Court Opinion

ID: 62723
Source: CourtListenerOpinion
Date Created: 2010-04-26 04:47:08+00
Date Added: 2024-06-11T17:20:08.483752
License: Public Domain

IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT  United States Court of Appeals
                                                    Fifth Circuit

                                                                            FILED
                                                                            June 9, 2008

                                     No. 07-50619                     Charles R. Fulbruge III
                                   Summary Calendar                           Clerk

JERRY A. GARZES,

                                                  Plaintiff-Appellee,
v.

MANUEL R. LOPEZ; CONNIE PRADO,

                                                  Defendants-Appellants.

                   Appeal from the United States District Court
                        for the Western District of Texas
                             USDC No. 5:02-CV-1131

Before STEWART, OWEN, and SOUTHWICK, Circuit Judges.
PER CURIAM:*
       Defendants-Appellees Manuel R. Lopez and Connie Prado (“Defendants”)
appeal the district court’s denial of their motion for summary judgment on
Plaintiff-Appellant Jerry A. Garzes’s § 1983 First Amendment retaliation and
conspiracy claims. Concluding that Garzes lacks standing to pursue his asserted
claims, we vacate the district court’s denial of the motion for summary judgment
and remand with instructions to dismiss.

       *
         Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR.
R. 47.5.4.
                                     No. 07-50619

                                            I.
       Prior to June 2002, the South San Antonio Independent School District
(“District”) had a contract with Agapito Flores and his company, Alamo
Insurance Group, Inc. (“Alamo”), to provide insurance services to employees of
the District. Plaintiff Jerry Garzes is a licensed independent insurance agent
in San Antonio, Texas, who was authorized to sell insurance on behalf of Flores
and Alamo. Garzes was not an employee of the District and had no direct
contractual relationship with the District. Nonetheless, as a result of his
affiliation with Alamo he derived significant income from commissions based on
his sales to District employees. On June 11, 2002, after the newly-elected Board
of Trustees took office, they convened a special meeting of the Board. At that
meeting, a majority of the Board voted to terminate the District’s then-existing
contract with Alamo and Flores. In place of Alamo, the Board chose Bernard
Donegan Insurance Agency as its new agent.
       On November 27, 2002, Garzes filed this lawsuit, alleging that Defendants
prompted the Board of Trustees to take these actions in order to punish Garzes
for supporting rival candidates in previous Board elections.1 He contended that
the termination of the District’s contract with Alamo caused him to lose a
significant amount of potential commissions. Garzes argued that he is entitled
to damages because the Board’s action of June 11, 2002, amounted to an adverse
governmental action directed against him in retaliation for his exercise of
protected First Amendment Rights.
       Defendants filed a motion for summary judgment on the basis of qualified
immunity, which the district court denied.               Defendants then filed this
interlocutory appeal.

       1
        Garzes also sued the District and two other individual trustees. The District Court
granted summary judgment to these defendants and dismissed the claims against them.
Garzes has not appealed that decision.

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                                   No. 07-50619

                                         II.
      Although Defendants did not clearly challenge Garzes’s standing to assert
a First Amendment retaliation claim based on the District’s termination of the
Alamo contract, this Court must raise any perceived jurisdictional issue sua
sponte. See Henderson v. Stalder, 287 F.3d 374, 379 n.5 (5th Cir. 2002). Our
review of this appeal raised the question of whether Garzes’s injury from the
contract termination was sufficiently direct to confer standing and we requested
the parties to submit supplemental briefing regarding this issue.
      Standing, at its “irreducible constitutional minimum,” requires plaintiffs
“to demonstrate: they have suffered an ‘injury in fact;’ the injury is ‘fairly
traceable’ to the defendant’s actions; and the injury will ‘likely . . . be redressed
by a favorable decision.” Public Citizen, Inc. v. Bomer, 274 F.3d 212, 217 (5th
Cir. 2001) (quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61(1992)).
“An injury in fact [is] an invasion of a legally protected interest which is (a)
concrete and particularized, and (b) actual or imminent, not conjectural or
hypothetical.” Lujan, 504 U.S. at 560.
      Generally, courts refuse to recognize standing based on economic harm
that is merely a consequence of an injury suffered by another party. For
example, corporate shareholders, officers, and employees may not pursue
personal claims that are based on alleged misconduct towards the corporation
unless they are able to show some “direct” harm to themselves. See, e.g., Pagan
v. Calderon, 448 F.3d 16, 28-30 (1st Cir. 2006). Recently, in an unpublished
decision, we relied on this principle in concluding that an employee of an
independent contractor lacked standing to bring a § 1983 First Amendment
retaliation suit against a municipality based on the termination of the contract
between the municipality and the independent contractor. See Duran v. City of
Corpus Christi, 240 F. App’x. 639 (5th Cir. 2007).

                                         3
                                  No. 07-50619

      The facts of Duran are strikingly similar to the present case. In that case,
Entrust had a contract to provide third-party claims administration in
connection with the city’s health insurance program. 240 Fed. Appx. at 640.
Under a separate agreement with Entrust, the plaintiff Duran served as a
“coordinator” to resolve all problems arising under Entrust’s contract with the
city. During the course of the contract, a dispute arose over the payment of a
certain claim and Duran contacted the local newspaper regarding the dispute.
Id. At the expiration of the Entrust contract, the city did not renew the contract
with Entrust, and Duran filed a § 1983 suit alleging that the city decided not to
renew Entrust’s contract because of his protected speech. Id. This Court
concluded that Duran lacked standing to assert a First Amendment retaliation
claim based on the city’s nonrenewal of the Entrust contract. Id. at 641. The
Court noted that only Entrust had a contractual relationship with the city;
Duran’s contract was with Entrust, not the city. Thus, “his putative injury
(potential loss of future fee payments from Entrust if the Contract had been
renewed) is at best only derivative of Entrust’s putative injury from nonrenewal
of the Contract.” Id. at 642. The Court found it irrelevant that it was allegedly
Duran’s conduct that had precipitated the nonrenewal of the contract because
“when a government actor discriminates against a corporation based on a
protected trait of a corporate agent, it is the corporation – and only the
corporation – that has standing to seek redress.” Id. at 643 (citing Pagan v.
Calderon, 448 F.3d 16, 30 (1st Cir. 2006).
      Although Duran is non-precedential, the factual and legal similarities
between that case and the present case render it persuasive. Garzes, in his
supplemental brief, conclusorily deems the case distinguishable, but provides no
legal analysis explaining why this is so. Garzes asserts that here, in contrast to
Duran, the retaliatory action was directed at Garzes because “he was directly
replaced as the employee disability service agent.” In support of this contention,

                                        4
                                 No. 07-50619

Garzes directs the Court to two documents contained in the record: (1) a letter
from the Superintendent stating that the Bernard Donegan Insurance Agency
is now the Agent of Record on the disability insurance policy; and, (2) the
minutes from the June 11, 2002 Board meeting. Neither document references
Garzes, and the minutes from the Board meeting show only that the Board
terminated the contract with Flores and Alamo Insurance Group.
      On the other hand, Defendants point out that, just like in Duran, Garzes
has failed to establish that he had any employment relationship with the
District. Instead, Garzes’s only contractual relationship was with Flores and
Alamo Insurance Group. Therefore, Defendants argue, Garzes’s claims are “at
best” derivative from Flores and Alamo’s injury and were no more than putative
injuries, depriving Garzes of standing.
      We agree with Defendants that any injury suffered by Garzes is
insufficiently direct to confer standing. The reasoning put forth by the panel in
Duran applies equally to bar Garzes’s standing. Here, as in Duran, “only the
corporation . . . has standing to seek redress,” 240 Fed. App’x at 643 (citing
Pagan, 48 F.3d at 30), and Garzes does not have standing to bring a First
Amendment retaliation or conspiracy claim against the District based on its
termination of the Alamo contract.
                                      III.
      For the reasons set forth above, Garzes lacks standing to maintain this
action. We therefore VACATE the district court’s denial of Defendants’ motion
for summary judgment and REMAND with instructions to the district court to
dismiss this action.

                                          5