Court Opinion

ID: 3004632
Source: CourtListenerOpinion
Date Created: 2015-09-25 06:13:25.735987+00
Date Added: 2024-06-11T11:45:57.616705
License: Public Domain

Opinion issued September 24, 2015

                                    In The

                           Court of Appeals
                                For The

                       First District of Texas
                         ————————————
                          NO. 01-14-00990-CV
                        ———————————
                      MANFRED FINK, Appellant
                                     V.
 JOANN D. ANDERSON, BETTY BAILEY, DOUG BIRD, ANN BROWN,
    BRAD BULLOCK, M.D., JIM BYRON, MIKE CLANN, CLAIRE
  CROWDER, EVAN QUIROS, PAUL FULMER, M.D., ERIC GEIBEL,
    MARK GRIFFIN, STEVE GERGUIS, STACEY HARVEY, BILL
 HENDERSON, ALLEN HOLT, LINDA HUDSON, CULLEN KAPPLER,
  RALPH KIRKLAND, SAM LO, M.D., THOMAS LU, M.D., GAILER
MILLER HOLD, MARY QUIROS, LARRY SAMS, BOB SOLBERG, LYNN
         WHITT, AND CLARISSA WILLIS, M.D., Appellees

                 On Appeal from the 152nd District Court
                          Harris County, Texas
                    Trial Court Case No. 2014-22740
                                   OPINION

      Manfred Fink is a physics professor at The University of Texas at Austin.

He invented a technology that UT patented and licensed to a private entity,

IsoSpec, for development and marketing. UT obtained an equity interest in

IsoSpec.

      Some of the IsoSpec investors sued Fink, alleging common-law fraud and

securities fraud, for statements he allegedly made regarding the efficacy of an

instrument he and his co-inventors created that utilized their newly discovered

technology. Fink moved for dismissal under the election-of-remedies provision of

the Texas Tort Claims Act. His motion was denied.

      Fink asserts that the trial court erred by denying his motion because (1) he

established that he was within the scope of his employment when he spoke at

IsoSpec meetings about his invention and (2) the claims asserted against him could

have been brought under the Texas Tort Claims Act and, therefore, are subject to

dismissal under Section 101.106(f) of that statute.

      We reverse the trial court’s order denying Fink’s motion to dismiss and

render judgment in his favor.

                                   Background

      Manfred Fink has been a physics professor at The University of Texas at

Austin for more than 40 years. One of his assigned duties is to conduct research.

                                          2
Along with fellow UT professor, Philip Varghese, and Michigan professor, Jacek

Borysow, Fink utilized the concepts underlying Raman Spectroscopy technology

to invent a new technology he termed ANDRaS. According to an affidavit filed by

Fink, the professors created prototype machines that utilizes ANDRaS technology.

      The patent for the technology is not held by the individual professors, but by

their institutional employers. As Professor Varghese explained: “Pursuant to UT

policy, I conveyed my rights as an employee of the University to our invention and

allowed UT to file patent applications for the technology on behalf of the

University.” See Regents’ Rules and Regulations, Rule 90102, sec. 2 (providing

that intellectual property developed by UT System employee within course and

scope of employment is owned by UT). Though the university owned the patent

rights, its rules gave Fink a right to provide input regarding his invention’s

commercialization. See id., Rule 90101, sec. 7 (stating that creator of intellectual

property “may give reasonable input on commercialization of inventions” but that

UT has final decision authority “concerning whether and how to develop and

commercialize an invention”). 1

      UT licensed the technology to a private company for development. The

Patent License Agreement is between UT and InnoSpec Technologies, LP. It states

that UT, as licensor, “owns or controls the entire right, title, and interest in and to

1
      Fink asked us to take judicial notice of these rules and regulations. The investors
      filed no objection and in oral argument confirmed that they had no objection.
                                           3
the Patent Rights,” and InnoSpec, as licensee, “desires to secure the right and

license to use, develop, manufacture, market, and commercialize the Patent

Rights.” The agreement lists Fink, Varghese, and Borysow as the “inventors.” The

inventors are not parties to the agreement. The Agreement grants UT a 5% equity

interest in the venture. No equity interest is extended to any of the inventors.

      IsoSpec later became the designated licensee of the ANDRaS technology in

place of InnoSpec. IsoSpec issued a Private Placement Memorandum (PPM) that

sought $1,000,000 in investments in exchange for limited partnership interest in

the company. The PPM named Fink as a member of its “Technology and Business

Advisory Group” and listed his relationship to IsoSpec as “Co-Inventor and

Scientific Developer of the Technologies.” Fink did not receive any compensation

from Isospec. He averred that he refused Isospec’s offer of a written consultation

agreement. IsoSpec’s PPM disclosed, under the heading “Risk Factors,” the

following:

      IsoSpec is dependent on key relationships.
      IsoSpec intends to look to the Technology Advisors as a source of
      counsel and development of new technologies. The Technology
      Advisors have been developed as a result of personal and business
      relationships with the General Partners, the inventors of the
      technologies licensed by IsoSpec, and the Research Institutions.
      IsoSpec is dependent upon the involvement and contribution of the
      inventing scientists. The loss of these relationships could have a
      materially adverse impact upon IsoSpec.

                                           4
      The PPM informed potential investors that “ANDRaS is rugged,

inexpensive, small and portable providing onsite analytical capabilities.” Further,

“[t]wo operating prototype instruments have proven the accuracy and operating

capabilities of ANDRaS.”

      IsoSpec held various meeting with potential investors, including at least

some of the plaintiffs. Fink attended at least one of these meetings. Professor

Varghese also attended at least one meeting along with Fink and established,

through documentation attached to his affidavit, that UT reimbursed some of his

travel expenses to meet with IsoSpec. The UT travel voucher form states that

Professor Varghese was being reimbursed for travel to IsoSpec in Houston to

discuss “commercializing their technology.” The UT travel addendum states that

he “is driving to Houston, TX to meet with [IsoSpec] to discuss their collaboration

on the commercialization of their technology” and to “[h]elp accomplish research

objectives.”

      The role Fink played at the meetings he attended is contested. He averred

that “the purpose of the meeting was only to answer technical questions about

ANDRaS technology.” While there, he “answered very specific scientific questions

that certain individuals had about Raman Spectroscopy and ANDRaS technology.”

Professor Varghese described his role similarly, stating that he attended the

                                        5
meeting to answer technical questions about the technology they developed as UT

employees.

      Fink averred that he did not participate in drafting the PPM or other

marketing materials or receive any compensation from IsoSpec. Additionally, he

stated that all of his involvement with IsoSpec was “a result of the work [he was]

doing as a professor of physics at UT and UT’s licensing of [his] technology to

IsoSpec.” Accordingly, when he attended the IsoSpec meetings, he “thought it was

in the scope and course of [his] responsibilities as a UT professor.” Professor

Varghese stated the same belief in his affidavit.

      The investors describe Fink’s role and relationship differently. In their

unverified response to Fink’s motion to dismiss, they allege that Fink was involved

in the development and issuance of the PPM, Fink intentionally engaged in

conduct “designed to obtain investments for IsoSpec, a private company,” and such

actions were not in the scope of his employment at the university. They argue that

Fink’s involvement at the IsoSpec meeting was not on UT’s behalf and did not

further any interest of the university. The investors contend that Fink’s role was,

instead, to solicit investors for the benefit of IsoSpec and his son, Dr. Rainer Fink,

who was IsoSpec’s Chief Technology Officer.

                                          6
        The investors asserted that Fink must have realized the actual nature of his

role:

        It is inconceivable to me that Dr. Manfred Fink would not have
        known the purpose of the meeting was to obtain investors in IsoSpec
        specifically based upon what was said at the meeting by IsoSpec
        representatives, the marketing materials distributed at the meeting, the
        fact that Dr. Manfred Fink’s son was part of the management team of
        IsoSpec and Dr. Manfred Fink’s own detailed discussion of the
        potential uses of the ANDRaS prototype, if commercialized by
        IsoSpec.

        The investors further claimed that Fink made specific representations to

them at IsoSpec meetings, indicating that an ANDRaS prototype had already been

created, was fully functional, and had multiple commercial applications. While

Fink has confirmed by affidavit that he and his co-inventors created functional

prototypes, the investors allege in their unverified response that his assertions are

untrue.

        After investing in IsoSpec and becoming dissatisfied with the company’s

performance, the investors sued Fink and his son. They asserted several causes of

action: violation of the Texas Securities Act, fraud, misrepresentation, conspiracy,

and aiding and abetting securities fraud and common-law fraud.

        Fink moved for dismissal under the election-of-remedies provision of the

Texas Tort Claims Act, alleging that dismissal was mandatory because he was a

governmental employee, he was acting in the scope of his employment at the

relevant time, and suit could have been brought under the Act against his employer

                                           7
instead. See TEX. CIV. PRAC. & REM. CODE ANN. § 101.106(f) (West 2011). The

trial court denied the motion, and Fink has appealed that order. 2

      The University of Texas has filed an amicus brief to support Fink’s

contention that he was acting in the scope of his employment when he discussed

ANDRaS technology at the IsoSpec meetings. However, to the extent the brief

relies on an affidavit submitted after the trial court ruled on Fink’s motion, we do

not consider it. See TVMAX Holdings, Inc. v. Spring Indep. Sch. Dist., No. 01-14-

00304-CV, 2015 WL 1967596, at *4 (Tex. App.—Houston [1st Dist.] Apr. 30,

2015, no pet.) (mem. op.) (affidavit submitted to appellate court after trial court

ruled held to not be part of appellate record and, therefore, was not considered on

appeal).

                                Standard of Review

      Generally, we review a trial court’s order on a motion to dismiss under an

abuse of discretion standard. Am. Transitional Care Ctrs. of Tex., Inc. v. Palacios,

46 S.W.3d 873, 878 (Tex. 2001). However, the proper standard of review is not

necessarily determined by the caption of the motion to which the order relates,

rather it is determined by the substance of the issue to be reviewed. Singleton v.

Casteel, 267 S.W.3d 547, 550 (Tex. App.—Houston [14th Dist.] 2008, pet.

2
      Interlocutory appeal is available for the denial of a state employee’s motion for
      summary judgment asserting immunity. TEX. CIV. PRAC. & REM. CODE ANN.
      § 51.014(a)(5) (West 2015).
                                          8
denied). Here, the motions to dismiss raised the issue of immunity. See id.; see also

Franka v. Velasquez, 332 S.W.3d 367, 371 n.9 (Tex. 2011) (stating that Section

101.106 confers immunity in some instances to employees of governmental units).

If immunity applies, the trial court lacks subject-matter jurisdiction over the case.

See Tex. Dep’t of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 224 (Tex. 2004);

see also Univ. of Tex. Health Sci. Ctr. at San Antonio v. Webber–Eells, 327 S.W.3d
233, 240 (Tex. App.—San Antonio 2010, no pet.). Subject-matter jurisdiction is a

question of law which we review de novo. Miranda, 133 S.W.3d at 226. Likewise,

matters of statutory construction are reviewed under a de novo standard. Entergy

Gulf States, Inc. v. Summers, 282 S.W.3d 433, 437 (Tex. 2009); City of San

Antonio v. City of Boerne, 111 S.W.3d 22, 25 (Tex. 2003).

      We may not presume the existence of subject-matter jurisdiction; the burden

is on the plaintiffs to allege facts affirmatively demonstrating the trial court’s

subject-matter jurisdiction over the case. Tex. Ass’n of Bus. v. Tex. Air Control Bd.,

852 S.W.2d 440, 443–44, 446 (Tex. 1993); Anderson v. Bessman, 365 S.W.3d 119,

123–24 (Tex. App.—Houston [1st Dist.] 2011, no pet.). In deciding whether the

court has subject-matter jurisdiction, we consider the plaintiffs’ pleadings and the

evidence pertinent to the jurisdictional inquiry, without regard to the case’s merits.

Cnty. of Cameron v. Brown, 80 S.W.3d 549, 555 (Tex. 2002); Anderson, 365
S.W.3d at 124.

                                          9
             Sovereign Immunity and Section 101.106(f) Dismissal

      The investors have alleged various tort-based claims against Fink. First, they

alleged that Fink violated the Texas Securities Act because he “engaged in fraud

by intentionally failing to disclose material facts related to the operation and

performance of ANDRaS and the future development of it into a commercial

product,” and also by “misrepresent[ing] one or more material facts . . . in

connection with the offer for sale and sale of limited partnership interests” in

IsoSpec. Second, they asserted common-law fraud claims for the same failures to

disclose and misrepresentations. Third, they alleged that Fink conspired with the

IsoSpec founders “to create IsoSpec and engage in securities fraud and common-

law fraud by developing and issuing the PPM and making numerous other verbal

misrepresentations in an effort to unlawfully appropriate financial contributions

from investors in exchange for limited partnership interests.” And fourth, they

alleged that Fink aided and abetted the IsoSpec founders “to commit securities

fraud and common law fraud.”

      In reviewing the trial court’s order denying Fink’s motion to dismiss under

the election-of-remedies provision of the Tort Claims Act, we consider whether he

conclusively proved that he met all three of the statute’s requirements: (1) he was a

governmental unit employee at the relevant time; (2) the complained-of conduct

was within the general scope of his employment with a governmental unit; and

                                         10
(3) the plaintiffs’ suit could have been brought under the Tort Claims Act against

Fink’s governmental employer. TEX. CIV. PRAC. & REM. CODE ANN. § 101.106(f);

Franka, 332 S.W.3d at 369; Anderson, 365 S.W.3d at 124; Mauk v. Pipe Creek

Water Well, LLC, No. 04-14-00906-CV, 2015 WL 2405338, at *2 (Tex. App.—

San Antonio May 20, 2015, no pet.) (mem. op.). It is undisputed that the

University of Texas is a governmental unit and that it was Fink’s employer at the

relevant time. Accordingly, we turn to whether Fink has established the two

remaining statutory requirements for dismissal under Section 101.106(f).

A.    General scope of employment

      The Tort Claims Act defines “[s]cope of employment” as “the performance

for a governmental unit of the duties of an employee’s office or employment and

includes being in or about the performance of a task lawfully assigned to an

employee by competent authority.” TEX. CIV. PRAC. & REM. CODE ANN.

§ 101.001(5) (West Supp. 2014); City of Lancaster v. Chambers, 883 S.W.2d 650,

658 (Tex. 1994) (“An official acts within the scope of her authority if she is

discharging the duties generally assigned to her.”).

      1.     Conduct may serve any purpose of employer

      The Texas Supreme Court has looked to the Restatement for “additional

clarity” on the term “scope of employment.” See Alexander v. Walker, 435 S.W.3d
789, 792 (Tex. 2014) (referring to RESTATEMENT (THIRD)      OF   AGENCY § 7.07(2)

                                         11
(2006)); Franka, 332 S.W.3d at 381 n.63 (citing same). The Restatement provides

a negative definition: “An employee’s act is not within the scope of employment

when it occurs within an independent course of conduct not intended by the

employee to serve any purpose of the employer.” RESTATEMENT (THIRD)            OF

AGENCY § 7.07(2).

      Thus, when an employee engages in conduct “for the sole purpose” of

furthering someone else’s interests and not his employer’s, the conduct is outside

the employee’s scope of employment. See id., cmt. b; see also Arbelaez v. Just

Brakes Corp., 149 S.W.3d 717, 722–23 (Tex. App.—Austin 2004, no pet.)

(holding that employer failed to prove as matter of law that employee’s “breakfast

run” was for purely personal purposes and not meant to further the employer’s

interest to any appreciable extent).

      2.     Conduct may escalate but not deviate

      Conduct that serves any purpose of the employer is within the scope of

employment even if the conduct escalates beyond that assigned or permitted. See

RESTATEMENT (THIRD)      OF   AGENCY § 7.07(2), cmt. b. So, for example, when an

employee’s job duties include making statements to prospective customers to

induce them to buy from the employer, intentional misrepresentations may be

within the scope of employment. Id.; cf. Celtic Life Ins. Co. v. Coats, 885 S.W.2d
96, 99 (Tex. 1994) (noting that insurance agent had authority to make

                                         12
representations about insurance policies and misrepresentations did not take

conduct outside scope of authority).

      Similarly, “if the employer places his employee in a position that involves

the use of force, so that the act of using force is in the furtherance of the

employer’s business, the employer can be found liable . . . even if the employee

uses greater force than is necessary.” Knight v. City Sts., L.L.C., 167 S.W.3d 580,

583–84 (Tex. App.—Houston [14th Dist.] 2005, no pet.) (concluding that plaintiff

failed to raise fact issue on whether employees were authorized to use force); see

ANA, Inc. v. Lowry, 31 S.W.3d 765, 770 (Tex. App.—Houston [1st Dist.] 2000, no

pet.) (stating that “an employer will be held liable for its employee’s assault on a

third party only if that assault stems directly from the employee’s exercise

(however inappropriate or excessive) of a delegated right or duty.”).

      But conduct that is better viewed as a deviation from an assigned task

instead of an escalation beyond what was authorized is not within the employee’s

scope of employment. See Zarzana v. Ashley, 218 S.W.3d 152, 159–60 (Tex.

App.—Houston [14th Dist.] 2007, pet. struck) (automotive service station

employee who sold counterfeit inspection sticker held not within scope of

employment because service station did not conduct inspections and act of selling

counterfeit stickers was not “of the same general nature as [the conduct] authorized

or incidental to the conduct authorized” by the employer).

                                         13
      3.     Intentional torts can fall within scope of employment

      As an initial matter, the investors argue that a fraud claim should not be

subject to Section 101.106(f) dismissal because intentionally tortious conduct is

“almost never” held to be within the scope of authority granted an agent by his

principal. At oral argument, through hypotheticals, they gave two examples of

intentional torts they assert would not be subject to immunity: assault and theft.

Yet both of those intentional torts have been held to involve conduct within a

governmental employee’s scope of employment when they take place while the

employee is engaged in conduct to further an interest of his employer and the

tortious act is more of an escalation of—rather than a deviation from—his job

duties.

             a.    Intentional tort of assault

      In Alexander v. Walker, police officers were sued for assault, conspiracy,

slander, false arrest, false imprisonment, and malicious prosecution. 435 S.W.3d at

790. The claims arose from the officers’ conduct while arresting the plaintiff on

two separate occasions. Id. The Texas Supreme Court reversed the denial of the

police officers’ Section 101.106(f) motion to dismiss, holding that engaging in an

arrest is conduct that is generally within an officer’s scope of employment; it is not

an independent course of conduct that fails to serve any purpose of the employer.

                                         14
See id. at 792. Accordingly, the Court rendered judgment in the officers’ favor on

the assault and other tort claims. See id.3

3
      In assault cases outside of the context of governmental immunity, the results have
      been the same. In these cases, the issue is whether the employer can escape
      liability under normal respondeat superior principles by arguing that intentional
      torts do not fall within the scope of employment. Courts have held that the
      employer is liable if the tortious conduct “is of the same general nature as that
      authorized or incidental to the conduct authorized.” Durand v. Moore, 879 S.W.2d
196, 199 (Tex. App.—Houston [14th Dist.] 1994, no writ) (holding that evidence
      supported conclusion that doorman’s “overzealous enforcement” of nightclub’s
      admittance policies, which led to assault of patron, was conduct within doorman’s
      scope of employment); Cowboys Concert Hall-Arlington, Inc. v. Jones, No. 02-12-
      00518-CV, 2014 WL 1713472, at *9–10 (Tex. App.—Fort Worth May 1, 2014,
      pet. denied) (mem. op.) (affirming that nightclub is vicariously liable for assault
      by bouncer after concluding that bouncer was within scope of employment
      because bouncer was instructed to restrain patrons if necessary and to “handle”
      fights, which occurred nightly). An assault “committed in the accomplishment of
      a duty entrusted to the employee, rather than because of personal animosity, may
      render the employer liable.” Wrenn v. G.A. T.X. Logistics, Inc., 73 S.W.3d 489,
      494 (Tex. App.—Fort Worth 2002, no pet.)

      However, an assault that is unrelated to the assigned duties of the employee is not
      within the scope of employment. See Ogunbanjo v. Don McGill of W. Houston,
      Ltd., No. 01-13-00406-CV, 2014 WL 298037, at *3–4 (Tex. App.—Houston [1st
      Dist.] Jan. 28, 2014, no pet.) (mem. op.) (concluding that car salesman who
      offered to drive service-department customer back to her home was not within
      scope of his employment when he assaulted her in his personal vehicle); Int’l &
      G.N.R. Co. v. Anderson, 17 S.W. 1039, 1040–41 (Tex. 1891) (stating that train
      passenger suing train company for tortious conduct of its employee who forcibly
      removed him from train could prevail on argument that employee was in scope of
      employment only if it was within employee’s duties to remove passengers, but
      evidence presented in that particular case was that brakeman did not have that
      authority and, therefore, was not acting within scope of employment); Galveston
      H. & S. A. Ry. Co. v. McMonigal, 25 S.W. 341, 342 (Tex. Civ. App. 1893).

      In sum, “an employer will be held liable for its employee’s assault on a third party
      only if that assault stems directly from the employee’s exercise (however
      inappropriate or excessive) of a delegated right or duty.” ANA, Inc. v. Lowry, 31
S.W.3d 765, 770 (Tex. App.—Houston [1st Dist.] 2000, no pet.).

                                              15
             b.     Intentional tort of theft

      Employees alleged to have committed theft have also been held to be acting

within scope of employment. In Lopez v. Serna, 414 S.W.3d 890, 894–95 (Tex.

App.—San Antonio 2013, no pet.), the appellate court held that jail officials acted

within their scope of employment because they were performing duties generally

assigned to them when they confiscated an inmate’s property. Whether they

intentionally and unlawfully appropriated the property did not change the

conclusion that the general nature of their duties included confiscating inmate

property. See id.

             c.     Intentional tort of fraud

      In addition to these cases involving dismissal of theft and assault claims, this

Court has held that fraud claims brought against university administrators were

subject to Section 101.106(f) dismissal as well. In Anderson v. Bessman, UTMB

medical school faculty members who had been fired following post-hurricane

budget cuts brought suit against various school officials, alleging tortious

interference with their employment relationships, negligent misrepresentation,

negligence, fraud, and civil conspiracy. 365 S.W.3d at 123. They alleged that the

school officials did not make the firing decision based on applicable rules and

regulations but, instead, on “financial incentives and personal animosities” and in

bad faith. See id. The school officials sought dismissal under Section 101.106(f),

                                         16
but their motions were denied. See id. at 126. We reversed because it was within

the school officials’ generally assigned duties to evaluate faculty members’

performance and the school officials had been specifically asked to make

recommendations regarding which faculty should be fired as part of the post-

hurricane budget-cut process. See id. at 125. Thus, the fraud claim was subject to

Section 101.106(f) dismissal because the actions taken by the governmental

employees—even though pleaded as an intentional tort—were within their scope

of employment. See id.

               d.    Other intentional torts

         This Court, likewise, has held that a mayor accused of slander and malicious

prosecution—two other intentional torts—acted within his scope of employment

when he made negative comments about a city employee’s job performance to

another mayor because it was undisputed that responding to employment

verification requests was a task generally assigned to the mayor. Hopkins v.

Strickland, No. 01-12-00315-CV, 2013 WL 1183302, at *3 (Tex. App.—Houston

[1st Dist.] Mar. 21, 2013, no pet.) (mem. op.) (stating that “an act may still be

within the scope of the employee’s duties even if the specific act that forms the

basis of the civil suit was wrongly or negligently performed, so long as the action

was one related to the performance of his job.” (citing Chambers, 883 S.W.2d at

658)).

                                          17
      Most telling, the Texas Supreme Court has rendered judgment for a

governmental employee after concluding that claims against him for intentional

infliction of emotional distress and conspiracy to intentionally inflict emotional

distress were subject to dismissal under Section 101.106(f). Newman v.

Obersteller, 960 S.W.2d 621, 622–23 (Tex. 1997); see also Mission Consol. Indep.

Sch. Dist. v. Garcia, 253 S.W.3d 653, 659 (Tex. 2008) (stating that “all tort

theories,” including these intentional torts, “are assumed to be ‘under [the Tort

Claims Act]’ for purposes of Section 101.106.” (brackets in original)).

      Thus, we reject the investors’ argument that an allegation of an intentional

tort forecloses the possibility that Fink was acting within his scope of employment,

for purposes of Section 101.106(f) dismissal analysis. We next consider whether

Fink’s alleged conduct fell within his scope of employment.

      4.    What conduct is being evaluated

      In arguing that Fink acted outside his scope of employment, the investors

describe his conduct as “soliciting investments for a private company and

committing fraud in the course of such solicitations . . . .” The investors rely on

older cases for the proposition that “unlawful or unauthorized actions” cannot be

within the scope of a governmental employee’s official duties. These cases,

including Bagg v. University of Texas Medical Branch, 726 S.W.2d 582, 585 (Tex.

                                         18
App.—Houston [14th Dist.] 1987, writ ref’d n.r.e.), predate the Texas Supreme

Court’s Alexander opinion and our Anderson and Hopkins opinions.

      Fink described his conduct quite differently. He contended that, “[a]s the

inventor of the ANDRaS prototypes, [he] from time to time assisted IsoSpec in

answering certain questions that they had about the technology and [his] research.”

These were “very specific scientific questions that certain individuals had about

Raman Spectroscopy and ANDRaS technology.” He averred that “the purpose of

the meeting was only to answer technical questions” about his invention. Professor

Varghese averred similarly. He stated that he attended IsoSpec meetings, at least

partially at UT’s expense, “to assist IsoSpec, the University’s licensee, in

answering very specific scientific questions related to our invention.”

      Thus, we are presented with two very different characterizations of Fink’s

involvement: answering specific scientific questions about a technology developed

as a UT research professor versus intentional, fraudulent solicitation of investments

for the benefit of a private company where a close family member worked.

      The Texas Supreme Court has noted the difficulty in analyzing immunity

when the challenged conduct is phrased in terms tied to the specific wrong alleged.

See Chambers, 883 S.W.2d at 653–54. In that case, the plaintiffs’ son was severely

injured during a high-speed police chase, and the parents sued the police officers

for negligence. Id. at 652. The officers moved for summary judgment based on an

                                         19
assertion of official immunity. Id. The court of appeals held that the officers did

not have discretion “to drive without due regard for the safety of all persons using

the highway.” Chambers v. City of Lancaster, 843 S.W.2d 143, 149 (Tex. App.—

Dallas 1992), rev’d, 883 S.W.2d 650 (Tex. 1994). The Texas Supreme Court

disagreed with the appellate court’s analysis and held that the focus should have

been on whether the police officers were performing a discretionary function

(when they allegedly acted wrongfully), not on whether they had discretion to do

an allegedly wrongful act while discharging that function. Chambers, 883 S.W.2d

at 653.

      The Texas Supreme Court described the officer’s conduct broadly. Instead

of asking whether the officers had discretion to driving unsafely, as the appellate

court had done, the Court considered whether “engaging in a high-speed chase”

was a discretionary act and held that it was. See id. at 653–55. The Court explained

that the appellate court’s use of a more specific description linked to the alleged

wrong “frustrates official immunity’s very function” because it “inexorably leads

to the [at times incorrect] conclusion that an officer is not entitled to immunity if

the officer is negligent.” Id. at 655.

      More recent cases likewise have broadened the focus to ask whether the

general conduct was within the scope of employment instead of whether the

specific act was somehow wrongful. We have already discussed several of these

                                         20
cases while analyzing whether intentional tort claims can fall within the scope of

employment. See Alexander, 435 S.W.3d at 790, 792 (in evaluating whether

officers sued for assault were acting within scope of employment, generally

considering act of securing an arrest instead of tort-based act of assaulting

arrestee); Anderson, 365 S.W.3d at 125–26 (in evaluating whether school officials

were acting within general scope of employment, considering their act to be

general act of evaluating faculty performance instead of tort-specific act of

fraudulently removing faculty); Lopez, 414 S.W.3d at 894–95 (concluding that jail

officials acted within scope of employment when they confiscated inmate’s

property because confiscation was within general nature of duties even if they

intentionally and unlawfully appropriated this particular property); cf. Cantey

Hanger, LLP v. Byrd, No. 13-0861, 2015 WL 3976267, at *6–7 (Tex. June 26,

2015) (rejecting argument that intentional misrepresentations are outside retained

attorney’s scope of employment and holding that general type of conduct engaged

in was within scope even if defendant performed in wrongful manner); Lenoir v.

Marino, No. 01-13-01034-CV, 2015 WL 4043248, at *12–13 (Tex. App.—

Houston [1st Dist.] July 2, 2015, no pet. h.) (holding that physician overseeing

medical care provided by resident was within general scope of employment

although alleged to have committed Medicaid fraud related to that care).

                                        21
       Here the pertinent question is not, as the investors state, whether fraudulent

solicitation was within Fink’s scope of employment. Rather, it is whether his

general conduct—speaking about his invention at the IsoSpec meeting—was

conduct that served any purpose of his employer. See Alexander, 435 S.W.3d at

792 (analyzing whether government employee was engaged in conduct intended

“to serve any purpose of” his employer to determine whether such conduct was

within scope of employment); cf. Chambers, 883 S.W.2d at 658 (“An official acts

within the scope of her authority if she is discharging the duties generally assigned

to her.”).

       5.    Fink established that conduct was within general scope of
             employment

       Fink spoke at a business meeting about a technology he co-discovered and a

device he co-invented. The investors argue that speaking at investor meetings is

not within the range of a university professor’s duties, but their assertion is not

verified or supported by evidence. Fink’s unrebutted evidence demonstrated that

his job duties included research, creating new intellectual property, and assisting in

the commercialization of such UT-owned technology. The alleged fraud occurred

while he was discussing the invention he co-created as a UT professor at meetings

held by a company of which his employer, UT, held partial equity ownership. Fink

was not paid by IsoSpec to participate in the meetings or to perform any services

for it. Fink’s co-inventor, another UT professor, also attended a meeting. Both

                                         22
answered technical questions about their invention. And the colleague’s travel

expenses were reimbursed by UT with this stated justification: “Help accomplish

research objectives.”

      We conclude that speaking at such a meeting was conduct within the general

scope of Fink’s employment. Commenting on the efficacy of a UT-patented device

was not “an independent course of conduct” that failed to “serve any purpose of

[his] employer.” See Alexander, 435 S.W.3d at 792; see also RESTATEMENT

(THIRD)   OF   AGENCY § 7.07(2). Rather, Fink’s actions served a purpose of his

employer because UT held an equity interest in IsoSpec, which was developing

and marketing UT’s patented technology.

      Next, the investors contend that it is “inconceivable” that Fink would not

have realized that the true purpose of speaking at the meeting was to obtain

investors, not to provide scientific insight. Even assuming Fink spoke at the

meeting with the intent to assist IsoSpec in garnering investments, given UT’s

partial ownership of IsoSpec, it remained within his employer’s interest that he

speak at the meetings. See Morrow v. Daniel, 367 S.W.2d 715, 718 (Tex. App.—

Dallas 1963, no writ) (fraudulent misrepresentations made by promoter of

corporate stock to induce others to purchase shares were made within scope of

employment); Alexander, 435 S.W.3d at 792.

                                        23
      Finally, the investors contend that Fink acted outside of the scope of his

employment because his efforts to solicit investors were in furtherance of his

personal goals and those of his son, an IsoSpec officer. But co-existing motivations

do not remove an employee’s actions from the scope of his employment so long as

the conduct also serves a purpose of the employer. See Anderson, 365 S.W.3d at

125–26. An activity may serve the employer’s purposes while simultaneously

benefitting the employee or even a third party and still qualify as conduct within

the scope of employment. See id.; Arbelaez, 149 S.W.3d at 722 (employee sent on

errand by employer to buy breakfast for himself and co-workers held within scope

of employment); Dictaphone Corp. v. Torrealba, 520 S.W.2d 869, 872 (Tex.

App.—Houston [14th Dist.] 1975, writ ref’d n.r.e.) (“Conduct may be within the

scope of employment, although done in part to serve the purposes of the servant or

of a third person.” (citing RESTATEMENT (SECOND)      OF   AGENCY § 236 (1958)));

Golgon, Inc. v. Hart, 893 S.W.2d 562, 568 (Tex. App.—Corpus Christi 1994, writ

denied) (stating that employee’s actions may be within scope of employment even

if private matters are mixed with business errand); Josey-Miller Co. v. Sheppard,

357 S.W.2d 488, 490 (Tex. App.—Beaumont 1962, no writ) (stating that employee

may be within scope of employment even when “there is a mingling of the

master’s business with the servant’s business”).

                                         24
      In conclusion, the evidence establishes that both UT professors who created

the patented technology attended IsoSpec meetings. UT was a part-owner of

IsoSpec. Fink’s discussions of the efficacy of his invention at the IsoSpec meetings

served a purpose of his equity-interest employer, even if they also served his

interests or those of his son. See Anderson, 365 S.W.3d at 125. Accordingly, we

hold that Fink has established that he acted within the general scope of his

employment. We turn next to the third requirement for Section 101.106(f)

dismissal—that the action could have been brought against Fink’s employer under

the Tort Claims Act.

B.    Claims could have been brought under Tort Claims Act

      The investors brought common law tort claims against Fink, as well as a

claim under the Texas Securities Act. While apparently conceding that the

common-law tort claims are claims that “could have been brought under the [Tort

Claims] Act,” the investors present two arguments why their Securities Act claim

is different. First, they contend that Section 101.106(f) refers only to common-law

tort actions, not statutory claims like violations of the Texas Securities Act.

Second, they argue that the Securities Act independently waives immunity and, as

a result, a claim brought under it could not have been brought under the Tort

Claims Act.

                                        25
      The Texas Supreme Court has held that a claim is considered one that “could

have been brought” under the Tort Claims Act if it (1) “is in tort” and (2) is not

brought “under another statute that independently waives immunity,” even if the

particular tort alleged is one for which immunity has not been waived. Franka, 332
S.W.3d at 379, 381.

      1.    Securities Act violation is a tort claim

      The Section 101.106(f) requirement that the claim be a “tort claim” is not

limited to negligence and other common law torts. See Tex. Adjutant Gen.’s Office

v. Ngakoue, 408 S.W.3d 350, 356–57 (Tex. 2013) (stating that claim could have

been brought under Tort Claims Act if “plaintiff had a tort claim to assert against

the government”); Williams v. Nealon, 394 S.W.3d 9, 11 (Tex. App.—Houston

[1st Dist.] 2012, pet. denied) (noting that “any tort action” is one that could have

been brought under Tort Claims Act). As the Texas Supreme Court stated in

Franka, any tort claim against the government is brought “under” the Act for

purposes of Section 101.106(f), even if the Act does not waive immunity. 332
S.W.3d at 375. A “tort claim” can include intentional torts. Alexander, 435 S.W.3d

at 792. A “tort claim” can also include claims that are tort based but pleaded as

statutory violations. Lopez, 414 S.W.3d at 894.

      The focus is on whether the claim “sounds in tort,” not the mechanism for

prosecuting the claim. See Rodriguez v. Christus Spohn Health Sys., 628 F.3d 731,

                                        26
735–37 (5th Cir. 2010) (rejecting argument that Tort Claims Act is limited to

“common law torts only” and holding that various statutory claims “sound in tort”

and, therefore, may be subject to Section 101.106(f) dismissal, including claims

under Medical Liability Act, Sexual Exploitation by Mental Health Services

Provider Act, and Patient’s Bill of Rights). Thus, for example, statutory theft

claims have been held to constitute claims that could have been brought under the

Tort Claims Act. Lopez, 414 S.W.3d at 894 (holding that claim brought under

Texas Theft Liability Act is one that could have been brought under Tort Claims

Act); Mason v. Wood, No. 09-12-00246-CV, 2013 WL 1088735, at *2 (Tex.

App.—Beaumont Mar. 14, 2013, no pet.) (mem. op.) (same); cf. TEX. CIV. PRAC. &

REM. CODE ANN. § 101.021 (West 2011) (waiving immunity for certain categories

of damages proximately caused by conduct described broadly to include “wrongful

act or omission”).

      Artful pleading will not change the tort nature of the claim. See Mason, 2013
WL 1088735, at *2 (while analyzing whether theft claim was one that could have

been brought under Tort Claims Act, stating that “plaintiff cannot, through artful

pleading, make a common law tort claim a statutory claim under the Theft Liability

Act.”).

      The investors sued Fink for misrepresentation and fraud, which are tort

theories of liability. They also sued for violation of the Securities Act based on the

                                         27
same misrepresentations and omissions. We conclude that the allegation that Fink

violated the Securities Act by making material misrepresentations about the

ANDRaS technology “sounds in tort” and is, therefore, considered a tort claim, for

purposes of Section 101.106(f) dismissal analysis, even though the allegation is

pleaded as a statutory violation. Cf. Navarro v. Grant Thornton, LLP, 316 S.W.3d
715, 718 (Tex. App.—Houston [14th Dist.] 2010, no pet.) (characterizing claims

brought under Texas Securities Act as “tort claims”).

      2.    Securities Act does not independently waive immunity

      The second requirement for a Securities Act violation to be a claim that

could have been brought under the Tort Claims Act is that the statute not contain

an independent waiver of immunity. Alexander, 435 S.W.3d at 792; Franka, 332
S.W.3d at 381 (holding that claim brought “under another statute that

independently waives immunity” is not subject to Section 101.106(f) dismissal);

Kelemen v. Elliott, 260 S.W.3d 518, 522 (Tex. App.—Houston [1st Dist.] 2008, no

pet.) (holding that alleged violations of Texas Whistleblower Act and Texas

Commission on Human Rights Act were not claims that could have been brought

under Tort Claims Act because each contained independent waiver of immunity);

Hamilton v. Pechacek, No. 02-12-00383-CV, 2014 WL 1096018, at *5 n.7 (Tex.

App.—Fort Worth Mar. 20, 2014, no pet.) (mem. op.) (stating that “‘under this

                                        28
chapter’ language does not include claims based on alternate, independent statutes

that waive sovereign or governmental immunity”).

      The Texas Supreme Court has consistently maintained that it is within the

Legislature’s sole province to waive sovereign immunity. Tex. Natural Res.

Conservation Comm’n v. IT-Davy, 74 S.W.3d 849, 854 (Tex. 2002); Fed. Sign v.

Tex. S. Univ., 951 S.W.2d 401, 409 (Tex. 1997). Legislative consent to sue the

State must be expressed in “clear and unambiguous language.” Wichita Falls State

Hosp. v. Taylor, 106 S.W.3d 692, 696 (Tex. 2003); Univ. of Tex. Med. Branch at

Galveston v. York, 871 S.W.2d 175, 177 (Tex. 1994). This requirement is codified

in Government Code Section 311.034, which provides that “a statute shall not be

construed as a waiver of sovereign immunity unless the waiver is effected by clear

and unambiguous language.” TEX. GOV’T CODE ANN. § 311.034 (West 2013).

      At times the Legislature has clearly stated its intent to waive immunity. See,

e.g., TEX. CIV. PRAC. & REM. CODE ANN. § 110.008 (West 2011) (providing that

“sovereign immunity to suit and from liability is waived . . . .”). But “magic

words” are not required. Taylor, 106 S.W.3d at 697. The Texas Supreme Court has

provided four “aids” to inform our analysis of whether the Legislature has clearly

and unambiguously waived immunity in the absence of a succinct statement

affirmatively stating so:

                                        29
      1)       An indication that the Legislature requires that the State be joined in a
               lawsuit for which immunity would otherwise attach indicates a waiver
               of immunity;
      2)       The Legislature often enacts measures that provide an objective
               limitation on the State’s potential liability when waiving immunity;
      3)       Waiver must be “beyond doubt” even if it is not “a model of ‘perfect
               clarity’”; and
      4)       Ambiguities are resolved to retain immunity.

Id. at 697–98; see Magnolia Petroleum Co. v. Walker, 83 S.W.2d 929, 934 (Tex.

1935) (stating that “ambiguity or obscurity” in a statute will operate in favor of the

State).

          The Securities Act does not contain a provision requiring that the State be

joined in a suit brought under the Act. Neither does the statute contain a provision

limiting the amount of damages that may be recovered from a governmental entity.

See Taylor, 106 S.W.3d at 701–02 (noting absence of liability limits in Patient’s

Bill of Rights statute). The absence of a liability cap for governmental entities in

the Securities Act is particularly relevant given that there is a limit on liability for a

different category of potential defendant: small business issuers. See TEX. REV.

CIV. STAT. ANN. art. 581-33(N).

      Further, the Act provides that any rights and remedies it provides are in

addition to other existing remedies, including exemplary or punitive damages. Id.

art. 581-33(M). The Texas Supreme Court has expressed “skepticism that the

Legislature intended to waive sovereign immunity by mere implication” when the
                                           30
statute being analyzed provides for exemplary damages. Taylor, 106 S.W.3d at

701–02 (analyzing Patient’s Bill of Rights statute). Thus, the first two areas of

analysis support the conclusion that the Securities Act does not independently

waive immunity.

      The two remaining factors consider whether waiver is established “beyond

doubt” or, instead, if there is an ambiguity in the statute. The investors argue that

the Securities Act clearly waives immunity through incorporation of a defined

term. The Act provides that a “person” who sells securities can be liable for

misrepresentations of material facts. TEX. REV. CIV. STAT. ANN. art. 581–33(A)(2).

The Act defines “person” to include “a government, or a political subdivision or

agency thereof.” Id. art. 581–4(B). However, Government Code Section 311.034

strongly negates this definition’s relevance by providing that inclusion of a

governmental entity within a “person” definition “does not indicate legislative

intent to waive sovereign immunity unless the context of the statute indicates no

other reasonable construction.” TEX. GOV’T CODE ANN. § 311.034 (West 2013).

The Section 4 “person” definition does not establish a waiver “beyond doubt”

under the third Taylor factor. At most, it creates an ambiguity and, under the final

Taylor factor, counsels against a conclusion of waiver. See Taylor, 106 S.W.3d at

697, 701 (stating that ambiguity precludes finding of unmistakable legislative

                                         31
intent to waive sovereign immunity and requiring that waiver be unambiguous and

“beyond doubt”).

      Because a violation of the Securities Act “sounds in tort” and the four Taylor

factors do not support the conclusion that the Legislature waived immunity under

the statute, we conclude that a violation of the Securities Act is a claim that “could

have been brought under [the Tort Claims Act]” for purposes of analyzing a

Section 101.106(f) motion to dismiss, just like the investors’ other claims.

                                     Conclusion

      Having concluded that Fink established that he was within the scope of his

employment and that the claims against him are ones that could have been brought

under the Tort Claims Act, we sustain his first and second issues. Because the

evidence established Fink’s right to dismissal and the investors failed to raise a fact

issue on that issue, the proper rendition is to reverse the trial court’s judgment and

render judgment for Fink. See Lund v. Giauque, 416 S.W.3d 122, 124 (Tex.

App.—Fort Worth 2013, no pet.); Leonard v. Glenn, No. 04-08-00200-CV, 2011
WL 3610420, at *1 (Tex. App.—San Antonio Aug. 17, 2011, no pet.) (mem. op.).

Accordingly, we reverse the trial court’s order denying Fink’s motion to dismiss,

dismiss the claims against him, and render judgment in his favor.

                                          32
                                             Harvey Brown
                                             Justice

Panel consists of Justices Jennings, Brown, and Lloyd.

                                        33