Univ. of Hous. v. Barth

• Decision Date: 25 August 2011
• Docket Number: No. 01–06–00490–CV.,01–06–00490–CV.
• Citation: 279 Ed. Law Rep. 1267,365 S.W.3d 438
• Parties: The UNIVERSITY OF HOUSTON, Appellant, v. Stephen BARTH, Appellee.
• Court: Texas Court of Appeals

365 S.W.3d 438

279 Ed. Law Rep. 1267

The UNIVERSITY OF HOUSTON, Appellant,

v.Stephen BARTH, Appellee.

No. 01–06–00490–CV.

Court of Appeals of Texas,

Houston (1st Dist.).

Aug. 25, 2011.

Shelley Alisa Dahlberg, Assistant Attorney General, Austin, TX, for Appellant.

J.W. Beverly, Dow Golub Remels & Beverly, LLP, Houston, TX, for Appellee.

Panel consists of Justices KEYES, HIGLEY, and MATTHEWS.^*

OPINION

LAURA CARTER HIGLEY, Justice.

Stephen Barth obtained a judgment awarding damages and attorney's fees against the University of Houston (“University”) based on a jury's finding that the University, Barth's employer, had violated the Texas Whistleblower Act. ¹ On original submission, we held that the University had waived its liability challenge to the judgment because it had failed to dispute all bases on which the jury could have found that the University violated the Whistleblower Act.²

After our opinion issued, the Supreme Court of Texas decided State v. Lueck in which it held that the elements of the Whistleblower Act must be considered to determine not only liability, but also subject-matter jurisdiction.³ Based on its holding in Lueck, the Supreme Court remands this case to us to determine whether “Barth's claims meet the Whistleblower Act's jurisdictional requirements for suit against a governmental entity and, thus, whether the trial court had jurisdiction over Barth's suit.” ⁴

After conducting the review mandated by the Supreme Court, we hold that the trial court had subject-matter jurisdiction and affirm the trial court's judgment.

Factual & Procedural Background

Steven Barth is a tenured professor in the University of Houston's Conrad N. Hilton College of Hotel Management (“the College”). In 1998 and early 1999, the College's business manager, David Gilkeson, told Barth that the dean of the College, Alan Stutts, had engaged in questionable accounting practices, mishandled University funds, and entered into an unauthorized contract for services on behalf of the college. Specifically, Gilkeson told Barth that he was concerned about the following accounting practices that he attributed to Stutts: (1) money donated by the Hilton Foundation and earmarked for renovation of the University Hilton was used to pay for expenses not related to the renovation; (2) Stutts had not followed University procurement policies and procedures when he had entered into a contract for public relations services; (3) money held in the University food and beverage account was used to pay for services rendered under a public relations contract; and (4) expenditures made on the public relations contract were improperly certified. Gilkeson was concerned because these questionable practices resulted in deficits in the College's operations. Gilkeson told Barth that he feared that the deficits would be attributed to him and that he might lose his job.

Barth was aware that the written policy governing the University of Houston System, as found in the System Administrative Memorandum, commonly referred to as “the SAM,” provided that “all employees of the University of Houston System ... have an obligation to report any suspected theft, fraud, embezzlement, destruction of property or any other irregularity causing a loss of cash, property or any other asset of the university.” Barth was also aware that the SAM warns that employees who are aware of criminal activity against the University and fail to report it, may be subject to disciplinary action. The SAM requires that the University employee report the criminal conduct to one of the officials identified in the SAM. These include the University police, the University's general counsel, and its chief financial officer.

Being the dean of the College, Stutts was Barth's supervisor. Nonetheless, in March 1999, Barth reported Stutts's alleged fiscal improprieties to Randy Harris, the University's chief financial officer, and to its general counsel, Dennis Duffy. In May 1999, Barth also reported Stutts's conduct to Don Guyton, the University's internal auditor and to Elaine Charlson, the associate provost.

As his supervisor, Stutts completed Barth's annual evaluation for the 1998–1999 academic year on June 17, 1999. In the evaluation, Stutts gave Barth a “marginal”rating with respect to “grantsmanship,” which pertained to Barth's success in obtaining outside grants for the college. The marginal rating adversely affected the merit raise received by Barth.

In 1999, Barth was also denied funds for travel related to his position. In addition, after Barth reported Stutts's conduct, Stutts withdrew his participation in a symposium created by Barth from which Barth received $10,000 in annual compensation. After Stutts stopped participating, one of the symposium's sponsors withdrew its support in December 1999, and the 2000 symposium was cancelled.

On March 10, 2000, Barth filed a grievance with the University's grievance committee. In the grievance, Barth asserted, “Dean Stutts has retaliated against me for making the university administration aware of inappropriate and/or illegal administrative actions by his administration.” The following were among the “retaliatory actions taken by Dean Stutts” cited by Barth: (1) “denial of travel dollars”; (2) “arbitrary and capricious evaluation (disparately imparting [sic] me by denying at least $600–$1,000 increase in salary)”; and (3) “withdrawing support for my initiatives including the Hospitality Legal Symposium, causing its cancellation and a loss of reputation in the industry.”

In June 2000, Barth reported Stutts's conduct to the University's police department. However, no criminal charges were ever filed against Stutts.

On August 17, 2000, Barth filed a second grievance asserting that Stutts had again retaliated against him by giving Barth a lower-than-deserved merit evaluation for the 1999–2000 academic year. This adversely affected his salary increase for the year 2001. Neither of Barth's grievances was successfully resolved through the University's internal grievance process.

In 2001, Randy Harris, the University's chief financial officer, requested University internal auditor Don Guyton to audit Barth's reports that Stutts had violated state civil and criminal law as well as University policy. Among his reports, Barth had told University officials that he believed that Stutts had violated Texas Penal Code section 37.10, which provides that tampering with a government document is a criminal offense.⁵ Barth claimed that Stutts had violated that section by making false statements on government payment vouchers.

In his audit report, Guyton concluded that (1) charges made to the University Hilton Hotel renovation account should have been charged to other accounts; (2) the expenditure vouchers associated with the public relations contract were not properly certified; (3) the College had improperly processed an amended food service contract; and (4) there had been no violation of Penal Code section 37.10.

The audit also found that Stutts had entered into a public relations contract without following University and state procurement criteria. In addition to failing to comply with the University's MAPP and with state regulations, the public relations contract had not been processed through the University's Contract Administration Department, had not been approved by the University's general counsel, and had not been presented to the Board of Regents. These failures were violations of the SAM, specifically SAM 03.A.05.

Soon after the audit was published, Barth sued the University. He alleged, as he had in his grievances, that the University had retaliated against him for reporting Stutts's improper actions. Barth asserted that the retaliation resulted in an adverse employment action against him. This included receiving a lower-than-deserved merit evaluation, resulting in a denial of a pay raise. Barth claimed that the University's action was a violation of the Whistleblower Act.

The University filed a plea to the jurisdiction seeking dismissal of Barth's suit. The University asserted, inter alia, that Barth had not timely initiated the grievance process, as required by the Whistleblower Act, thereby depriving the trial court of subject-matter jurisdiction.

The trial court denied the University's plea to the jurisdiction. We affirmed the denial in University of Houston v. Barth, holding that issues of fact existed regarding whether Barth had timely initiated the grievance process and regarding whether Barth had suffered adverse employment actions. 178 S.W.3d 157, 164 (Tex.App.-Houston [1st Dist.] 2005, no pet.).

The case was ultimately tried to a jury. At trial, Barth asserted three specific grounds to support his whistleblower claim: (1) retaliation for his report to University officials that Stutts violated the Texas Penal Code; (2) retaliation for his report to University officials that Stutts violated the University's internal rules, including the MAPP and the SAM; and (3) retaliation for his report to University officials that Stutts had violated state statutes and regulations governing the administration of government contracts. The jury found that the University had violated the Whistleblower Act. However, the jury charge did not require the jury to reveal on which of Barth's grounds it had made its liability finding against the University. The jury also found that Barth was entitled to actual damages totaling $40,000, as well as $245,000 in attorney's fees for trial preparation and attendance, and $20,000 for appellate attorney's fees. The trial court rendered judgment on the jury's findings.

The University appealed to this Court. It asserted that the trial court lacked jurisdiction because Barth had not timely filed his grievances. University of Houston v.Barth, 265 S.W.3d 607, 610 (Tex.App.-Houston [1st Dist.] 2008, pet. granted). We held that Barth had not timely filed his first grievance, but that he had timely filed his second...