Opinion ID: 6108934
Heading Depth: 2
Heading Rank: 2

Heading: Did the Pension System Bring Valid Ultra Vires Claims?

Text: Cities, as political subdivisions of the State, have immunity from suits for damages unless the immunity has been waived. Reata Constr. Corp. , 197 S.W.3d at 374 . Immunity shield[s] the public from the costs and consequences of improvident actions of their governments. Tooke v. City of Mexia , 197 S.W.3d 325 , 332 (Tex. 2006) ; see also City of El Paso v. Heinrich , 284 S.W.3d 366 , 371 (Tex. 2009) ([S]uits for contract damages against the state are generally barred by immunity ....). Even if a governmental entity's immunity has not been waived by the Legislature, a claim may be brought against a governmental official if the official engages in ultra vires conduct. Hall v. McRaven , 508 S.W.3d 232 , 238 (Tex. 2017). Plaintiffs in ultra vires suits must allege, and ultimately prove, that the officer acted without legal authority or failed to perform a purely ministerial act. Heinrich , 284 S.W.3d at 372 . Ministerial acts are those where the law prescribes and defines the duties to be performed with such precision and certainty as to leave nothing to the exercise of discretion or judgment. Sw. Bell Tel., L.P. v. Emmett , 459 S.W.3d 578 , 587 (Tex. 2015) (quoting City of Lancaster v. Chambers , 883 S.W.2d 650 , 654 (Tex. 1994) ). Conversely, discretionary acts are those that require the exercise of judgment and personal deliberation. Id. Ultra vires suits are subject to certain qualifications. See Heinrich , 284 S.W.3d at 373 . One is that merely failing to comply with a contract does not give rise to an ultra vires claim. Klumb , 458 S.W.3d at 12 . Another is that retrospective monetary claims are generally barred. Heinrich , 284 S.W.3d at 374 (holding that because an ultra vires claim is against the State, its remedies must be limited). Thus, ultra vires claimants are only entitled to prospective relief. Id. at 374-77 . If the relief is injunctive, then whether it is retrospective or prospective is measured from the date of injunction. Id. at 376 . If the injury has already occurred and the only plausible remedy is monetary damages, an ultra vires claim will not lie. Id. at 374 (quoting City of Houston v. Williams , 216 S.W.3d 827 , 828 (Tex. 2007) ). In cases in which the alleged ultra vires conduct is governmental inaction, a court may issue a writ of mandamus compelling action to bring the official into conformance with the law. See Shamrock Psychiatric Clinic, P.A. v. Tex. Dep't of Health & Human Servs. , 540 S.W.3d 553 , 560 (Tex. 2018) ; Hall , 508 S.W.3d at 237 ; see also Tex. Dep't of Transp. v. Sefzik , 355 S.W.3d 618 , 622 n.2 (Tex. 2011) (Although Sefzik refused to apply the ultra vires label to his suit below, that is the underlying nature of his claim.... Sefzik ultimately wishes to compel a government official ... to perform some act that he  considers to be nondiscretionary (holding a hearing). That relief falls within the ultra vires rationale.). Mandamus will issue only to correct a clear abuse of discretion or the violation of a duty imposed by law when there is no other adequate remedy by law. In re Essex Ins. Co. , 450 S.W.3d 524 , 526 (Tex. 2014) (quoting Walker v. Packer , 827 S.W.2d 833 , 839 (Tex. 1992) ). A writ of mandamus can be used to compel a public official to perform a ministerial act, which, for purposes of mandamus, is an act where the law clearly spells out the duty to be performed by the official with sufficient certainty that nothing is left to the exercise of discretion. Anderson v. City of Seven Points , 806 S.W.2d 791 , 793 (Tex. 1991).
The City is required to make contributions only for members of the Pension System. See TEX. REV. CIV. STAT. art. 6243h §§ 1(11), 8, 8A. So, the City is correct that the Pension System's case turns on whether the corporations' personnel are employees and thus members of the Pension System under the statute. Id. § 1(11) (defining employee); id. § 1(13) (defining members as active employees except for those statutorily ineligible). If they are not members, then the City has no duty to make payments on their behalf and is not acting ultra vires by failing to do so. The City argues that the corporations' personnel are not members of the Pension System and that contrary to the Pension System's claim, the Court in Klumb did not decide otherwise. According to the City, Klumb only addressed the Pension System's statutory authority. The City's argument is without merit. As we explained in Klumb : The breadth of the pension board's authority under Article 6243h is inescapable. As it pertains to the matter at hand, the statute expressly authorizes the pension board to construe the statute, add language it deems necessary for the administration of the pension fund, and determine all eligibility questions and all other legal and factual matters pertaining to the fund's administration. Courts may not review the board's actions in doing so absent a manifest conflict with express statutory terms. That is not the case here because (1) the definition of employee is composed of essential terms that are undefined and (2) the supplemental language the board adopted neither inherently nor patently conflicts with the terms of the statute. We therefore conclude that, as a matter of law, the pension board did not act without legal authority in interpreting the term employee to include a full-time employee of a Texas local government corporation ... controlled by the City, upon a determination by the External Affairs Committee of the Board of Trustees that such [local government corporation's] employees are Employees for purposes of the [Pension System] Plan. The board's additional explication of the definition as including employees of any entity controlled, directly or indirectly, by [the City] is also well within the board's discretionary authority. Absent a conspicuous and irreconcilable conflict, any further consideration of the matter would impermissibly encroach on the unreviewable, discretionary authority afforded to the board under Article 6243h. Klumb , 458 S.W.3d at 10-11 (emphasis added). There is no substantive difference between saying that the board did not act ultra vires when interpreting employee to include the corporations' personnel, and directly saying that those individuals are  employees pursuant to the board's resolutions. The board had authority to define the term and did so. To reiterate what we said in Klumb , under article 6243h, and per the final and binding board resolutions defining employee, the corporations' personnel are employees and therefore members of the Pension System unless otherwise ineligible under statutory requirements. And the City does not contend that the personnel are otherwise ineligible under the statute. See TEX. REV. CIV. STAT. art. 6243h, § 4. The City asserts that even if the personnel at issue are members of the Pension System, the Pension System's ultra vires claims against it are barred by immunity because the Pension System (1) seeks to enforce contractual duties under the MCA, and noncompliance with a contract does not give rise to an ultra vires claim; (2) can maintain ultra vires claims only where there is no adequate remedy by law; (3) does not seek to impose duties imposed by law but complains only about discretionary matters; (4) seeks retrospective relief; and (5) made claims that are now moot because of recent statutory amendments prohibiting agreed deviations from statutory requirements regarding the City's contribution rate and amounts. We address the above arguments next.
The City asserts that the Pension System's ultra vires and mandamus claims are barred because they seek to enforce either contractual duties under the MCA or statutory duties that have been supplanted by the MCA. The City argues and the court of appeals held, 513 S.W.3d at 128-29 , that our holding in Klumb precludes the Pension System from bringing an ultra vires claim based on the MCA: Meet-and-confer agreements are written contracts, and regardless of whether the parties deem the provisions of the contract to be an 'amendment' of the statute, noncompliance with a contract does not give rise to an ultra vires claim. Klumb , 458 S.W.3d at 12 . The Pension System argues that under Heinrich , where a statute or the constitution requires that government contracts be made or performed in a certain way, leaving no room for discretion, a suit alleging a government official's violation of that law is not barred, even though it necessarily involves a contract. Heinrich , 284 S.W.3d at 371 . According to the Pension System, in providing that MCAs shall be enforceable against and binding on the City, article 6243h requires that MCAs be performed in a certain way: in accordance with their terms. See TEX. REV. CIV. STAT. art. 6243h, § 3(n). The System maintains that when Klumb was decided, the statute did not make MCAs enforceable against and binding on the Pension System, so Klumb is therefore distinguishable. We disagree with the Pension System that under a statute providing a contract is binding and enforceable, the contract must be performed in a certain way such that an ultra vires claim can be brought to enforce it. We have yet to expand on our statement in Heinrich regarding statutes requiring that a government contract be performed in a certain way. But we disagree that because a statute authorizes a governmental entity to enter into contracts and that such contracts will be binding on it, the statute requires such contracts to be performed in a particular way. Such an approach would threaten to cause the exception in Heinrich -permitting an ultra vires claim where a statute or the constitution requires that government contracts be made or performed in a certain way-to swallow the rule in Klumb that noncompliance with a contract does not give rise to an ultra  vires claim. The Pension System does not point to specific language in article 6243h that requires the MCA to be performed in a certain way. Thus, we agree with the City that the Pension System cannot bring an ultra vires claim to enforce compliance with the MCA. However, the System also argues that even if it cannot seek ultra vires relief for the City's failure to comply with the MCA, the court of appeals' decision to remand for it to replead its claims was still erroneous. The Pension System posits that in remanding the case with instructions to allow it to replead, the court suggested that the System could seek contributions at the rate contained in the statute, but not the MCA. See 513 S.W.3d at 128-29 (holding that the Pension System's ultra vires claims were barred [t]o the extent they challenge the City's contribution failures based on the MCA's contribution rate). But, the System continues, the statutory contribution rate is higher than the rate contained in the MCA. And because litigants can seek less than the maximum amount that could be claimed by law, the System was entitled to seek recovery at a lower rate than that in the statute. The City argues in response that Klumb held the statute provides MCAs as an alternative mechanism[ ] for resolving pension issues so the MCA has supplanted the statute. Klumb , 458 S.W.3d at 11 . The City points to the following language in Klumb : Section 3(n) of the statute[, which provides for the execution of MCAs,] authorizes, but does not require, the pension board to enter into a written agreement with the City regarding pension and benefit issues. See TEX. REV. CIV. STAT. ANN. art. 6243h, § 3(n) ([T]he pension board may enter into a written agreement with the city regarding pension issues and benefits. (emphasis added) ). Section 3(n) does not purport to constrain the board's authority under section 2(x) [to interpret article 6243h ]; it merely provides an alternative mechanism for the board to resolve pension issues. When the pension board and the City agree on a pension issue, the statute allows them to execute an enforceable contract to that effect. When they cannot agree, the statute makes the board's determinations of fact and statutory interpretations final and binding. Id. Therefore, according to the City, it would make little sense to construe the statute as requiring compliance with its provisions where MCA provisions deviate from the particular provisions; rather, when an MCA alters the statute's terms, those statutory terms become supplanted and superseded by the MCA. The City concludes that immunity thus bars the Pension System's ultra vires and mandamus claims alleging violations of statutory duties because the duties in question are governed only by contract-the MCA. We disagree with the City. Here, article 6243h provides, in pertinent part, [T]he 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 of the city 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 pension board, the city, and the pension system, including the pension system's members, retirees, deferred participants, beneficiaries, eligible survivors, and alternate payees. Any reference in this Act to an agreement between the city and the pension board or pension system is a  reference to an agreement entered under this subsection. TEX. REV. CIV. STAT. art. 6243h, § 3(n). The construction of a statute is a legal question for courts, subject to de novo review. City of Rockwall v. Hughes , 246 S.W.3d 621 , 625 (Tex. 2008). Our goal in construing statutes is to ascertain and give effect to the Legislature's intent as expressed by the language of the statute. McIntyre v. El Paso Indep. Sch. Dist. , 499 S.W.3d 820 , 834 (Tex. 2016) (quoting Hughes , 246 S.W.3d at 625 ). There is nothing in the statute indicating legislative intent for MCAs to supplant statutory provisions. As demonstrated here, MCAs may lessen the City's burden to make contributions to the pension fund, but if the City chooses not to honor its agreements, its obligations under the statute do not simply disappear. Although the Pension System cannot bring an ultra vires claim to enforce the MCA, we agree with the Pension System that the court of appeals erred by requiring it to replead. In its pleadings, the System sought a writ of mandamus compelling Defendants to allocate funding in the current and all future proposed City budgets to include contributions owed for [the corporations'] employees' salaries. It further pled that  Article 6243h... requires the City to make periodic payments to the pension fund in an amount that is based on the combined salaries of [the Pension System's] 'members,' who have been judicially confirmed to include all [the corporations'] employees, and that [b]y failing to perform these purely ministerial acts required by Article 6243h, Defendants are acting ultra vires . The Pension System pled a valid ultra vires action for the City's failure to comply with article 6243h. The statute requires the City to make payments to the pension fund. Even though it requested a writ of mandamus compelling the City to provide the payments at the lower rate provided for in the MCA, the System was not required to seek the maximum amount allowed by the statute. Nor did the MCA relieve the City from its statutory obligation to make payments.
As an extraordinary remedy, mandamus is available only in limited circumstances. Walker , 827 S.W.2d at 840 . It is available only in situations involving manifest and urgent necessity and not for grievances that may be addressed by other remedies. Id. (quoting Holloway v. Fifth Court of Appeals , 767 S.W.2d 680 , 684 (Tex. 1989) ). Adequate, which we have termed the operative word, does not have a comprehensive definition. In re Prudential Ins. Co. of Am. , 148 S.W.3d 124 , 136 (Tex. 2004). Instead, it is simply a proxy for the careful balance of jurisprudential considerations, which implicate both public and private interests. Id. ; see also Rivercenter Assoc. v. Rivera , 858 S.W.2d 366 , 367 (Tex. 1993) (Although mandamus is not an equitable remedy, its issuance is largely controlled by equitable principles.). The City argues that the Pension System's ultra vires claims seeking mandamus relief are barred because the System has another adequate remedy by law: a breach of contract claim for the City's violation of the MCA. See In re Essex Ins. , 450 S.W.3d at 526 (holding that mandamus relief is only available when there is no other adequate remedy by law). The Pension System counters that a breach of contract claim is not an adequate remedy because the City has asserted that it would be immune from such a claim. The City was reasonably firm at oral argument regarding  its position on whether it has asserted, or will assert, that it is immune from such a claim as the Pension System argues. The City firmly said that it has yet to decide what its position is, but it plans on making a decision at some point in the future. That position conflicts with the City's plea to the jurisdiction, in which it said that to the extent the Pension System's claims were substantively breach of contract claims, the City was immune from them. We give credence to the City's trial court pleadings. The question thus becomes whether a breach of contract claim by the Pension System, which the City maintained in its trial court pleadings would be barred by immunity, constitutes an adequate remedy for purposes of mandamus relief in an ultra vires suit. The City's position, substantively, is: (1) if the Pension System had refused to attempt to work out its conflict with the City by entering into the MCA and the City then failed to abide by article 6243h and make payments to the pension fund, the Pension System could have sued the City on an ultra vires claim and obtained relief if it prevailed; (2) but because the Pension System worked with the City to try to resolve their conflicts and entered into an MCA, then the Pension System can no longer assert an ultra vires claim for the City's failure to comply and its only remedy is a breach of contract claim; (3) yet, a breach of contract claim, according to the City's pleadings in the trial court, which it did not disown at oral argument, is barred by immunity. If the Pension System were to be frustrated with the City's litigation conduct, its frustration would be understandable. The Legislature specifically provided that the City and the Pension System can enter into MCAs but did not require them to do so. See TEX. REV. CIV. STAT. art. 6243h, § 3(n) (stating that the pension board may enter into a written agreement with the city regarding pension issues and benefits (emphasis added) ). If we were to hold, as the City invites us to, that entering into an MCA leaves the System with no remedy to enforce its terms, no MCAs would follow in the future. We cannot conceive of the Legislature intending such a nonsensical result. We conclude, contrary to the City's position, that under these circumstances, the Pension System does not have an adequate remedy by law.
The City next asserts that the Pension System's ultra vires claims are barred because they do not seek to enforce ministerial duties, but rather, the claims are as to discretionary matters. See Heinrich , 284 S.W.3d at 372 (To fall within this ultra vires exception, a suit must not complain of a government officer's exercise of discretion, but rather must allege, and ultimately prove, that the officer acted without legal authority or failed to perform a purely ministerial act.). The City asserts that the allocation and appropriation of funds are necessarily discretionary matters and therefore ultra vires and mandamus claims are barred because it has discretion to determine how to secure or structure funding for the pension payments. The City cites Kassen v. Hatley for the proposition that governmental resource allocation is discretionary in nature. See 887 S.W.2d 4 , 10 (Tex. 1994) (At times, government doctors and nurses must decide how to allocate a scarce pool of state resources among possible recipients.). The City claims that it has discretion to decide, for example, whether to provide for the payments in its budget or  instead issue bonds for the contribution payments. The Pension System's position, with which the court of appeals agreed, is that article 6243h requires the City to provide pension payments, which is a ministerial as opposed to a discretionary duty. We agree with the Pension System and the court of appeals that the System is not seeking relief regarding how the payments must be made, but, rather, whether the payments must be made. And the statute mandates that contribution payments must be made by the City. Article 6243h states that the City shall provide full and timely information to the Pension System and shall make contributions to the Pension System. TEX. REV. CIV. STAT. art. 6243h, §§ 2(u), 8A(a). Use of the word 'shall'  in a statute evidences the mandatory nature of the duty imposed. Emmett , 459 S.W.3d at 588 . The controversy here is not about how the City must make the payments, only whether it must. See Tex. Dep't of Parks & Wildlife v. Miranda , 133 S.W.3d 217 , 226 (Tex. 2004) (When a plea to the jurisdiction challenges the pleadings, we determine if the pleader has alleged facts that affirmatively demonstrate the court's jurisdiction to hear the cause. We construe the pleadings liberally in favor of the plaintiffs and look to the pleaders' intent.). The statute leaves no room for the City to exercise judgment regarding whether the payments must be made. See Emmett , 459 S.W.3d at 587 . Accordingly, we hold that article 6243h creates mandatory duties and defines them with sufficient clarity to support the Pension System's ultra vires and mandamus claims.
The City next challenges the holding of the court of appeals that the Pension System sought prospective, not retrospective relief. See Heinrich , 284 S.W.3d at 374 (stating that retrospective monetary claims are generally barred by immunity). As the City points out, the System did not specifically allege in its petition whether it seeks relief for past periods, future periods, or both. In its conclusion and prayer in its pleadings, the System requested it be awarded [a] writ of mandamus compelling [the City] to allocate funding in the current City budget to provide the statutorily required payments of 27.36% of the payroll of the [corporations'] employees, to make such payments to [the Pension System] in accordance with the allocation, to include in all future proposed City budgets the contributions owed for [the corporations'] employees' salaries as members of [the Pension System], and to pick up and pay any biweekly contributions made on their behalf. The City argues the Pension System's pleadings are broad enough to be construed as requesting both payments and allocations of amounts allegedly owed for past periods, which would necessarily include all past periods before the then-current fiscal year. The System responds that it is seeking payments for what it is owed on the date of judgment and in the future. Under Heinrich , prospective relief is permissible so that statutes specifically directing payment can be judicially enforced going forward. 284 S.W.3d at 376 . Further, we construe pleadings liberally to determine whether the pleader has alleged facts that affirmatively demonstrate the court's jurisdiction. Miranda , 133 S.W.3d at 226 . Construing the pleadings liberally, the Pension System asks for the statute to be enforced going forward and thus is seeking prospective relief.  6. Are the Pension System's Claims Moot? The City argues that jurisdiction has been lost, if it ever existed, because the System's claims are now moot due to 2017 amendments to Article 6243h. One of the amendments brought the City's unfunded liability current to July 1, 2016. See TEX. REV. CIV. STAT. art. 6243h, §§ 1(11-g), 8. Under the amendments, any unfunded actuarial accrued liability for the fiscal year ending June 30, 2016, or for each subsequent year is treated as part of the City's legacy liability. Id. § 1(11-g). The amendments provide that the legacy liability is to be amortized over a thirty-year period. Id. § 8. Also under the amendments, the City is no longer permitted under an MCA to pay a lower contribution rate than the one found in the statute. Id. § 3(o)(4). The City first argues that all payments for periods before the amendment's effective date constitute retrospective relief. However, as explained above, we disagree that the Pension System seeks retrospective relief by asking that the City be directed to comply with its current obligations and seeking that the statute be enforced as of the date of judgment. The City next argues that the Pension System's suit is moot because any payments for future periods based on the contribution rate found in the MCA are barred because the statute prohibits the parties from altering the statutory contribution rate. Although the City may be correct that the amendments no longer allow a lower contribution rate under an MCA, as we held above, the Pension System is entitled to sue to enforce the statute for the City's failure to make contributions under article 6243h. The amended statute still provides that the City  shall make contributions to the pension system, id. § 8A(a) (emphasis added), so the City is still required to make payments under the statute regardless of whether a lower contribution rate under the MCA is barred. The City has not claimed that it has made any pension system contributions for the corporations' personnel, which is what the Pension System is seeking in its suit. We therefore conclude that the case is not moot.