City of Midland v. O'Bryant

• Decision Date: 15 June 2000
• Docket Number: No. 97-0954,97-0954
• Citation: 18 S.W.3d 209
• Parties: (Tex. 2000) City of Midland, Richard L. Czech, individually and in his official capacity as Chief of Police, City of Midland Police Department, and J.W. Marugg, individually and in his official capacity as Lieutenant, City of Midland Police Department, Petitioners v. Milton O'Bryant, Leonard Hendon, Jr., Jimmie Cross, Joe Ortiz, and Marvin Rasco, Respondents
• Court: Texas Supreme Court

Page 209

18 S.W.3d 209 (Tex. 2000)

City of Midland, Richard L. Czech, individually and in his official capacity as Chief of Police, City of Midland Police Department, and J.W. Marugg, individually and in his official capacity as Lieutenant, City of Midland Police Department, Petitioners v. Milton O'Bryant, Leonard Hendon, Jr., Jimmie Cross, Joe Ortiz, and Marvin Rasco, Respondents

No. 97-0954

IN THE SUPREME COURT OF TEXAS

Argued September 9, 1998

Decided June 15, 2000

On Petition for Review from the Court of Appeals for the Third District of Texas

[Copyrighted Material Omitted]

Justice Owen delivered the opinion of the Court.

The opinion issued April 6, 2000, is withdrawn, and the following opinion is substituted in its place:

The principal issue in this case is whether an employer owes a duty of good faith and fair dealing to its employees. The plaintiffs are present or former City of Midland police officers. They sued two other officers and the City asserting various causes of action that have as their nucleus allegations of retaliation and discrimination. The trial court granted summary judgment for the defendants on all claims. The plaintiffs appealed, and the court of appeals affirmed in part, reversed in part, vacated the trial court's judgment in part, and remanded the case to the trial court. The City and the defendant police officers seek review. We hold that (1) there is no cause of action in Texas based on a duty of good faith and fair dealing in the context of an employer/employee relationship; (2) there is no evidence to support the plaintiffs' claims of intentional infliction of emotional distress; and (3) the claims of two plaintiffs for reinstatement as a remedy for alleged violations of the Texas Constitution should be remanded to the trial court for further proceedings. Accordingly, we affirm the judgment of the court of appeals in part, reverse in part, and remand the reinstatement claim of Milton O'Bryant¹ to the trial court.

I

The five plaintiffs in this case, Milton O'Bryant, Leonard Hendon, Jr., Jimmie Cross, Joe Ortiz, and Marvin Rasco, were certified law enforcement and police officers for the City of Midland. O'Bryant brought two prior lawsuits against the City that are pertinent to this case. In the first, O'Bryant sued in federal court alleging violations of the Americans with Disabilities Act (ADA). O'Bryant voluntarily dismissed that suit. About a year later, the City notified O'Bryant and seven other police officers (who included the plaintiffs) that their duties were slated to be reclassified as civilian positions within three months. Each officer was given the option of: (1) staying in his present position with reclassification as a civilian; (2) applying for a transfer to another position within the police department and continuing in the status of police officer; or (3) applying for a transfer to a civilian position in other City departments. If an officer chose a civilian position, then the pay and benefits would be less. The City also required its police officers to demonstrate greater physical abilities than it had in the past.

After these and other changes within the police department were announced but before they took effect, O'Bryant filed a second suit, and Hendon, Cross, Ortiz, and Rasco later joined as plaintiffs. That suit was filed in state court seeking to enjoin the City's alleged violations of the ADA and the Texas Commission on Human Rights Act. The plaintiffs voluntarily dismissed that action.

The City proceeded to reclassify many positions that police officers had held, and each of the plaintiffs was affected. Two of the plaintiffs, O'Bryant and Cross, were working in the telephone response unit and were reclassified as civilians. Cross suffered from a degenerative arthritic condition, and O'Bryant had previously injured his back and was under physician's orders to limit physical activity. Two other plaintiffs, Rasco and Ortiz, were transferred to evening shifts as patrol officers when their respective positions in the evidence room and in the telephone response unit were reclassified as civilian positions. Rasco suffered from heart and lung disease, and Ortiz has an artificial leg prostheses. Both men requested transfer to another position with police officer status, and patrol duty was the second choice of assignment for both. Plaintiff Hendon, who had no disability, was transferred to an evening patrol after his position in crime analysis became a civilian one. A few months after these reclassifications took effect, the plaintiffs brought this suit against the City and later added as defendants Chief of Police Richard L. Czech, and another police officer, J.W. Marugg, in their official and individual capacities.

The plaintiffs alleged that the reclassifications were in retaliation for filing the two prior suits. Rasco and Ortiz asserted that because of their disabilities, their personal safety was endangered when they were transferred to evening patrol shifts instead of less hazardous and less strenuous airport duty. O'Bryant similarly claimed that he was placed in jeopardy by his new assignment as an unarmed, non-commissioned civilian officer who was at times the only person on duty at the police station. The plaintiffs also alleged that the City's new, more stringent physical requirements for police officers were unnecessary and discriminated against the plaintiffs who had disabilities. A number of other acts of discrimination and retaliation were alleged by all five plaintiffs. Their theories of recovery included violations of the Texas Labor Code, intentional infliction of emotional distress, breach of an alleged duty of good faith and fair dealing, tortious interference with contract, and violations of the due course of law and free speech provisions of the Texas Constitution. The plaintiffs also sought an injunction restoring them to their original positions with the status and benefits of police officers.

The defendants' responses to the factual allegations are detailed by the court of appeals. 949 S.W.2d at 411. Briefly summarized, they were that the City faced budgetary constraints and that there were limited human and monetary resources to meet an increased need for law enforcement services. Chief of Police Czech stated in an affidavit that in light of these circumstances, he filled positions formerly held by police officers with civilians. There was also evidence that the City revised the job requirements for police officers in response to the enactment of the Americans With Disabilities Act.

The City, Czech, and Marugg moved for summary judgment asserting official and sovereign immunity, that an implied duty of good faith and fair dealing does not arise in an employment agreement, that none of the defendants' actions constituted intentional infliction of emotional distress, that there is no private cause of action for damages under the Texas Constitution, that the City's employees could not as a matter of law interfere with its employment contracts with the plaintiffs, and that there had been no violations of the Texas Labor Code. The trial court granted summary judgment for all defendants on all claims without specifying the grounds. The plaintiffs appealed. The court of appeals affirmed in part, reversed in part, and vacated the trial court's judgment in part. 949 S.W.2d at 417.

The court of appeals held that the defendants were entitled to summary judgment on the tortious interference claims. Id. at 415. The court also held that the plaintiffs were not entitled to money damages in the form of back pay for alleged constitutional violations. Id. at 414. The court of appeals concluded, however, that reinstatement was available as a remedy for the alleged constitutional violations and that summary judgment on that claim for relief was inappropriate. Id. at 414-15. The court of appeals also reversed the trial court's judgment with regard to official immunity, sovereign immunity, and intentional infliction of emotional distress on the basis that there were fact issues to be resolved. Id. at 413, 416. The court of appeals likewise reversed the trial court's judgment with regard to the plaintiffs' claim that the City had breached a duty of good faith and fair dealing. The court reasoned that the City had failed to negate that it owed such a duty to the plaintiffs. Id. at 416. Finally, the court of appeals held that the trial court did not have jurisdiction of the Labor Code claims because the plaintiffs had failed to exhaust their administrative remedies. Id. at 417. The court of appeals accordingly vacated the summary judgment with regard to the Labor Code claims. Id.

The City and the individual defendants filed a petition for review in this Court, which we granted. Because of our disposition of the issues regarding good faith and fair dealing and intentional infliction of emotional distress, we do not consider any of the issues raised regarding official immunity.

We turn first to the court of appeals' holding that the City was not entitled to summary judgment on the plaintiffs' claim that it breached a duty of good faith and fair dealing.

II

The City contends that no cause of action exists in Texas for breach of a duty of good faith and fair dealing in the context of an employer/employee relationship. This Court has never decided the question. Courts in other jurisdictions that have considered the issue have reached varying conclusions.

In decisions that have considered employment at-will, the holdings seem to fall within one or more of several broad categories: 1) an employee cannot be terminated if to do so would violate public policy;² 2) there is an implied covenant of good faith and fair dealing not to impair a right to receive a benefit an employee has already earned;³ 3) there is a general implied covenant of good faith and fair dealing;⁴ 4) there is an implied covenant of good faith and fair dealing, but any damages...