Opinion ID: 895305
Heading Depth: 3
Heading Rank: 5

Heading: Disclaimer of Vested Rights

Text: In a further effort to negate contractual intent, the City asserts that Houston Ordinance No. 96-1088 disclaims any contractual effect in the Ordinances at issue in this case. Houston Ordinance No. 96-1088 provides: That the provisions of article III of chapter 14 of the Code of Ordinances, Houston, Texas, as amended in section 2 of this ordinance, are subject to amendment or repeal at any time and payment of benefits thereunder is subject to the appropriation or allocation of funds for that purpose by the city council. No provision of this ordinance shall be construed to create a vested right of compensation for sick leave benefits or, where applicable, for termination payments. Houston, Tex., Ordinance 96-1088 § 7 (Oct. 23, 1996). The City points us to several cases in which documents that might otherwise have constituted contracts included statements that effectively disclaimed contractual intent, particularly County of Dallas v. Wiland , 216 S.W.3d 344 (Tex. 2007). In Wiland , the disclaimer stated: “Nothing in this [manual] is to be construed as a contract of employment or a provision guaranteeing the specific term or tenure of employment.” Id. at 349. We recognized that this statement precluded giving the manual in question any contractual effect. Id. at 352, 354. The City contends the instant ordinance likewise disclaims contractual intent. We disagree. Disclaiming a vested right to compensation is not equivalent to a disclaimer of contractual intent—to the contrary, an employee may have a valid employment contract, promising that benefits will accrue upon performance, but those benefits will not vest until the employee actually performs. See Vanegas , 302 S.W.3d at 303 (“But whether the promise was illusory at the time it was made is irrelevant; what matters is whether the promise became enforceable by the time of the breach.”). The disclaimer amounts to a warning to City employees that the City can change the benefits over time—in other words, the offer that the City is making, as regards to sick leave benefits, is subject to change. 1 2 At most, the disclaimer indicates that the promises contained in the Ordinances remained illusory until the Firefighters performed. See id. (“Almost all unilateral contracts begin as illusory promises.”). Further, the scope of the disclaimer in Ordinance 96-1088 is limited by its express language. It refers only to Article III of Chapter 14 of the Houston Code of Ordinances. That Article is concerned only with sick leave for City civil service employees generally, see Houston, Tex., Code of Ordinances ch. 14, art. III, while the Ordinances the Firefighters point to as evidencing contractual intent are located in the Fire Department provisions of Chapter 34, not Chapter 14. The disclaimer is likewise limited to “sick leave benefits or, where applicable, for termination payments.” The plain meaning of the clause “where applicable, for termination payments” is to include accrued sick leave benefits that would give rise to a termination payment. Thus, even if we accept the City’s construction of the disclaimer—that it is a contractual disclaimer—its scope would only cover the Firefighters’ right to that portion of their claims based on sick leave. But, in fact, the Firefighters’ claims are based on several other components of compensation, such as premium pay, vacation leave, holiday leave, and overtime pay, see City of Houston , 183 S.W.3d at 419, 424, all of which fall outside the scope of any disclaimer achieved by Ordinance 96-1088.