What to Watch for in the Next SCOTX Term

by James F. Parker

It is that time of year when our attention turns toward the normal summertime pursuits—baseball, cook-outs, and the next term of the Texas Supreme Court.

So for your summertime beach reading, may we offer the briefs from a few of the cases the Court will be hearing when it returns to Austin in September. And if you find any of these cases pertinent to your interests, please let us know so that we can discuss what actions you can take to protect those interests:

Is a floodgate “motor-driven equipment” under the Texas Tort Claims Act?

Ratttray v. City of Brownsville, — S.W.3d —, 2020 WL 6118473 (Tex. App.—Corpus Christi 2020, pet. granted) (SCOTX Docket No. 20-0975).

Homeowners sued the City after their homes were flooded from the nearby resaca, alleging that the City’s negligent operation of its stormwater system caused their damages. The stormwater system contains a series of drainage ditches that are controlled by numerous motor-driven gates and pumps. The homeowners allege that a City employee negligently did not open a gate to release stormwater downstream.

The Tort Claims Act waives immunity to claims for property damage that “arises from the operation or use” of motor-driven equipment. The Court of Appeals concluded that the homeowners did not allege that the City negligently operated or used the floodgate, but that it failed to use the gate. Hence, the Tort Claims Act did not apply and the City’s immunity was not waived.

The issue is thus presented—is non-use “use” of the floodgates for purposes of the Tort Claims Act? The answer could greatly expand governmental tort liability.

Is a government contractor a “governmental entity” for purposes of the Whistleblower Act?

Tex. Health & Human Servs. Comm’n v. Pope, 2020 WL 2079093 (Tex. App.—Austin 2020, pet. granted) (SCOTX Docket No. 20-0999).

The Texas Health & Human Services Commission (“HHSC”) runs a Medical Transportation Program, under which contractors provide rides to parents for Medicaid-eligible health services. Two HHSC employees, Pope and Pickett, complained to law enforcement authorities that a third-party contractor was failing to follow state parental-accompaniment rules in transporting minor patients, that the contractor was not making required payments to HHSC, and that the contractor was not providing required documentation.

After Pope and Pickett were fired, they sued HHSC for violation of the Whistleblower Act. But the Whistleblower Act only protects employees who make a good-faith report of a violation of law by a governmental entity. Nevertheless, the Court of Appeals concluded that Pope and Pickett’s complaint about the third-party contractor’s legal violations necessarily implicated a violation by HHSC, and that HHSC’s “responsibility” to enforce Medicaid laws may have been violated when it did not seek reimbursement from the contractor.

The Supreme Court granted HHSC’s petition to consider whether the Whistleblower Act’s good-faith standard applies when the reporting employee identifies only a governmental contractor.

Is a Chapter 380 economic-development agreement a contract for goods or services under the Local Government Contract Claims Act?

City of League City v. Jimmy Changas Inc., 619 S.W.3d 819 (Tex. App.—Houston [14th Dist.] 2021, pet. granted) (SCOTX Docket No. 21-0307).

The City entered into an economic development agreement with Jimmy Changas by which the City offered incentives to Changas to develop a restaurant. After the City allegedly failed to fully perform, Changas sued for breach of contract.

The City asserted that it was immune to Changas’ claim. But the Court of Appeals concluded that the City had no governmental immunity because it was acting within its proprietary capacity when it entered into the development agreement under Chapter 380 of the Local Government Code. And as noted in the discussion of the Austin Court of Appeals’ decision in City of Austin v. Findley in the “In the Courts” column, plaintiffs are becoming more aggressive in asserting that actions are proprietary to avoid governmental immunity. Thus far, Texas courts have been very restrictive in identifying cities’ actions as “proprietary.” Will that continue?

Can a state university revoke the degree of a former student?

Hartzell v. S.O., 613 S.W.3d 244 (Tex. App.—Austin 2020, pet. granted) (SCOTX Docket No. 20-0811)

–consolidated with—

Trauth v. K.E., 613 S.W.3d 222 (Tex. App.—Austin 2020, pet. granted) (SCOTX Docket No. 20-0812)

For many years, we were plagued with a recurring dream: we were actually one credit short of graduation and, through some bit of bureaucratic clean-up, the university only recently discovered it and rescinded our degree.

If you also have had this dream, this case is for you.

In Hartzell, S.O. received a Ph.D. from The University of Texas at Austin in 2008. In 2012, UT began an investigation into whether she had engaged in scientific misconduct and academic dishonesty in connection with her doctoral research. When S.O. sued, both the trial court and the Court of Appeals concluded that the university president lacks legal authority to rescind a degree that has already been conferred. Trauth involves similar facts. But unlike in Hartzell, the university had already revoked the former student’s degree. Nevertheless, the result was the same—the trial court and the Court of Appeals concluded that the university’s president acted ultra vires.

So, does the statutory authority granted to the universities by the Education Code allow for degrees to be rescinded? Or will our nightmares be put to rest?

James Parker is a Principal in the Firm’s Litigation Practice Group. If you would like additional information or have questions related to this article or other matters, please contact James at 512.322.5878 or jparker@lglawfirm.com.

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