Lowrey v. University of Texas Medical Branch at Galveston

• Decision Date: 15 July 1992
• Docket Number: No. 08-91-00136-CV,08-91-00136-CV
• Citation: 837 S.W.2d 171
• Parties: 78 Ed. Law Rep. 143 Danny J. LOWREY, Appellant, v. The UNIVERSITY OF TEXAS MEDICAL BRANCH AT GALVESTON, et al., Appellees.
• Court: Texas Court of Appeals

Page 171

837 S.W.2d 171

78 Ed. Law Rep. 143

Danny J. LOWREY, Appellant, v. The UNIVERSITY OF TEXAS MEDICAL BRANCH AT GALVESTON, et al Appellees.

No. 08-91-00136-CV.

Court of Appeals of Texas,

El Paso.

July 15, 1992.

Rehearing Overruled Aug. 26, 1992.

Thomas W. McQuage, Galveston, for appellant.

Dan Morales, Atty. Gen., Esther L. Hajdar, Asst. Atty. Gen., Austin, for appellees.

Before OSBORN, C.J., and KOEHLER and LARSEN, JJ.

OPINION

LARSEN, Justice.

This appeal concerns the State's claim of sovereign immunity in a suit to set aside a Compromise Settlement Agreement (CSA) in a workers' compensation case. The trial court entered summary judgment for the University of Texas Medical Branch (UTMB), an agency of the State of Texas, and for individual defendants who are all employees of UTMB. We reverse as to UTMB and remand that portion of the case for further proceedings in the trial court.

FACTS

Plaintiff/Appellant Danny J. Lowrey was hired as a painter at the University of Texas Medical Branch at Galveston in April 1981. In May 1981, he suffered an on-the-job injury to his right knee. He settled his workers' compensation claim, without benefit of counsel, by entering into a compromise settlement agreement for $11,000 in September 1986.

As a result of the injury, Mr. Lowrey had surgery and remains restricted from certain physical activities including ladder climbing, stooping, crawling, squatting and kneeling. He nevertheless continued to do light duty tasks in the UTMB paint shop for several years. His fellow painters resented this arrangement, and created a hostile working environment designed to drive Mr. Lowrey from his job.

On September 11, 1986, Mr. Lowrey was terminated from his employment. He brought suit on July 17, 1988, alleging: (1) violations of the Texas Commission on Human Rights Act prohibiting discrimination on account of handicap; (2) the State's willful misrepresentation in the settlement of his workers' compensation claim, entitling him to set aside the CSA and reopen the case; and (3) wrongful termination against supervisors who had violated UTMB's own internal procedures in firing him.

Defendants moved for summary judgment, ¹ urging that: (1) plaintiff could not prevail on his handicap discrimination claim for a variety of reasons; and (2) that the remainder of plaintiff's claims, against both the State and the individuals, were barred by sovereign immunity. The trial court granted summary judgment on all causes of action for all defendants. Appellant challenges only those parts of the summary judgment disposing of his suit to set aside the CSA and against the individual defendants.

SUIT TO SET ASIDE CSA

On appeal, UTMB urges two grounds for sustaining the summary judgment against plaintiff on the suit to set aside the settlement agreement: First, that sovereign immunity bars the action; and second, that an essential element of plaintiff's case was conclusively established against him.

In order to prevail in his suit to set aside a workers' compensation CSA for fraud, Mr. Lowrey must show (1) that misrepresentations concerning the employee's injuries were made by the carrier or the carrier's duly authorized agent; (2) that he relied upon the representations in making the settlement; and (3) that he was damaged because he had a meritorious claim for more compensation than the settlement amount. Brannon v. Pacific Employers Ins. Co., 148 Tex. 289, 224 S.W.2d 466, 468 (1949); Texas Employers Insurance Association v. Alcantara, 764 S.W.2d 865 (Tex.App.--Texarkana 1989, no writ). A review of the summary judgment record before the trial court, however, shows that UTMB never raised at that level the argument that plaintiff could not establish at least one of the elements of a suit to set aside the CSA. To support summary judgment, each independent argument must be alleged before the trial court. Tilotta v. Goodall, 752 S.W.2d 160, 161 (Tex.App.--Houston [1st Dist.] 1988, writ denied). Having failed to present this ground for judgment for consideration, the argument was waived and cannot be considered by this Court.

SOVEREIGN IMMUNITY

UTMB did, however, properly raise its argument that the State possesses sovereign immunity in this matter. The question before us here is one of first impression. We must decide whether plaintiff's action for rescission of the compromise settlement agreement against the State is a part of the underlying workers' compensation action for which the State has waived sovereign immunity, or whether it is an independent action for which the State retains its sovereign immunity. Examining the intent of the workers' compensation laws, the effect of a rescission and the relevant case law, we conclude that a suit for rescission of a CSA and the underlying workers compensation action must be viewed as a whole; therefore, we hold that plaintiff may pursue his workers' compensation action here. ²

It is well settled that citizens may not bring suit against the State absent legislative consent. Texas Mexican Railway Company v. Jarvis, 80 Tex. 456, 15 S.W. 1089 (1891); Missouri Pacific Railroad Company v. Brownsville Navigation District, 453 S.W.2d 812 (Tex.1970). A suit to set aside a compromise agreement is one for rescission and cancellation of a contract. Bullock v. Texas Employers Insurance Ass'n, 254 S.W.2d 554, 556 (Tex.Civ.App.--Dallas 1952, writ ref'd); Texas Employers Ins. Ass'n v. Kennedy, 135 Tex. 486, 143 S.W.2d 583 (Tex.Comm'n App.1940). Rescission, in this context, is an equitable remedy that operates to set aside a contract that is legally valid but is marred by fraud, mistake or for some other reason must be set aside to avoid unjust enrichment. Country Cupboard, Inc. v. Texstar Corporation, 570 S.W.2d 70, 73 (Tex.Civ.App.--Dallas 1978, writ ref'd n.r.e.). Rescission works to avoid the contract, return any consideration paid and to return the parties to their respective positions as if no contract had ever existed. Hunt County Oil Co. v. Scott, 28 Tex.Civ.App. 213, 67 S.W. 451, 452 (1902, writ ref'd).

A cause of action for rescission accrues when the plaintiff discovered or should have reasonably discovered the fraud, mistake or other ground. Ruebeck v. Hunt, 142 Tex. 167, 176 S.W.2d 738, 739 (1943); Bush v. Stone, 500 S.W.2d 885, 889-90 (Tex.Civ.App.--Corpus Christi 1973, writ ref'd n.r.e.). Suits for rescission must be brought within four years of the accrual of the cause of action. Tex.Civ.Prac. & Rem.Code § 16.051 (Vernon 1986).

UTMB argues that because rescission is an independent action, with its own elements, statute of limitations and remedies, that absent specific authority from the legislature, the plaintiff cannot pursue this cause of action against defendant, a branch of state government. Plaintiff, on the other hand, argues that sovereign immunity is inapplicable because this type of suit is not a prosecution of an unauthorized cause of action against a state agency, but is actually at bottom, a suit to recover workers' compensation benefits, an action against the State statutorily approved by the Texas legislature. Tex.Rev.Civ.Stat.Ann. art. 8309d (Vernon 1967).

We agree with plaintiff. In reaching this conclusion, we have examined closely the case of Brannon v. Pacific Employers Ins. Co., 148 Tex. 289, 224 S.W.2d 466, 468 (1949) where the Texas Supreme Court was asked to determine whether a district court had subject matter jurisdiction to hear a suit to set aside a CSA for $215, an amount which, standing alone, was below the minimum amount needed to invoke jurisdiction. Id. The Court there scrutinized the amount actually in controversy, and concluded that the suit to rescind the CSA was only a first step toward the ultimate relief actually sought: A full award under the workers' compensation statutes. The Court observed that the Industrial Accident Board ³ was not empowered to set aside the CSA; only a court could do that. Conversely, the Court could not make an award to plaintiff under the compensation laws; the statutes require that this first be done by the IAB, and only then might a dissatisfied party take an appeal to district court. The Supreme Court observed "the effect of such holding may be to require a case to be tried by piecemeal, but it must be tried that way or not at all." [Emphasis added]. Brannon, 224 S.W.2d at 469. In analyzing the process, the Court observed:

This complicated procedure should not blind us to the real nature of the matter in dispute between the parties. The fact that in the present proceeding the court cannot award the petitioner a money judgment does not alter the amount or value of the matter in controversy. If the petitioner succeeds in this proceeding, he has won the first round in his attempt to collect $9,810. On the other hand, if the respondent wins in this proceeding, then the petitioner will have finally lost his claim for $9,810, because he will be concluded by the judgment upholding the compromise agreement from further asserting this claim.... Brannon, 224 S.W.2d at 469.

Thus, although a suit for rescission is, in form, an independent proceeding, in substance it is but one step toward plaintiff's ultimate goal of recovering full benefits under the workers' compensation laws. Mr. Lowery has a single cause of action against UTMB for workers' compensation; if the trial court determines the compromise settlement agreement at issue here was fraudulently obtained, it will remand to the Texas Workers' Compensation Commission for further review and action. The suit before this Court is one in which plaintiff seeks adjudication of UTMB's affirmative defense in the nature of accord and satisfaction, by way of the CSA. If plaintiff prevails, he will simply be placed back in the administrative process with an opportunity to re-urge his claim. The substance of this suit is one for workers' compensation, which the legislature has clearly authorized against the State.

Finally, in deciding...