Court Opinion

ID: 9733708
Source: CourtListenerOpinion
Date Created: 2023-08-26 17:15:00.516279+00
Date Added: 2024-06-11T15:27:52.365493
License: Public Domain

NORMAN R. LEE, Senior Justice,
dissenting.
The en banc majority reverses and renders judgment against Kallina based on two conclusions: (1) the City’s fixed-asset policies were not adopted under any statute or ordinance; and (2) there was no evidence Kallina believed in good faith that Lathenia Harris was an appropriate law enforcement authority to which he could report theft. However, there was legally sufficient evidence that the fixed-asset policies were adopted under city ordinances, and there was legally sufficient evidence Kallina believed in good faith that Harris was an appropriate law enforcement authority. Therefore, I respectfully dissent.
The Texas Whistleblower Act does not apply only to reports of criminal violations; rather it also applies to reports of violations of rules adopted under a statute or ordinance. See Tex. Gov’t Code § 554.001(1)(C); Jones v. City of Stephenville, 896 S.W.2d 574, 575-76 (Tex.App.-*176Eastland 1995, no writ) (report of violation of policy contained in Employee Handbook was a report of violation of law because handbook was a rule adopted under a statute or ordinance). Kallina asserts two different theories of recovery under the Texas Whistleblower Act. Under one theory, Kallina reported the violation of fixed-asset policies adopted under a statute or ordinance to Harris, who he believed in good faith was authorized to regulate under or enforce these policies.
Although the majority relies on the recent Needham case, Needham does not apply to Kallina’s theory of recovery under the fixed-asset policies. See Texas Dept. of Transp. v. Needham, 82 S.W.3d 314, 315-22 (Tex.2002). Needham is not on point because it involved alleged violations of the criminal law — not violations of policies adopted under a statute or ordinance — and because, unlike in Needham, there was sufficient evidence at trial that Harris was an appropriate law enforcement authority for these policies. See id. In this case, Harris was authorized to regulate under and enforce the fixed-assets policies. Kallina does not rely on internal disciplinary procedures as the plaintiff did in Needham. See id. at 321-22. Furthermore, the majority reads Needham too broadly. In discussing the determination of whether the plaintiff has reported a violation of law in good faith to an appropriate law enforcement authority, the Needham court stressed that “the particular law the public employee reported violated is critical to the determination.” Id. at 320.
The jury found in Kallina’s favor, and, on appeal, Kallina has asserted his theory based on the fixed-asset policies. The City of Houston Fixed Asset Accounting Policies were admitted in evidence at trial. These policies indicate that they were adopted under City of Houston ordinances (emphasis added):
The responsibilities of the Director of Finance and Administration for fixed assets are described in the Code of Ordinances. Chapter 2, Sections 2-51(6), and 2-52(19), and relate to the physical custody, security and inventory control thereof on behalf of the Citizens. The Code of Ordinances states that:
“... the Director of Finance and Administration, subject to the direction and supervision of the Mayor, shall.... Be the chief custodian of all city property, both real and personal, except property that is assigned by law or directive of the mayor to the custody of another city officer or department. Following the conclusion of each city fiscal year, the director shall provide the mayor with a full annual inventory of all property within his custody.”
“The Department of Finance and Administration shall be charged with the following duties ... (19) Manage the city’s real and personal property within the custody of the director, including surplus city personal property, and maintain a perpetual inventory thereof.”
The Director of Finance and Administration shall have responsibility for developing and implementing operating policies and procedures covering the management and security of all City-owned property. ... In carrying out these duties, the Director shall be responsible for:
h) Establishing a Fixed Asset Management program within Finance and Administration to coordinate the development and dissemination of fixed asset policies and procedures....
*177In conducting a legal-sufficiency analysis, we review the evidence in a light that tends to support the disputed findings and disregard all evidence and inferences to the contrary. Lee Lewis Const., Inc. v. Harrison, 70 S.W.3d 778, 782 (Tex.2001). If more than a scintilla of evidence exists, it is legally sufficient. Id. More than a scintilla of evidence exists if the evidence furnishes some reasonable basis for differing conclusions by reasonable minds about a vital fact’s existence. Id. at 782-83. After citing two ordinances regarding the responsibility of the Department of Finance and Administration for managing city property and maintaining a perpetual inventory thereof, the policies state that the Director of Finance and Administration has responsibility for developing and implementing operating policies and procedures for the management and security of all city property. While the policies do not explicitly recite that they are adopted under these ordinances; in these circumstances, the reasonable meaning of the above language is that the polices were adopted under these ordinances. Based on the above language from the fixed-asset policies, there was legally sufficient evidence that these policies were adopted under sections 2-51(6) and 2-52(19) of the Houston Code of Ordinances. See City of Houston, Texas, Code of ORdinances §§ 2-51(6), 2-52(19); City of Stephenville, 896 S.W.2d at 576.
The majority states that these policies do not indicate they were adopted under the authority of any ordinance and that the ordinances do not delegate any rule-making authority to Director of Finance and Administration. While there is no Texas Supreme Court authority on point, the majority’s holding is too narrow, and it conflicts with a decision of the Eastland Court of Appeals. See City of Stephenville, 896 S.W.2d at 576 (report of violation of policy contained in Employee Handbook was a report of violation of law because handbook was a rule adopted under a statute or ordinance).
The Grabowski and Ruiz cases cited by the majority are not on point. See Harris Cty. Precinct Four Constable Dept. v. Grabowski, 922 S.W.2d 954, 956 (Tex.1996); Ruiz v. City of San Antonio, 966 S.W.2d 128, 130 (Tex.App.-Austin 1998, no pet.). Unlike Kallina, the plaintiff in Grabowski did not allege that the departmental polices in question were adopted under a statute or ordinance. See Grabowski 922 S.W.2d at 955-56. The Ruiz court held that summary judgment was improper because Ruiz had alleged violations of the criminal law, without addressing whether any departmental policies were adopted under a statute or ordinance. See Ruiz, 966 S.W.2d at 130-31. The Ruiz court correctly stated that the Texas Whistle-blower Act does not protect violations of internal policy not adopted under a statute or ordinance. See Ruiz, 966 S.W.2d at 130 (citing Tex. Gov’t Code § 554.001(1) and Grabowski). Conversely, the Texas Whistleblower Act does protect violations of policies adopted under a statute or ordinance. See Tex. Gov’t Code § 554.001(1)(C); City of Stephenville, 896 S.W.2d at 576.
The Texas Whistleblower Act does not require that the policies explicitly state that they are adopted under an ordinance, and it does not require that the ordinance explicitly give rule-making authority to the entity that made the rule. See Tex. Gov’t Code § 554.001(1)(C); City of Stephenville, 896 S.W.2d at 575-76. The policies recite that Houston ordinances charge the Director of Finance and Administration with responsibility for managing city property and maintaining a perpetual inventory thereof. They then state that the Director is responsible for implementing policies for the management and security of all city *178property, and they outline policies for the management and security of all city property. The fixed-asset policies were adopted under City of Houston ordinances, and, therefore, they are a law whose violation may be reported under the Texas Whistleblower Act. See Tex. Gov’t Code § 554.001(1); City of Stephenville, 896 S.W.2d at 575-76.
Policy # 1 requires city employees to exercise the utmost care and diligence in protecting the city property placed under their control:
City employees, regardless of classification or function, shall exercise the utmost care and diligence in the use, maintenance and protection of all public assets placed under their control or custody.
Policy # 14 requires that departments maintain current and accurate fixed-asset-inventory records:
The departments shall maintain accountability for their equipment and current and accurate fixed asset physical inventory records by conducting physical inventories under the coordination of the Finance & Administration Department (F & A).
The evidence strongly supports the jury’s finding that Kallina believed in good faith that Harris was an appropriate law enforcement authority as to the fixed-asset policies. As the majority correctly states, the evidence showed that Harris had administrative responsibility for the assets in the Broad Street Warehouse and that she regulated and enforced departmental rules for protecting those assets. Harris testified that she enforces the rules regarding inventory and that if somebody has a problem with these rules he can come to her about it. Kallina and Harris both testified that Harris had the authority to enforce these policies regarding the inventory at the Broad Street Warehouse. Considering the evidence in a light that tends to support the jury’s findings and disregarding all evidence and inferences to the contrary, there was legally sufficient evidence to support the jury’s finding that Kallina believed in good faith Harris was authorized to regulate under or enforce the fixed-asset policies and that this belief was reasonable in light of Kallina’s training and experience. See Needham, 82 S.W.3d at 320-21; Lee Lewis Const. Inc., 70 S.W.3d at 782-87.
There was also legally sufficient evidence that Kallina was terminated for reporting in good faith violations of Policies # 1 and # 14 to Harris. Kallina testified he determined that there were approximately 800 assets listed on the inventory records that were not in the Broad Street Warehouse and that these assets were worth in excess of $400,000. Kallina testified that Jerry Ferguson, the manager of the Broad Street Warehouse, was not responsive and that he was stalling in response to Kallina’s requests that he take steps to maintain current and accurate inventory records at the Broad Street Warehouse. There was evidence that, both orally and by his memorandum of December 8,1997, Kallina informed Harris of this discrepancy and failure to maintain accurate inventory records. There was evidence that Kallina reported Ferguson’s failure to exercise the utmost care and diligence in the use and protection of all public assets placed under his control or custody. There was also evidence that Kallina reported the failure to maintain current and accurate physical inventory records by conducting physical inventories under the coordination of the Finance & Administration Department. Considering the evidence in a light that tends to support the jury’s findings and disregarding all evidence and inferences to the contrary, there was legally sufficient evidence to *179support a jury finding that Kallina was terminated for reporting in good faith violations of Policies # 1 and # 14 to Harris. See Lee Lewis Const., Inc., 70 S.W.3d at 782-87. Therefore, the majority errs in sustaining the City’s second issue on the ground that there was legally insufficient evidence to support the jury’s finding of liability under Kallina’s fixed-asset-policies theory.
Alternatively, the majority holds there was no evidence Kallina believed in good faith that Harris was an appropriate law enforcement authority to which he could report theft. For this holding, the majority relies on the Needham case. See Needham, 82 S.W.3d at 315-22. Even as to the theory that Kallina was reporting a violation of the criminal law against theft, the Needham case is not directly on point. In Needham, the only evidence of the plaintiffs good faith belief that the report was made to an appropriate law enforcement authority was his employer’s disciplinary process, his participation therein, and his belief that his employer could forward information to another entity to prosecute his co-worker for drunk driving. See Needham, 82 S.W.3d at 321-22. In this case, the alleged law enforcement authority herself testified that her job was to enforce the rules and to make sure there was no criminal activity at the Broad Street Warehouse. Therefore, even after Needham, there wa& legally sufficient evidence to support the jury’s finding that Kallina reported in good faith to an appropriate law enforcement authority under both of his theories of recovery. Under both of these theories, this court errs in determining that there was legally insufficient evidence. For all of the above reasons, I respectfully dissent.