Court Opinion

ID: 2773863
Source: CourtListenerOpinion
Date Created: 2015-01-28 05:11:25.678452+00
Date Added: 2024-06-11T10:48:51.017361
License: Public Domain

Opinion issued January 27, 2015

                                        In The

                               Court of Appeals
                                       For The

                           First District of Texas
                            ————————————
                               NO. 01-12-01167-CV
                            ———————————
    THE BOARD OF TRUSTEES OF THE HOUSTON FIREFIGHTERS’
           RELIEF AND RETIREMENT FUND, Appellant
                                          V.
                THE CITY OF HOUSTON, TEXAS, Appellee

                   On Appeal from the 189th District Court
                            Harris County, Texas
                      Trial Court Case No. 2012-28760

                                   O P I N I O N1

1
     The Honorable Jim Sharp, a former justice on this court, was on the panel and
     present for argument, but having left office on December 31, 2014, did not
     participate in this decision. Thus, the two remaining justices may decide the case if
     they agree on a judgment. See TEX. R. APP. P. 41.1(a), (b).
      This appeal concerns the construction of Texas Government Code section

802.1012. See TEX. GOV’T CODE ANN. § 802.1012 (West 2012). This section

became effective September 1, 2007 and governs audits of the actuarial valuations,

studies, and reports of certain public retirement systems, including appellant, the

Board of Trustees of the Houston Firefighters’ Relief and Retirement Fund (“the

Board”). The City of Houston filed a petition for writ of mandamus and a motion

for summary judgment in the trial court seeking to compel the Board to disclose

information pursuant to section 802.1012. The Board filed a cross-motion for

summary judgment.

      The trial court granted the City’s motion and issued a writ of mandamus

against the Board but suspended enforcement of its order. The Board appeals the

grant of the City’s motion for summary judgment, issuance of the writ of

mandamus, and the denial of its cross-motion for summary judgment. We reverse

and render judgment in favor of the Board.

                                      Background

A.    Government code provisions

      The Board is the governing body of the Houston Firefighters’ Relief and

Retirement Fund, the public retirement system for the City’s firefighters. 2 The

2
      Section 802.001(2) defines the “[g]overning body of a public retirement system”
      as “the board of trustees . . . that has the fiduciary responsibility for assets of the

                                             2
Board is statutorily required to employ an actuary, and the actuary is required to

make a valuation of the system’s assets and liabilities at least once every three

years. TEX. GOV’T CODE ANN. § 802.101(a) (West 2012). An actuarial valuation

requires economic and demographic assumptions in order to estimate future

liabilities. Based on this valuation, the actuary makes recommendations to the

Board to ensure the actuarial soundness of the system. See id. § 802.101(b) (West

2012).

      In addition to the periodic audits by the Fund’s auditor, a second audit is

required by an independent auditor hired by the City, which makes retirement

contributions to the Fund. Section 802.1012 requires that “[e]very five years, the

actuarial valuations, studies, and reports . . . most recently prepared for the

retirement system . . . must be audited by an independent actuary who . . . is

engaged for the purpose of the audit by the governmental entity.” Id.

§ 802.1012(c). Following completion of the audit, the independent actuary

prepares a report, and the governmental entity ultimately submits a copy of the

final audit report to the Board and the State Pension Review Board (“the PRB”).

      system and has the duties of overseeing the investment and expenditure of funds
      of the system and the administration of benefits of the system.” TEX. GOV’T CODE
      ANN. § 802.001(2) (West Supp. 2014). Under Texas Civil Statutes article
      6243e.2(1), “Board” means “the board of trustees of a firefighters’ relief and
      retirement fund.” TEX. REV. CIV. STAT. ANN. art. 6243e.2(1) (West 2010).

                                          3
See id. § 802.1012(f)–(j). The City’s ability to perform an appropriate audit is an

important safeguard to the public.

B.    Parties’ dispute

      The City’s auditor first conducted an audit in 2008 based upon the Fund’s

valuations, studies, and reports as of July 1, 2007. 3 In November 2011, Houston

Mayor Annise Parker sent a letter to the Board Chairman stating that the City is

required, under section 802.1012, to have an independent audit performed “at least

every 5 years.” The Mayor advised that the City had engaged an actuarial firm “to

conduct a more thorough audit by replicating the . . . results of the July 1, 2011

actuarial valuations” and requested the Board to provide detailed information

relative to the July 1, 2011 valuations. 4

      Two months later, the Board responded that section 802.1012’s statutorily

specified five-year interval had yet to elapse. The Board further objected to the

level of information requested by the Mayor, stating that it did not consider a
3
      There are different levels of actuarial audits. A “high-level” audit evaluates the
      most recent available actuarial valuation and other related studies and reports
      without access to the detailed employee census data underlying the valuation. A
      “replication” audit, on the other hand, is a comprehensive and detailed
      independent actuarial valuation utilizing the same census data, assumptions, and
      actuarial methods used by the plan actuary. This was a high-level actuarial audit.
4
      While the Mayor requested specific categories of census information, she stated
      that in order to protect members’ identity, the data should not include the
      individual’s name, Social Security number, employee number, or member number,
      but instead a unique record identification number assigned by the actuary.

                                             4
“replication audit” to be the usual and customary practice of audits performed by

Texas municipalities.

      Addressing concerns expressed by the Board regarding the confidentiality of

member data, the Mayor sent a letter in February 2012 advising the Board that the

City had amended its request and now sought group rather than individual data.

Mayor Parker also stated that the timing of the City’s request to audit the July 1,

2011 actuarial valuation was “in compliance with the law’s timing requirement, as

interpreted by the [PRB].” The Board, however, continued to assert that the next

audit pursuant to section 802.1012 was required to commence no sooner than five

years from the 2008 audit and, therefore, the City’s request was premature.

      In May 2012, pursuant to Government Code section 802.003, 5 the City filed

an original petition for writ of mandamus to compel the Board “to provide to

Houston all underlying documents, information, and/or electronic data for all the

Fund’s valuations, studies, and reports for each year since at least 2000.” The

5
      Section 802.003 provides, in relevant part:

      (a)    Except as provided by Subsection (b), if the governing body of a
      public retirement system fails or refuses to comply with a requirement of
      this chapter that applies to it, a person residing in the political subdivision
      in which the members of the governing body are officers may file a motion,
      petition, or other appropriate pleading in a district court having jurisdiction
      in a county in which the political subdivision is located in whole or in part,
      for a writ of mandamus to compel the governing body to comply with the
      applicable requirement.

      TEX. GOV’T CODE ANN. § 802.003(a) (West 2012).

                                            5
information sought included “census data,” i.e., individual pension member and

survivor information such as gender, date of birth, hire date, compensation,

pension contributions, and pension account balances.6 Specifically, the City

alleged that “the Board has a ministerial duty to release the underlying materials

for the Fund’s valuations, studies, reports, and audits to Houston” and, therefore,

“has no discretion to refuse to comply with Houston’s request for these materials.”

      Shortly thereafter, the City moved for summary judgment, arguing that it

was entitled to mandamus relief because (1) section 802.1012 imposes a

nondiscretionary duty to disclose the requested materials, (2) the City had

requested the Board to do so, and (3) the Board had refused. The Board responded

to the City’s motion and filed a cross-motion for summary judgment, in which it

argued that (1) the statute creates no ministerial duty for which mandamus relief is

available; (2) the Board neither failed nor refused to comply with the statute; and

(3) the City failed to comply with its own statutory obligations in various ways

before beginning the audit, including that it retained an auditor who assisted the

City with lobbying activities instead of the required “independent auditor,” had not

signed a confidentiality agreement (and neither had its retained actuary), and failed

to meet with the Fund’s manager to discuss the assumptions for the audit. The City

6
      While Mayor Parker’s letters to the Board limited the scope of the materials
      sought to the “information related to the July 1, 2011 actuarial valuations,” the
      City’s petition did not.

                                          6
amended its summary-judgment motion, and various responses and replies were

exchanged by the parties.

      After several hearings, the trial court granted the City’s summary-judgment

motion and denied the Board’s cross-motion. It further ordered that

      a writ of mandamus issue directing the Board to provide and disclose
      to the independent actuary . . . all information and/or electronic data
      (including all “census data”) requested by the independent actuary in
      the audit pursuant to section 802.1012(c) of the actuarial valuations,
      studies, and reports most recently prepared for the Fund pursuant to
      Chapter 802.

The trial court subsequently suspended enforcement of its summary judgment and

mandamus order pending appeal.7

                   The Duty at Issue Was Not Ministerial,
         Precluding Summary Judgment and Mandamus for the City

      The Board argues that the trial court erred in granting the City summary

judgment and issuing a writ of mandamus because (1) the City never established as

a matter of law that the Board failed to perform a ministerial duty; (2) no effective

demand for performance was made or refused; and (3) the preconditions for an

audit under section 802.1012 have yet to occur. The Board also argues that the trial

court erred by denying its cross-motion for summary judgment because (1) the

statute creates no ministerial duty for which mandamus is available; (2) the Board

7
      By order dated May 13, 2013, this Court granted the Board’s motion to continue
      suspension of enforcement of the trial court’s judgment and order of mandamus
      pending the resolution of this appeal.

                                         7
neither failed nor refused to comply with the statute; and (3) the City failed to

comply with its own statutory obligations before beginning an audit.

A.    Standard of review

      We review a trial court’s grant of summary judgment de novo. Mann

Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844, 848 (Tex.

2009). Rule of Civil Procedure 166a(c) provides that a movant is entitled to

summary judgment if the summary judgment evidence establishes that “there is no

genuine issue of material fact and the moving party is entitled to judgment as a

matter of law on those issues expressly set out in the motion or in an answer or in

any other response.” TEX. R. CIV. P. 166a(c); Am. Tobacco Co., Inc. v. Grinnell,

951 S.W.2d 420, 425 (Tex. 1997). When, as here, both parties move for summary

judgment, each bears the burden of establishing that it is entitled to judgment as a

matter of law. City of Garland v. Dall. Morning News, 22 S.W.3d 351, 356 (Tex.

2000). The reviewing court should render the judgment that the trial court should

have rendered or reverse and remand if neither party has met its summary

judgment burden. Id.

B.    Requirements for mandamus relief

      An original proceeding in a trial court for a writ of mandamus is a civil

action subject to trial and appeal on substantive law issues and rules of procedure

as any other civil action. See Anderson v. City of Seven Points, 806 S.W.2d 791,

                                         8
792 n.1 (Tex. 1991). Texas law generally authorizes mandamus relief to compel a

public official or body to either perform a ministerial duty or to correct a clear

abuse of discretion. See Walker v. Packer, 827 S.W.2d 833, 840 (Tex. 1992) (orig.

proceeding). The movant typically must establish that (1) a public official or body

failed to perform a ministerial duty or committed a clear abuse of discretion and

(2) there is no adequate remedy at law. See Republican Party v. Dietz, 940 S.W.2d
86, 88 (Tex. 1997) (orig. proceeding). However, when mandamus relief is

provided by statute, the petitioner is relieved of the burden to prove that there is no

adequate remedy at law. See In re Transcon. Realty Investors, Inc., 271 S.W.3d
270, 271 (Tex. 2008) (per curiam). Here, section 802.003 of the Government Code

authorizes trial courts to grant mandamus relief when the governing body of a

public retirement system fails or refuses to comply with statutory requirements.

TEX. GOV’T CODE ANN. § 802.003. Accordingly, to obtain mandamus relief, the

City was required to establish that a public official or body failed to perform a

ministerial duty or committed a clear abuse of discretion.

      An act is ministerial, or nondiscretionary, when “the law clearly spells out

the duty to be performed with sufficient certainty that nothing is left to the exercise

of discretion.” See Anderson, 806 S.W.2d at 793. A writ of mandamus may issue

when the facts and circumstances dictate only one rational decision under

unequivocal, well-settled, and clearly controlling legal principles. In re Amos, 397

                                          9
S.W.3d 309, 312 (Tex. App.—Dallas 2013, orig. proceeding); In re Dacus, 337
S.W.3d 501, 504 (Tex. App.—Fort Worth 2011, orig. proceeding). When the

public official or body has a legal duty to perform a nondiscretionary act, a demand

for performance of that act has been made, and the official or body refuses to

perform, a party is entitled to mandamus relief against the official or body. See id.;

Sheppard v. Thomas, 101 S.W.3d 577, 581 (Tex. App.—Houston [1st Dist.] 2003,

pet. denied). Whether a statute creates a ministerial duty is a question of law.

Associated Press v. Cook, 17 S.W.3d 447, 461 (Tex. App.—Houston [1st Dist.]

2000, no pet.).

C.       Section 802.1012 requires non-ministerial action by the Board

         While conceding that the statute “does not expressly say so,” the City

    contends that the Board has a nondiscretionary duty to disclose any materials that

    an independent actuary requests in connection with an audit under section

    802.1012(c). The Board maintains that, while section 802.1012 may imply a duty

    on its part to cooperate with an independent actuary and produce information

    reasonably necessary for conducting an audit, it does not impose a ministerial duty

    to provide all materials requested by the City because the statute does not define

    what are reasonably necessary documents for an independent actuarial audit.8

8
         In addition to compelling the performance of a nondiscretionary duty, mandamus
         may be issued to correct a clear abuse of discretion. See Anderson, 806 S.W.2d at

                                            10
      Section 802.1012, entitled “Audits of Actuarial Valuations, Studies, and

Reports,” provides, in relevant part:

      (c) Every five years, the actuarial valuations, studies, and reports of a
      public retirement system most recently prepared for the retirement
      system as required by Section 802.101 . . . must be audited by an
      independent actuary who:

      (1) is engaged for the purpose of the audit by the governmental
      entity[.]
                                    ...

      (d) Before beginning an audit under this section, the governmental
      entity and the independent actuary must agree in writing to maintain
      the confidentiality of any nonpublic information provided by the
      public retirement system for the audit.

      (e) Before beginning an audit under this section, the independent
      actuary must meet with the manager of the pension fund for the public
      retirement system to discuss the appropriate assumptions to use in
      conducting the audit.

TEX. GOV’T CODE ANN. § 802.1012. Taken together, these three subsections

require that (1) the materials underlying the Fund’s valuations, studies, and reports

most recently prepared for the Fund for its own section 802.101 valuation be

audited every five years by an independent actuary hired by the City for the

purpose of conducting the audit, (2) before beginning the audit, the independent

      793. The Board argues, “Unreasonable negotiating positions might subject the
      Board to mandamus under an abuse of discretion standard, but that is not the
      City’s case before this Court.” We do not determine whether mandamus relief
      might be appropriate for a clear abuse of discretion because that issue was not
      presented to the trial court.

                                         11
actuary and the City must agree in writing to maintain the confidentiality of any

nonpublic information provided by the Fund, and (3) the independent actuary must

meet with the Fund’s manager to discuss assumptions to be used in the audit.

      It is undisputed that the language of section 802.1012 does not expressly

require the Board to disclose the underlying materials requested by the City. 9 The

City, however, argues that “where a statute expressly commands or grants

anything, courts must construe it to also impliedly authorize whatever is necessary

for executing its commands or whatever is indispensable to the enjoyment or

exercise of its grant, and to prevent frustration of its purpose and function.” See

Warner v. Glass, 135 S.W.3d 681, 684–85 (Tex. 2004). Thus, the City reasons,

“the only reasonable construction of Chapter 802 is that it necessarily imposes a

duty on the Board to disclose the underlying materials for the Fund’s valuations,

studies, and reports that the City must have audited.”

      The Board acknowledges that section 802.1012 implies a duty to cooperate

with the independent actuary but disputes that such an obligation is “ministerial.”

9
      In fact, section 802.1012’s requirements are not directed to public retirement
      systems but rather to independent actuaries and the governmental entity that
      employs the system’s members. See TEX. GOV’T CODE ANN. § 802.1012(c)–(j)
      (stating that actuary and governmental entity “must” or “shall” take specified
      actions). Section 802.1012 significantly differs from every other subsection in
      Chapter 802, each of which imposes administrative requirements on public
      retirement systems. See, e.g., TEX. GOV’T CODE ANN. §§ 802.101–.102,
      802.1024–.1025, 802.103–.107 (West 2012 & Supp. 2014) (stating that public
      retirement systems “shall” take specified actions).

                                         12
The Board contends that, because section 802.1012’s language does not preclude it

from exercising its discretionary authority to negotiate the terms and scope of the

production and the protections to be afforded its members’ confidential

information, the Board’s disclosures cannot be merely “ministerial.” Further, the

Board is statutorily charged with protecting the confidentiality of the Fund

members’ and beneficiaries’ non-public information. See TEX. REV. CIV. STAT.

ANN. art. 6243e.2(1) § 17 (West 2010); TEX. GOV’T CODE ANN. § 552.0038(i) (“To

the extent of a conflict . . . the prevailing provision is the provision that provides

the greater substantive and procedural protections for the privacy of information

concerning that individual . . . .”). Thus, the Board contends, it has some discretion

in determining the scope of the disclosure.

      The City relies on this Court’s decision in In re Robinson, 175 S.W.3d 824

(Tex. App.—Houston [1st Dist.] 2005, orig. proceeding), for authority that the

Board has a ministerial duty to disclose whatever information the auditor requests.

In Robinson, registered voters sought writs of mandamus to compel the Houston

City Council and the Mayor to enter an order declaring the adoption of three

propositions as new amendments to the city charter and to certify the new

amendments to the Texas Secretary of State. Id. at 826–27. After concluding that

                                         13
the word “shall” in Local Government Code section 9.007 10 imposed a

nondiscretionary duty on the mayor to certify the amendments to the secretary of

state, the Court considered whether section 9.005(b) 11 imposed a nondiscretionary

duty on the city council to enter an order declaring the adoption of the three

propositions passed by voters. Id. at 830–31. The Robinson court noted that, while

section 9.005(b) does not contain mandatory language, it “concerns when an

amendment to the city charter becomes effective.” Id. at 832 (“A charter

amendment ‘does not take effect until the governing body of the municipality

10
      Section 9.007 of the Local Government Code, entitled “Certification of Charter or
      Amendment,” provides, in relevant part:

            (a) As soon as practicable after a municipality adopts a charter or
            charter amendment, the mayor or chief executive officer of the
            municipality shall certify to the secretary of state an authenticated
            copy of the charter or amendment under the municipality’s seal
            showing the approval by the voters of the municipality.

      TEX. LOC. GOV’T CODE ANN. § 9.007(a) (West 2008) (emphasis added).
11
      Section 9.005, entitled “Adoption of Charter or Amendment,” provides as follows:

            (a) A proposed charter for a municipality or a proposed amendment
            to a municipality’s charter is adopted if it is approved by a majority
            of the qualified voters of the municipality who vote at an election
            held for that purpose.

            (b) A charter or an amendment does not take effect until the
            governing body of the municipality enters an order in the records of
            the municipality declaring that the charter or amendment is adopted.

      TEX. LOC. GOV’T CODE ANN. § 9.005(a), (b) (West 2008) (emphasis added).

                                          14
enters an order in the records . . . .’”) (quoting TEX. LOC. GOV’T CODE § 9.005(b)

(West 1999)). After reviewing the legislative intent, the Court concluded that

section 9.005(b) did impose a nondiscretionary duty on the city council to declare

the propositions adopted. See id. The City submits that the issue of statutory

construction in Robinson and that presented here are sufficiently similar to

conclude that the statute imposes a nondiscretionary duty on the Board. The City’s

reliance on Robinson is misplaced.

      Unlike Robinson, neither the language of section 802.1012(c) nor the

legislative intent prescribe or define a specific duty to act and, to the extent it

implies a duty, it fails to do so with the “precision” and “certainty” necessary to

make the action ministerial. See Heard, 603 S.W.2d at 832 (“ministerial duty”

exists when law defines duty “‘with such precision and certainty as to leave

nothing to the exercise of discretion or judgment.’”) (quoting Smith, 5 Tex. at 479).

Whether the scope of the information requested by the City’s actuary extends

beyond information “reasonably necessary” for the purposes of the audit is a

question of degree. It is not specified in the statute with sufficient detail to remove

all exercise of discretion by the Board.

      In his affidavit, Mickey McDaniel, the actuary engaged by the City,

explained that there are different levels of actuarial audits and that each level

requires different information. While a “replication-level” audit requires the census

                                           15
data used by the system’s actuary, “a high-level audit” involves “evaluation of the

most recent available actuarial valuation and other related studies and reports

without access to the detailed employee census data [] underlying them.”

McDaniel stated that, due to time constraints, the City only performed a “high-

level review audit” of the Fund’s actuarial valuations in 2008 and, therefore, did

not seek access to participant census data. But for its second audit, the City

requested information to conduct a “replication-level” audit. The differences

between the two audits suggest that the statute permits the actuary and the public

retirement system discretion to negotiate the scope of the audit.

      Further, assuming that section 802.1012 requires public retirement systems

to disclose some participant information, it does not require a replication-level

audit, which would require the disclosure of the individual participants’ personal

data reviewed by the Board’s auditor. Because section 802.1012 does not direct,

with precision and certainty, that such information be provided, some level of

discretion exists.

      Finally, the City’s reliance on section 802.1012(d) to contend that all

requested information be produced is also misplaced. Section 802.1012(d) requires

the City and the independent actuary to “agree in writing to maintain the

confidentiality of any nonpublic information provided by the [Fund] for the audit.”

See TEX. GOV’T CODE ANN. § 802.1012(d). This provision addresses the issue of

                                         16
confidentiality (i.e., prohibiting unauthorized disclosure to third parties) rather than

the scope of the document production. Contrary to the City’s interpretation,

subsection (d) is not evidence of a duty to disclose information to the auditor;

rather, it merely provides that the City and its retained auditor must agree in

writing to keep any produced information confidential. To ensure that such

information will remain protected, the relevant parties must enter into a

confidentiality agreement before the disclosure of the information. The terms of a

confidentiality agreement must be “agree[d]” upon, which suggests an exercise of

judgment, rather than a clear and precise directive. Without such an agreement, the

Board’s duty to disclose is not invoked. Hawkins v. Cmty. Health Choice, Inc., 127
S.W.3d 322, 327 (Tex. App.—Austin 2004, no pet.) (“‘[M]andamus will not issue

to enforce a right which is contingent or incomplete by reason of condition

precedent which is still to be performed . . . .’”) (quoting Tex. Mexican R.R. Co. v.

Jarvis, 15 S.W. 1089 (Tex. 1891)).

      Accordingly, we conclude that the summary judgment evidence does not

demonstrate, as a matter of law, that the Board has a ministerial (i.e.,

nondiscretionary) duty “to provide and disclose to the independent actuary . . . all

information and/or electronic data (including all ‘census data’) requested by the

independent actuary” for a replication-level audit, as stated in the trial court’s

December 21, 2012 order. See Anderson, 806 S.W.2d at 793. Having failed to

                                          17
establish this element of its claim for its requested mandamus relief, the City was

not entitled to summary judgment. See Rhone-Poulenc, Inc. v. Steel, 997 S.W.2d
217, 223 (Tex. 1999). Because the Board disproved an essential element of the

City’s cause of action, i.e., that the Board has a legal duty to perform a ministerial

act under section 802.1012, it was entitled to summary judgment on the City’s

claim.

                                     Conclusion

         We reverse the trial court’s December 21, 2012 order (1) granting the City’s

amended motion for summary judgment and issuing a writ of mandamus and

(2) denying the Board’s cross-motion for summary judgment, and we render

judgment in favor of the Board.

                                               Harvey Brown
                                               Justice

Panel consists of Justices Jennings and Brown.

                                          18