A recent decision from the Twelfth Court of Appeals, Damuth v. Trinity Valley Community College, shows that, while there is no indication that Texas courts would dispute the value of teachers, they do take issue with the characterization of teachers’ contributions as “services.”
The Damuth court held that teachers/coaches do not provide the type of “services” that justify the waiver of governmental immunity under Section 271.152 of the Local Government Code. This holding has significant implications with regard to when school districts have to honor teaching/coaching contracts.
Under Damuth, school districts are immune to breach of contract actions brought by teachers and/or coaches (i.e., teachers and coaches cannot sue a school district for breach of contract after being terminated before the end of their term contract). Therefore, the duration of a term contract will no longer give districts heartburn when deciding whether to terminate a teacher or coach.1
The Damuth Background
In Damuth, Billy Edward Damuth, II (“Damuth”), a former employee of Trinity Valley Community College (“TVCC”), appealed a trial court’s order dismissing his breach of contract suit against TVCC.2
Damuth had entered into a written employment agreement with TVCC to coach and teach. Five months into the one year contract, Damuth was discharged. Damuth brought suit against TVCC for breach of contract, and against the president of TVCC, individually, for tortious interference with his employment contract. TVCC and its president filed a motion to dismiss and plea to the jurisdiction, which the trial court granted in separate orders. Damuth only appealed the order dismissing his suit against TVCC.
In his sole issue on appeal, Damuth contended that, pursuant to Section 271.152, TVCC waived its immunity to suit when it entered into a coaching/teaching contract with him. Section 271.152 provides the following:
A local government entity that is authorized by statute or the constitution to enter into a contract and that enters into a contract subject to this subchapter waives sovereign immunity to suit for the purpose of adjudicating a claim for breach of the contract, subject to the terms and conditions of this subchapter.3
The Damuth court stressed that Section 271.152 waives immunity from suit for only certain contracts.4 The legislature defined the type of contract described in Section 271.152 as “a written contract stating the essential terms of the agreement for providing goods or services to the local governmental entity.”5 Damuth argued that the legislature intended for this language to encompass his functions as a teacher and coach. The court disagreed.
The Damuth Reasoning
In determining whether Section 271.152 applied, the court looked to legislative intent (i.e., did the legislature intend for the waiver provision to encompass teaching/coaching contracts like Mr. Damuth’s?). The legislature did not define the term “services.” With regard to undefined terms, the court stated that it would “construe the statute’s words according to their plain and common meaning.”6
Under the plain and common meaning standard, it would seem as though coaching and teaching certainly fall under the broad umbrella of the term “services.” In its opinion, the court admitted as much:
In ordinary usage, the term [services] has a rather broad and general meaning, and it includes generally any act performed for the benefit of another under some agreement whereby such act was to have been performed.7
In spite of the term’s plain and common meaning, the court ultimately held that coaching and teaching do not constitute the type of “services” that trigger the waiver of immunity provided by Section 271.152. In support, the court relied on the principle that Texas courts interpret statutory waivers of immunity narrowly.
With that principle in mind, the court turned its focus to the Title in which the waiver provided by Section 271.152 appears. Chapter 271 falls within Title Eight of the Local Government Code, which is entitled “Acquisition, Sale, or Lease of Property.” Chapter 271 includes the Public Property Finance Act, rules for competitive bidding on public works contracts, and the Certificate of Obligation Act, which provides a procedure for certain financing.8 The court explained that those statutes apply to situations wherein third parties are doing business with a governmental entity. As such, the court narrowly interpreted Title Eight to apply only to third parties and not employees of the governmental entity (like a teacher or coach).9
The court also distinguished coaching/teaching contracts from other types of contracts that are subject to the waiver provided by Section 271.152. In City of Houston v. Williams, the Texas Supreme Court held that the fire protection services provided by fire fighters were “services” within the meaning of Section 271.151 and, therefore, the city’s immunity was waived pursuant to Section 271.152.10 The court did not interpret the Texas Supreme Court’s ruling in Williams as a blanket holding that all employment contracts with a governmental entity are subject to waiver. The Damuth court provided the following reasoning for not extending the Williams holding to teaching/coaching contracts:
The services of fire fighters are so significant that fire fighters are designated civil servants subject to special rules. See Tex. Loc. Gov’t Code Ann. §§ 143.001- .313 (West 2008 & Supp. 2012). Also, the statute specifically states that those rules do not apply to all employees of a fire department, such as secretaries and administrative employees. See Tex. Loc. Gov’t Code Ann. § 143.003(4)(B) (West 2008). Thus, there is a distinction between the services provided by fire fighters and those of other employees.11
In closing, the Damuth court provided the following additional support for its holding:
Had the legislature intended to waive immunity from suit for every contract participated in by governmental entities, it could have done so. We must interpret the limitation as having some meaning. Further, as a general rule, ambiguity as to waiver is resolved in favor of retaining governmental immunity. Accordingly, based on the plain language of the limited waiver of immunity in Section 271.152, we conclude that it does not apply here.12
The Damuth court’s final basis for its holding was the “plain language” of Section 271.152. As mentioned above, the court found a way to circumvent the “plain language” principle when determining the meaning of the term “services.” It is interesting that the court both relied on and avoided the same principle within its holding.
The Damuth Take-Away
The significance of the Damuth holding is highlighted by the vast number of teachers and coaches working under term contracts in Texas. Pursuant to Damuth, school districts are afforded the autonomy to terminate those teachers and coaches, before the end of the agreed upon term, with no fear of being subjected to a breach of contract action. This assurance provides school districts with substantial discretion in deciding when it will honor a term contract.
Petition for review was filed on October 10, 2013, and the Supreme Court of Texas requested full merits briefing on February 14, 2014. The parties filed their briefs earlier this year, and the case is currently pending before the court. Stay tuned to find out whether the Supreme Court of Texas decides to put some teeth back into the duration of term contracts. If Damuth stands, school districts can rely on it as a significant shield from potential liability.