The opinion
Opinion issued August 28, 2009
In The
Court of Appeals
For The
First District of Texas
NO. 01-07-00276-CV
GRIFFIN MACY, Appellant/Cross-Appellee
V.
WASTE MANAGEMENT, INC., Appellee/Cross-Appellant
On Appeal from the 157th District Court
Harris County, Texas
Trial Court Cause No. 2004-47274
OPINION DISSENTING FROM THE
DENIAL OF EN BANC CONSIDERATION
In its opinion, the panel erroneously concludes that the intent of appellant,
Griffin Macy, and appellee, Waste Management, Inc., as expressed in their
employment contract, was for Waste Management "alone" to have the power to make
the legal determination as to whether Waste Management had terminated Macy's
employment "with cause." However, as conceded by the panel, the contract "does not
expressly state that the decision" of Waste Management's board of directors to
terminate Macy's employment with cause has the legal effect of being "final and
binding," precluding him from litigating the issue in a court of law. In effect, as
argued by Macy in his Motion for En Banc Consideration of this case, the panel, "by
judicial fiat," inserts this "non-existent language" into the employment contract in
violation of well-established Texas law. See Fortis Benefits v. Cantu , 234 S.W.3d
642 , 649 n.41 (Tex. 2007). Thus, the panel errs in affirming the judgment of the trial
court. Accordingly, I respectfully dissent from the denial of en banc consideration
of the case. (1) See Tex. R. App. P. 41.2(c).
Macy's employment contract provided that Waste Management could terminate
his employment "with" or "without cause." If terminated without cause, Waste
Management agreed to pay Macy two times the sum of his base salary "plus his target
annual bonus (as then in effect), of which one-half shall be paid in a lump sum within
ten (10) days after such termination and one-half shall be paid during the two (2) year
period beginning the date of Employee's termination . . . ." If terminated with cause,
Waste Management agreed to pay Macy only accrued wages.
Section 5 of the employment contract expressly defined "cause" and outlined
a specific procedure for Waste Management to follow in terminating Macy's
employment for cause:
(c) Termination by the Company for Cause. The Company may
terminate Employee's employment hereunder for "Cause" at any time
after providing written notice to Employee.
(i) For purposes of this Agreement, the term "Cause" shall
mean any of the following . . . (C) fraud or embezzlement
determined in accordance with the Company's normal
investigative procedures consistently applied in
comparable circumstances . . . .
(ii) An individual will be considered to have been
terminated for Cause if the Company determines that the
individual engaged in an act constituting Cause at any time
prior to a payment date for any amounts due hereunder,
regardless of whether the individual terminated employment
voluntarily or is terminated involuntarily, and regardless of
whether the individual's termination initially was
considered to have been for Cause.
(iii) Any determination of Cause under this Agreement shall
be made by resolution of the Company's Board of Directors
adopted by affirmative vote of not less than a majority of
the entire membership of the Board of Directors at a
meeting called and held for that purpose and at which
Employee is given an opportunity to be heard .
(Emphasis added.)
Pursuant to the contract, Waste Management could only terminate Macy's
employment for cause after providing him with written notice and an opportunity to
be heard. Although Waste Management could, regardless of whether it had previously
determined that the termination of Macy's employment was without cause,
subsequently consider his employment terminated with cause, nothing in the contract
evidences an intent of the parties that this determination would be considered "final
and binding," precluding him from litigating the issue in a court of law.
Believing that his employment had been constructively terminated without
cause, Macy stopped working for Waste Management on April 5, 2004. In August
2004, he sued Waste Management for breach of the employment contract. One year
later, in August 2005, only after being sued for breach of contract, and while the
lawsuit was pending, did Waste Management's board of directors meet to determine
whether it had previously terminated Macy's employment "with" or "without cause."
Thus, in August 2005, after being sued, the board determined that it had terminated
Macy's employment "with cause" in April 2004.
After the board made its belated determination, Waste Management then filed
its summary judgment motion, asserting that the board was the sole and final authority
for making the legal determination as to whether Macy had been terminated for cause
in April 2004. The trial court granted Waste Management summary judgment, and the
panel affirms.
In its opinion, under the subheading " Decision is Final Despite Absence of
Certain Words ," the panel reasons,
Although the Agreement does not expressly state that the decision [of the
board] is final and binding , it plainly states that Waste Management is to
make the determination of cause. An examination of the entire
Agreement shows it does not provide Macy any right of appeal to another
entity, nor does it refer to any other entity as having the authority to
determine cause. We conclude the intent of the Agreement is that the
determination of cause must be made by Waste Management alone. . . .
Nothing in the Agreement supports Macy's position that a jury should
independently decide whether there is cause to terminate Macy.
(Emphasis added.)
There are at least three serious flaws in the panel's reasoning. First, the parties
to a contract do not have to expressly state in their contract that they have the right to
enforce the contract in a court of law and have a jury determine fact issues. Rather,
the opposite is true. Only if the parties intend that their contract may be enforced in
a specific way or in a specific forum, must the contract expressly state how and where.
Here, it is indeed the "absence of certain words" regarding dispute resolution that
precludes the panel's conclusion to the contrary.
Second, the plain language of the contract does not evidence any intent of the
parties to provide a mechanism for dispute resolution, especially one in which Waste
Management's board of directors would be the final arbiter of any disputes between
Waste Management and Macy. It is well-settled that Texas courts are to determine the
intent of the parties to a contract by construing the plain language actually used in the
contract and considering the contract as a whole. Motiva Enterps., LLC v. McCrabb ,
248 S.W.3d 211, 215 (Tex. App.--Houston [1st Dist.] 2007, pet. denied) (citing Coker
v. Coker , 650 S.W.2d 391, 393 (Tex. 1983)). Here, the panel inserts "non-existent
language" into the employment contract in violation of this Court's precedent and
well-established Texas law. See id. ; see also Fortis Benefits , 234 S.W.3d at 649 n.41.
As argued by Macy,
The panel's opinion and judgment, in effect, reads an arbitration
provision into the Agreement, and makes the Board of Directors the
arbiters. This is in conflict with a prior opinion of this Court, . . . stating
that "[t]his Court may not expand upon the terms of the contract or
tolerate a liberal interpretation of it by reading into it a voluntary,
consensual agreement to arbitrate when one otherwise does not exist."
Bates v. MTH Homes-Texas, L.P. , 177 S.W.3d 419, 422 (Tex.
App.--Houston [1st Dist.] 2005, orig. proceeding). This apparent
conflict raises an issue of uniformity that should be addressed by this
Court en banc. Tex. R. App. P. 49.7
Only by improperly inserting "certain words," which are absent, into the contract
could the panel possibly come to the conclusion that the parties intended that Waste
Management's board of directors would be the final arbiter of any disputes between
Waste Management and Macy.
Third, the plain language of the contract evidences that the parties had the exact
opposite intent. Under the panel's interpretation, Waste Management would obviously
have the final and binding say as to whether Macy's employment was terminated with
cause. This interpretation, of course, defeats the obvious intent of the parties to
actually protect Macy from the arbitrary termination of his employment through the
provision of additional benefits for termination of his employment without cause.
Section 5(c) of the contract simply defines cause and provides the procedure for
terminating Macy's employment with cause, giving him the right of prior written
notice and an opportunity to be heard. It also provided Waste Management with the
protection of reconsidering any termination status upon learning that Macy had
defrauded the company or embezzled from the company "at any time prior to a
payment date for any amounts due hereunder." However, nothing in the contract
evidences an intent of the parties that such a determination would be considered final
and binding, precluding enforcement of the contract in a court of law and resolution
of fact issues by a jury.
In fact, section 10 of the employment contract, entitled "Disputes and Attorneys
Fees," provides that "should any dispute arise as to the validity, interpretation or
application of any term of condition" of the contract, Waste Management agrees, upon
a written demand, to provide Macy sums sufficient to pay his reasonable attorneys fees
and costs incurred "in connection with any dispute or any litigation ." (Emphasis
added). Section 10 further provides that Macy must repay any amounts furnished if
he "is not the prevailing party with respect to any dispute or litigation arising under
[s]ection[] 5(c)." Thus, section 10 expressly contemplates litigation with respect to
Macy's termination for cause in accordance with section 5(c), and nothing in section
10 limits the scope of the litigation or otherwise suggests that Macy should be
precluded from challenging the cause determination in a court of law. Certainly, if the
parties had intended to include such significant limitations on Macy's rights in the
event of his termination, the parties would have expressly included these limitations
in the section of the contract addressing "disputes."
Accordingly, I would hold that the trial court erred in granting summary
judgment in favor of Waste Management. The panel's insertion of non-existent
language into the employment contract and conclusion that Macy and Waste
Management intended that Waste Management "alone" would have the power to make
a final and binding legal determination as to whether it had terminated Macy's
employment with "cause" are in serious error. See Fortis Benefits , 234 S.W.3d at 649
n.41. Thus, I would grant Macy's motion for en banc consideration of the case. Tex.
R. App. P. 41.2. I would further sustain his first issue, reverse the judgment of the trial
court, and remand the case for a trial on the merits.
Terry Jennings
Justice
Panel consists of Chief Justice Radack and Justices Alcala and Hanks.
En banc consideration was requested. See Tex. R. App. P. 41.2(c).
A majority of the Court voted to deny en banc consideration. See Tex. R. App. P. 49.7.
Justice Alcala, concurring to the denial of en banc consideration.
Justice Jennings, dissenting from the denial of en banc consideration, joined by Justice
Keyes.
1. In regard to the Concurring Opinion From the Denial of En Banc Consideration, it
must first be noted that the Texas Supreme Court has made clear that "when a court
of appeals votes against hearing a case en banc, any member of the court is entitled
to file a dissent, regardless of whether the judge was on the original panel deciding
the case." O'Connor v. First Court of Appeals , 837 S.W.2d 94, 97 (Tex. 1992). Here,
Macy, in his motion, asserts that the panel's opinion "reads an arbitration provision
into the agreement," raising an issue of uniformity with another First Court of
Appeals' opinion. See Bates v. MTH Homes-Texas, L.P. , 177 S.W.3d 419 (Tex.
App.--Houston [1st Dist.] 2005, orig. proceeding).
Macy further argues that the
"panel's opinion and judgment also create a new standard pursuant to which parties
must expressly state that they are not forfeiting their right to sue when entering into
a contract that delegates a particular decision to a particular person or entity," and that
this newly-created standard is contrary to "well-established law." These arguments
are objectively valid. This is not a situation in which there is a simple disagreement
with the panel's opinion over an important issue. Rather, as pointed out by Macy, the
panel's error is extraordinary, requiring en banc consideration. See Tex. R. App. P.
41.2(c). Accordingly, Macy's motion should be granted.
Second, the Texas Rules of Appellate Procedure expressly provide that "[a]n opinion
may not be designated a memorandum opinion if the author of a concurrence or
dissent opposes that designation." Tex. R. App. P. 47.4.