City of Houston v. Leach, A14-90-00013-CV

• Citation: 819 S.W.2d 185
• Decision Date: 26 September 1991
• Docket Number: No. A14-90-00013-CV,A14-90-00013-CV
• Parties: CITY OF HOUSTON and Ulysses Ford, Appellants, v. F. Richard LEACH, Appellee. (14th Dist.)
• Court: Court of Appeals of Texas

Page 185

819 S.W.2d 185

CITY OF HOUSTON and Ulysses Ford, Appellants, v. F. Richard LEACH, Appellee.

No. A14-90-00013-CV.

Court of Appeals of Texas,

Houston (14th Dist.).

Sept. 26, 1991.

Mark Thompson, Houston, for appellants.

M.H. Cersonsky, Houston, for appellee.

Before JUNELL, MURPHY and CANNON, JJ.

OPINION

CANNON, Justice.

Richard Leach is a self-confessed whistleblower. He contends, and the jury agreed, that he was fired from his job with the City of Houston's Solid Waste Management Department in violation of the "Texas Whistleblower Act" and the first amendment because he in good faith reported a violation of law to an appropriate law enforcement authority. The city and its Director of Solid Waste Management, Ulysses Ford, appeal from the jury's verdict and bring seven points of error complaining of the sufficiency of the evidence, the admission of certain evidence, and error in the charge. We affirm.

In January 1986, after six and a half years of distinguished service in the City of Houston's Public Works and Purchasing Departments, Leach accepted a position with the city's Solid Waste Management Department (the Department). When Leach joined the Department, Charles Ware was its director. Ware left the Department a year later and was replaced by Ulysses Ford in March 1987. As Administrative Assistant III, Leach reviewed purchasing and accounting documents before the director signed them, wrote correspondence for the director, managed the capital improvement plan for the Department, conducted investigations and wrote reports on behalf of the Department, and worked on special projects assigned to him by the director. During his tenure, Leach conducted several investigations or audits of Department operations. Leach contends that his discharge in September 1987, was a result of those activities. The following are the activities that Leach contends led to his discharge.

The Heil Contract

In a report to Ware, dated February 21, 1986, Leach concluded that approximately 22% of the items purchased under invoices representing 20% of the total value of the contract were non-contract items. Leach found that a city supplier was using non-contract parts to fabricate new truck cylinders or to rebuild old truck cylinders. The supplier provided the cylinders to the city at a set fee. The value of these purchases was $30,644.84. The estimated value of these purchases based on the total value of the contract was approximately $154,000.00. Leach made several recommendations to "legitimize" the purchase of these non-contract items through use of emergency purchase orders, through renegotiation with the supplier, or through a new contract established through the formal bid process.

The Pak-Mor Contract

In a report to Ware, dated June 9, 1986, Leach found that a city contractor, charged above the contract price for truck replacement parts and labor 22% of the time. The overcharges cost the city $1746.22. In 39% of its purchases under the contract, the Department did not know if it was overcharged by the contractor since the replacement parts were not on the manufacturer's published price list and labor was charged as a lump sum. Thus, in a total of 61% of its purchases under the contract, the Department was either overcharged or did not know if it was overcharged. Because the contractor refused to explain the overcharges or to provide the manufacturer's price list, Leach recommended that the matter be referred to the city Legal Department to pursue both civil and criminal actions. A copy of both the Heil and Pak-Mor reports were given to the new director, Ford, on May 5, 1987.

Collection Crews

In a report to Ware, dated August 6, 1986, Leach found that different collection crews demanded money and beverages from customers as a fee for extra garbage pick-up. At two neighboring locations, a crew received $15.00 every collection day for two years and seven months. At another location, a crew received a six-pack of beer every week for twenty-three years. At a fourth location, a crew received beer, sodas and/or ice every service day for twenty five years.

Astro Reflections

In December 1986, Leach found that a Department employee, Dr. Pam Cooper, operated a computer horoscope business called "Astro Reflections," on city time, using city employees and equipment. Since Leach alleged that Ware was involved in the business, he reported his findings to Clarence West in the mayor's office. West contacted City Attorney, Jerry Smith, who set up a meeting between Leach and the district attorney's office. After Leach turned over documents from the business, the district attorney's office conducted an investigation and determined there was insufficient evidence to bring criminal charges. On January 29, 1987, the results of that investigation were given to the Public Integrity Review Group or "PIRG." PIRG operates out of the city's Legal Department and is staffed by Houston police officers, who are charged with investigating allegations of wrongdoing by city employees. Officers from PIRG met with Leach and the new director, Ford, on March 19, 1987. The officers advised Ford to take administrative action. Ford then initiated his own investigation. He interviewed employees who were involved with, or had knowledge of, the business. Ford found that Dr. Cooper was primarily responsible for the operation of the horoscope business and that she coerced assistance from other Department employees. He found that employees who worked in proximity to Dr. Cooper were aware of the business. As a result of his investigation, Ford forced Dr. Cooper's resignation. On August 18, 1987, PIRG filed a report of its investigation. That report sustained allegations regarding the operation of an outside business while on city time and the use of city employees to assist in an outside business while on city time. PIRG ceased its investigation after the target of its inquiry, Dr. Cooper, resigned.

The Slavin Testimony

Leach prepared testimony for Ford in a suit brought by Sidney Slavin and Consolidated Warehouse. The suit sought to enjoin the city and the Department from operating a temporary service center on adjacent land. Slavin claimed that the service center was a nuisance and that city council was misled about notice of the service center to neighboring property owners. Ford testified in the Slavin suit on August 6 and 7, 1987. On one of those days, Leach informed Ford in the presence of city attorneys, that he (Ford) incorrectly testified about the length of time the city would be at the temporary service center and about the construction of a portable shower and restroom/locker facility. Ford had testified that the city would be there two years at most. In fact, the plans called for the city to be there at least two and a half years. Ford also had testified that the city was ready to bring the restroom/locker facility on site when in fact he had previously instructed that the facility not be fabricated.

The Budget Crisis

Appellants, on the other hand, contend that Leach was treated no differently than eleven other employees who were laid off because of cuts in the Department's budget mandated by city council during the city's budget crises in the fall of 1987.

Under the city's budget process, the Department must begin preparing the budget for the next fiscal year approximately six months before the end of the current fiscal year. The city's fiscal year runs from July 1 to June 30. The Department must submit its proposed budget to the city's Finance and Administration Division and the mayor. Finance and Administration must then recommend any changes to the Department's proposed budget before the mayor submits it to city council for final approval. When Ford submitted the Department's proposed budget for fiscal year 1988, it did not include employee layoffs. The budget called for expenditures of $32,893,789.00 and included a user fee and discontinuance of the Department's sponsorship program that reimbursed civic associations for private hauling of garbage.

That budget was rejected on July 29, 1987, when city council approved a 3% across-the-board spending cut for every city department because of a projected $18 million shortfall in the city's budget. As a result, Ford searched for areas in the budget that could be cut without layoffs and without affecting the Department's primary function of garbage pick-up. Ford made several cuts in different areas of the budget; however, the reductions still did not meet the 3% target. Thus, Ford decided that layoffs were necessary. He also decided that he would not direct layoffs toward positions that were directly responsible for services, such as drivers, collectors, and mechanics. Ford chose twelve positions for layoffs, including three positions that reported directly to him. One of those positions was Leach's. On August 3, 1987, Ford submitted his revised budget to Finance and Administration and the mayor. That budget called for expenditures of $31,437,520.00 and included layoffs. On August 21, 1987, city council approved the Department's budget. That budget called for expenditures of $31,304,000.00. On September 2, 1987, the city formally notified Leach of his termination. Shortly thereafter, Leach obtained temporary employment with city council member George Greanias and his successor, Vince Ryan, both of whom testified for him at trial.

On November 30, 1987, Leach filed suit alleging a cause of action under TEX.REV.CIV.STAT.ANN. art. 6252-16a (the Whistleblower Act) and 42 U.S.C. § 1983. Trial began on August 10, 1989. The issues were whether Ford discharged Leach with retaliatory intent and whether the city had a policy of retaliation against whistleblowers. The jury found that Ford terminated Leach for reporting in good faith a violation of law to an appropriate authority. The jury also found that Leach's termination was the result of an official policy, custom, or practice of the city. The...