City of Houston v. Rhule

• Decision Date: 07 June 2012
• Docket Number: No. 01–09–01079–CV.,01–09–01079–CV.
• Citation: 377 S.W.3d 734
• Parties: The CITY OF HOUSTON, Appellant v. Christopher RHULE, Appellee.
• Court: Texas Court of Appeals

377 S.W.3d 734

The CITY OF HOUSTON, Appellant

v.Christopher RHULE, Appellee.

No. 01–09–01079–CV.

Court of Appeals of Texas,

Houston (1st Dist.).

June 7, 2012.

Alton J. Hall Jr., Orelia Darcele Holley, Cozen O'Connor, Dean G. Pappas, Mary M. Markantonis, Pappas & Suchma PC, Houston, TX, for Appellant.

John S. Powell, The Powell Law Firm, Pearland, TX, for Appellee.

Panel consists of Justices KEYES, SHARP, and MASSENGALE.

OPINION ON REHEARING

EVELYN V. KEYES, Justice.

Following the issuance of our opinions in this case on July 21, 2011, appellant, the City of Houston (“the City”), filed a motion for rehearing and a motion to dismiss the appeal on jurisdictional grounds.¹ We grant rehearing to address both the City's motion for rehearing and its motion to dismiss. We withdraw our opinion and judgment of July 21, 2011 and issue this opinion and judgment in their stead.

In its motion to dismiss, the City contends that the trial court and this Court lack jurisdiction to entertain this suit because appellee, Christopher Rhule, failed to exhaust his administrative remedies before bringing the suit.

In four issues on appeal, the City argues that (1) the trial court lacked subject matter jurisdiction over Rhule's damages to the extent that the requested damages exceeded remedies allowed by the Texas Workers' Compensation Act (the “Act” or “TWCA”), and, thus, the trial court erred in denying the City's plea to the jurisdiction; (2) the trial court erred in submitting a question to the jury that allowed it to award Rhule damages for physical pain as a result of the City's breach of the settlement agreement; (3) the trial court erred in entering judgment on the jury's award of damages for mental anguish because there was no evidence of Rhule's propensity for mental anguish at the time the parties entered into the settlement agreement; and (4) the trial court's award of attorney's fees was erroneous because Rhule failed to establish any damages that would support an award of attorney's fees, or, alternatively, Chapter 38 of the Civil Practice and Remedies Code does not authorize an award of attorney's fees against a municipality.

We deny the motion to dismiss and affirm the judgment of the trial court.

BACKGROUND

Rhule, a firefighter for the Houston Fire Department, suffered a permanent on-the-job spinal injury on February 25, 1988. He timely filed a workers' compensation claim with the Industrial Accident Board, now the Texas Workforce Commission (the Commission or the TWC).² The Board ruled in Rhule's favor and issued an award that required the City to provide Rhule with “Lifetime Medical Care and Treatment” for his spinal injury, including pain management. The City appealed the results of the administrative proceeding to the 281st District Court of Harris County, in cause number 89–26686, seeking to set aside the award.

In lieu of trying the case to the jury, the parties reached a settlement agreement which provided that Rhule was to receive $36,000 and that the City was discharged and released from any claim Rhule might have for workers' compensation benefits or for other claims arising from his injury, “except that CHRISTOPHER A. RHULE shall receive lifetime open reasonable and necessary medical [expenses] for the injuries made the basis of this claim as provided by the [TWCA] with a mutually agreed upon doctor” (the “Settlement Agreement”). The trial court entered an agreed judgment to this effect in cause number 89–26686 on August 31, 1990 (the “Agreed Judgment”). The Agreed Judgment set aside the final award made by the Industrial Accident Board in the administrative proceedings.

The City honored the terms of the Agreed Judgment for a number of years, including paying Rhule's bills for office visits with his agreed-upon treating physician, his pain medication, and the installation of a pain pump. Then the pain pump began to fail. Rhule's treating physician, Dr. Alvarez, as well as Dr. Elizabeth Duncan, a respected pain specialist hired by the City without Rhule's knowledge, both recommended that the pain pump be replaced. However, the City, which had changed risk managers, determined that the pain pump and other medications and treatments sought by Rhule and his physician were not reasonable, necessary, and related to the 1988 work injury.³In addition to refusing to replace the pain pump, the City decided to quit paying for Rhule's physician visits and his pain medications as not reasonably necessary.

Rhule eventually filed suit against the City in the 281st District Court of Harris County, cause number 2005–79440, for breach of the Settlement Agreement. Rhule sought damages for “out-of-pocket expenses, incidental expenses, loss of the ‘benefit of the bargain,’ cost of reasonable medical care and treatment in the past, cost of medical care and treatment which will in all reasonable medical probability be required in the future, physical pain and suffering in the past ..., mental anguish damages ..., nominal damages, attorney's fees necessary to bring and prosecute this action, [and] costs of court.” Alternatively, Rhule sought specific performance of the Settlement Agreement and actual damages, costs of court, and attorney's fees. Rhule also sought a declaratory judgment to clarify his rights under the Settlement Agreement, specifically concerning his right to ongoing lifetime medical expenses relating to his injury. Rhule also specifically sought attorney's fees under Chapters 37 and 38 of the Civil Practice and Remedies Code.

The City filed a plea to the jurisdiction, arguing that Rhule's breach of contract claim and request for declaratory relief were barred. The trial court denied the plea to the jurisdiction and the parties proceeded to a trial before a jury.⁴ Prior to trial, the City paid for a replacement pain pump and reinstituted payment for Rhule's office visits and pain medications. It then demanded that Rhule drop this suit. Rhule refused.

The jury found that the City failed to comply with the Settlement Agreement, and it determined that Rhule was entitled to $50,000 for past physical pain, $75,000 for past mental anguish, and $2,500 for out of pocket expenses. The jury also found that Rhule was entitled to attorney's fees in the amount of $53,000 for trial, $10,000 for an appeal to the Court of Appeals, and $20,000 for an appeal to the Texas Supreme Court.

The City filed a motion for judgment notwithstanding the verdict, asking the trial court to eliminate the award for past physical pain and past mental anguish and to enter judgment that “Rhule recover mental anguish damages, out of pocket expenses, and attorney's fees only.” The City argued that damages for physical pain cannot be recovered on a breach of contract claim and that Rhule had failed to provide any evidence to show that he was entitled to mental anguish damages for breach of contract. The trial court denied the City's motion and entered judgment on the verdict. The City appealed.

MOTION TO DISMISS

In its motion to dismiss for lack of jurisdiction, filed after our July 21, 2011 opinion issued but before this Court lost plenary jurisdiction, the City argues that its appeal must be dismissed for lack of jurisdiction because Rhule's claim was not a claim for breach of contract, but instead was a claim for denial of benefits; therefore, Rhule's exclusive remedy lay under the TWCA. The City argued that Rhule

failed to exhaust his administrative remedies by failing to first present his claim and dispute to the Industrial Accident Board, now known as the Department of Insurance—Division of Workers' Compensation (DWC) within six months from the time such dispute arose and prior to filing his suit as required by the statute in effect at the time of his on-the-job injury.

In other words, the City contends that Rhule was required to treat his claim that the City breached the Settlement Agreement as a claim that the City improperly denied him benefits, which had to first be presented to the Industrial Accident Board (“IAB”). The City makes this argument even though the claim was originally submitted to the IAB in 1988, the claim was settled, and the City's alleged breach occurred in 2004—fourteen years after the agreement was reached and entered as an Agreed Judgment of the court. The City ignores the history of the case, including the fact that Rhule did present his original claim to the IAB and was awarded lifetime reasonable and necessary medical care by the Board, an award the City resisted and sued to set aside, resulting in the Settlement Agreement. Rhule argues that the City should be estopped to deny the history of this case between its original denial of benefits in 1988 and its breach of the Settlement Agreement in 2004 and their implications under the TWCA. We agree with Rhule.

The TWCA specifically provides, in Labor Code section 408.021, that “[a]n employee who sustains a compensable injury is entitled to all health care reasonably required by the nature of the injury as and when needed.” Tex. Labor Code Ann. § 408.021(a) (Vernon 2006). A “compensable injury” is defined, in relevant part, as “damage or harm to the physical structure of the body” that “arises out of and in the course and scope of employment.” Id. § 401.011(10), (26) (Vernon Supp.2011).A “[m]edical benefit” obtainable under the Act “means payment for health care reasonably required by the nature of a compensable injury and intended to ... cure or relieve the effects naturally resulting from the compensable injury ..., or ... enhance the ability of the employee to return to or retain employment.” Id. § 401.011(31).

Labor Code section 408.005 provides for “settlements and agreements” of claims for benefits. See id. § 408.005 (Vernon 2006); Act of May 22, 1993, 73rd Leg., ch. 269, §§ 1, 5(2), 6, 1993 Tex. Gen. Laws 987 (adopting Labor Code, effective September 1, 1993, as non-substantive revision of Texas Workers' Compensation Act, articles 8308–1.01 et seq.,...