SCOT TWOFER ON “ULTRA VIRES”

Meyers v. JDC/Firethorne, Ltd.
Supreme Court of Texas, No. 17-0105 (June 8, 2018)
Justice Green’s Opinion linked here

City of Houston v. Houston Municipal Employees Pension System
Supreme Court of Texas, No. 17-0242 (June 8, 2018)
Justice Johnson’s Opinion linked here

Lyndon Bittle

The Texas Supreme Court issued two opinions on Friday, June 8, dealing with claims of governmental immunity and the concept of “ultra vires” actions. The cases reach different conclusions in applying immunity to different situations. In Meyers, the Court held a developer lacked standing to enjoin a county commissioner’s interference in a construction-application process over which the commissioner had no authority. In the Houston case, a dispute between two governmental bodies, the Court held the City had no discretion to circumvent a pension system’s determination of who was an “employee” for which the City was obligated to make pension contributions.

Meyers v. JDC/Firethorne, Ltd. involved a dispute between a land developer and an individual county commissioner in Fort Bend County. JDC/Firethorne complained that Meyers, the elected commissioner for the precinct in which JDC/Firethorne sought to develop a new subdivision, was improperly interfering with the processing of plat applications and construction plans it had submitted for several sections of the proposed development. The developer sued Meyers in his individual and official capacities, as well the County and its chief engineer. The claim against Meyers in his official capacity was based on the argument that he was acting ultra vires, i.e. outside his legal authority, in his efforts to have the chief engineer delay processing of the plat applications to “exact a concession” on a related project. Meyers filed a plea to the jurisdiction on governmental-immunity grounds, arguing that he was exercising his authority and acting within his discretion, not ultra vires.

The trial court denied the plea to the jurisdiction and entered an injunction ordering Meyers to “cease and desist … from instructing the [engineer] to ‘hold,’ ‘delay,’ or otherwise impede plats and construction plans submitted by JDC/Firethorne.” Meyers filed an interlocutory appeal, and the court of appeals affirmed. On review in the Texas Supreme Court, the parties continued to press their ultra vires arguments. The Supreme Court, however, took a different approach, sua sponte, and decided the core issue was whether the developer had standing to seek the injunction against Meyers.

The Court noted the plaintiff’s standing is essential to a court’s subject-matter jurisdiction, and has three elements: “the plaintiff suffered an injury, this injury is fairly traceable to the defendant’s conduct, and this injury is likely to be redressed by the requested relief.” The Court did not address the first two elements, finding the third dispositive. As the Court explained, “JDC/Firethorne’s insistence that Meyers has acted ‘without authority’ as to the plat-application process betrays the deficiency in standing—if Meyers has no legal power over the processing and presentment of plat applications, then JDC/Firethorne has not shown a substantial likelihood that its requested relief will remedy its alleged injury.” Under the County’s Regulation of Subdivisions, the county engineer was charged with processing plat applications and presenting them to the Commissioners Court. And Meyers “acts only as one member of a five-person body.” The Court noted, however, that the developer had sued “other defendants who could remedy its alleged injury”—the county engineer, the Commissioners Court, and the County. So, although the injunction against Meyers was vacated and the claims against him in his official capacity were dismissed, claims against him as an individual, as well as claims against the other defendants, remain in the trial court.

The second case, City of Houston v. Houston Municipal Employees Pension System, involved a dispute between two governmental entities, which the Court described as “a relationship that is not working out well.” Indeed, this was the Court’s second opinion addressing disputes concerning the Houston Pension System, which was organized and operates under section 6243h of the Texas Revised Civil Statutes. The City was required to contribute specific amounts to the Pension Fund for each City employee. To reduce its payment obligations, the City created three “local government corporations” and transferred many of its employees to those entities. The Pension System deemed all of the transferred individuals “employees” of the City, and a group of affected individuals, joined by the City, sued the Pension System. In Klumb v. Houston Municipal Employees Pension System, 458 S.W.3d 1 (Tex. 2015), the Court upheld the Pension System’s plea to the jurisdiction, holding its board did not act ultra vires when issuing its resolutions defining “employee” because the statute expressly granted that authority to the board.

After Klumb, the Pension System asked the City to provide payroll data and other related information on the transferred employees. The City did not provide the requested information, and did not contribute to the pension fund for those individuals. The Pension System sued for a writ of mandamus against the City, claiming it “acted ultra vires by failing to perform the purely ministerial function of providing the required employee information and by failing to budget for the retirement contributions.” The City filed a plea to the jurisdiction, which the trial court denied. The court of appeals affirmed, as did the Texas Supreme Court.

On the core issues, the Court held its holding in Klumb disposed of any argument concerning the Pension System’s statutory authority to define “employee,” and the statute “leaves no room for the City to exercise its discretion regarding whether the payments must be made” and the information provided. While the City retained discretion to determine how to comply, it had no discretion not to comply. Finally, the Court held the case was not rendered moot by 2017 amendments to the statute allowing the City to amortize its “legacy liability” over a thirty-year period.