Wallace v. City of Midland

• Decision Date: 27 May 1992
• Docket Number: No. 08-91-00326-CV,08-91-00326-CV
• Citation: 836 S.W.2d 641
• Parties: Mark E. WALLACE, Appellant, v. CITY OF MIDLAND, Appellee.
• Court: Texas Court of Appeals

Page 641

836 S.W.2d 641

Mark E. WALLACE, Appellant, v. CITY OF MIDLAND, Appellee.

No. 08-91-00326-CV.

Court of Appeals of Texas El Paso.

May 27, 1992.

Rehearing Overruled July 22, 1992.

A.J. Pope, Midland, for appellant.

Terry Rhoads, Cotton, Bledsoe, Tighe & Dawson, Midland, for appellee.

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

OPINION

KOEHLER, Justice.

In a case arising out of a workers' compensation claim against a self-insured municipality, the Appellant alleged causes of action for wrongful discharge and breach of the duty of good faith and fair dealing against the City. The trial court granted a partial summary judgment in favor of the City on the good faith and fair dealing cause based on the doctrine of sovereign immunity and severed it from the main suit. In a single point of error, the Appellant contends that the trial court erred in granting the summary judgment. We affirm.

The Appellant, Mark E. Wallace (Wallace), was employed by the City of Midland Fire Department as a fire fighter. The City was and is self-insured in accordance with provisions of the Texas Workers' Compensation Act, art. 8309h (Vernon Pamph.1992). Wallace suffered injuries while fighting fires on two separate occasions in 1989. After receiving a letter from a doctor stating that Wallace could not "work in places where there is smoke or dust present[,]" he either was terminated by the City or he resigned. The award of the Industrial Accident Board was appealed by both parties, such suits having been consolidated and transferred to the Midland County Court at Law. With that case still pending, Wallace then filed another suit in the district court alleging, initially causes of action for wrongful termination and breach of the duty of good faith and fair dealing (bad faith), and later adding, by an amended petition, a breach of contract claim. The City responded with a motion for partial summary judgment asserting that the bad faith claim was barred by sovereign immunity as a matter of law. The trial court agreed and granted the motion, severing the bad faith claim from the remaining causes of action for the purpose of creating a final judgment. The only issue in this appeal is whether the bad faith cause of action against the City is barred as a matter of law by the doctrine of sovereign immunity.

Wallace asserts that the trial court erred by granting the summary judgment on sovereign immunity grounds. According to him, the doctrine of sovereign immunity is not applicable because (1) by exercising its option to be self-insured, the City was acting in a proprietary manner and had thus lost its immunity; (2) it had waived its immunity by engaging in litigation with him; and (3) the doctrine of sovereign immunity violates the Texas Constitution.

The City is a political subdivision of the State of Texas. Tex.Civ.Prac. & Rem.Code Ann. § 101.001(2)(B) (Vernon Supp.1992). ¹ If the City acts in its governmental, rather than a proprietary function, it is liable for damages under a narrow set of circumstances. Section 101.021 specifically provides that:

A governmental unit in the state is liable for:

(1) property damage, personal injury, and death proximately caused by the wrongful act or omission or the negligence of an employee acting within his scope of employment if:

(A) the property damage, personal injury, or death arises from the operation or use of a motor-driven vehicle or motor-driven equipment; and

(B) the employee would be personally liable to the claimant according to Texas law; and

(2) personal injury and death so caused by a condition or use of tangible personal or real property if the governmental unit would, were it a private person, be liable to the claimant according to Texas law.

Governmental functions are "those functions that are enjoined on a municipality by law and are given it by the state as part of the state's sovereignty, to be exercised by the municipality in the interest of the general public, ...." Section 101.0215(a). Fire protection and control is a governmental function. Section 101.0215(a)(1). In contrast, proprietary functions "are those functions that a municipality may, in its discretion, perform in the interest of the inhabitants of the municipality,...." Section 101.0215(b). Except in cases where the Texas Tort Claims Act applies, municipalities in Texas "are immune from tort liability in performing 'governmental' as opposed to 'proprietary' functions." Abbott v. City of Kaufman, 717 S.W.2d 927, 930 (Tex.App.--Tyler 1986, writ dism'd).

The law in effect at the time Wallace's claim arose, as well as at the present time, requires that "[a]ll political subdivisions of this state shall become either self-insurers, provide insurance under workmen's compensation insurance contracts or policies, or enter into interlocal agreements with other political subdivisions providing for self-insurance, extending workmen's compensation benefits to their employees." Tex.Rev.Civ.Stat. art. 8309h § 2(a) (Vernon Pamph. 1992). Thus, the City was required by state law to provide workers' compensation coverage in any one of three ways. Though it had some discretion in how it would fulfill the workers' compensation requirement, it did not have the discretion not to cover its employees one way or the other.

State universities required to provide self-insured workers' compensation coverage for their employees retain their general tort immunity. Bridges v. Texas A & M University System, 790 S.W.2d 831, 834 (Tex.App.--Houston [14th Dist.] 1990 no writ); Lyons v. Texas A & M University, 545 S.W.2d 56, 58 (Tex.Civ.App.--Houston [14th Dist.] 1976, writ ref'd n.r.e.). School districts that establish self-funded group medical insurance programs do not waive their governmental immunity. Murray v. San Jacinto Agency, Inc., 759 S.W.2d 778, 779 (Tex.App.--El Paso 1988), rev'd on other grounds, 800 S.W.2d 826 (Tex.1990). There is no indication in the Workers' Compensation Act that the legislature intended, by giving municipalities several options to meet the requirement, to waive governmental immunity. The furnishing of workers' compensation coverage by one means or another by a municipality to its employees is mandated by law and as such, the means by which the municipality complies remains a governmental function.

Wallace next contends that the City waived its defense of sovereign immunity by going to court seeking relief by either claim or counterclaim. In support of this proposition, he cites Cortez v. Unauthorized Practice of Law Committee, State Bar of Texas, 674 S.W.2d 803 (Tex.App.--Dallas 1984), rev'd, 692 S.W.2d 47 (Tex.1985), cert. denied, 474 U.S. 980, 106 S.Ct. 384, 88 L.Ed.2d 337 (1985), where the Court of Appeals held that a governmental entity was, in the absence of an exempting statute, liable for court costs assessed against it. He also cites Texas Company v. State, 281 S.W.2d 83 (Tex.1955), which held that the state, by failing to assign error as required by the Rules of Civil Procedure, waived its complaint. Neither of these cases hold that a governmental entity waives its sovereign immunity by requesting affirmative relief in court but only that a state agency is subject to the same rules of procedure as any other litigant.

Finally, Wallace asserts that the doctrine of sovereign immunity violates Article 1, Sections 17 and 19 of the Texas Constitution. The Supreme Court of Texas has held that any waiver of sovereign immunity is a matter to be addressed by the state legislature. Hopkins v. Spring Independent School District, 736 S.W.2d 617, 619 (Tex.1987); Barr v. Bernhard, 562 S.W.2d 844 (Tex.1978); Lowe v. Texas Tech University, 540 S.W.2d 297 (Tex.1976).

Wallace's point of error is overruled. Judgment of the trial court is affirmed.

BARAJAS, Justice, concurring.

While I am in agreement with the majority's holding, I find it necessary to concur with the majority opinion.

The central issue is whether a city who elects to be self-insured pursuant to the Texas Workers' Compensation Act, and who contracts with an independent claims adjuster for the administration of its plan, is performing a governmental function and, therefore, may avail itself of the doctrine of governmental immunity.

On November 8, 1988, the City entered into an interlocal agreement with the Texas Municipal League Workers' Compensation Joint Insurance Fund (the Fund) for the purpose of providing the statutory benefits prescribed by Article 8309h of the Texas Workers' Compensation Act for its employees. ² Tex.Rev.Civ.Stat.Ann. art. 8309h. By executing the interlocal agreement, the City agreed to become a self-insured workers' compensation employer by becoming one of the members of the Fund Pool of other self-insured employer members. ³ All expenses and claims were paid into the Fund. The Texas Municipal League Workers' Compensation Joint Insurance Fund administered the City's workers' compensation plan for a fee. ⁴

I. SCOPE OF SOVEREIGN IMMUNITY

The Texas Legislature has taken steps to statutorily list those municipal activities that fall within a municipality's governmental as well as proprietary functions. Tex.Civ.Prac. & Rem.Code Ann. § 101.0215 (Vernon Supp.1992). Neither list is inclusive.

A city is immune from liability for torts committed by its employees when the city is performing a governmental function unless the state, by statute, has waived immunity. ⁵ On the other hand, a city is liable for torts committed by its employees when the city is performing a proprietary function. City of Gladewater v. Pike, 727 S.W.2d 514, 519 (Tex.1987); City of Round Rock v. Smith, 687 S.W.2d 300, 302 (Tex.1985); City of Austin v. Daniels, 160 Tex. 628, 335 S.W.2d 753 (Tex.1960).

The courts of this State have long ago established the rules for determining whether a particular municipal activity is governmental or proprietary. It is well settled that activities which are carried on by a city pursuant to state...