Court Opinion

ID: 9733707
Source: CourtListenerOpinion
Date Created: 2023-08-26 17:15:00.511567+00
Date Added: 2024-06-11T15:27:52.362340
License: Public Domain

MAJORITY OPINION ON REHEARING EN BANC
SCOTT BRISTER, Chief Justice.
The City of Houston appeals from a judgment awarding $250,000 plus attorney’s fees to its former employee, Gerald Kallina, under the Texas Whistleblower Act. On February 14, 2002, a panel of this Court modified the judgment by adding to it $65,000 in back pay, and otherwise affirmed.
On May 9, 2002, the Supreme Court of Texas issued its opinion in Texas Department of Transportation v. Needham, 82 S.W.3d 314, (Tex.2002), addressing for the first time the 1995 amendments defining “an appropriate law enforcement authority” under the Act. See Act of May 25, 1995, 74th Leg., R.S. ch. 721, §§ 1-12, 1995 Tex. Gen. Laws 3812 (current version at Tex. Gov’t Code § 554.002(b)). We granted the City’s motion for rehearing en banc to consider the effect of the latter opinion on the former. Finding that this new authority requires a different result, we withdraw the panel’s opinion and issue this en banc opinion.

Jurisdiction

As an initial matter, the City argues the trial court lacked subject-matter jurisdiction because Kallina did not initiate a grievance with the City as required. See Tex. Gov’t Code § 554.006(a). Assuming this requirement is jurisdictional,1 we hold it does not bar Kallina’s suit.
On January 19, 1998, Kallina sent a letter to Mayor Lee Brown claiming wrongful dismissal and requesting a hearing. The City’s response on February 16, 1998 stated Kallina “had no civil-service protection or other internal review procedure,” pointing to a city document in which he acknowledged that he was an executive-level employee and therefore exempt from all civil-service protections and procedures.
A governmental entity may not frustrate an employee’s efforts to initiate a grievance and then challenge subject-matter jurisdiction on that basis. See Fort Bend I.S.D. v. Rivera, 93 S.W.3d 315 (Tex.App.-Houston [14th Dist.] 2002, no pet. h.) (holding plaintiff initiated grievance by requesting meeting with her supervisors, though they refused to meet with her); University of Tex. Med. Branch v. Hohman, 6 S.W.3d 767, 775 (Tex.App.-Houston [1st Dist.] 1999, pet. dism’d w.o.j.) (holding notice of claim to employer was sufficient to initiate grievance when procedures were unclear). Kallina’s letter to the City stating his claim was sufficient to initiate a grievance in light of the City’s response that no other procedures applied to him. The City’s first point is overruled.

Theft

On the merits, we address whether Kallina’s supervisor was a repre*173sentative of an appropriate law enforcement authority, or whether Kallina had a good faith belief that she was. We review the former de novo, and the latter for legal sufficiency. See Needham, 82 S.W.3d at 318, 321.
Kallina worked as division manager in the fixed-asset department of the City of Houston. In the course of his duties, he conducted an inventory audit at a City warehouse where both abandoned and City-owned assets were stored. It was his opinion that 800 items worth at least $400,000 were missing, and he concluded they must have been stolen.
According to Kallina, he initially made an oral report of his findings to his supervisor, Lathenia Harris. He believed City policy required missing assets to be reported as stolen if not located after a thirty-day search, and eventually reported to the Mayor, the Controller, and perhaps City Council. Shortly after Kallina put his final report on Harris’s desk, she abruptly informed him he had two days to resign or he would be fired. He complied, but later sued.
The Whistleblower Act prohibits termination of a government employee “who in good faith reports a violation of law by the employing governmental entity or another public employee to an appropriate law enforcement authority.” Tex. Gov’t Code § 554.002(a). The Act defines the latter as a “governmental entity ... that the employee in good faith believes is authorized to regulate under or enforce the law alleged to be violated in the report; or investigate or prosecute a violation of criminal law.” Tex. Gov’t Code § 554.002(b). Although the City and Kalli-na raised a number of other issues, we address only the City’s assertion that Kal-lina’s report to Harris did not fall within the scope of this definition.
In Needham, an employee of the Texas Department of Transportation (“TxDOT”) reported a co-worker’s drunk driving to his supervisors at the department. He argued TxDOT was included in the statutory definition because the department could investigate allegations about criminal acts by employees, discipline them for such acts, and forward information to other agencies for prosecution. The supreme court rejected this interpretation of the statute, holding the focus must be on enforcement of the particular law reportedly violated:
In other words, the particular law the public employee reported violated is critical to the determination ... TxDOT has no authority to regulate under or enforce the Texas’s driving while intoxicated laws. Nor does it have authority to investigate or prosecute these criminal laws. At most, TxDOT has authority to regulate and investigate its employees’ conduct only to carry out its internal disciplinary process procedures. But construing the statutory terms to include a public employer’s internal disciplinary power would mean all public employers with a disciplinary policy for handling employees’ alleged illegal conduct are “appropriate law enforcement authorities” for purposes of reporting any alleged violation. We reject such an interpretation.
Needham, 82 S.W.3d at 320 (citations omitted).
Here, the reported violation concerned theft. There was no evidence Harris or anyone else in the City’s asset management department had (or that Kallina believed they had) any authority to investigate, enforce, or prosecute a violation of the state’s penal laws regarding property theft. At most, the evidence showed Harris had administrative responsibility for assets in the warehouse, regulated and enforced departmental rules for protecting *174that property, and was required to investigate and report any criminal activity. But Kallina conceded he knew Harris could only forward evidence of theft to the police for actual investigation and prosecution under state law. Needham holds this is not enough. Id. Almost any supervisor has a duty to keep departmental property from disappearing, and report or discipline subordinate employees if it does. Harris had authority to investigate employees’ conduct and carry out internal disciplinary procedures, but no authority to enforce the theft laws of the state of Texas. We hold as a matter of law the City’s asset management department was not an appropriate law enforcement authority under the Whis-tleblower Act, and there was no evidence Kallina had an objectively reasonable belief otherwise. See id. at 320-21 (holding good faith must meet both subjective and objective tests).

Inventories

In one sentence in his appellate brief, Kallina argues alternatively that he was terminated for reporting violations of the City’s inventory procedures. The Whistleblower Act protects employees who report violations not only of statutes, but also of ordinances or “a rule adopted under a statute or ordinance.” See Tex. Gov’t Code § 554.001(1). Kallina points to no City ordinances that were violated, but argues his report was based on violations of two City manuals — the City’s Fixed Asset Accounting Procedures and Fixed Asset Accounting Policies — which he says contain “rules adopted under an ordinance.”
First, we doubt switching from statutes to rules changes the definition of “law enforcement authority.” Although the court in Needham addressed only a penal statute, it expressly rejected (in the quotation noted above) any interpretation of the Act that would extend “law enforcement” to supervisors carrying out internal disciplinary procedures. This is not new— several years before Needham, the court ruled that the Whistleblower Act does not protect reports of violations of a department’s internal policies. See Harris County Precinct Four Constable Dept. v. Grabowski, 922 S.W.2d 954, 956 (Tex.1996) (holding statute did not apply to reported violation of constable’s internal policies); see also Ruiz v. City of San Antonio, 966 S.W.2d 128, 130 (Tex.App.-Austin 1998, no pet.) (affirming dismissal of claims related to violations of police department’s internal policies).
But even if “law enforcement” expands when considering “rules adopted under an ordinance,” nothing reported by Kallina fell in that category. Of the two manuals upon which he relies, Kallina admits the Procedures manual was adopted under the authority of the Policies manual, not any statute or ordinance. But he asserts the Policies manual was “derived from the Code of Ordinances,” though he leaves us to guess what ordinances he has in mind.
Our dissenting colleagues helpfully suggest that the Policies manual was adopted under City ordinances 2-51(6) and 2-52(19). But the former merely designates the director of the department of finance and administration as the chief custodian of all City property;2 the latter merely *175requires the director to manage the city’s property.3 Nothing in either gives the director or the department the power to adopt rules of any kind. Of course, neither prohibits the department from adopting internal rules, but such rules would not be “adopted under a statute or ordinance.”
Our colleagues also point to language giving the director “responsibility for developing and implementing operating policies and procedures covering the management and security of all City-owned property.” Athough it is difficult to tell from their opinion, this directive appears not in any City ordinance, but in the Policies manual itself. Obviously, any rule adopted under this authority would be adopted under an internal policy not under an ordinance.
The Policies manual here was issued by the City Controller and the Mayor; the Procedures manual was issued by the director of the finance department. Neither was adopted by the Houston City Council. It is quite clear that these manuals (and the hundreds of pages they contain) reflect internal policies rather than rules promulgated pursuant to an ordinance. That is not enough. See Needham, 82 S.W.3d at 320; Grabowski 922 S.W.2d at 956.

Conclusion

Without question, Kallina had a duty to report possible theft or violations of department procedures to his supervisor. That was his job. The legislature might have drafted the Whistleblower Act to provide immunity for all reports governmental employees make to their supervisors, but it did not. Instead, it protected only reports made to appropriate law enforcement authorities.
Accordingly, the judgment of the trial court is reversed, and judgment is rendered that Gerald Kallina take nothing.
Senior Justice LEE filed a dissenting opinion in which Senior Justice WITTIG joined.

. See Fort Bend I.S.D. v. Rivera, 93 S.W.3d 315 (Tex.App.-Houston [14th Dist.] 2002, no pet. h.) (Brister, C.J., concurring) (arguing failure to initiate grievance before filing suit is not jurisdictional and may be cured by abatement). Because all members of the Court agree the exhaustion requirement in this case has been satisfied, we need not decide whether the question is jurisdictional here. See Texas Dept. of Public Safety v. Kreipe, 29 S.W.3d 334, 337 (Tex.App.-Houston [14th Dist.] 2000, pet. denied) (assuming without deciding that notice requirement was jurisdictional, as plaintiff could correct defect). For the same reason, it does not merit en banc consideration. See Tex.R.App. P. 41.2(c) (stating en banc consideration should only be granted to maintain uniformity of court's decisions or in extraordinary circumstances).

. "... the director of finance and administration, subject to the direction and supervision of the mayor, shall:
(6) Be the chief custodian of all city property, both real and personal, except property that is assigned by law or by directive of the mayor to the custody of another city officer or department. Following the conclusion of each city fiscal year, the director shall provide the mayor with a full annual inventory of all property within his custody.” *175Houston, Tex, Code of Ordinances ch. 2, art. Ill, div. 1, § 2-51.

. “The department of finance and administration and such employees of the department as are assigned to it shall be charged with the following duties:
(19) Manage the city's real and personal property within the custody of the director, including surplus city personal property, and maintain a perpetual inventory thereof; provided, however, that any surplus personal property that has a fair market value of not more than $15.00 may, at the discretion of the city purchasing agent, be destroyed or disposed of in any lawful manner.”
Houston, Tex., Code of Ordinances ch. 2, art. Ill, div. t, § 2-52.