Fort Worth Transportation Authority v. Thomas

303 S.W.3d 850, 2009 WL 3490976

• Court: Court of Appeals of Texas
• Decided: February 4, 2010
• Docket: 2-08-236-CV
• Status: Published

Opinions

OPINION

ANNE GARDNER, Justice.

Introduction

Appellants Fort Worth Transportation Authority (FWTA) and McDonald Transit, Inc. appeal the trial court’s order granting appellee Ricky C. Thomas’s motion for summary judgment in this breach of contract case. In two issues, appellants contend that the trial court improperly granted Thomas’s summary judgment motion because he failed to exhaust contractual remedies before filing his lawsuit and because a collective bargaining agreement unambiguously permitted the termination of his employment. We affirm.

Background Facts

Thomas’s employment with appellants

Thomas began working for appellants¹ as a bus driver in January 1989. He injured his back in 2001 and was unable to work for an extended period of time. Thomas requested and received twelve weeks’ leave under the federal Family and Medical Leave Act (FMLA),² from July 13 through October 3, 2001. Appellants classified Thomas’s absences on his Operator Work Record as “FMLA” from July 13 through October 3, 2001. One of appellants’ employees wrote in an e-mail on October 3, 2001, that “[t]oday is the last day of FMLA for Ricky. Starting tomorrow, 10/4, he is just out sick.” Appellants thereafter changed the classification of Thomas’s absences on his Operator Work Record to “ill/sickness” beginning October 4, 2001.

While he was unable to work, Thomas collected workers’ compensation benefits and received a series of approximately seven injections as treatment for his back injury. Thomas was initially released to return to work in April 2002, but appellants did not allow him to return to work because he failed an April 16, 2002 performance evaluation.³ In the interim, Thomas received a verbal warning, on April 5, and a written warning, on April 30, regarding his absences. The written warning stated, in part, “You now have 146 absences. Please keep in contact with the ‘T’ every two weeks.”

Appellants terminated Thomas’s employment by letter dated August 1, 2002. The letter cited a provision in a Union Contract Agreement⁴ that required automatic termination for an absence from work lasting greater than one year when such an absence was caused by anything other than military leave.

Thomas filed a grievance with appellants on August 5, 2002, asking for reinstatement because he alleged that his performance evaluation was not required for all of appellants’ employees. Appellants denied the grievance four days later. Thomas proceeded through two more unsuccessful steps in the grievance process,⁵ and the union did not thereafter pursue arbitration on his behalf.

The CBA and the Operator Handbook

Effective October 1, 2000, appellants entered into the CBA with Teamsters Local Union No. 997.⁶ The provision in Article 20 under which appellants terminated Thomas’s employment states in relevant part: “the following shall be cause for immediate dismissal without prior warnings: ... being on light duty status and/or absence [sic] from work for any reason other than military leave for a period of more than one (1) year.”⁷

Appellants also issued employees an Operator Handbook, effective July 2001. The Operator Handbook included, among other things, appellants’ FMLA and attendance control policies. Concerning FMLA leave, the Operator Handbook stated: “The T complies with the Family and Medical Leave Act (FMLA) for serious health problems” and that “[a]s with holidays, vacation leave, personal days, funeral leave and jury duty, FMLA is not counted as absenteeism.” The attendance control policy in the Operator Handbook stated that it should be “constructed [sic] in accordance with” the CBA and outlined a progressive disciplinary process for excessive absenteeism. The Operator Handbook also specifically defined “absence” under its attendance control policy:

Definition of “Absence”

The term “absence” means every absence from work, regardless of the reason, except for the following:

1. vacations

2. holidays

3. floating holiday

4. jury duty

5. court appearance as defined in Article 37 of the labor agreement

6. military leave

7. approved union business

8. approved bereavement

9. approved administrative leave

10. leave of absence approved under Article 19

11. absences protected by the Family and Medical Leave Act of 1993

12. absent from assigned work for no more than sixty (60) minutes [Emphasis added.]

The proceedings in the trial court

Thomas filed suit against appellants in January 2003, alleging in his original petition that they violated Texas labor laws when they terminated his employment. Thomas filed a second amended petition in August 2006 that included a breach of contract claim and claims of retaliation and discrimination under the labor code.⁸

Thomas filed a motion for summary judgment in November 2007, contending that appellants breached the CBA.⁹ Thomas argued that because the Operator Handbook’s definition of “absence” excluded FMLA leave, he was actually “absent” for less than one year; appellants therefore breached the CBA by terminating his employment when they did. Appellants responded to Thomas’s summary judgment motion by asserting that his contractual claim was precluded because he did not seek arbitration before bringing suit, that the Operator Handbook could not be treated as a contract, and that the CBA justified his termination. The trial court granted Thomas’s summary judgment motion in January 2008. Thomas then non-suited his other claims, and appellants timely filed their notice of appeal.

Standard of Review

We review the trial court’s grant of summary judgment de novo. See Gray v. Nash, 259 S.W.3d 286, 289 (Tex.App.-Fort Worth 2008, pet. denied). A plaintiff is entitled to summary judgment on a cause of action if it conclusively proves all essential elements of the claim. See Tex.R. Civ. P. 166a(a), (c); MMP, Ltd. v. Jones, 710 S.W.2d 59, 60 (Tex.1986). In other words, the plaintiff meets the summary judgment burden by establishing that no genuine issue of material fact exists and that it is entitled to judgment as a matter of law. Tex.R. Civ. P. 166a(c); Sw. Elec. Power Co. v. Grant, 73 S.W.3d 211, 215 (Tex.2002); City of Houston v. Clear Creek Basin Auth., 589 S.W.2d 671, 678 (Tex.1979).

When reviewing the trial court’s grant of a plaintiffs summary judgment motion, we take as true all evidence favorable to the defendant, and we indulge every reasonable inference and resolve any doubts in the defendant’s favor. See IHS Cedars Treatment Ctr. of DeSoto, Tex., Inc. v. Mason, 143 S.W.3d 794, 798 (Tex.2004). Evidence that favors the plaintiffs position will not be considered unless it is uncontroverted. See Great Am. Reserve Ins. Co. v. San Antonio Plumbing Supply Co., 391 S.W.2d 41, 47 (Tex.1965). However, we must consider whether reasonable and fair-minded jurors could differ in their conclusions in light of all of the evidence presented. See Wal-Mart Stores, Inc. v. Spates, 186 S.W.3d 566, 568 (Tex.2006); City of Keller v. Wilson, 168 S.W.3d 802, 822-24 (Tex.2005). Summary judgment is proper where, as here, the parties do not dispute the relevant facts. Havlen v. McDougall, 22 S.W.3d 343, 345 (Tex.2000).

Exhaustion of Contractual Remedies

In their first issue, appellants contend that the trial court’s summary judgment was improper because Thomas waived his breach of contract claim by failing to fully comply with the CBA’s grievance procedure. Specifically, appellants assert that Thomas failed to pursue arbitration after the three-step grievance procedure, thus waiving his breach of contract claim. Thomas contends, in response, that the CBA specifically exempts “management rights” from mandatory arbitration and that the decision to terminate Thomas’s employment was one of the “management rights.”¹⁰

‘Where there is a labor contract between a union and an employee which provides procedures for settlement of disputes between the employee and employer, an employee is not entitled to redress in the courts where he fails to exhaust his remedies under the contract.” Lindsey v. Gen. Dynamics Corp., 450 S.W.2d 895, 895-96 (Tex.Civ.App.-Waco 1970, no writ); see Int’l Union United Auto. Aerospace & Agric. Implement Workers of Am. Local 119 v. Johnson Controls, Inc., 813 S.W.2d 558, 565 (Tex.App.-Dallas 1991, writ denied) (op. on reh’g) (indicating that claims may be barred because of a plaintiffs failure to comply with the grievance process in a collective bargaining agreement); Roberts v. City of Corpus Christi, 744 S.W.2d 214, 215-16 (Tex.App.-Corpus Christi 1987, no writ) (“[A]n employee generally must exhaust the grievance remedies provided for in a collective bargaining agreement or other contract before bringing suit.”). Here, Article 12 of the CBA indicates that “any controversy” concerning the application of any of the CBA’s provisions “shall be treated as a grievance and shall be settled, if possible.” Appellants relied on a provision of the CBA to justify Thomas’s termination, and Thomas has contested the application of this section; thus, his complaints were subject to the CBA’s grievance procedure.

The parties agree that Thomas proceeded through the three steps of the CBA’s grievance process described above. They also agree that the union did not demand arbitration following the three-step grievance process. Thomas asserts, however, that his discharge was not subject to arbitration under the CBA. We agree.

Article 13 (titled “Arbitration”), Section A of the CBA provides: “Should any grievance remain unsettled after exhausting [the three-step grievance procedure], either party hereto shall, if the party desires, demand arbitration.... Otherwise, the grievance shall be considered settled.” However, Article 13, Section C of the CBA states in part, “Issues arising out of the exercise of the rights reserved to management under the title Rights of Management above, including management’s determination of the facts underlying its exercise of such rights, shall not be subject to arbitration.” Article 3 of the CBA, titled “Management Rights,” ¹¹ states,

Except to the extent expressly abridged by a specific provision of [the CBA], the Company reserves and retains, solely and exclusively, all of its Common Law rights to manage its business, as such rights existed prior to the execution of [the CBA]. Prominent among such unqualified rights ... are the following: ... to hire, lay-off, assign, transfer, and promote employees ... [;] to adopt and enforce working rules; to discipline and discharge employees for just cause.12, [Emphasis added.]

We conclude that the unambiguous cumulative effect of Article 13, Section C and Article 3 is that appellants’ “unqualified” decision to discharge Thomas based on what they allege was just cause under the CBA was not subject to arbitration because this decision was one of their “Management Rights.” Therefore, we hold that Thomas complied with the Article 12 grievance procedure, although not successfully demanding arbitration, by proceeding through all three grievance steps and that the CBA did not require Thomas to also seek arbitration.¹³ We overrule appellants’ first issue.

Thomas’s Discharge Under the CBA and the Operator Handbook

In their second issue, appellants argue that the trial court improperly-granted summary judgment because the Operator Handbook should not have been considered to alter the CBA’s unambiguous language. Thomas argues that the definition of “absence” in the Operator Handbook, which excludes FMLA leave from an “absence,” must be considered with Article 20 of the CBA because the CBA does not define “absence.” ¹⁴ Neither party argues that the CBA is ambiguous. Instead, they offer competing contentions as to whether the definition of “absence” in the Operator Handbook may be considered when interpreting Article 20 of the CBA.

Lack of clarity or a disagreement among the parties does not necessarily create an ambiguity. See Universal Health Servs., Inc. v. Renaissance Women’s Group, P.A., 121 S.W.3d 742, 746 (Tex.2003). Rather, whether “a contract is ambiguous is a question of law that must be decided by examining the contract as a whole in light of the circumstances present when the contract was entered.” Id.

When construing contracts and other written instruments, our primary concern is to ascertain the true intent of the parties as expressed in the instrument. See NP Anderson Cotton Exch., L.P. v. Potter, 230 S.W.3d 457, 463 (Tex.App.-Fort Worth 2007, no pet.); see also City of San Antonio v. Scott, 16 S.W.3d 372, 377 (Tex.App.-San Antonio 1999, pet. denied) (applying general principles of contract construction to the interpretation of a collective bargaining agreement). To ascertain the parties’ intent, we may consider together all writings relating to the same transaction, even if they were executed at different times. DeWitt County Elec. Coop., Inc. v. Parks, 1 S.W.3d 96, 102 (Tex.1999). We must examine and consider the entire contract in an effort to harmonize and give effect to all provisions so that none are rendered meaningless. Potter, 230 S.W.3d at 463; see also J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 229 (Tex.2003). “We construe contracts ‘from a utilitarian standpoint bearing in mind the particular business activity sought to be served’ and “will avoid when possible and proper a construction which is unreasonable, inequitable, and oppressive.’ ” Frost Nat’l Bank v. L & F Dist., Ltd., 165 S.W.3d 310, 312 (Tex.2005) (quoting Reilly v. Rangers Mgmt., Inc., 727 S.W.2d 527, 530 (Tex.1987)). “If, after the pertinent rules of construction are applied, the contract can be given a definite or certain legal meaning, it is unambiguous and we construe it as a matter of law.” Id. (citing Webster, 128 S.W.3d at 229).

To resolve appellants’ second issue, we must determine whether the parties intended to exempt FMLA leave from a one-year absence under Article 20 of the CBA. The provision at issue permits termination of employment for an absence exceeding one year and specifically exempts military leave; it does not expressly reference FMLA leave. In fact, the CBA does not define “absence” and does not set forth appellants’ FMLA policy. Appellants’ FMLA policy and a definition of “absence” are instead contained in the Operator Handbook.¹⁵ The question, then, is whether the Operator Handbook should be considered with the CBA to determine if Thomas’s “absence” exceeded one year.

“Under generally accepted principles of contract interpretation, all writings that pertain to the same transaction will be considered together, even if they were executed at different times and do not expressly refer to one another.” Parks, 1 S.W.3d at 102. The CBA became effective October 1, 2000, and the Operator Handbook is dated July 2001, so they were not contemporaneously executed. They may nevertheless be considered together if they relate to the same transaction and the surrounding circumstances do not indicate that they should not be considered together. Id.; see also Miles v. Martin, 159 Tex. 336, 321 S.W.2d 62, 65 (1959).

The CBA set forth the agreements between appellants and the union with regard to the terms and conditions of employment for the union’s members. It addressed, among other things, rights reserved to management, strikes and lockouts, uniforms, work schedules, discipline, termination for “just cause,” and grievance procedures. The Operator Handbook similarly set forth appellants’ personnel policies, generally with more specificity than the CBA, and included policies relating to employee benefits, health and safety, FMLA leave, and absenteeism. The Operator Handbook referenced the CBA, and its attendance control policy provided that it was to be “constructed [sic] in accordance with” the CBA. Under the circumstances of this case, the CBA and the Operator Handbook related to the same transaction because they set forth the terms and conditions of Thomas’s employment with appellants.

We must next consider whether the surrounding circumstances prevent the CBA and the Operator Handbook from being considered together. In this regard, the CBA stated in Article 42: “This Agreement together with its Exhibits constitutes the only agreement between the parties hereto, and no previous addenda, memo-randa^] understandings or practices, whether written or oral, shall be binding upon either party.”¹⁶ [Emphasis added.] The CBA did not, however, state that subsequent documents, such as the Operator Handbook, cannot be considered with the CBA. The Operator Handbook, on the other hand, stated that its attendance control program was “intended to be and should be constructed [sic] in accordance with” the CBA and any successor CBAs. The Operator Handbook also stated, however, that “[i]t is not an employment contract,” that it “is not intended to create contractual obligations of any kind,” and that it is “not intended to disagree in word or intent with the current Labor Agreement.” Even though the Operator Handbook does not purport to create contractual rights, we find that we may consider its terms in determining whether the parties intended to exempt FMLA leave from the provision in Article 20 under which appellants terminated Thomas’s employment. The CBA and the Operator Handbook related to the same transaction, and their terms do not clearly prevent them from being considered together. See Parks, 1 S.W.3d at 102; Miles, 321 S.W.2d at 65. Thus, we will consider the CBA and Operator Handbook together to determine the parties’ intent with respect to FMLA leave and absences exceeding one year.¹⁷

Appellants terminated Thomas’s employment under the provision in Article 20 that states: “the following shall be cause for immediate dismissal without pri- or warnings: ... being on light duty status and/or absence [sic] from work for any reason other than military leave for a period of more than one (1) year.” The provision does not expressly exempt FMLA leave from an absence justifying termination.¹⁸ However, the Operator Handbook states: “The T complies with the Family and Medical Leave Act (FMLA) for serious health problems.” The Operator Handbook also provides that “[a]s with holidays, vacation leave, personal days, funeral leave and jury duty, FMLA is not counted as absenteeism.” [Emphasis added.] The Operator Handbook further defines “absence” as “every absence from work, regardless of the reason, except for the following: ... (11) absences protected by the Family and Medical Leave Act of 1993.”¹⁹ Considering the CBA and the Operator Handbook together, we conclude that FMLA leave cannot be counted as an “absence” under Article 20 of the CBA when terminating an employee for an absence exceeding one year.²⁰

Based on the foregoing, we hold that Article 20 of the CBA must be interpreted to exclude FMLA leave when calculating whether Thomas was absent from work for more than one year. The summary judgment evidence establishes that Thomas first missed work on July 13, 2001, when his FMLA leave began, and that his FMLA leave ended on October 3, 2001. The summary judgment evidence also establishes that appellants terminated Thomas’s employment on August 1, 2002. Excluding Thomas’s FMLA leave, Thomas was actually “absent” from work for less than one year when appellants terminated his employment on August 1, 2002. Appellants therefore breached the CBA by terminating Thomas’s employment when they did. The trial court properly granted summary judgment to Thomas on his breach of contract claim. We overrule appellants’ second issue.

Conclusion

Having overruled each of appellants’ issues, we affirm the judgment of the trial court.

LIVINGSTON, J., filed a dissenting opinion.

1 . McDonald manages the public transportation bus system owned by FWTA, which is a political subdivision of the state. McDonald and FWTA do not argue on appeal that their liability should be considered separately. Thus, we refer to McDonald and FWTA, collectively, as appellants.

2 . See 29 U.S.C.A. §§ 2601-2654 (West 2009). The FMLA guarantees qualifying employees twelve weeks of unpaid leave each year for disabling health problems, family members' serious illnesses, or the birth of a new son or daughter; employers are prohibited from interfering with such leave. See Ragsdale v. Wolverine World Wide, Inc., 535 U.S. 81, 84-86, 122 S.Ct. 1155, 1158-60, 152 L.Ed.2d 167 (2002).

3 . Thomas again failed a performance evaluation in June 2002.

4 . The parties refer to this agreement as a collective bargaining agreement, and we will refer to the agreement as the "CBA” in this opinion.

5 . During the grievance process, appellants gave Thomas another opportunity to pass the performance evaluation and be reinstated. It is unclear from the record whether Thomas accepted appellants' offer to retake the performance evaluation.

6 . Thomas affirmed during deposition testimony that he was a member of this union; he also filed an affidavit stating that he was “covered by the [CBA].”

7 . Appellants have maintained throughout the proceedings in the trial court and on appeal that this provision of the CBA was the sole basis of the termination of Thomas's employment.

8 . Thomas’s only pleaded theory of recovery at this time is his theory that appellants breached the terms of the CBA. Thomas nonsuited all of his other claims.

9 .Thomas also sought summary judgment on his discrimination claim, but the trial court denied the motion as to that claim. Thomas does not challenge that ruling in this appeal.

10 . Appellants contended in their reply brief and at oral argument that Thomas failed to assert the “Management Rights” exclusion from the arbitration requirement in the trial court and that this exclusion cannot be raised for the first time on appeal. We disagree. The record indicates that Thomas raised the "Management Rights” issue in his reply to appellants’ response and objections to his amended summary judgment motion.

11 . While there is no provision of the CBA titled “Rights of Management” as denoted by Article 13, Section C, we conclude that Article 3, pertaining to “Management Rights,” is the title to which Article 13, Section.C refers.

12 . Appellants have not asserted that any provision of the CBA expressly abridged its "management right” to discharge Thomas's employment.

13 .Thomas also contends that appellants forfeited any right to arbitration by violating the grievance procedure and by their litigation conduct and that any failure to arbitrate was harmless error. Because we conclude that the arbitration requirement did not apply to Thomas’s discharge, we do not address these other assertions.

14 . Thomas also argues on appeal that his FMLA leave cannot be counted as an "absence” under Article 20 because doing so violates the FMLA. Because “[t]he assertion of new grounds before the appellate court in support of summary judgment may prejudice the nonmovant’s ability to demonstrate that the issue raises a genuine issue of material fact,” we cannot affirm a summary judgment "on grounds not expressly set out in the motion or response.” Stiles v. Resolution Trust Corp., 867 S.W.2d 24, 26 (Tex.1993). Thomas did not include this argument in his amended motion for summary judgment or in any other document filed with the trial court. Thomas cited the applicable federal regulation, 29 C.F.R. § 825.220 (2009), in his reply to appellants’ response and objections to his first amended motion for summary judgment, but only for the proposition that he was not required to arbitrate his claim against appellants. We are therefore prohibited from affirming the summary judgment on this ground. See Stiles, 867 S.W.2d at 26; Franco v. Slavonic Mut. Fire Ins. Ass’n, 154 S.W.3d 777, 786 (Tex.App.-Houston [14th Dist.] 2004, no pet.).

15 . Federal law requires appellants to include their FMLA policies in the Operator Handbook. See 29 C.F.R. § 825.300(a)(1), (3) (West 2009) (requiring FMLA-covered employers to provide its eligible employees with a notice explaining the provisions of the FMLA and to "includ[e] the notice in employee handbooks ... if such written materials exist").

16 . This type of contractual provision is commonly referred to as a "merger clause.” "Merger occurs when the same parties to an earlier agreement later enter into a written integrated agreement covering the same subject matter.” Texas A & M Univ.—Kingsville v. Lawson, 127 S.W.3d 866, 872 (Tex.App.-Austin 2004, pet. denied). This merger clause does not prevent consideration of the Operator Handbook because the CBA pre-dates the Operator Handbook.

17 .Our precedent establishes that as a general rule, employee handbooks and policy manuals constitute general guidelines in the employment relationship and do not create implied contracts between the employer and employee that alter the at-will employment relationship. Brown v. Sabre, Inc., 173 S.W.3d 581, 585 (Tex.App.-Fort Worth 2005, no pet.). Our decision today does not conflict with Brown. Thomas was not an at-will employee; the CBA governed the terms and conditions of his employment with appellants. And, contrary to the dissent’s characterization of our holding, we do not say that the Operator Handbook created contractual rights. We consider the CBA with the Operator Handbook only to determine the intent of the parties concerning FMLA leave in the context of Article 20 of the CBA.

18 . This provision also does not exempt bereavement leave from an absence justifying termination, but we note that Article 36 of the CBA provides: "Employees taking approved bereavement leave shall not be charged with an absence.”

19 . There is no dispute in this case that Thomas was in fact eligible for leave under appellants’ FMLA policy as stated in the Operator Handbook.

20 . Although "a court may conclude that a contract is ambiguous even in the absence of such a pleading by either party,” McCreary v. Bay Area Bank & Trust, 68 S.W.3d 727, 730-31 (Tex.App.-Houston [14th Dist.] 2001, pet. dism’d), we do not find that the CBA is ambiguous. Instead, after applying the pertinent rules of construction and considering the CBA and the Operator Handbook together, we find that the provision in Article 20 under which Thomas was terminated is susceptible to only one reasonable interpretation: FMLA leave cannot be counted as an absence when terminating an employee for an absence exceeding one year.