Court Opinion

ID: 4048492
Source: CourtListenerOpinion
Date Created: 2016-09-29 00:40:12.633535+00
Date Added: 2024-06-11T14:26:17.143115
License: Public Domain

NUMBER 13-14-00205-CV

                             COURT OF APPEALS

                   THIRTEENTH DISTRICT OF TEXAS

                      CORPUS CHRISTI - EDINBURG

CORNELIO MORALES,                                                            Appellant,

                                            v.

HIDALGO COUNTY IRRIGATION
DISTRICT NO. 6,                                                              Appellee.

                    On appeal from the 398th District Court
                          of Hidalgo County, Texas.

                          MEMORANDUM OPINION

             Before Justices Benavides, Perkes, and Longoria
                 Memorandum Opinion by Justice Perkes

       Appellant Cornelio Morales (“Morales”) appeals from a summary judgment entered

in favor of appellee Hidalgo County Irrigation District No. 6 (“District”) on his breach of

contract claim. By four issues, Morales argues that the trial court erred by: (1) granting

summary judgment on the District’s affirmative defenses of illegality and lack of
consideration; (2) denying Morales’s motion for partial summary judgment; (3) denying

Morales’s motion for new trial; and (4) denying Morales’s motion to compel the

depositions of the District’s board members and corporate representative. We reverse

and remand.

                                    I. BACKGROUND

       This appeal concerns an employment contract between Morales and the District.

The contract provided that Morales would serve as the District’s general manager for a

period beginning on January 1, 2010 and ending on December 31, 2014. Under the

contract, Morales agreed that he would “to the best of his ability, faithfully manage and

operate the affairs of employer in a manner consistent with the laws applicable to

employer and the policies set forth by its Board of Directors.” The District was required

to pay Morales “a fixed minimum annual gross salary of $106,655.00 for services

performed on the employer’s behalf[.]” The contract’s termination clause provided that

the agreement shall terminate upon the death or disability of Morales. The termination

clause further stated:

       If employer’s Board of Directors terminate or cancel this agreement for any
       reason other than those reasons provided for above in this agreement, prior
       to the completion of employee’s term of employment, employee shall be
       entitled to receive a cash severance payment in an amount equal to the
       remaining compensation due for the term of this agreement.

       Morales was employed by the District through August 25, 2011, when he received

notice from the District’s Board President that the District was terminating his employment

contract because he “materially breached” its terms. Following termination, Morales filed

a breach of contract action alleging that he was entitled to the remaining compensation

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due for the term of the contract because the District terminated his employment for a

reason other than death or disability.               Morales sought recovery in the amount of

$357,269.90 for the remaining 3 years, 4 months, and 6 days remaining on his contract

at the time of termination. Morales also brought a claim for attorney’s fees. The District

answered, asserting illegality and lack of consideration as affirmative defenses.

         Morales filed a motion for partial summary judgment,1 arguing that there was no

genuine issue of material fact concerning the elements of his breach of contract claim.

The District filed a competing motion for traditional summary judgment on the basis of its

affirmative defenses. By its motion, the District argued that the employment contract

compelled the District to pay Morales five years of salary “regardless of whether he works

a single second” for the District. For this reason, the District asserted that the contract

lacked consideration and was illegal because it constituted a gratuitous grant of public

funds to an individual in violation of the Texas Constitution. See TEX. CONST. art. III, §

52(a).       The summary judgment evidence is undisputed that the employment contract

was terminated by the District on August 25, 2011, and that the District did not pay

Morales any severance payment.

         The trial court entered an order granting the District’s motion for summary

judgment, finding that “the employment agreement made the subject of [Morales’s]

breach of contract suit is illegal and thus void[,]” and “said employment agreement is

unenforceable for lack of consideration.” The trial court denied Morales’s motion for

partial summary judgment in a separate order. This appeal followed.2

         1   Morales’s motion for partial summary judgment did not include his claim for attorney’s fees.
         2   By his fourth amended petition, Morales also brought an action for negligent misrepresentation
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                          II. SUMMARY JUDGMENT STANDARD OF REVIEW

        We review a summary judgment de novo. Mann Frankfort Stein & Lipp Advisors,

Inc. v. Fielding, 289 S.W.3d 844, 848 (Tex. 2009). We review the evidence presented in

the motion and response in the light most favorable to the party against whom the

summary judgment was rendered, crediting evidence favorable to that party if reasonable

jurors could, and disregarding contrary evidence unless reasonable jurors could not.

See City of Keller v. Wilson, 168 S.W.3d 802, 827 (Tex. 2005); Johnson v. Brewer &

Pritchard, P.C., 73 S.W.3d 193, 208 (Tex. 2002).                  The party moving for traditional

summary judgment bears the burden of showing that no genuine issue of material fact

exists and that it is entitled to judgment as a matter of law. Mann Frankfort, 289 S.W.3d

at 848; see TEX. R. CIV. P. 166a(c). A defendant is entitled to summary judgment on an

affirmative defense if the defendant conclusively establishes all the elements of the

affirmative defense. Frost Nat'l Bank v. Fernandez, 315 S.W.3d 494, 508–09 (Tex.

2010); Chau v. Riddle, 254 S.W.3d 453, 455 (Tex. 2008); see TEX. R. CIV. P. 166a(b), (c).

                                            III. ILLEGALITY

        By his first issue, Morales argues “the trial court erred in granting [the District’s]

Motion for Traditional Summary Judgment on the employment agreement based upon

the affirmative defenses of illegality and lack of consideration.” As argued in its motion

for summary judgment and on appeal, the District contends that the employment contract

against Deborah Cordova and Kittleman, Thomas & Gonzalez, L.L.P., an attorney and law firm that
provided legal services to the District in relation to Morales’s employment contract. The causes of action
against those defendants were severed into a separate cause that is not before us.
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is illegal because it constitutes a gratuitous grant of public funds to an individual in

violation of the Texas Constitution. See TEX. CONST. art. III, § 52(a).

A. Applicable Law

       “A contract to do a thing which cannot be performed without a violation of the law

is void.” Plano Surgery Ctr. v. New You Weight Mgmt. Ctr., 265 S.W.3d 496, 501 (Tex.

App.—Dallas 2008, no pet.) (quoting Lewis v. Davis, 199 S.W.2d 146, 148–49 (1947)).

When the illegality does not appear on the face of the contract, it will not be held illegal

unless the facts showing its illegality are before the court. Id. When two constructions

of a contract are possible, courts must apply the construction that does not result in a

violation of the law. See Ross v. Union Carbide Corp., 296 S.W.3d 206, 218 (Tex.

App.—Houston [14th Dist.] 2009, pet. denied); Gupta v. Eastern Idaho Tumor Inst., Inc.,

140 S.W.3d 747, 752 (Tex. App.—Houston [14th Dist.] 2004, pet. denied). “Unless the

contract's language is ambiguous, contract interpretation is a legal question that we

review de novo.” AmeriPath, Inc. v. Hebert, 447 S.W.3d 319, 329 (Tex. App.—Dallas

2014, pet. denied).

       Article III, section 52(a) of the Texas Constitution provides, in relevant part, that,

“the Legislature shall have no power to authorize any county, city, town or other political

corporation or subdivision of the State to lend its credit or to grant public money or thing

of value in aid of, or to any individual, association or corporation[.]” TEX. CONST. art. III,

§ 52(a).   The purpose of this constitutional provision is to prevent the gratuitous

application of public funds to any individual. Graves v. Morales, 923 S.W.2d 754, 757

(Tex. App.—Austin 1996, pet. denied).        But the Constitution does not invalidate an

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expenditure which incidentally benefits a private interest if it is made for the direct

accomplishment of a legitimate public purpose. Brazoria County v. Perry, 537 S.W.2d
89, 90 (Tex. Civ. App.—Houston [1st Dist.] 1976, no writ).        Section 52(a) does not

prohibit payments to individuals that: (1) serve a legitimate public purpose; and (2) afford

a clear public benefit received in return. Tex. Mun. League Intergovernmental Risk Pool

v. Tex. Workers' Comp. Comm'n, 74 S.W.3d 377, 383 (Tex. 2002).

B. Analysis

       The employment contract entitles Morales to a cash severance equal to the

remaining compensation due for the term of his employment if the District terminates the

contract for any reason other than death or disability.      The District argues that the

contract lacks consideration and is illegal because it entitles Morales to five years of

compensation in the event he failed to report for even one day of work, presumably

because the contract is silent regarding the right of the District to terminate his

employment for good cause.       The District cites no legal authority in support of this

contention, and at least one Texas court has rejected this argument. See Ingram v.

Dallas County Water Control & Improvement Dist. No. 7, 425 S.W.2d 366, 367 (Tex. Civ.

App.—Dallas 1968, no writ) (refusing to agree with appellant's contention that

employment contract for term silent on issue of termination for cause must be paid in full

upon discharge for any reason). We also note that the contract unambiguously provides

for Morales’s performance as a general manager as consideration for compensation.

       The District does not argue that Morales failed to perform his obligations under the

contract. “As a rule, parties have the right to contract as they see fit as long as their

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agreement does not violate the law or public policy.” In re Prudential Ins. Co. of America,

148 S.W.3d 124, 129 (Tex. 2004). Parties are bound by the terms of their agreement as

written, and this court cannot rewrite the agreement to change its terms.           Alamo

Community College Dist. v. Miller, 274 S.W.3d 779, 785–86 (Tex. App.—San Antonio

2008, no pet.).

      The employment contract does not constitute a gratuitous payment of public funds

to Morales. The contract clearly serves a legitimate public purpose—the employment of

the District’s general manager. The benefit received in return by the District under the

contract is the performance by Morales of the duties of general manager.              The

“severance” required for early termination of the contract by the District was a term that

was negotiated by the parties, presumably to achieve that end. “A political subdivision’s

paying public money is not ‘gratuitous’ if the political subdivision receives return

consideration.” Tex. Mun. League Intergovernmental Risk Pool, 74 S.W.3d at 383.

      Texas courts have long held that the performance of employment duties is

consideration for the payment of benefits to employees under the terms of a contract, and

therefore such payments are not unconstitutional gratuities. See Byrd v. City of Dallas,

6 S.W.2d 738, 740 (Tex. 1928) (explaining that “[t]here is no reason why a city may not

engage its servants and employees upon any terms of payment acceptable to both

parties”); City of Corpus Christi v. Hershbach, 536 S.W.2d 653 (Tex. Civ. App.—Corpus

Christi 1976, writ ref'd n.r.e.); City of Galveston v. Landrum, 533 S.W.2d 394 (Tex. Civ.

App.—Houston [1st Dist.] 1976, writ ref'd n.r.e.); Devon v. City of San Antonio, 443
S.W.2d 598 (Tex. Civ. App.—Waco 1969, writ ref'd); City of Orange v. Chance, 325

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S.W.2d 838 (Tex. Civ. App.—Beaumont 1959, no writ); City of San Antonio v. Baird, 209
S.W.2d 224, 225 (Tex. Civ. App.—San Antonio 1948, writ ref’d); see also TEX. EDUC.

CODE ANN. § 11.201(c) (West, Westlaw through Ch. 46 2015 R.S.) (authorizing severance

payments to superintendents of a school district on early termination of the

superintendent's contract); TEX. ATT'Y GEN. OP. No. H-786 (1976) (severance payment of

one year salary for terminated college professor is constitutional so long as it is a term or

condition of employment).

       We conclude that Morales’s employment contract does not authorize a gratuitous

payment of public funds in violation of the Texas Constitution. We also conclude that the

contract is not void for lack of consideration. See Ingram, 425 S.W.2d at 367 (concluding

that consideration for written employment contract for term was the mutual covenants of

the parties—i.e., employee would perform certain services for which he was to be

compensated at stipulated rate). The trial court erred in granting the District’s motion for

summary judgment. We sustain Morales’s first issue.

                     IV. MORALES’S MOTION FOR SUMMARY JUDGMENT

       By his second issue, Morales argues the trial court erred in denying Morales’s

motion for partial summary judgment on its breach of contract claim. Morales moved for

summary judgment on his breach of contract claim pursuant to Rule 166a(c). See TEX.

R. CIV. P. 166a(c) (movant is entitled to summary judgment on claim if he can show that

there is no genuine issue of material fact and that he is entitled to judgment as matter of

law). The trial court denied his motion.

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      Generally, the denial of a motion for summary judgment is an interlocutory order

that, with a few exceptions, is not appealable. Cincinnati Life Ins. Co. v. Cates, 927
S.W.2d 623, 627 (Tex. 1996). One exception arises when the parties file motions for

summary judgment on the same issues and the trial court grants one motion and denies

the other. See Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005).

Under this scenario, the appellate court considers the summary judgment evidence

presented by both sides, determines all questions presented, and, if the reviewing court

determines that the trial court erred, renders the judgment the trial court should have

rendered. See id. However, this exception is inapplicable when the parties do not move

for summary judgment on the same issue. Mitchell v. Mitchell, 445 S.W.3d 790, 800–01

(Tex. App.—Houston [1st Dist.] 2014, no pet.).

      The parties in this case moved for summary judgment on different issues—Morales

moved for summary judgment on his breach of contract claim and the District moved for

summary judgment solely on the basis of two affirmative defenses. Therefore, the denial

of Morales’s motion for summary judgment is not properly before this court. See Mitchell,
445 S.W.3d at 800–01 (declining to rule on denial of plaintiff’s motion for partial summary

judgment on breach of fiduciary duty claim, where defendant moved for summary

judgment solely on the basis of his affirmative defense); Givens v. Ward, 272 S.W.3d 63,

67 (Tex. App.—Waco 2008, no pet.) (explaining that appellate court may reverse and

remand if parties' competing motions for summary judgment are premised on different

grounds); see also Frankoff v. Norman, No. 14–11–00152–CV, 2012 WL 2394050, at *6,

8 (Tex. App.—Houston [14th Dist.] Jun. 26, 2012, no pet.) (mem. op.) (reversing trial

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court's grant of summary judgment on defendant's affirmative defenses and overruling

plaintiff's appellate challenge to trial court's denial of plaintiff's motion for summary

judgment on breach of fiduciary duty claim because challenge did not fit within any

exception to general rule that appellate courts may not review denials of summary

judgment).

      We also note that Morales’s motion for partial summary judgment did not seek a

final judgment and, therefore, we lack appellate jurisdiction to review the trial court's

denial of that motion. See Alaniz v. Rebello Food & Beverage, LLC, 165 S.W.3d 7, 20

(Tex. App.—Houston [14th Dist.] 2005, no pet.).     Accordingly, we overrule Morales’s

second issue.

      Finally, given our disposition of Morales’s first two issues, we do not reach his

remaining issues. TEX. R. APP. P. 47.1.

                                    V. CONCLUSION

      We reverse the judgment of the trial court granting the District’s motion for

summary judgment and remand the cause for further proceedings consistent with this

opinion.

                                                GREGORY T. PERKES
                                                Justice
Delivered and filed the
24th day of September, 2015.

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