Opinion ID: 6108934
Heading Depth: 3
Heading Rank: 2

Heading: Are the Ultra Vires Claims for Breach of Contract?

Text: 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.