Justice GUZMAN delivered the opinion of the Court.
Section 271.152 of the Local Government Code, under certain circumstances, waives governmental immunity for suits alleging breach of a written contract. For a second time on interlocutory appeal, we review the City of Houston's plea to the jurisdiction in a suit by 540 former Houston Firefighters.
We hold the Ordinances and Agreements constitute written contracts within the scope of section 271.152. But we conclude that Chapter 143, standing alone, does not establish a contract between the City and the Firefighters, and as such does not fall within the scope of section 271.152's waiver of immunity. Accordingly, we affirm the court of appeals' judgment in part, reverse in part, and remand the case to the trial court for further proceedings consistent with this opinion.
The Firefighters assert two claims against the City, both based on alleged underpayment of lump sums owed to them when their employment with the City terminated. The first is the "debit dock" claim, alleging that previously paid overtime amounts were improperly deducted
This case first came before us after the trial court granted a partial judgment in 2004, denying the City's plea to the jurisdiction and upholding the Firefighters' claims. The court of appeals affirmed that ruling, holding that governmental immunity had been waived because (1) the Firefighters were seeking a declaratory judgment, and (2) the "sue and be sued" language in the City's Charter, and the "plead and be impleaded" language of Local Government Code section 51.075, effectuated a waiver of governmental immunity. See id. at 426. On petition to this Court, we reversed on both grounds. As to the first, we held that because the only conceivable remedy for the Firefighters was money damages, the Firefighters "`cannot circumvent the State's sovereign immunity from suit by characterizing a suit for money damages . . . as a declaratory-judgment claim.'" City of Houston v. Williams (Williams I), 216 S.W.3d 827, 829 (Tex.2007) (quoting Tex. Natural Res. Conservation Comm'n v. IT-Davy, 74 S.W.3d 849, 856 (Tex.2002)). As to the second ground, we held, applying our then-recent ruling in Tooke v. City of Mexia, that immunity was not waived by the Charter and statutory language empowering the City to "sue and be sued"
However, in the interim between the trial court's partial judgment and our initial review of this case, the Legislature retroactively waived governmental immunity for certain contract claims by enacting Subchapter I, Local Government Code Chapter 271, particularly section 271.152. See Act of May 23, 2005, 79th Leg., R.S., ch. 604, §§ 1-3, 2005 Tex. Gen. Laws 1548, 1548-49 (codified at TEX. LOC. GOV'T CODE §§ 271.151-.160); Tooke, 197 S.W.3d at 344-45. As a result, numerous pending suits against governmental units that had rested on "sue and be sued" assertions of waiver were reversed and remanded to the trial courts for consideration of whether immunity was waived under section 271.152. See, e.g., City of Midland v. Goerlitz, 201 S.W.3d 689, 690 (Tex.2006) (per curiam); City of Houston v. Jones, 197 S.W.3d 391, 392 (Tex.2006) (per curiam); City of Houston v. Clear Channel Outdoor, Inc., 197 S.W.3d 386, 386-87 (Tex.2006) (per curiam). This case was one such suit. Williams I, 216 S.W.3d at 828-29.
Accordingly, on remand to the trial court, the Firefighters argued that certain City of Houston Ordinances constituted a written contract for which immunity was waived under section 271.152. Both the trial court and court of appeals agreed, determining again that the City's immunity had been waived. 290 S.W.3d 260, 262. The Firefighters also argued that Local Government Code Chapter 143, the two MCAs from 1995 and 1997, and the 2005 CBA, all likewise constituted written contracts within the scope of section 271.152's
Interlocutory appeals such as this are generally final in the court of appeals. TEX. GOV'T CODE § 22.225(b)(3). However, there are exceptions, and, as relevant here, we may review an interlocutory appeal when the intermediate court's decision conflicts with a prior decision of another court of appeals, or of this Court. Id. §§ 22.001(a)(2), 22.225(c). The standard governing whether two decisions conflict for purposes of interlocutory jurisdiction was broadened by the Legislature in 2003.
The parties dispute which standard should apply to this case,
Thus, we conclude this Court has jurisdiction over this interlocutory appeal under Government Code sections 22.001(a)(2) and 22.225(c).
Immunity from suit deprives a trial court of jurisdiction. Tex. Dep't of Transp. v. Jones, 8 S.W.3d 636, 638-39 (Tex.1999) (per curiam). Accordingly, a governmental entity properly asserts immunity in a plea to the jurisdiction. Tex. Dept. of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 225-26 (Tex.2004). Whether a trial court possesses jurisdiction is a question of law we review de novo. IT-Davy, 74 S.W.3d at 855. Hence, we review de novo the central issue in this case: whether the City's governmental immunity deprives the trial court of jurisdiction.
Sovereign immunity has two components: immunity from suit, and immunity from liability.
Second, immunity from liability shields the state from money judgments even when the Legislature has given consent to sue. Little-Tex, 39 S.W.3d at 594. Nevertheless, immunity from liability is waived when the state contracts with a private party. Id. Because immunity from liability constitutes an affirmative defense, not a jurisdictional bar, only immunity from suit is properly before us today. See Miranda, 133 S.W.3d at 224.
Local Government Code section 271.152 waives qualifying local governmental entities' immunity from suit for certain breach of contract claims, providing:
TEX. LOC. GOV'T CODE § 271.152. According to its plain terms, the statute by clear and unambiguous language waives a governmental entity's immunity from suit for breach of written contract. Ben Bolt-Palito Blanco Consol. Indep. Sch. Dist. v. Tex. Political Subdivs. Prop./Cas. Joint Self-Ins. Fund, 212 S.W.3d 320, 327 (Tex.2006).
For section 271.152's waiver of immunity to apply, three elements must be established: (1) the party against whom the waiver is asserted must be a "local governmental entity" as defined by section 271.151(3), (2) the entity must be authorized by statute or the Constitution to enter into contracts, and (3) the entity must in fact have entered into a contract that is "subject to this subchapter," as defined by
The first and second elements are present as to each of the Firefighters' claims. Regarding the first, the waiver of immunity in section 271.152 applies to "local governmental entities," which include municipalities, public school and junior college districts, and various special-purpose districts and authorities. Id. § 271.151(3). The City is incorporated as a home-rule city—a type of municipality—see id. §§ 1.005, 5.004; Act of Mar. 18, 1905, 29th Leg., R.S., ch. 17, 1905 Tex. Spec. Laws 131 (granting Houston's present Charter), and thus is a "local governmental entity" for whom immunity is waived for certain contract suits under section 271.152. Concerning the second element, because the City is a chartered home-rule city, it meets section 271.152's requirement that it be "authorized by statute or the constitution to enter into a contract." See Proctor v. Andrews, 972 S.W.2d 729, 733 (Tex.1998) (noting that home-rule cities possess all powers of the state not inconsistent with "the Constitution, the general laws, or the city's charter," except where limited by statute). Indeed, the City's Charter specifically authorizes it to "contract and be contracted with." HOUSTON, TEX., CHARTER art. II, § 1.
The third element presents a more difficult inquiry; that is, whether the City has entered into a "contract subject to this subchapter." Section 271.151(2) effectively states five elements a contract must meet in order for it to be a contract subject to section 271.152's waiver of immunity: (1) the contract must be in writing, (2) state the essential terms of the agreement, (3) provide for goods or services, (4) to the local governmental entity, and (5) be executed on behalf of the local governmental entity. TEX. LOC. GOV'T CODE § 271.151(2). To answer that inquiry, we turn to the three separate writings the Firefighters contend are contracts under sections 271.151(2) and 271.152:(1) certain City Ordinances, (2) Local Government Code Chapter 143, and (3) the Agreements.
The Firefighters assert that, when read together, certain sections of Chapter 34 of the Houston Code of Ordinances constitute a unilateral employment contract between the City and the Firefighters.
Unlike a bilateral contract, in which both parties make mutual promises, Hutchings v. Slemons, 141 Tex. 448, 174 S.W.2d 487, 489 (1943), a unilateral contract is created when a promisor promises a benefit if a promisee performs, Vanegas v. Am. Energy Servs., 302 S.W.3d 299, 303
Although the concept of a unilateral contract has been questioned by some authorities, see, e.g., RESTATEMENT (SECOND) OF CONTRACTS § 1, rptrs. note on cmt.f (1981), the concept enjoys continued recognition among many scholars of contract law, see, e.g., 1 WILLISTON ON CONTRACTS § 1.17, and has recently been reaffirmed as part of the common law of Texas by this Court, see Vanegas, 302 S.W.3d at 302. In Vanegas, we held that when an employer offered to share five percent of the proceeds of a sale or merger of the company with certain employees if they remained employed until the sale or merger, a unilateral contract was formed when the employees remained employed for the requested time. Id. at 303. We noted that "`unilateral contract analysis is applicable to the employer's promise to pay a bonus or pension to an employee in case the latter continues to serve for a stated period.'" Id. (quoting 2 JOSEPH M. PERILLO & HELEN HADJIYANNAKIS BENDER, CORBIN ON CONTRACTS § 6.2 (1995)). Thus, a unilateral employment contract is created when an employer promises an employee certain benefits in exchange for the employee's performance, and the employee performs.
Relying on Overton v. City of Houston, the City contends that general standing ordinances, however detailed, can never constitute a unilateral employment contract.
A municipality utilizes ordinances as a means to conduct its business. Cf. Cent. Power & Light Co. v. City of San Juan, 962 S.W.2d 602, 613 (Tex.App.-Corpus Christi 1998, pet. dism'd w.o.j.). It is therefore unsurprising that this Court has implicitly recognized that municipalities sometimes contract with third parties by way of ordinance. See City of San Antonio v. Frizzell, 127 Tex. 119, 91 S.W.2d 1056, 1056-57 (1936) (noting that an ordinance evidenced the entire contract between a city and a third party). When an ordinance evidences a contract, and is
We have also read two ordinances and related documents together as a single agreement, and noted that "a court may determine, as a matter of law, that multiple documents comprise a written contract." Fort Worth Indep. Sch. Dist. v. City of Fort Worth, 22 S.W.3d 831, 840-41 (Tex.2000). It is "well-established law that instruments pertaining to the same transaction may be read together to ascertain the parties' intent."
Further, no particular words are required to create a contract; therefore the fact that an ordinance does not contain the word "contract" in its text does not preclude it from having contractual effect. See 14 TEX. JUR.3D Contracts § 46 (2006); Farmers' State Bank & Trust Co. v. Gorman Home Refinery, 3 S.W.2d 65, 66 (Tex. Comm'n App.1928, judgm't adopted); Coffman v. Woods, 696 S.W.2d 386, 387-88 (Tex.App.-Houston [14th Dist.] 1985, writ ref'd n.r.e.).
Guided by these principles, we turn to the particular Ordinances at issue to determine if they constitute a unilateral employment contract between the City and the Firefighters within section 271.152's waiver of immunity. As discussed above, in order to determine if the Ordinances can collectively constitute a contract to which section 271.152 applies, we must determine whether five elements are met: (1) the contract must be in writing, (2) state the essential terms of the agreement, (3) provide for goods or services, (4) to the local governmental entity, and (5) be properly executed on behalf of the local governmental entity. TEX. LOC. GOV'T CODE § 271.151(2). Because the Ordinances at issue here meet each of these five elements, we conclude the Ordinances collectively constitute a unilateral employment contract between the City and the Firefighters, thereby meeting the third requirement
First, the Ordinances comprise a contract, and that contract is in writing. "A promise, acceptance of which will form a contract, `is a manifestation of intention to act or refrain from acting in a specified way, so made as to justify a promisee in understanding that a commitment has been made.'" Montgomery Cnty. Hosp. Dist. v. Brown, 965 S.W.2d 501, 502 (Tex. 1998) (quoting RESTATEMENT (SECOND) OF CONTRACTS § 2(1)). The City manifested its intention to act in a specific way in the Ordinances by its extensive use of the word "shall"
The City's Ordinances further promised the Firefighters specific compensation in the form of overtime pay and termination pay. That promise required acceptance by performance, making the promise a unilateral contract that became binding when the Firefighters performed. See id. The performance the City requested is detailed in parts of Chapter 34, Article III,
The contract is also in writing. See generally HOUSTON, TEX., CODE OF ORDINANCES, ch. 34. As explained earlier, "written" contracts may be "embodied in more than one document," RESTATEMENT (SECOND) OF CONTRACTS § 95 cmt. b, including, as here, multiple ordinances, see City of Fort Worth, 22 S.W.3d at 840-41.
Second, the Ordinances state the essential terms of the agreement between the Firefighters and the City. Section 271.151(2) does not define "essential terms," but we have characterized "essential terms" as, among other things, "`the time of performance, the price to be paid,
Third, the Ordinances provide for goods or services. We have previously held that "services" under section 271.151(2) encompass a wide array of activities, generally including any act performed for the benefit of another. Kirby Lake, 320 S.W.3d at 839. The Firefighters benefitted the City by providing fire protection services as defined in the Ordinances themselves. HOUSTON, TEX., CODE OF ORDINANCES ch. 34, art. III, §§ 34-46, 34-48, 34-50.
Fourth, the services were provided to a local governmental entity. The services were rendered to the City, and the Firefighters' performance of those services was tracked by the fire chief. See id. § 34-59(c); see also Byrd, 6 S.W.2d at 740-41 (noting that a pension plan was given to retired firefighters as compensation for services rendered to the City of Dallas).
Finally, the Ordinances were executed by the City. The City does not deny that the Ordinances were duly enacted, but does challenge whether they were "executed." Section 271.151(2) does not define "executed." We have noted that to "execute" means to "finish" or to "complete," and that it is not necessary to sign an instrument in order to execute it, unless the parties agree that a signature is required. Mid-Continent Cas. Co. v. Global Enercom Mgmt., Inc., 323 S.W.3d 151, 157 (Tex.2010) (per curiam). No agreement between the City and the Firefighters establishing that a signature was required is before us. Therefore, the Ordinances, when duly enacted by the City with the intent to be bound, were "executed" under section 271.151(2). See id.
In summary, the Ordinances meet each of the five elements required by section 271.151(2), and thus comprise a unilateral employment contract within the scope of section 271.152's waiver of immunity.
In an effort to negate contractual intent behind the Ordinances, the City argues that it could not have intended to be contractually bound by the Ordinances, because doing so would create a debt in violation of Article XI, Section 5, of the Texas Constitution. Our Constitution ordains that "no debt shall ever be created by any city, unless at the same time provision be made to assess and collect annually a sufficient sum to pay the interest thereon and create a sinking fund of at least two per cent. thereon." TEX. CONST. art. XI, § 5. But we long ago noted that this prohibition does not extend to "that class of pecuniary obligations in good faith intended
In a further effort to negate contractual intent, the City asserts that Houston Ordinance No. 96-1088 disclaims any contractual effect in the Ordinances at issue in this case. Houston Ordinance No. 96-1088 provides:
Houston, Tex., Ordinance 96-1088 § 7 (Oct. 23, 1996).
The City points us to several cases in which documents that might otherwise have constituted contracts included statements that effectively disclaimed contractual intent, particularly County of Dallas v. Wiland, 216 S.W.3d 344 (Tex.2007). In Wiland, the disclaimer stated: "Nothing in this [manual] is to be construed as a contract of employment or a provision guaranteeing the specific term or tenure of employment." Id. at 349. We recognized that this statement precluded giving the manual in question any contractual effect. Id. at 352, 354. The City contends the instant ordinance likewise disclaims contractual intent. We disagree.
Disclaiming a vested right to compensation is not equivalent to a disclaimer of contractual intent—to the contrary, an employee may have a valid employment contract, promising that benefits will accrue upon performance, but those benefits will not vest until the employee actually performs. See Vanegas, 302 S.W.3d at 303 ("But whether the promise was illusory at the time it was made is irrelevant; what matters is whether the promise became enforceable by the time of the breach."). The disclaimer amounts to a warning to City employees that the City can change the benefits over time—in other words, the offer that the City is making, as regards to sick leave benefits, is subject to change.
Further, the scope of the disclaimer in Ordinance 96-1088 is limited by its express language. It refers only to Article III of Chapter 14 of the Houston Code of Ordinances. That Article is concerned only with sick leave for City civil service employees generally, see HOUSTON, TEX., CODE
The City next claims that the Firefighters seek to avoid, rather than enforce, their ordinance-based contract, and their suit is therefore not a suit for breach of a contract within the limited scope of section 271.152's waiver. See TEX. LOC. GOV'T CODE § 271.152 (waiving immunity "for the purpose of adjudicating a claim for breach of the contract"). The pleadings provide some indication that the Firefighters' ultimate recovery could depend on a showing that certain parts of the City of Houston Code of Ordinances violated state law, specifically the civil service provisions of Chapters 142 and 143 of the Local Government Code. See City of Houston, 183 S.W.3d at 424-25. That indeed was the basis for much of the court of appeals' original opinion in favor of the Firefighters. See generally id. at 419-26. We decline to decide whether any of the Ordinances violate these specific statutory provisions, leaving this merits determination to the trial court, see Bland Indep. Sch. Dist. v. Blue, 34 S.W.3d 547, 554 (Tex. 2000), but conclude the City's argument fails because the Firefighters' claim is, overall, one for breach of contract.
In determining whether jurisdiction is proper, we look to the pleadings, "construing them liberally in favor of the plaintiffs and looking to the pleader's intent." City of Waco v. Kirwan, 298 S.W.3d 618, 621 (Tex.2009). Viewing the Firefighters' pleadings as a whole, the Firefighters currently plead a cause of action for breach of contract.
Further, it is "settled that the laws which subsist at the time and place of the making of a contract . . . form a part of it, as if they were expressly referred to or incorporated in its terms." Von Hoffman v. City of Quincy, 71 U.S. 535, 550, 4 Wall. 535, 18 L.Ed. 403 (1867). Relevant statutes can form a part of an employment contract. Byrd, 6 S.W.2d at 740 (holding that a state law governing civil service pensions was "part of the contract of employment and is read into the contract as fully as though it had been actually incorporated therein"); see also Wilson v. Andrews, 10 S.W.3d 663, 667-68 (Tex.1999) (holding that the Civil Service Act, as amended, becomes part of the employment contract between a city and its firefighters when the city adopts it). The trial court may determine that at least some portions of the relevant statutes form a part of the unilateral contract between the City and Firefighters. Therefore, the Firefighters' suit is properly characterized as one for breach of contract.
Sections 180.006 and 271.152 differ significantly in scope and effect. Section 271.152 is a retroactive waiver of immunity, while section 180.006 is prospective only. Compare Act of May 23, 2005, 79th Leg., R.S., ch. 604, § 2, 2005 Tex. Gen. Laws 1548, 1549, with Act of May 25, 2007, 80th Leg., R.S., ch. 1200, § 4, 2007 Tex. Gen. Laws 4071, 4072. Section 271.152 applies to breaches of contract generally, while section 180.006 is limited to back-pay claims and related penalties only. Compare TEX. LOC. GOV'T CODE § 271.152, with id. § 180.006(b)-(c). Moreover, section 180.006 does not require a contract in writing, while section 271.152 does. Compare id. § 180.006(b), with id. § 271.151(2). Finally, section 180.006 is limited to a specific class of persons—civil service firefighters or police officers—while section 271.152 has no such limitation. Compare id. § 180.006(a), with id. § 271.152.
Although the Firefighters' suit might fall within the scope of both waivers if it accrued and were filed today, that does not render section 180.006 "useless." Because section 180.006 does not require a written contract, it also applies to those qualifying civil service firefighters and police officers who, unlike the Firefighters in this case, cannot point to a written contract, and for whom there was previously no waiver of immunity until its enactment. See id. § 180.006(a). Accordingly, the "no useless act" rule of construction does not preclude applying section 271.152 to the Firefighters' claims.
Finally, the City and amici raise concerns about the impact of our holding, claiming it will transmute vast numbers of ordinances into contracts. But this fear overlooks the basic requirements of contract law—just as with any writing alleged to be a contract, an ordinance can only be enforced as a contract in a court of law if it satisfies the requirements of a contract. Moreover, most municipal ordinances will not function as contracts within the meaning of section 271.151(2), because most will not contain the detailed request for performance and promised compensation found in Chapter 34 of the Houston Code of Ordinances, nor will they be cognizable as an offer to identifiable offerees as these Ordinances are. In addition, as discussed above, ordinances have long functioned at times as contractual instruments in this state, without any apparent adverse effect. See, e.g., City of San Antonio, 91 S.W.2d at 1056-57.
In conclusion, because the Ordinances at issue are addressed to the Firefighters, promising in detail specific compensation in return for specified services, and meet each element in the definition of a contract under Local Government Code section 271.151(2), we hold the relevant provisions of Chapter 34 of the City of Houston Code of Ordinances constitute a unilateral contract that became effective and enforceable as to these retired Firefighters who have completed the requested performance, and the City's immunity is thereby waived pursuant to section 271.152.
In their cross-petition, the Firefighters assert that certain provisions of Local Government Code Chapter 143 likewise constitute a contract between the City and the Firefighters. Chapter 143 creates a civil service classification system for emergency service personnel in those qualifying municipalities that vote to adopt it. TEX. LOC. GOV'T CODE § 143.002(a); Wilson, 10 S.W.3d at 666. The Firefighters argue that, when the City voted to "opt-in" to Chapter 143, the statute became an offer by the City that the Firefighters accepted by performing.
In order to qualify as a contract, the document or documents must evidence the parties' intent to be bound. See Owen v. Hendricks, 433 S.W.2d 164, 166-67 (Tex. 1968). That intention must be manifested in a way that justifies a promisee's understanding that a promise has been made to him. See Montgomery Cnty. Hosp. Dist., 965 S.W.2d at 502. Because Chapter 143 was written by the Legislature, not by the City, we cannot presume that it is a communication of intent by the City. Rather, we must examine the manner in which the City adopted Chapter 143 to determine whether the City communicated an intent to be bound to any potential promisees. Although the original City Ordinance
HOUSTON, TEX., CODE OF ORDINANCES app. B.
Unlike the Ordinances discussed above, which make specific, detailed promises to the Firefighters, the above statement is addressed to City policy makers and the City's civil service commission. It is a warning to them that the City, having elected to be governed by the Civil Service Act, must comply with it, or risk adverse consequences in court. See Wilson, 10 S.W.3d at 668 ("As long as the Civil Service Act governs [the city], however, it must adhere to the Act[]. . . ."). In other words, it fails the basic contract requirement of communication of an offer to the offeree. See RESTATEMENT (SECOND) OF CONTRACTS § 24; RESTATEMENT OF CONTRACTS § 23 ("[I]t is essential to the existence of an offer that there should be a proposal by the offeror to the offeree. . . ."). Accordingly, we cannot say the City has adopted Chapter 143 in a manner that communicates a promise or an offer to the Firefighters. We thus conclude that Chapter 143 does not, in itself, constitute a contract entered into by the City, and so cannot be a "contract subject to this subchapter" for purposes of section 271.152's waiver of immunity.
We of course do not hold that a statute cannot be incorporated by reference into a contract—as mentioned above, the trial court may conclude that at least some portions of Chapter 143 were incorporated by reference into the unilateral employment contract at issue here. Rather, we hold that when a municipality adopts Chapter 143—without sufficient manifestation of an intent to be contractually bound in the ordinance or other instrument by which it is adopted—Chapter 143 does not, in itself, constitute a stand-alone municipal contract.
As a final basis for waiver of immunity under Local Government Code section 271.152, the Firefighters' cross-petition also attacks the court of appeals' holding that those Firefighters whose employment fell within the scope of the MCAs and the CBA lacked standing to sue under those Agreements. 290 S.W.3d at 271. Finding a lack of standing, the court of appeals did not reach the issue of whether the Agreements qualify under section 271.152's waiver of immunity. See id. We first address the issue of standing, then determine whether the Agreements fall within the
Standing is a constitutional prerequisite to suit. Williams v. Lara, 52 S.W.3d 171, 178 (Tex.2001). It is founded in the separation-of-powers doctrine, and in the Texas open-courts provision. Tex. Ass'n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440, 447 (Tex.1993). The separation-of-powers doctrine precludes courts from issuing advisory opinions on abstract questions of law that do not bind actual parties. See TEX. CONST. art. II, § 1; Brown v. Todd, 53 S.W.3d 297, 302 (Tex. 2001). In complementary fashion, the open-courts provision guarantees access to the courts, but the purpose is to make whole those who have suffered actual injury, not to provide a forum for general injuries or hypothetical complaints. Tex. Air Control Bd., 852 S.W.2d at 444. "Thus, as a general rule, to have standing an individual must demonstrate a particularized interest . . . distinct from . . . the public at large." S. Tex. Water Auth. v. Lomas, 223 S.W.3d 304, 307 (Tex.2007) (per curiam).
In holding the Firefighters had no standing to sue for alleged breaches of the MCAs, the court of appeals invoked the doctrine of inclusio unius est exclusio alterius, 290 S.W.3d at 271, which is the presumption that purposeful inclusion of specific terms in a writing implies the purposeful exclusion of terms that do not appear. See Newman v. Blum, 9 S.W. 178, 178 (Tex.1888). Both MCAs state they were negotiated "by and between the Houston Professional Fire Fighters Association and the City of Houston, Texas." Both provide that grievances may be resolved either through the statutory grievance procedures of Local Government Code sections 143.127-.134, or by judicial resolution under section 143.206 upon "application by either party." Section 143.206 (which the MCAs incorporate by reference) likewise speaks in terms of "either party" and "other party." TEX. LOC. GOV'T CODE § 143.206(b). "The state district court of the judicial district in which the municipality is located has full authority and jurisdiction on the application of either party aggrieved by an action or omission of the other party. . . ." Id. (emphasis added). From this language, applying the inclusio unius doctrine, the court of appeals concluded that only the Union and the City had standing to sue for breach of the MCAs. 290 S.W.3d at 271. Although inclusio unius is a sound maxim of construction, judicial review cannot start and end on such a narrow basis when, as here, there is another valid ground to confer standing—the Firefighters' status as third-party beneficiaries under the MCAs.
Texas law recognizes that third parties have standing to recover under a contract that is clearly intended for their direct benefit. Stine v. Stewart, 80 S.W.3d 586, 589 (Tex.2002) (per curiam). In determining whether there is intent to benefit a third party, we look to the entire agreement, giving effect to all its provisions. Id. at 590. The contract need not have been executed solely to benefit the noncontracting party. Id. at 591. We do not create a third-party benefit by implication; the presumption is the parties contracted only for themselves, absent a clear showing of intent otherwise. MCI Telecomms. Corp. v. Tex. Utils. Elec. Co., 995 S.W.2d 647, 651-52 (Tex.1999). However, the agreement need not state "third-party beneficiary" or any similar magic words. See Stine, 80 S.W.3d at 590-91. Finally, a third party cannot enforce a contract if the third party benefits only incidentally from it. MCI, 995 S.W.2d at 651-52.
The City asserts two arguments to defeat the Firefighters' claim to standing under the CBA: failure to establish a breach of the duty of fair representation by the Firefighters' Union, and failure to exhaust the CBA's grievance procedures. We reject both objections, and conclude the Firefighters have standing as third-party beneficiaries to sue for breach of the CBA.
The court of appeals held the Firefighters lack standing under the CBA because they failed to establish that their Union breached its duty of fair representation. The court of appeals reasoned that showing such a breach "is an `indispensable predicate' to an employee's action against the City for violation of the collective bargaining agreement." 290 S.W.3d at 271 (quoting Metro. Transit Auth. v. Burks, 79 S.W.3d 254, 257 (Tex.App.-Houston [14th Dist.] 2002, no pet.)). However, that "predicate" only applies to "hybrid" suits-cases in which the employee alleges both breach of the collective bargaining agreement by the employer, and breach of the duty of fair representation by the union, as when the union has mishandled grievance and arbitration proceedings. See Reed v. United Transp. Union, 488 U.S. 319, 328, 109 S.Ct. 621, 102 L.Ed.2d 665 (1989). It typically is an issue in suits under federal labor law, such as when an employee who is covered by a collective bargaining agreement sues for wrongful termination after losing under grievance and binding arbitration procedures. See United Parcel Serv., Inc. v. Mitchell, 451 U.S. 56, 62, 101 S.Ct. 1559, 67 L.Ed.2d 732 (1981). Here, no grievance or arbitration occurred at all, so whether the Union breached its duty is not an issue. See id. As such, the Firefighters are not required to establish the predicate of any breach of duty. In short, the rule invoked by the court of appeals does not apply to this case.
The City argues in the alternative the Firefighters have no standing under the CBA because they have not exhausted the administrative remedies required by it.
Once employees retire, they cease to be employees and become retirees. See Allied Chem. & Alkali Workers, Local Union No. 1 v. Pittsburgh Plate Glass Co., 404 U.S. 157, 168, 92 S.Ct. 383, 30 L.Ed.2d 341 (1971). "The ordinary meaning of `employee' does not include retired workers; retired employees have ceased to work for another for hire." Id. Indeed, such retirees are no longer even a part of the collective bargaining unit. Id. at 175-76, 92 S.Ct. 383. This is so not only because they are no longer employees, but because their interests are no longer adequately aligned with that of active employees
The CBA's plain language does not include retired firefighters in the class of persons who are bound by the Agreement.
Moreover, the terms of the grievance procedures confirm that they do not logically apply to retirees like the Firefighters. Article 14, section 2, of the CBA encourages an aggrieved firefighter to "verbally inform his/her immediate supervisor of the grievance." As retirees, the Firefighters have no immediate supervisors to inform.
Further, because the Firefighters' cause of action only accrued when they received their allegedly deficient termination payments, which was after they retired, they had no grievance to assert during the time period when they were employees governed by the CBA's grievance procedures. Accordingly, we conclude the Firefighters' failure to exhaust the CBA's administrative remedies is not a bar to their standing to sue.
Finally, as with the MCAs, the Firefighters have standing as third-party beneficiaries under the CBA. Like the MCAs, it was negotiated by the Union with the clear intent to benefit the Firefighters. Significantly, collective bargaining agreements are recognized as a type of third-party beneficiary contract. See RESTATEMENT (SECOND) OF CONTRACTS § 302 cmt. d, illus. 14 ("A, a labor union, enters into a collective bargaining agreement with B, an employer, in which B promises not to discriminate against any employee because of his membership in A. All B's employees who are members of A are intended beneficiaries of the promise.").
The CBA states:
In its references to rates of pay, hours of work, and conditions of employment, this is a clear statement of an intent to benefit parties other than the Union and the City. As former Bargaining Unit Members, the Firefighters became entitled to rights under the agreement by performing in accordance with it. Like the MCAs, the CBA made specific promises to the Firefighters when they were active employees. In particular, these included terms concerning
The MCAs and CBA, like the Ordinances, constitute contracts subject to section 271.152's waiver of immunity, because they also meet the five definitional elements in section 271.151(2). First, they are indisputably written contracts. Second, they each state the essential terms of the agreement, such as salary, overtime compensation, vacation leave, and work conditions. Third, like the Ordinances, they provide for services, namely the provision of fire protection services to the City. Fourth, the services are provided to a local governmental entity—the City. Finally, all three Agreements are signed by the mayor of the City, who appears to have been duly authorized to do so, thus constituting execution of the Agreements.
Having concluded the City entered into a unilateral contract with the Firefighters through its Ordinances, and because the Legislature waived the City's immunity from suit through its enactment of Local Government Code section 271.152 for a suit claiming breach of that contract, we hold the trial court properly denied the City's plea to the jurisdiction. We also hold that section 271.152 waives immunity from suit for breach of the MCAs and CBA, and the Firefighters have standing to sue under those Agreements. Finally, we hold Chapter 143 of the Local Government Code, as adopted by the City, does not, in itself, constitute a contract between the City and the Firefighters, and it therefore is not a contract within the scope of section 271.152's waiver of immunity. Accordingly, we affirm the judgment of the court of appeals in part, reverse in part, and remand the case to the trial court for further proceedings consistent with this opinion.
HOUSTON, TEX., CODE OF ORDINANCES ch. 34, art. I, § 34-3(b)—Payment for sick or vacation leave upon firemen's or policemen's death or termination of employment; repayment upon reemployment.
HOUSTON, TEX., CODE OF ORDINANCES ch. 34, art. III, § 34-46-Created; duties generally.
HOUSTON, TEX., CODE OF ORDINANCES ch. 34, art. III, § 34-48—Fire prevention division; duties generally.
HOUSTON, TEX., CODE OF ORDINANCES ch. 34, art. III, § 34-50—Divisions of fire department; general duties and responsibilities of each division.
HOUSTON, TEX., CODE OF ORDINANCES ch. 34, art. III, § 34-59—Workweek; overtime compensation; sick leave; vacation leave.
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