply.
Based on the foregoing, we affirm the trial court's denial of the City's pleas to the jurisdiction with respect to appellees' requests
for a declaratory judgment. We reverse the trial court's orders with respect to appellees' claims for breach of contract and remand
the causes to the trial court for further proceedings consistent with this opinion.
 Concurrent with issuing this opinion, we also issue our opinion on rehearing in City of Dallas v. Martin, 214 S.W.3d 638 (Tex.
App.-Dallas 2006). With the exception of the arguments concerning collateral estoppel and appellees bringing this suit as agents
of the City, the issues and arguments addressed in this opinion are substantively identical to those addressed in Martin.
 Appellees also argue the City is collaterally estopped from arguing that section 51.075 of the Texas Local Government Code
and chapter II of the Dallas City charter do not waive immunity because that issue was decided against the City in Webb v. City of
Dallas, 314 F.3d 787 (5th Cir.2002). In Webb, the Fifth Circuit examined the same provisions of the Local Government Code and
the Dallas City Charter and concluded the language was an express waiver of immunity from suit. See Webb, 314 F.3d at 795-96.
The Fifth Circuit's opinion in Webb pre-dates the Texas Supreme Court's opinions in both Tooke and Reata. Furthermore,
determinations of law are not generally given preclusive effect. John G. & Marie Stella Kenedy Mem'l Found. v. Dewhurst, 90 S.W.
3d 268, 288 (Tex.2002). This is particularly true when there is a difference in the forums in which the two actions are determined.
See Tankersley v. Durish, 855 S.W.2d 241, 246 (Tex.App.-Austin 1993, writ denied).
Also see: Texas Causes of Action | 2011 Texas Supreme Court Opinions | 2011 Tex Sup Ct Per Curiams
This appeal involves a pay dispute between the City of Dallas and many of its police officers
and firefighters. Pursuant to a referendum approved by the voters, the City adopted an ordinance
addressing the pay of “each sworn police officer and fire fighter and rescue officer employed by the
City of Dallas.” Claiming the City did not properly pay them according to the ordinance, some
firefighters and police officers (collectively, the Officers) sued the City. They sought both a
declaratory judgment construing the ordinance and damages for breach of contract. The City
counterclaimed, alleging that if the Officers had not been paid correctly, they had been overpaid
instead of underpaid and the City was entitled to reimbursement for the overpayments. The City
eventually sought dismissal of the Officers’ claims on the basis of governmental immunity, then
later dismissed its counterclaim. The trial court denied the City’s immunity claim and this
interlocutory appeal followed. During the pendency of the appeal, the Legislature amended the
Local Government Code to provide for a limited, retroactive waiver of certain local governmental
entities’ immunity from suit.
The main issues before us involve governmental immunity from suit. We will address the
issues in the order that the court of appeals did: (1) what is the effect on the City’s immunity of its
filing, then non-suiting, the counterclaim; (2) what is the effect, if any, of the Legislature’s
retroactive waiver of immunity; (3) whether the City has immunity from the Officers’ declaratory
judgment action; and (4) whether the City lacks immunity from suit because the pay ordinance was
adopted by referendum. We conclude that (1) by nonsuiting its counterclaim the City did not
reinstate complete immunity from the Officers’ pending claims; (2) the case must be remanded for
the trial court to consider whether, by amending the Local Government Code, the Legislature waived
the City’s immunity; (3) the City has immunity from the declaratory judgment action; and (4) the
ordinance having been adopted by referendum did not result in waiver or abrogation of the City’s
Justice Willett delivered a dissenting opinion. [pdf]
Link to e-briefs: CITY OF DALLAS v. ALBERT
City of Dallas v. Albert, No. 07-0284 (Tex. Aug. 26,
2011)(Opinion by Justice Phil Johnson)
CITY OF DALLAS v. KENNETH E. ALBERT, ET AL.; from Collin
County; 5th district (05-03-01297-CV, 05-03-01298-CV, 214
SW3d 631, 12-21-06) 214 S.W.3d 631 (2006) 2 petitions
motion to strike response to notice regarding counsel denied;
motion to strike notice of appearance denied; motion to
consider cause denied
The Court reverses the court of appeals' judgment and
remands the case to the trial court.
Justice Phil Johnson delivered the opinion of the Court, in which
Justice Wainwright, Justice Medina, Justice Green, Justice
Guzman, and Justice Lehrmann joined, and in which Chief
Justice Jefferson and Justice Hecht joined except to Part II-B.
Justice Hecht delivered an opinion concurring in part and
dissenting in part, in which Chief Justice Jefferson joined. [pdf]