Houston Municipal Employees Pension System v. Craig E. Ferrell, Jr.

Opinion issued May 20, 2005

In The

Court of Appeals

For The

First District of Texas

NO. 01-03-00925-CV

____________

HOUSTON MUNICIPAL EMPLOYEES PENSION SYSTEM ,

Appellant

V.

CRAIG E. FERRELL JR., AL PENA, B.L. CHEBRET, BRAD PIEL,

BUBBA CALDWELL, C. NEWMAN, COLE LESTER,

G.L. BLANKENSHIP, GARY GRYDER, GEORGE SHAW,

HAROLD BARTHE, J.J. BERRY, J.M. DEMARTIN, JEFF LARSON,

JOE PYLAND, JOHN MILLER, JOHN WALSH, JOHN YENCHA,

M. DONATO, M.R. CLARK, MATT CALLEY, PATRICIA MURRAY,

R.D. MOSLEY, R.L. MARTIN, ROBERT SONDOVAL,

RODNEY JOHNSON, SHAWN PALIN, T.J. CARR, TOM HAYES,

AND WARREN GIVENS, Appellee s

On Appeal from County Civil Court at Law No. 1

Harris County, Texas

Trial Court Cause No. 789,357

CONCURRING OPINION

I join the Court’s judgment, and I also join much of its opinion. However, I

write separately to express my disagreement with some of the majority’s reasoning.

In holding that HMEPS does not have exclusive jurisdiction over the subject-matter of the plaintiffs’ declaratory-judgment suit, the majority distinguishes Williams

v. Houston Firemen’s Relief & Retirement Fund , 121 S.W.3d 415 (Tex.

App.—Houston [1st Dist.] 2003, no pet.) (“ Williams III ”) . I believe that we cannot

distinguish Williams III on the basis on which the majority does. I would, therefore,

expressly overrule Williams III to the extent that it holds that the retirement statute

at issue in that case—which is similar in material respects to the one at issue in this

case—conferred exclusive jurisdiction on the pension board to interpret the

retirement statute.

What Williams III Did

In Williams III , Williams sought to purchase prior service credit (“PSC”) for

the Houston statutory firefighters’ retirement fund for the time that he had served with

the fire departments of two other cities that did not have statutory retirement funds

like Houston’s. Id. at 422 . While Williams’s claim was pending, the Houston

Firemen’s Relief and Retirement Fund (“the Fund”) interpreted the retirement

statute’s PSC provision, and adopted corresponding guidelines, to deny PSC to

firefighters who had previously worked for cities that did not have pension funds like

Houston’s. Id. at 422. The Fund’s sole basis for adopting the guidelines was its

interpretation of the retirement statute’s PSC provision. Id. at 442 n.2 (Taft, J.,

dissenting). Based solely on its guidelines and on the undisputed fact that Williams

had not previously worked for qualifying cities, the Fund denied Williams’s PSC

request. Id. at 422 .

Williams sued the Fund and others, asserting three categories of claims against

the Fund: (1) challenges to the merits of the guidelines and the Fund’s PSC

determination, which generally involved questions of statutory interpretation applied

to undisputed facts;

(2) constitutional claims; and (3) common-law claims. Id. at

424 . Although Williams sought damages, he also sought a declaration that the

retirement statute allowed him to obtain PSC and that the guidelines were thus

erroneous; that is, he sought a declaration of the statute’s meaning. See id. The Fund

sought summary judgment on both jurisdictional and substantive grounds. See id. at

427-33 . The trial court granted the Fund’s summary judgment and rendered a take-nothing judgment against Williams on all of his claims against the Fund. Id. at 424-25 .

We first considered over which of Williams’s causes of action the trial court

had jurisdiction. Id. at 426-29 . The retirement statute in Williams III made the

Fund’s PSC determination final, without requiring the exhaustion of further

administrative remedies, but then provided for judicial review of those determinations

only when aggrieved firefighters were disabled or eligible for retirement. Id. at 427-28 ; see Act of May 27, 1975, 64th Leg., R.S., ch. 432, § 17, 1975 Tex. Gen. Laws

1135 , 1145, repealed by Act of May 21, 1997, 75th Leg., R.S., ch. 1268, § 3, 1997

Tex. Gen. Laws 4794 , 4811 (current version at Tex. Rev. Civ. Stat. Ann. art.

6243e.2(1), §§ 2(j), 12(a) (Vernon 2003)) . It was undisputed that, at the time of his

filing suit, Williams was neither disabled nor eligible to retire. See Williams III , 121

S.W.3d at 425 . Among its other holdings, the Williams III majority held that the

courts had no jurisdiction to review Williams’s challenges to the merits of the

guidelines and the Fund’s PSC determination, necessarily including his declaratory-judgment cause of action seeking statutory interpretation under undisputed facts . See

id. at 426-29, 433-35. The majority reasoned that the retirement statute (which is

strikingly similar in material respects to the retirement statute here) granted the Fund

exclusive jurisdiction over “Williams’s claims”—necessarily meaning, with respect

to Williams’s claims based solely on statutory interpretation, exclusive jurisdiction

to interpret the retirement statute. See id. at 427 . The majority based this exclusive-jurisdiction holding on the “pervasive regulatory scheme” that the retirement statute

allegedly established. Id.

Although I agreed that the trial court lacked subject-matter jurisdiction over

Williams’s various claims for damages, I dissented to the disposition concerning his

causes of action based on pure statutory interpretation because I concluded that (1)

the retirement statute did not grant exclusive jurisdiction to the Fund over matters of

statutory interpretation; (2) the district court had inherent jurisdiction over Williams’s

challenges based on statutory interpretation because they involved pure questions of

law applied to undisputed facts, even though Williams did not yet meet the statutory

requirements for judicial review; and (3) the trial court thus had subject-matter

jurisdiction to interpret the statute at that time, i.e. , to consider Williams’s

declaratory-judgment cause of action. Id. at 440-49 (Taft, J., dissenting). I further

explained:

Persons aggrieved by an administrative agency’s action have no absolute

right to challenge that action in court: the right of judicial review of an

agency determination exists only when

1.a statute allows judicial review,

2.the agency’s action adversely affects a vested property

right,

3.the agency’s action violates certain constitutional rights,

4.the action exceeds the agency’s jurisdiction, or

5. the agency action involves a pure question of law, such

as the interpretation of a statute , when the agency does

not have exclusive jurisdiction to determine that

question of law.

Id. at 441 (Taft, J., dissenting) (citations omitted; emphasis added) . I also responded

as follows to a principal argument that the majority asserted against my conclusion:

Because the majority believes that the Fund has exclusive jurisdiction

over legal questions, it concludes that my position would eviscerate

agencies’ exclusive jurisdiction. That view misunderstands my position,

which is simply that, in the absence of statutory authority to do so,

courts may still consider pure questions of law that are raised by an

agency’s action when the agency itself does not have exclusive

jurisdiction over the particular question of law. If I read the

retirement statute to grant the Fund exclusive jurisdiction over pure

legal questions, I would not apply the pure-question-of-law

exception here. I do not so read the statute, however.

Id. at 447 (Taft, J., dissenting) (citations omitted; italicized emphasis in original;

bolded emphasis added).

Why Williams III Cannot Be Distinguished

HMEPS relies on Williams III to argue that the retirement statute here grants

it exclusive jurisdiction over the subject-matter of the plaintiffs’ declaratory suit

because we held that the similar retirement statute in Williams III granted the Fund

exclusive jurisdiction over like matters. In today’s opinion, the majority distinguishes

Williams III because

[Williams] asserted numerous constitutional and common law

“claims” against the Fund and sought “compensatory and punitive

damages, declaratory relief, pre- and post-judgment interest, attorney’s

fees and costs.” Treating his entire suit as an appeal from the Fund’s

benefit decision, this court addressed all of Williams’s “claims,”

including his request for declaratory relief regarding the Fund’s

construction of the pertinent retirement statute, together in the context

of the statutory scheme for the determination of benefits, and we held

that the Fund “had exclusive jurisdiction over Williams’s claims.” This

decision was based on the specific language of two pertinent statutory

provisions that expressly addressed “rights of appeal” and judicial

review of the Fund’s benefit decision. We noted that “[b]oth Williams’s

cause of action and remedy for its enforcement [were] derived from

statute, [and that] the statutory provisions for review [were] mandatory

and exclusive.”

Williams requested a review, based on his interpretation of a

“former” retirement statute, of the Fund’s method of calculating his

future retirement benefits, and he sought an award of the credit, under

his interpretation of the superseded statute. We pointed out that

Williams was not eligible for retirement and that he could not use the

courts to require the Fund to calculate his future unvested pension

benefits under already superseded law. The retirement statute at issue

expressly limited judicial review of the board’s decision accepting or

rejecting a claim for benefits to members “eligible for retirement.”

Accordingly, we agreed with the Fund that the statute, “on its face [did]

not allow judicial review of the Fund’s credit determination until

Williams [met its] requirements.”

Williams III should not be read as holding that all declaratory

judgment actions against administrative entities to determine the proper

construction of pertinent statutes or to obtain a declaration of rights,

status and legal relations under pertinent statutes are precluded under the

exclusive jurisdiction doctrine. Here, the plaintiffs seek an interpretation

of a current statute and a determination of their rights under that statute

in accordance with the courts’ inherent power to construe statutes. We

are dealing solely with a declaratory judgment action, not multiple

claims that are, in effect, an improper appeal of an administrative

decision. The DJA action before us is, in fact, an action for a

declaration of the plaintiffs’ rights, status and legal relationship with

HMEPS, not a request for judicial review of an administrative benefits

determination that is unappealable under the express language of the

statute.

(Citations and footnote omitted.)

I perceive three bases for the majority’s distinguishing Williams III , with none

of which I agree.

First, the majority appears to distinguish Williams III because Williams

asserted damages claims along with his declaratory-judgment request to interpret the

statute and to declare his rights under it. I disagree that Williams III may be

distinguished on this basis. Williams’s having asserted damages claims along with

his declaratory-judgment cause of action had no impact on the majority’s holding

concerning Williams’s declaratory cause of action, which was based on statutory

interpretation and a pure question of law. See id. at 433-34 (rejecting dissenting

opinion’s contention that trial court had inherent jurisdiction, in absence of statutory

basis for judicial review, to consider pure questions of law because of pension

board’s exclusive jurisdiction over these matters); id. at 441-49 (Taft, J., dissenting)

(explaining why court had jurisdiction to consider declaratory-judgment cause of

action based on pure questions of law when agency did not have exclusive

jurisdiction). Neither did Williams III involve a situation like that in Thayer v.

Houston Municipal Employees Pension System , cited by the majority in this case, in

which our Court held that Thayer could not “circumvent a governmental entity’s

immunity from suit by characterizing a suit for money damages as a declaratory

judgment claim.” 95 S.W.3d 573, 578 (Tex. App.—Houston [1st Dist.] 2002, no

pet.). The majority in Williams III in no way indicated or based its holding on a

conclusion that Williams had impermissibly recharacterized his damages claims as

declaratory-judgment allegations.

Second, the majority distinguishes Williams III because “[h]ere, the plaintiffs

seek an interpretation of a current statute and a determination of their rights under

that statute in accordance with the courts’ inherent power to construe statutes” and

because “[h]ere, we are dealing solely with a declaratory judgment action, not

multiple claims that are, in effect, an improper appeal of an administrative decision.

The DJA action before us is, in fact, an action for a declaration of the plaintiffs’

rights, status and legal relationship with HMEPS, not a request for judicial review of

an administrative benefits determination that is unappealable under the express

language of the statute. ” I disagree that Williams III may be distinguished on this

basis, either. At the core of his declaratory-judgment cause of action , Williams

sought a declaration that the retirement statute meant what he claimed that it did; that

the Fund’s decision, which was based solely on the Fund’s erroneous statutory

interpretation applied to undisputed facts, was thus erroneous; and that he was

entitled to prior service credit under the statute. That is, with respect to his

declaratory-judgment cause of action, Williams in essence alleged that the Fund had

misconstrued the retirement statute. And, recognizing in my dissenting opinion in

Williams III that “[c]ourts have jurisdiction to perform the inherently judicial function

of determining pure questions of law, such as interpreting a statute,” I further

recognized that Williams’s declaratory-judgment cause of action invoked that

inherent jurisdiction, just as the plaintiffs’ pleadings do here. Id. at 443, 447 (Taft,

J., dissenting).

This is what the plaintiffs seek in this suit:

PRELIMINARY STATEMENT

Plaintiffs . . . join in filing this action seeking declaratory relief

that establishes his [sic] entitlement to Pension Benefits in the HMEPS

retirement system for all his [sic] years of service while working for the

City of Houston (COH). Defendants wrongfully contend that they are

not entitled to benefits during the period they were employed as police

cadets which [sic] the City of Houston classified them as civilian

employees. Plaintiff [sic] respectfully requests the court to grant the

declaratory relief requested and injunctive relief under law and equity.

* * *

A. Declaratory Judgment

. . .

11.A controversy has arisen concerning the credited years of

service Plaintiffs should have in HMEPS retirement system.

Accordingly Plaintiffs respectfully request that this Court grant

declaratory relief declaring Plaintiffs [sic] correct length of service.

* * *

PRAYER FOR RELIEF

Plaintiffs respectfully request that this Court, upon trial, enter

judgment in favor of Plaintiffs against Defendants and grant the

following relief:

1.Declaratory Judgment and injunctive relief; . . . .

The plaintiffs also alleged that the retirement statute’s and its statutory predecessor’s

plain language supported their interpretation.

I see no material difference between the declaration that Williams sought (at

least to the extent that he sought a declaration based on matters of statutory

interpretation, rather than based on estoppel or other grounds) and the declaration that

the plaintiffs seek here. Additionally, the plaintiffs and Williams both sued the

governmental unit that had denied them prior service credit, and each sought a

declaration that would affect the governmental unit’s ruling. If Williams’s statutory-interpretation declaratory-judgment cause of action is not materially like the

declaratory-judgment action here, then I do not know what would be.

Third, the fact that the retirement statute that Williams sought to have

interpreted had been superseded was not the basis of the majority’s holding in

Williams III that the retirement statute granted exclusive jurisdiction to the Fund over

matters of statutory interpretation.

Moreover, as I explained in my dissenting

opinion in Williams III , because the Fund had moved for summary judgment under

the former retirement statute (and argued on appeal that that statutory version

applied), the rules of summary judgment required that we apply the former statutory

version in that case. See id. at 448 (Taft, J., dissenting).

Why Williams III Should Be Overruled

Given my conclusion that Williams III cannot be distinguished on the basis

cited by the majority, I would address the effect of Williams III on this appeal. I do

not believe that the holding in Williams III can be reconciled with our holding in this

case—which I join fully—that the retirement statute here does not confer exclusive

jurisdiction on HMEPS over the subject matter of the plaintiffs’ declaratory-judgment

action. Neither the statute at issue in this appeal nor the one considered in Williams

III expressly states that the governmental unit has exclusive jurisdiction over matters

of statutory interpretation. Likewise, for purposes of determining whether either

statute confers exclusive jurisdiction by establishing a pervasive regulatory scheme,

the retirement statute here is indistinguishable in material respects from that

considered in Williams III .

And the appellants in both suits asserted a declaratory-judgment action to determine the same matters: the interpretation of a retirement

statute, what appears to have been a pure question of law in each case. See Williams

III , 121 S.W.3d at 424 . Simply put, if the retirement statute here does not confer

exclusive jurisdiction on HMEPS to construe that statute, then neither did the statute

in Williams III confer exclusive jurisdiction on the Fund to do so . Because the

exclusive-jurisdiction holding in Williams III cannot be reconciled with our

exclusive-jurisdiction holding in this case, and because I disagree with that holding

in Williams III ,

I would overrule Williams III in that respect.

Conclusion

For these reasons, and for the reasons set out in my dissenting opinion in

Williams III , I would overrule Williams III to the extent that it held that the retirement

statute at issue in that case gave the relevant pension board exclusive jurisdiction over

statutory interpretation .

With these explanations, I join the judgment and join the majority opinion in

all matters except for those addressed herein, to which extent I respectfully concur.

Tim Taft

Justice

Panel consists of Justices Taft, Jennings, and Hanks.

Justice Taft, concurring.