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.