CITY NOT IMMUNE FROM SUIT FOR ALLEGED VIOLATIONS OF ORDINANCE CONCERNING EMPLOYEE COMPENSATION

City of Dallas v. Arredondo
Dallas Court of Appeals, Nos. 05-12-00963-CV, 05-12-00965-CV, 05-12-00966-CV, 05-12-00967-CV (consolidated) (August 13, 2013)
Justices O’Neill, FitzGerald, and Lang-Miers (Opinion)
The Court of Appeals affirmed the trial court’s denial of the City of Dallas’s pleas to the jurisdiction in lawsuits brought by police officers and firefighters for alleged violations of a city ordinance regarding their compensation.  The court concluded the ordinance was a unilateral contract that satisfied the waiver of immunity for breach-of-contract claims contained in the Texas Local Government Code.  The City therefore was not immune from suit, and its pleas to the jurisdiction were properly denied.

In 1979, the City of Dallas enacted an ordinance that mandated a pay raise for police officers and firefighters and required the differential among pay grades to remain the same.  Beginning in 1994, certain police officers and firefighters (the “Officers”) filed multiple suits against the City for failing to maintain the required differential among pay grades.  The Officers contended the ordinance was a contract requiring the City to maintain the 1979 pay-grade differential indefinitely.  The City responded that the differential requirement was intended to apply only to the one-time pay raise made in 1979.  After multiple appeals to the Court of Appeals and Texas Supreme Court, followed by remand to the trial court, the City filed pleas to the jurisdiction in each of the lawsuits, contending it was immune from the Officers’ claims for breach of contract.  The trial court denied the pleas.

The Court of Appeals relied heavily on the Texas Supreme Court’s 2011 opinion in City of Houston v. Williams in analyzing the City’s assertion of governmental immunity.  The court in City of Houston stated that the Local Government Code waives immunity for contract claims if the alleged contract is in writing, states the essential terms of the parties’ agreement, provides for goods or services to the government entity, and is properly executed on behalf of the government entity.  The Texas Supreme Court concluded that Houston’s ordinance relating to termination payments to firefighters was a contract under this test, and Houston therefore lacked immunity.

The Court of Appeals found the case before it indistinguishable from City of Houston.  As in City of Houston, the court considered the ordinance together with other documents, including other provisions of the City’s code, the City’s charter, and City resolutions, to determine whether these documents together constituted a contract.  The requirement of a writing was indisputably satisfied.  The Court concluded the requirement of a statement of essential terms was also satisfied, as in City of Houston, by the City Code’s definitions of the responsibilities, work schedules, and compensation principles applicable to the Officers.  The court also agreed with the Officers that the alleged contract called for them to provide services to the City.  Finally, the court concluded the ordinance was properly executed by the City.  Although not signed by the city manager and city attorney, as the City urged was necessary, the ordinance was passed in accordance with the City’s charter, making it “a valid and binding ordinance.”  And the ordinance’s use of mandatory language like “shall” evidenced the City’s intent to be bound to act in a specific way.  The ordinance therefore constituted a contract on which the City could properly be sued.

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