Frank Watson v. Houston Independent School District (HISD) Dr. Rod Paige, Individually and in His Official Capacity as Superintendent of HISD Larry Marshall, Individually and in His Official Capacity as a Member of the HISD Board of Trustees

• Court: Court of Appeals of Texas
• Decided: August 9, 2005
• Docket: 14-03-01202-CV
• Status: Published

Opinion

Reversed and Remanded and Memorandum Opinion filed August 9, 2005

Reversed and Remanded and Memorandum Opinion filed August 9, 2005.

In The

Fourteenth Court of Appeals

____________

NO. 14-03-01202-CV

FRANK WATSON, Appellant

V.

HOUSTON INDEPENDENT SCHOOL DISTRICT (HISD); DR. ROD PAIGE, Individually and in His Official Capacity as Superintendent of HISD; LARRY MARSHALL, Individually and in His Official Capacity as a Member of the HISD Board of Trustees, Appellees

On Appeal from the 151^st District Court

Harris County, Texas

Trial Court Cause No. 00-30349

M E M O R A N D U M   O P I N I O N

Appellant, Frank Watson, appeals the grant of summary judgment in favor of appellees, Houston Independent School District (HISD), Dr. Rod Paige, and Larry Marshall (collectively, Athe District@).  The District terminated Watson=s employment as an Assistant Superintendent nine months into his two-year contract.  Watson subsequently sued the District for various claims, alleging that he was dismissed for reporting corrupt activities occurring within HISD.  The trial court granted the District=s request for summary judgment without specifying the grounds.  In his sole point of error, Watson complains the trial court erred in entering summary judgment against him because: (1) he did not waive any rights to sue the District, especially for the particular claims he brought; and (2) his claims are not moot despite his acceptance of a $76,145.07 payment from the District.  We reverse and remand to the trial court.

Factual and Procedural Background

In the late 1990s, HISD began privatizing its employee health care program.  Watson, an HISD employee since 1968, became concerned with some of the District=s practices regarding the privatization.  He reported these concerns to several HISD administrators, citing the District=s allegedly preferential treatment of People 1^st Healthcare Network, the only minority-owned Independent Physician Association (IPA).^[1]  Allegedly, this had negative implications for other IPAs under contract with HISD and created a boon for several HISD administrators who had close ties to People 1^st.  More importantly, Watson claimed it violated HISD=s conflict of interest policies and had potential legal ramifications for HISD and those involved.  While this was ongoing, Watson began working for HISD under a new contract where he was given the position of Assistant Superintendent for Employee Benefits and Claims Management.  Under the terms of the contract, Watson=s employment was to last from September 1999 to August 2001.  However, the District fired him on May 19, 2000.

In accordance with several provisions in the employment contract, the District declined to provide Watson with any procedural mechanism to contest his dismissal, but instead, wrote him a check for $76,145.07, the equivalent of one-year=s salary plus sick leave.^[2]  Watson accepted and cashed the check on June 15, 2000, but then filed suit against the District the very next day.  Watson claimed that his termination was due directly to his objections to the District=s healthcare policies.  He sought damages under the Texas Whistleblower Act,^[3] under the Texas Constitution,^[4] and for tortious interference with a contract. 

The District filed a motion for summary judgment relying on the contractual provisions governing termination.  In its motion, the District argued that it followed the proper procedure in dismissing Watson when it paid him a year=s salary upon termination.  It further claimed that because Watson accepted and cashed the check, he waived any right to sue for his dismissal.  In addition, the District argued the payment for one-year=s salary was the full extent of damages to which Watson would be entitled in any event.  Therefore, the District posited that Watson=s claims were moot because he had no recoverable damages.  The trial court ultimately entered summary judgment for the District. 

Standard of Review

Under Rule 166a of the Texas Rules of Civil Procedure, summary judgment is proper when the movant establishes that there are no genuine issues of material fact and that he is entitled to judgment as a matter of law.  Tex. R. Civ. P. 166a(c); Lear Siegler, Inc. v. Perez, 819 S.W.2d 470, 471 (Tex. 1991).  A defendant seeking summary judgment must, as a matter of law, either: (1) negate at least one element of each of the plaintiff=s theories of recovery; or (2) plead and prove each element of an affirmative defense.  Sci. Spectrum, Inc. v. Martinez, 941 S.W.2d 910, 911 (Tex. 1997); Centeq Realty, Inc. v. Siegler, 899 S.W.2d 195, 197 (Tex. 1995).  If the defendant establishes a right to summary judgment, the burden shifts to the plaintiff to present evidence raising a material fact issue.  Centeq Realty, 899 S.W.2d at 197.

When a motion for summary judgment is based on several grounds and the trial court fails to specify the basis for granting summary judgment, the appellant must show that each ground alleged in the motion is insufficient to support summary judgment.  FM Props. Operating Co. v. City of Austin, 22 S.W.3d 868, 872B73 (Tex. 2001).  Therefore, because the District argued in its summary judgment motion that Watson=s claims were both waived and moot, and the trial court did not specify why it granted summary judgment, we must address both arguments.^[5]  See FM Props. Operating Co., 22 S.W.3d at 872B73.  We will affirm if either theory supports the summary judgment.  Star-Telegram, Inc. v. Doe, 915 S.W.2d 471, 473 (Tex. 1995).  However, when reviewing the grant of summary judgment, we view the evidence in the light most favorable to the non‑movant and make every reasonable inference and resolve all doubts in favor of the non‑movant.  Centeq Realty, 899 S.W.2d at 197.

Waiver

In the District=s motion for summary judgment and subsequent pleadings filed with the trial court, it argued that a threshold legal issue prevented the case from proceeding to trial, namely that Watson waived any right to sue.  The District specifically posited that because Watson voluntarily accepted the cash payment from HISD after he was terminated, he waived his right to assert any and all claims against the District.

Waiver is an affirmative defense and may be grounds for summary judgment.  See generally Tenneco Inc. v. Enter. Prods. Co., 925 S.W.2d 640, 643 (Tex. 1996) (providing an example of when evidence is sufficient to establish waiver for summary judgment).  However, to be entitled to summary judgment on a waiver theory, the defendant must put forth sufficient evidence of the plaintiff=s Aintentional relinquishment of a known right or intentional conduct inconsistent with claiming that right.@  Id.; see also Jernigan v. Langley, 111 S.W.3d 153, 156 (Tex. 2003) (quoting Sun Exploration & Prod. Co. v. Benton, 728 S.W.2d 35, 37 (Tex. 1987)); Robinson v. Robinson, 961 S.W.2d 292, 299 (Tex. App.CHouston [1st Dist.] 1997, no writ).  This is a Aheavy burden@ and must be proved by showing a Avoluntary, intelligent and knowing@ waiver was made by the plaintiff.  Gonzalez v. City of Hidalgo, 489 F.2d 1043, 1052 (5th Cir. 1973).

Waiver is largely a matter of intent and, therefore, is generally a fact issue.  Tenneco Inc., 925 S.W.2d at 643; Cont=l Casing Corp. v. Siderca Corp., 38 S.W.3d 782, 789 (Tex. App.CHouston [14th Dist.] 2001, no pet.).  Only where facts are clearly established and are undisputed does waiver become a question of law for the courts to decide.  Tenneco Inc., 925 S.W.2d at 643.  For a court to determine if a waiver has in fact occurred, it must examine the acts, words, or conduct of the parties.  Robinson, 961 S.W.2d at 299.  The court should find waiver where the party Aunequivocally manifested@ an intent to no longer assert its rights.  See id.  Absent express intent, a party=s actions may support a finding of implied waiver only if the surrounding facts and circumstances clearly demonstrate intent.  Cont=l Casing, 38 S.W.3d at 789 (citing Motor Vehicle Bd. v. El Paso Indep. Auto. Dealers Ass=n, 1 S.W.3d 108, 111 (Tex. 1999)).

In support of its contention that Watson waived any right to sue, the District directs our attention to Watson=s employment contract.  The District claims the contract set out the full rights and responsibilities of the parties upon termination and contends that Paragraph 7 was the exclusive provision governing Watson=s rights.^[6]  Paragraph 7 of the employment contract states:

The Administrator [Watson] may be terminated during the term of this Contract without cause upon the payment by the District of the unpaid base salary for the remainder of the Contract term . . . with a maximum payment of one-year=s salary, including up to six months accumulated sick leave . . . ; in the alternative, at the District=s option the Administrator may be reassigned to an administrative position at a base salary equal to the salary actually received by the Administrator before being employed under this Contract.

The District claims this paragraph represented a clear, express waiver of Watson=s right to file suit against it.  However, Paragraph 7 simply established a procedure whereby the District could terminate employment during the term of the contract.  See generally Renken v. Harris County, 808 S.W.2d 222, 225 (Tex. App.CHouston [14th Dist.] 1991, no writ) (AWhen, as here, rules and procedures are set forth, the court must carefully determine whether the employer is granting [or denying] a right . . . or is defining procedures that are to be complied with when discharging an employee.@).  In other words, this provision simply required the District to elect one of two options when terminating Watson=s employment during the contract=s term.  The District could either: (1) pay Watson the unpaid base salary for the remainder of the termCup to one-year=s salaryCincluding accumulated sick leave, i.e., $76,145.07 in this case; or (2) reassign Watson to an administrative position at a reduced salary.  The District opted to offer the cash payment.  No provision of Paragraph 7 can reasonably be construed as a clear, voluntary, and knowing waiver by Watson of his right to sue the District.^[7]

Moreover, Watson presented evidence that he did not intend to waive any rights to sue the District upon, allegedly wrongful, termination.  Along with his summary judgment response, Watson provided an affidavit explaining that he understood his contract to bar only his rights under the Term Contract Nonrenewal Act.  We agree with Watson that Paragraph 8 was the only contractual provision that represented a clear, express waiver and that it only waived his rights to request an administrative review of his dismissal.  Therefore, nothing in the contract represents a clear, express waiver of Watson=s right to sue the District for alleged violations of the law.

In further support of its argument, the District cites several cases where a party was held to have waived the right to sue an employer based on the party=s acceptance of post-termination benefits.  In two of these cases there was a clear, express waiver which dictated the parties= rights and responsibilities.^[8]  However, here there was no clear, express waiver of Watson=s right to bring suit against the District.  In the third case relied on by the District, Hurt v. Standard Oil Co., the court dismissed an employee=s breach of contract claim against his former employer because he accepted monthly retirement checks and other retirement benefits over the course of nearly two years.  444 S.W.2d 342, 346B47 (Tex. Civ. App.CEl Paso 1969, no writ).  The court explained that, by accepting retirement benefits for nearly two years, the employee was estopped from claiming he was forced to retire and waived his right to recover damages for lost wages.  Id.  Therefore, the court in Hurt held the employee=s actions in accepting benefits from the employer over the course of two years constituted sufficient evidence of an intent to waive his rights.  Id.  This holding is consistent with the concept that a party may impliedly waive known rights through action, words, or conduct.  See Robinson, 961 S.W.2d at 299; see also Cont=l Casing, 38 S.W.3d at 789 (explaining that a party=s actions may support a finding of implied intent if the actions clearly demonstrate the intent). 

An important distinction here is that Watson filed suit almost immediately after he was terminated.  While he did accept a one time cash payment, we do not believe this acceptance Aunequivocally manifested@ his intent to waive his right to sue the District for any and all claims.  See Robinson, 961 S.W.2d at 299.  Neither do we find it Aclearly demonstrated@ an intent sufficient to constitute an implied waiver.  Instead, as explained above, Watson simply accepted the payment as a condition of his termination, not in lieu of any right to sue the District for any and all claims.  See Neiman-Marcus Group, Inc. v. Dworkin, 919 F.2d 368 (5th Cir. 1990) (holding that, absent evidence of an express or implied agreement to the contrary, a former employee was not estopped from suing for breach of contract even though he accepted monthly paychecks after being terminated).  Therefore, the cases relied on by the District are not dispositive of the issue presented here.

Nothing in the record indicates, as a matter of law, that Watson clearly intended or understood his acceptance of the cash payment to waive any rights to file suit against the District.  Therefore, we find that there is insufficient proof that an express waiver occurred as a matter of law, and further find that there was conflicting evidence as to Watson=s intent which sufficiently raised a fact issue as to whether an implied, Avoluntary, intelligent and knowing@ waiver occurred.  See Tenneco Inc., 925 S.W.2d at 643; Cont=l Casing Corp., 38 S.W.3d at 789.  Accordingly, we hold that the District failed to sustain the Aheavy burden@ required for summary judgment on its waiver theory.

Mootness

The District also alleged in its summary judgment motion that Watson=s claims were moot.  In support of this theory, the District again relies on Watson=s acceptance of the cash payment.  More precisely, the District argued that Watson=s recovery was limited to what he has already received, i.e., $76,145.07.  As such, it asserted that Watson=s claims were moot because he has no recoverable damages.  Ultimately, this argument is an attack on the damages element of Watson=s claims.

It is axiomatic that a plaintiff must sustain some injury before he can bring suit.  Spera v. Fleming, Hovenkamp & Grayson, P.C., 25 S.W.3d 863, 873 (Tex. App.CHouston [14th Dist.] 2000, no pet.).  Proof of damages is required for any plaintiff to prevail, and Auncertainty as to the fact of legal damages is >fatal to recovery.=@  Id. (quoting McKnight v. Hill & Hill Exterminators, Inc., 689 S.W.2d 206, 207 (Tex. 1985)).  A corollary to this notion is the idea of mootness.  The mootness doctrine limits courts to deciding cases in which an actual controversy exists.  Lincoln Prop. Co. v. Kondos, 110 S.W.3d 712, 715 (Tex. App.CDallas 2003, no pet.).  Under the mootness doctrine, a controversy must involve a dispute of something more than a hypothetical or abstract character.  Securtec, Inc. v. County of Gregg, 106 S.W.3d 803 (Tex. App.CTexarkana 2003, pet. denied) (citing Scurlock Permian Corp. v. Brazos County, 869 S.W.2d 478, 487 (Tex. App.CHouston [1st Dist.] 1993, writ denied)).  A case becomes moot when (1) there is no real controversy, or (2) when a party seeks judgment which, when rendered, cannot have any practical legal effect.  Id.  (citing Scholl v. Firemen=s & Policemen=s Civil Serv. Comm=n, 520 S.W.2d 470, 471 (Tex. Civ. App.CCorpus Christi 1975, no writ)). 

The District contends that because it provided the full rights to which Watson was entitled under the contract, he has no recoverable damages and thus, his claims are moot.  The District again relies on Paragraph 7 of the employment contract, but also cites Paragraph 8 of the contract and section 21.304 of the Texas Education Code to support its mootness theory.  We have already noted, however, that Paragraph 8 merely waives Watson=s right, if any, to request an administrative hearing under the Education Code.  Thus, Paragraph 8 is not relevant, and has no application, to the District=s mootness contention.  Further, section 21.304 of the Texas Education Code, likewise, does not apply to this case.  Section 21.304 governs only the appeals of a teacher=s dismissal to the Commissioner of Education.^[9]  This action does not involve an administrative review of the District=s actions and at no point in time has the Commissioner of Education been involved in the proceedings.  Therefore, our analysis is again limited to determining whether Paragraph 7 of the contract, and Watson=s acceptance of the one-time cash payment, makes Watson=s claims moot.

As we have already explained, we do not agree with the District=s application of Paragraph 7.  The contract unquestionably allowed the District, under Paragraph 7, to terminate Watson=s employment without cause during the term of the contract in exchange for a lump sum payment equal to one-year=s salary.  We agree that the District fully performed its obligations under the contract in relation to how Watson was fired.  But the crux of Watson=s claims go to why he was fired rather than how.  The District=s application of the mootness doctrine may have been proper had Watson merely asserted a claim for breach of contract.  In that case, the District would have fulfilled its contractual obligations by tendering the $76,145.07 payment to Watson upon termination and he would have no further recoverable damages.  However, Watson=s dispute is not that his employment was terminated in violation of his contract, but rather, that it was terminated in violation of the law.  Therefore, the specific causes of action for which Watson seeks redress are not governed exclusively by the contract.  Because each of Watson=s causes of action provides for damages beyond what the District provided, he has a valid justiciable controversy.

For example, the Texas Whistleblower Act entitles a successful plaintiff to recoverCin addition to actual damagesCup to $250,000 for emotional damages as well as injunctive relief, court costs, attorney=s fees and reinstatement.  Tex. Gov=t Code Ann. ' 554.003 (Vernon Supp. 2004B05).  Because Watson sued under the Whistleblower Act, he was entitled to seek each of these damages or remedies over and above the contractually required $76,145.07.  Moreover, Watson requested equitable relief in the form of reinstatement, an injunction to prohibit further acts of retaliation by the District, and declaratory relief.^[10]  These types of equitable remedies are generally recoverable on constitutional claims.  See, e.g., Haynes v. City of Beaumont, 35 S.W.3d 166, 182 (Tex. App.CTexarkana 2000, no pet.) (explaining that even when damages at law are precluded, Aequitable remedies for violation of constitutional rights may be enforced@).  Also, assuming he could succeed on his tortious interference claim, Watson would be entitled to recover damages beyond the $76,145.07 the District paid him.  This could include damages for mental anguish and harm to his reputation,^[11] as well as interest and court costs.  See generally Michol O=Connor, O=Connor=s Texas Causes of Action 101B02, at ' 3 (2004) (listing the damages recoverable in a tortious interference claim).  Therefore, his claims are not limited by the $76,145.07 payment provided by the District.

The District also cites KTRK Television, Inc. v. Fowkes, 981 S.W.2d 779 (Tex. App.CHouston [1st Dist.] 1998, writ denied), for the proposition that Watson has no recoverable damages and, therefore, has no real controversy for the courts to decide.  However, the plaintiff in Fowkes conceded that his salary and benefits were not affected by the defendant=s allegedly tortious interference with his employment relationship.  Id. at 790.  The First Court of Appeals relied on this concession, and the fact that the plaintiff remained employed with the city, in finding that he suffered no damages.  Id.  Here, Watson was terminated from his position with HISD and seeks damages incurred as a result of that, allegedly wrongful, termination.  Because he alleged causes of action which allow for additional damages, i.e., more than simply lost wages for breach of his employment contract, his claims are not moot despite accepting the District=s check.  Accordingly, we sustain Watson=s sole point of error.

Having found the trial court erred in granting summary judgment on the limited grounds alleged, we reverse its judgment and remand the cause for further proceedings consistent with this opinion.

/s/      J. Harvey Hudson

Justice

Judgment rendered and Memorandum Opinion filed August 9, 2005.

Panel consists of Justices Yates, Anderson, and Hudson.

---

^[1]  Specifically, Watson reported that the District was improperly influencing the decisions of HISD employees who had not designated an IPA provider so those employees would select People 1^st over other providers.  Watson suggested the ultimate goal was to increase the number of patients and, thus, revenue for People 1^st.

^[2]  One provision permitted HISD to terminate an administrator=s employment without cause upon payment of up to one-year=s salary, including accumulated sick leave.

^[3]  Tex. Gov=t Code Ann. ' 554.001B.010 (Vernon 2004 & Supp. 2004B05).

^[4]  Tex. Const. art. I, '' 8, 19.

^[5]  In its motion, the District argued that it was entitled to summary judgment Abased on Affirmative Defense No. 6 in the HISD Defendant=s Answer.@  Affirmative Defense No. 6 stated, A[t]he HISD Defendants assert the affirmative defenses of waiver, estoppel, and offer and acceptance, based on provisions 7 and 8 of [Watson=s] contract with the District.@  The District further argued in its summary judgment motion that Watson=s claims were moot. 

On appeal, the District also claims that Watson=s Whistleblower action should be dismissed in light of the Texas Supreme Court decision in Texas Dept. of Transp. v. Needham, 82 S.W.3d 314 (Tex. 2002).  Without commenting on the merits of this point, we refuse to uphold the summary judgment on this basis because the District did not present the issue to the trial court.  See Tex. R. Civ. P. 166a(c); Sci. Spectrum, Inc., 941 S.W.2d at 911B12; see also Johnson v. Brewer & Pritchard, P.C., 73 S.W.3d 193, 204 (Tex. 2002) (explaining that summary judgment issues not expressly presented to the trial court cannot be considered by an appellate court).  Because the scope of our review is expressly limited to those issues addressed in the District=s summary judgment motion, we will reserve our analysis to the District=s waiver and mootness arguments.

^[6]  The District made it clear, throughout the proceedings below, that it was limiting its  interpretation of Watson=s termination to Paragraph 7 of the contract.  For example, the District argued in its reply to Watson=s summary judgment response: AWatson was terminated under paragraph 7, not paragraph 8 . . . .@ (empahsis added).  The District further stated in a hearing on Watson=s Motion for Reconsideration or New Trial: A[i]n this case there was -- in an at-will employment, you simply fire a person.  You fire them, and they are gone.  Here you had two steps on the part of both parties.  The district activated [sic] the Paragraph 7.  And just to be clear, this is not a Paragraph 8 case. . . . [Watson] was not terminated pursuant to Paragraph 8.  He was terminated pursuant to Paragraph 7.@  (emphasis added).

^[7]  We note that another contract provision contained a clear waiver of Watson=s rights.  Paragraph 8 explained that Ain consideration for being employed in a position with a title of Superintendent . . . the Administrator knowingly waives any claim to any rights the Administrator might otherwise have under the Term Contract Nonrenewal Act, Sections 21.201‑21.211, Texas Education Code.@  Ultimately, this provision waived Watson=s rights, if any, to request an administrative hearing under the Education Code.  See Tex. Educ. Code Ann. ' 21.201B.213 (Vernon 1996 & Supp. 2004B05).  This is the type of clear, express waiver courts are willing to enforce.  See, e.g., Smith v. Golden Triangle Raceway, 708 S.W.2d 574, 575B76 (Tex. App.CBeaumont 1986, no writ) (enforcing a contractual waiver which stated Athe undersigned . . . hereby releases, waives, discharges, and covenants not to sue . . . [and] voluntarily signs the release and waiver of liability . . . understand[ing] it is a release of all claims. . . .@).  However, nothing in Paragraph 7 suggests that Watson was relinquishing any rights he might have other than the right to continued employment.  Had the District intended Paragraph 7 to waive Watson=s rights to bring suit, it could have included language similar to that of Paragraph 8. 

^[8]  Specifically, the District cites Wright v. Heritage Envtl. Servs., No. 99 C 7579, 2000 WL 1474410, at *1B5 (N.D. Ill. 2000 Oct. 4, 2000) (holding that an employee was precluded from pursuing a Title VII claim where the employee executed a clear release and received benefitsCin the form of cash paymentsCin consideration for the release) and Pack v. City of Fort Worth, 552 S.W.2d 895 (Tex. Civ. App.CFort Worth), writ ref=d n.r.e., 557 S.W.2d 771 (Tex. 1977) (dismissing the personal injury claims of an employee against the city after the employee executed a releaseCwhich stated it was a Arelease from all claims for all liability of the City of Fort Worth on account of your employment@C and in turn, received medical expenses, a year=s salary, and retirement benefits from the city).

^[9]  Section 21.304(f) states A[i]nstead of reinstating a teacher [as determined appropriate by the Commissioner of Education], the school district may pay the teacher one year=s salary to which the teacher would have been entitled . . . .@  Tex. Educ. Code Ann. ' 21.304(f) (Vernon 1996).  The rest of the subchapter explains the procedure whereby a teacher may appeal his or her termination to the commissioner.   See Tex. Educ. Code Ann. ' 21.301B.357 (Vernon 1996 & Supp. 2004B05).  However, Watson did not seek redress via this administrative remedy because he was precluded from doing so under his contract.

^[10]  Watson cited Chapters 37 and 65 of the Texas Civil Practice and Remedies Code to support his claims for equitable relief.  See Tex. Civ. Prac. & Rem. Code Ann. '' 37.001B.011, 65.001B.044 (Vernon 1997 & Supp. 2004B05).

^[11]  The Restatement (Second) of Torts, ' 774A(c) provides that a party who is liable to another for tortious interference with a contract is liable for Aemotional distress or actual harm to reputation, if they are reasonably to be expected to result from the interference.@  Restatement (Second) of Torts ' 774A (1977); see also Comstock Silversmiths, Inc. v. Carey, 894 S.W.2d 56, 57 n.2 (Tex. App.CSan Antonio 1995, no writ); Exxon Corp. v. Allsup, 808 S.W.2d 648, 660 (Tex. App.CCorpus Christi 1991, writ denied); King v. Acker, 725 S.W.2d 750, 754 (Tex. App.CHouston [1st Dist.] 1987, no writ).  Furthermore,  comment (d) to ' 774A explains that tortious interference is an action in tort where damages are not based upon contract rules; therefore, Ait is not required that the loss incurred be one within the contemplation of the parties to the contract itself at the time it was made.@  Restatement (Second) of Torts ' 774A cmt. d (1977).