Opinion
No. 01-09-01079-CV
Opinion issued July 21, 2011.
On Appeal from the 281st District Court, Harris County, Texas, Trial Court Case No. 0579440.
Panel consists of Justices KEYES, SHARP, and MASSENGALE.
Justice MASSENGALE, dissenting.
OPINION
In 1990, appellant, the City of Houston ("the City"), and appellee, Christopher Rhule, a former firefighter for the Houston Fire Department, entered an agreed judgment settling their dispute regarding Rhule's worker's compensation claim. The City subsequently breached the settlement agreement, and Rhule filed suit to enforce it. The City now appeals the jury verdict in Rhule's favor for damages of $127,500 for the City's breach of the settlement agreement. In four issues, the City argues that (1) the trial court lacked subject matter jurisdiction over Rhule's damages to the extent that the requested damages exceeded remedies allowed by the Worker's Compensation Act, and, thus, the trial court erred in denying the City's plea to the jurisdiction; (2) the trial court erred in submitting a question to the jury that allowed it to award Rhule damages for physical pain as a result of the City's breach of the settlement agreement; (3) the trial court erred in entering judgment on the jury's award of damages for mental anguish because there was no evidence of Rhule's propensity for mental anguish at the time the parties entered into the settlement agreement; and (4) the trial court's award of attorney's fees was erroneous because Rhule failed to establish any damages that would support an award of attorney's fees, or, alternatively, Chapter 38 of the Civil Practice and Remedies Code does not authorize an award of attorney's fees against a municipality.
We modify the judgment of the trial court and affirm as modified.
Background
Rhule's back was injured in 1988 while he was acting within the course and scope of his duties with the Houston Fire Department. A dispute about his workers' compensation benefits was handled through the administrative process in place at that time. The City appealed the results of the administrative proceedings to the 281st District Court of Harris County in cause number 89-26686.
The parties reached a settlement agreement in which the City agreed to pay Rhule $36,000 and reasonable and necessary medical care for his lifetime for the injuries he had sustained in exchange for Rhule's release of all claims against the City (the "Settlement Agreement"). The trial court entered an agreed judgment to this effect for cause number 89-26686 on August 31, 1990 (the "Agreed Judgment"). The Agreed Judgment set aside the final award made in the administrative proceedings and reflected that Rhule was to receive $36,000 and that the City was discharged and released from any claim Rhule might have for worker's compensation benefits or for other claims arising from his injury, "except that CHRISTOPHER A. RHULE shall receive lifetime open reasonable and necessary medical [expenses] for the injuries made the basis of this claim as provided by the Texas Worker's Compensation Act with a mutually agreed upon doctor beginning as of the date of execution of Mr. Rhule's Affidavit."
More than a decade later, Rhule and the City again began to disagree regarding Rhule's entitlement to payment for his medical care related to his 1988 injury. Specifically, the City determined that the pain pump and other medications and treatments sought by Rhule and his physician were not reasonable, necessary, and related to the 1988 work injury.
Rhule eventually filed a second suit against the City in the 281st District Court of Harris County, cause number 2005-79440. Rhule alleged a breach of contract action against the City, seeking damages for "out-of-pocket expenses, incidental expenses, loss of the 'benefit of the bargain,' cost of reasonable medical care and treatment in the past, cost of medical care and treatment which will in all reasonable medical probability be required in the future, physical pain and suffering in the past . . ., mental anguish damages . . ., nominal damages, attorney's fees necessary to bring and prosecute this action, [and] costs of court." Alternatively, Rhule sought specific performance of the Agreed Judgment and actual damages, costs of court, and attorney's fees. Rhule also sought a declaratory judgment to clarify his rights under the existing agreement between himself and the City, specifically including his right to ongoing lifetime medical expenses relating to his injury. Rhule also specifically sought attorney's fees under Chapters 37 and 38 of the Civil Practice and Remedies Code.
The City filed a plea to the jurisdiction, arguing that Rhule's breach of contract claim and request for declaratory relief were barred. The trial court denied the plea to the jurisdiction and the parties proceeded to a trial before a jury. The jury found that the City failed to comply with its settlement agreement with Rhule, and it determined that Rhule was entitled to $50,000 for past physical pain, $75,000 for past mental anguish, and $2,500 for out of pocket expenses. The jury also found that Rhule was entitled to attorney's fees in the amount of $53,000 for trial, $10,000 for an appeal to the Court of Appeals, and $20,000 for an appeal to the Texas Supreme Court.
The record does not contain the trial court's ruling on the plea to the jurisdiction, and it is not clear when or how the declaratory judgment claims were dropped. The case was tried on Rhule's breach of contract claims, and no declaratory judgment was issued.
The City filed a motion for judgment notwithstanding the verdict, asking the trial court to eliminate the award for past physical pain and past mental anguish and to enter judgment that "Rhule recover mental anguish damages, out of pocket expenses, and attorney's fees only." The City argued that damages for physical pain cannot be recovered on a breach of contract claim and that Rhule had failed to provide any evidence to show that he was entitled to mental anguish damages for breach of contract. The trial court denied the City's motion and entered judgment on the verdict.
Plea to the Jurisdiction
In its first issue, the City argues that the trial court lacked subject matter jurisdiction over Rhule's damages to the extent that the requested damages exceeded remedies allowed by the Worker's Compensation Act and that, therefore, the trial court erred in denying the City's plea to the jurisdiction. Specifically, the City argues that its conduct in handling the medical treatment for Rhule's worker's compensation injury is protected by governmental immunity and that the scope of the waiver of that governmental immunity is limited to compensation Rhule would have been entitled to under the Worker's Compensation Act. Thus, the City argues, the trial court erred in denying the City's plea to the jurisdiction on Rhule's claims for attorney's fees, physical pain, and mental anguish damages.
A. Standard of Review
A plea to the jurisdiction challenges the trial court's subject matter jurisdiction to hear the case. Bland Indep. Sch. Dist. v. Blue, 34 S.W.3d 547, 554 (Tex. 2000). Subject matter jurisdiction is essential to the authority of a court to decide a case and is never presumed. Tex. Ass'n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440, 443-44 (Tex. 1993). The existence of subject matter jurisdiction is a question of law. State Dep't of Hwys Pub. Transp. v. Gonzales, 82 S.W.3d 322, 327 (Tex. 2002). Therefore, we review the trial court's ruling on a plea to the jurisdiction de novo. Id.
Governmental immunity has two components — immunity from liability and immunity from suit. Tooke v. City of Mexia, 197 S.W.3d 325, 332 (Tex. 2006). A unit of state government is immune from suit and liability unless the state consents. Tex. Dep't of Transp. v. Jones, 8 S.W.3d 636, 638 (Tex. 1999). Immunity from suit defeats a trial court's subject matter jurisdiction and is properly asserted in a plea to the jurisdiction. Id. at 639. Immunity from liability protects the state from money judgments even if the Legislature has expressly given consent to sue. Tex. Natural Res. Conservation Comm'n v. IT-Davy, 74 S.W.3d 849, 853 (Tex. 2002).
B. Waiver of Immunity
By entering into a contract, a governmental entity waives its immunity from liability for breach of the contract, "but does not, merely by entering into a contract, waive immunity from suit." Tex. AM Univ.-Kingsville v. Lawson, 87 S.W.3d 518, 520 (Tex. 2002); Gen. Servs. Comm'n v. Little-Tex Insulation Co., 39 S.W.3d 591, 594 (Tex. 2001). When a state contracts, it is liable on contracts made for its benefit as if it were a private person. Little-Tex Insulation Co., 39 S.W.3d at 594 (citing Fed. Sign v. Tex. S. Univ., 951 S.W.2d 401, 405 (Tex. 1997)). However, a plurality of the supreme court has held that "when a governmental entity is exposed to suit because of a waiver of immunity, it cannot nullify that waiver by settling the claim with an agreement on which it cannot be sued." Lawson, 87 S.W.3d at 521. Thus, "enforcement of a settlement of a liability for which immunity is waived should not be barred by immunity." Id.
Here, by entering into the agreement settling Rhule's worker's compensation claim, the City has waived its immunity from liability under that agreement. See id. at 520. Furthermore, the Legislature's waiver of the City's immunity from suit for the purposes of Rhule's original worker's compensation claim also waives the City's immunity from suit for Rhule's suit to enforce the Settlement Agreement. Id. at 521; see also City of La Porte v. Barfield, 898 S.W.2d 288, 294 (Tex. 1995) (recognizing legislature's "express waiver" of governmental unit's immunity from liability and suit for worker's compensation benefits claims).
However, the City argues that this waiver of immunity from suit is limited and that "[t]he scope of the waiver in connection with a breach of the [Settlement Agreement] should be limited to the initial scope of the waiver. Specifically, the waiver provided by the [Worker's Compensation] Act." Thus, the City argues that its liability should be limited to the benefits that were authorized by the Worker's Compensation Act and that the trial court lacked subject matter jurisdiction over Rhule's claims for damages falling outside those limits.
The City cites Reata Construction v. City of Dallas to support its claim. See 197 S.W.3d 371 (Tex. 2006). However, Reata Construction is distinguishable from the present case as it involved the City of Dallas's waiver of its immunity by seeking affirmative relief. See id. at 373. This case is more analogous to cases interpreting the effect of limitations on breach of contract damages under section 271.153 of the Local Government Code. In City of Mesquite v. PKG Contracting, Inc., the Dallas Court of Appeals concluded that "statutory limitations on PKG's recoverable damages do not deprive the trial court of subject matter jurisdiction to adjudicate PKG's breach of contract claims." 263 S.W.3d 444, 448 (Tex. App — Dallas 2008, pet. denied); see also Kirby Lake Dev. Ltd. v. Clear Lake City Water Auth., 320 S.W.3d 829, 840 (Tex. 2010) ("The purpose of section 271.153. is to limit the amount due by a governmental agency on a contract once liability has been established, not to foreclose the determination of whether liability exists."); City of Houston v. S. Elec. Servs., Inc., 273 S.W.3d 739, 744 (Tex. App.-Houston [1st Dist.] 2008, pet. denied) (holding pleadings alleged sufficient facts to establish waiver of immunity from suit and to defeat plea to jurisdiction and declining to determine plaintiff's damage claim through plea to jurisdiction).
As we have already discussed, in the instant case, Rhule established that the City waived its immunity from suit on his claim for breach of the Settlement Agreement. See Jones, 8 S.W.3d at 638-39; S. Elec. Servs., Inc., 273 S.W.3d at 744. Any alleged limitations on Rhule's recoverable damages did not deprive the trial court of subject matter jurisdiction to adjudicate Rhule's breach of contract claims. See PKG Contracting, 263 S.W.3d at 448. Thus, the trial court had subject matter jurisdiction over the entirety of the suit and it did not err in denying the City's plea to the jurisdiction.
We overrule the City's first issue.
Recoverable Damages
In its second and third issues, the City argues that Rhule was not entitled to damages for past physical pain or for mental anguish. The City argues in its second issue that the trial court erred in submitting a jury question permitting an award of damages for physical pain on Rhule's breach of contract claim. In its third issue, the City argues that the evidence was insufficient to support the jury's award of mental anguish damages on Rhule's breach of contract claim.
The City first argues that it can only be liable for damages to the same extent it would have been liable under the worker's compensation act in effect at the time it settled its claim with Rhule. The City argues that this is so because the courts of this State defer to the legislature regarding waiver of immunity and the legislature waives immunity only sparingly. We acknowledge that we must defer to the legislature on the issue of waiver of immunity — in the context of a claim for a breach of contract, the legislature must have waived immunity from suit as to the claim in question by clear and unambiguous language. See TEX. GOV'T CODE ANN. § 311.034 (Vernon 2008) (providing that statute shall not be construed as a waiver of sovereign immunity unless waiver is effected by clear and unambiguous language); Tooke, 197 S.W.3d at 332-33 (requiring clear and unambiguous language to waive governmental immunity).
However, we have already determined that the legislature's waiver of a governmental entity's immunity from suit on a worker's compensation claim also applies to waive immunity from suit for enforcement of a settlement of that claim. See Lawson, 87 S.W.3d at 521-22; see Barfield, 898 S.W.2d at 294. Having determined that the City was susceptible to suit on Rhule's breach of contract claim, we recognize that "[w]hen the state contracts, it is liable on contracts made for its benefit as if it were a private person." Little Tex. Insulation Co., 39 S.W.3d at 594. Furthermore, the court in Lawson addressed the reasoning the City uses here. See 87 S.W.3d at 521-22. The supreme court acknowledged that "a suit for breach of a settlement agreement is separate and apart from the suit on the settled claim" and reasoned that "[a]llowing suit against the government for breach of an agreement settling a claim for which immunity has been waived does not interfere with the Legislature's policy choices." The supreme court further stated,
This all assumes, of course, that a governmental entity would not, in settling a suit for which immunity has been waived, undertake an obligation that exposes it to liability much greater or different than that which it faced from the original claim. But we think this assumption is a realistic one. A settlement of a claim trades unknowns — such as what the evidence will be, and how a jury will view it — for knowns — obligations that are more accurately assessable. In reaching a settlement, the government is guided by local counsel to help gauge the degree of exposure to liability and the fairness of the settlement. Once the Legislature has decided to waive immunity for a class of claims, the inclusion of settlements within the waiver is consistent with that decision.
Id. at 522.
Thus, we conclude that the City is liable for its breach of the Settlement Agreement just as any private entity would be. See id.; Little Tex. Insulation Co., 39 S.W.3d at 594; see also Liberty Mut. Fire Ins. Co. v. Crane, 898 S.W.2d 944, 948 (Tex. App.-Beaumont 1995, no writ) (stating, in context of breach of settlement agreement of worker's compensation claim, "This suit is based on a settlement agreement that was incorporated into an agreed judgment. Because a consent judgment is a written agreement, it should be interpreted as a contract with general rules relating to construction of contracts applicable.").
Generally, the measure of damages for breach of contract is that which restores the injured person to the economic position he would have enjoyed if the contract had been performed. Mood v. Kronos Prods., Inc., 245 S.W.3d 8, 12 (Tex. App.-Dallas 2007, pet. denied). Consequential damages are those damages that "result naturally, but not necessarily, from the defendant's wrongful acts." Stuart v. Bayless, 964 S.W.2d 920, 921 (Tex. 1998) (per curiam) (quoting Arthur Andersen Co. v. Perry Equip. Corp., 945 S.W.2d 812, 816 (Tex. 1997)). Consequential damages are not recoverable unless the parties contemplated at the time they made the contract that such damages would be a probable result of the breach. Id. Thus, to be recoverable, consequential damages must be foreseeable and directly traceable to the wrongful act and must result from it. Id. A. Propriety of Jury Charge on Physical Pain Damages
We review the trial court's submission of instructions and jury questions for an abuse of discretion. Moss v. Waste Mgmt. of Tex., Inc., 305 S.W.3d 76, 81 (Tex. App.-Houston [1st Dist.] 2009, pet. denied). A trial court abuses its discretion when it acts in an arbitrary or unreasonable manner, or if it acts without reference to any guiding rules or principles. Id. A trial court has wide discretion in submitting instructions and jury questions. Id.
Here, the City objected to the charge question allowing the jury to find an amount of damages to compensate Rhule for his physical pain resulting from the City's breach of the Settlement Agreement. Rhule argues that the City's refusal to comply with its obligation to pay for his medical expenses denied him access to the pain pump, which had been managing his pain effectively and allowing him to work and perform other day-to-day tasks. Thus, because he could not afford the pain pump on his own and was forced to rely on other, less-effective pain management treatments, he suffered unnecessary pain while he was required to wait for his dispute with the City to be resolved, and thus his physical pain was actual damage that resulted from the City's breach of the agreement.
However, damages for physical pain are not traditionally recovered in a breach of contract suit. See Mood, 245 S.W.3d at 12 (holding that measure of damages for breach of contract is that which restores injured person to economic position he would have enjoyed if contract had been performed) (emphasis added). Thus, we conclude that the trial court abused its discretion in submitting a question to the jury allowing it to assess damages for physical pain. See Moss, 305 S.W.3d at 81.
We reverse the judgment of the trial court awarding Rhule $50,000 for physical pain sustained as a result of the City's breach of the Settlement Agreement.
We sustain the City's second issue.
B. Sufficiency of Evidence Supporting Mental Anguish Damages
In its third issue, the City complains that the evidence supporting the jury's award for mental anguish damages was insufficient, and the trial court should have granted the City's judgment notwithstanding the verdict.
A trial court may disregard a jury verdict and render a judgment notwithstanding the verdict if no evidence supports the jury finding on an issue. TEX. R. CIV. P. 301; Tiller v. McLure, 121 S.W.3d 709, 713 (Tex. 2003). We may sustain a "no-evidence" or legal sufficiency challenge only when (1) the record discloses a complete absence of evidence of a vital fact; (2) the court is barred by rules of law or rules of evidences from giving weight to the only evidence offered to prove a vital fact; (3) the evidence offered to prove a vital fact is no more than a mere scintilla; or (4) the evidence establishes conclusively the opposite of a vital fact. City of Keller v. Wilson, 168 S.W.3d 802, 810 (Tex. 2005). In determining whether there is legally sufficient evidence to support the finding under review, we must consider evidence favorable to the finding if a reasonable fact-finder could and disregard evidence contrary to the finding unless a reasonable fact-finder could not. Id. at 807, 827.
The jury charge stated, "What sum of money, if any, if paid now in cash, would fairly and reasonably compensate [Rhule] for his damages if any, that resulted from [the City's] failure to comply [with the Settlement Agreement]? . . . Only include such amounts for mental anguish that you find would have been within the contemplation of the City at the time the contract was made."
The City did not object before the trial court to this portion of the charge. The City now argues on appeal that "[t]here was absolutely no evidence, or the evidence was so weak that it did nothing more than create a surmise or suspicion, the Rhule had a particular susceptibility to emotional distress and the City knew about his particular susceptibility." It relies on Lions Eye Bank of Tex. v. Perry, 56 S.W.3d 872 (Tex. App.-Houston [14th Dist.] 2001, pet. denied) to support its claims. However, because the City did not object to the portion of the charge instructing the jury on mental anguish damages, we evaluate the sufficiency of the evidence based on the charge and instructions that were actually submitted to the jury. See Osterberg v. Peca, 12 S.W.3d 31, 55 (Tex. 2000). Thus, we must determine whether there was any evidence that would allow the jurors to conclude that mental anguish damages were within the contemplation of the City at the time it entered into the Settlement Agreement with Rhule.
We note that mental anguish damages generally are not recoverable for breach of contract claims. Latham v. Castillo, 972 S.W.2d 66, 72 (Tex. 1998). However, the City failed to present this argument to the trial court or to this Court on appeal, and the City instead argues that the evidence of mental anguish was insufficient. In our review of the trial court's proceedings, we are limited to considering issues objected to in the trial court and properly presented to this Court on appeal. See TEX. R. APP. P. 33.1, 38.1. This opinion should not be interpreted as attempting to expand damages typically available for breach of contract claims.
We also note that application of the traditional measure of damages for breach of contract — that which restores the injured person to the economic position he would have enjoyed if the contract had been performed — limits the damages a litigant generally can obtain in prosecuting a claim against a governmental unit for breach of a settlement agreement. See Mood v. Kronos Prods., Inc., 245 S.W.3d 8, 12 (Tex. App.-Dallas 2007, pet. denied) (providing general measure of damages). This inherent limitation on breach of contract damages addresses the dissent's argument that our holding in this case will discourage governmental entities from settling cases with agreements to provide lifetime medical benefits due to the fear of being subjected to mental anguish and other remedies not recoverable under the statutory scheme that originally waived their liability from suit. See Tex. AM Univ.-Kingsville v. Lawson, 87 S.W.3d 518, 521-22 (Tex. 2002) (making "realistic" assumption that "a governmental entity would not, in settling a suit for which immunity has been waived, undertake an obligation that exposes it to liability much greater or different than that which it faced from the original claim" and holding that "when a governmental entity is exposed to suit because of a waiver of immunity, it cannot nullify that waiver by settling the claim with an agreement on which it cannot be sued").
In response to the damages question, the jury answered that Rhule was entitled to $75,000 for his mental anguish. Thus, to overturn the jury's award, we must determine that there was no evidence that mental anguish damages would have been within the contemplation of the City at the time it entered into the Settlement Agreement with Rhule. See City of Keller, 168 S.W.3d at 810; Tiller, 121 S.W.3d at 713; see also Osterberg, 12 S.W.3d at 55 (holding that when there is no relevant objection to jury charge, we evaluate sufficiency of evidence based on charge and instructions that were submitted to jury).
At trial, Rhule testified, regarding the Settlement Agreement with the City, that it was important to him that he receive lifetime medical treatment for his back injury because the doctor told him that he had an ongoing problem that would require treatment for the rest of his life. Rhule testified that when the City originally decided to file suit appealing the administrative proceeding determination that he was entitled to lifetime medical expenses, he was very concerned because the City only wanted to give him ten years' worth of medical expenses. Rhule testified that he eventually settled his claim with the City under the terms related in the Agreed Judgment. He further testified that he relied on the payment of his medical expenses to effectively manage his pain, including the City's approval of his first pain pump. He testified that when the City denied the replacement of the battery in his pain pump, and eventually denied other forms of treatment as well, he experienced significant pain, fear that he would never be able to adequately treat the pain he was suffering if the City did not pay his expenses, difficulty sleeping, eating and digestion problems, and other stress-related and psychological problems. Finally, Rhule testified that he was seeking $108,000 for his mental anguish — a number he arrived at because it was "three times what they paid [him] many years ago for [his] mental anguish."
As Rhule's counsel was questioning him at trial, and Rhule began to testify regarding the circumstances surrounding the original suit and Settlement Agreement, counsel for the City interjected, "Your Honor, he's getting into settlement negotiations which, I think, are inadmissible, 408." Thus the City's argument on appeal that neither Rhule's original attorney or the City's original attorney testified regarding the circumstances surrounding the formation of the settlement agreement is misleading.
Rhule's testimony and other documents indicated that the City was aware from the time of the original Settlement Agreement of the nature and severity of Rhule's injury and of the fact that he would require extensive treatment for his injury. We conclude, therefore, that Rhule's testimony that it was important to him that he receive lifetime medical treatment for his injury, that he was not willing to accept the City's offer of ten years' medical expenses because his doctor had already told him his back injury would require care for the rest of his life, and that he did suffer mental anguish when the City subsequently refused to pay his medical expenses, combined with the City's awareness of the severity of his injury, is sufficient to show that mental anguish damages would have been a foreseeable consequence of the City's breach of the Settlement Agreement that was within the contemplation of the City at the time it entered into the Settlement Agreement with Rhule.
We overrule the City's third issue.
Attorney's Fees
In its fourth issue, the City argues that Rhule was not entitled to an award of attorney's fees. However, the City did not make any objection to the award of attorney's fees in the trial court, and it affirmatively stated in its motion for judgment notwithstanding the verdict that the trial court should enter judgment for Rhule awarding "mental anguish damages, out of pocket expenses, and attorney fees only." See TEX. R. APP. P. 33.1; Marcus v. Smith, 313 S.W.3d 408, 417 (Tex. App.-Houston [1st Dist.] 2009, no pet.) ("In order to preserve certain complaints regarding an award of attorney's fees, a party must make a timely and sufficiently specific objection to such an award in the trial court."). Therefore, the City waived any complaint regarding attorney's fees.
We overrule the City's fourth issue.
Conclusion
We modify the trial court's judgment by deleting the portion of the judgment awarding Rhule $50,000 in damages for physical pain. We affirm the judgment of the trial court as modified.
DISSENTING OPINION
Christopher Rhule suffered a tragic injury in the line of duty serving as a City of Houston firefighter. There is no dispute that for his sacrifice, Rhule justly deserved to be compensated. There was, however, a dispute about the amount of workers' compensation that would be paid to Rhule, and that matter was resolved by a settlement agreement.
The validity of a waiver of governmental immunity depends on the waiver being clear and unambiguous as to its scope. See, e.g., TEX. GOV'T CODE ANN. § 311.034 (West Supp. 2010); Travis Cent. Appraisal Dist. v. Norman, No. 09-0100, 2011 WL 1652133, at *4 (Tex. Apr. 29, 2011). In the case of the workers' compensation system, the available remedies are limited and exclusive. See, e.g., TEX. LABOR CODE ANN. § 408.001 (West 2006); HCBeck, Ltd. v. Rice, 284 S.W.3d 349, 352 (Tex. 2009). Remedies not clearly and unambiguously included in the workers' compensation system are therefore not included in the scope of the waiver of governmental immunity. See, e.g., City of LaPorte v. Barfield, 898 S.W.2d 288, 297 (Tex. 1995) ("The rule that a waiver of immunity must be clear and unambiguous applies to both the existence and the extent of the waiver.").
The City of Houston asserts immunity from Rhule's suit for breach of the settlement agreement, but only to the extent the claim seeks monetary relief for physical pain and mental anguish allegedly resulting from the City's breach of contract. Those theories of recovery were not available among the statutory remedies for Rhule's original workers' compensation claim. At the time of Rhule's original claim, his sole recoverable remedies were (1) a percentage of his average weekly wage, up to a statutory maximum, and for no more than 401 weeks, (2) reasonable and necessary medical expenses, and (3) attorney's fees awarded as a percentage of any income benefits received.
Because Rhule's injury occurred in 1988, his claim was governed by the "old" worker's compensation act. See generally Act of May 26, 1981, 67th Leg. R.S., ch. 861, § 1, 1981 Tex. Gen. Laws 3290, 3290 (formerly codified at TEX. REV. CIV. STAT. art. 8306 § 10), repealed by Act of Dec. 12, 1989, 71st Leg., 2nd C.S., ch. 1, § 16.07(7), 1989 Tex. Gen. Laws 1, 114; Act of Mar. 6, 1969, 61st Leg. R.S., ch. 18, § 4, 1969 Tex. Gen. Laws 48, 49 (formerly codified at TEX. REV. CIV. STAT. art. 8306, § 11), repealed by Act of Dec. 12, 1989, 71st Leg., 2nd C.S., ch. 1, § 16.01(7), 1989 Tex. Gen. Laws 1, 114; see also Act of Dec. 12, 1989, 71st Leg., 2d C.S., ch. 1, § 15.47, 1989 Tex. Gen. Laws 1, 113 (formerly codified as Tex. Rev. Civ. State. Art. 8309h, § 3), repealed by Act of May 12, 1993, 73rd Leg., R.S., ch. 269, 1993 Tex. Gen. Laws 987, 1250. The Legislature codified the current worker's compensation system in the Labor Code as the Texas Workers' Compensation Act. See TEX. LABOR CODE ANN. §§ 401.001- 419.007 (West 2006 Supp. 2010); see also TEX. LABOR CODE ANN. §§ 504.001-.073 (West 2006 Supp. 2010) (providing for worker's compensation insurance coverage for employees of political subdivisions).
The common-sense principle that a governmental entity does not expand the scope of the waiver of its immunity by settling a claim as to which it was not immune was a critical assumption underlying the decision in Texas A M University-Kingsville v. Lawson, 87 S.W.3d 518 (Tex. 2002). Lawson held that when the State enters into a settlement agreement to resolve a claim for which it has waived immunity, it cannot thereafter claim immunity against a claim for breach of the settlement agreement. See id. at 522-53. In holding that the "State should not regain waived immunity by settling a case," a plurality of the Texas Supreme Court noted that its holding assumed that "a governmental entity would not, in settling a suit for which immunity has been waived, undertake an obligation that exposes it to liability much greater or different than that which it faced from the original claim." Id. at 522. Relying on that logic, our Court has previously held that there is no waiver of immunity to suit for a claimed breach of a settlement agreement when the State was immune from the settled claim. See Porretto v. Patterson, 251 S.W.3d 701, 712 (Tex. App.-Houston [1st Dist.] 2007, no pet.).
This is not a case in which a governmental entity would reclaim waived immunity by asserting immunity from a suit for breach of a settlement agreement. The City was immune from the outset from suit for claims of pain and suffering or mental anguish. In settling a workers' compensation claim, no rational governmental entity would agree to provide greater remedies than those available through the workers' compensation system and for which immunity already had been waived. And unless the claimant were willing to settle his claim for something of lesser value than the lowest reasonable settlement value for the remedies available in the workers' compensation system (certainly a rare circumstance and something no party has suggested happened in this case), a rational governmental entity would only agree in settlement to provide a remedy within the universe of outcomes available in the workers' compensation process (or of equivalent value).
The majority's holding may lead state governmental entities to be reluctant to agree to provide lifetime medical benefits to workers' compensation claimants for fear that a future dispute over the provision of such benefits could expose the entity to mental anguish damages and other remedies that would not be available to the claimant so long as the government simply litigates the claim to the conclusion of the administrative and legal process. In this case, the City agreed to provide a remedy that could have resulted from the workers' compensation claim resolution process (i.e. lifetime medical benefits and a fixed amount of cash). Only the fact of a settlement agreement is now alleged to support Rhule's claim for pain and suffering and mental anguish damages. The fact of a settlement agreement with Rhule should not render the City subject to responding to a suit alleging theories of recovery from which it would be immune if it had refused to settle and the outcome of the claims process had been the same. The law of governmental immunity does not permit this undesirable result.
Rhule acknowledges that the City was self-insured. To the extent that a workers' compensation claimant may assert a claim in connection with the care, skill, or reasonable expedience and faithfulness with which a claim is paid by a workers' compensation carrier, that claim arises not under the statutory workers' compensation scheme, but instead under an independent common-law duty of good faith and fair dealing recognized by the Texas Supreme Court in Aranda v. Insurance Company of North America, 748 S.W.2d 210, 212-13 (Tex. 1988). The Legislature has specified that a tort action for breach of that duty, if any, may only be asserted against a governmental entity consistent with the Texas Tort Claims Act. See TEX. LABOR CODE ANN. § 416.002(b) (West 2006); see also TEX. CIV. PRAC. REM. CODE ANN. §§ 101.001-.109 (Texas Tort Claims Act); Jackson v. City of Galveston, 837 S.W.2d 868, 870-71 (Tex. App.-Houston [14th Dist.] 1992, writ denied) (characterizing provision of workers' compensation benefits as governmental function). Courts traditionally defer to the Legislature on the waiver of governmental immunity, assuming it to be "better suited to balance the conflicting policy issues associated with waving immunity." Norman, 2011 WL 1652133, at *4 (quoting Wichita Falls State Hosp. v. Taylor, 106 S.W.3d 692, 695 (Tex. 2003)). It is contrary to the Legislature's intent as expressed in Labor Code section 416.002(b) to allow this suit to proceed against a governmental entity for what is essentially a tort recovery (i.e., pain and suffering or mental anguish damages) arising from a failure to provide workers' compensation benefits.
The City's plea to the jurisdiction should have been granted, and I respectfully dissent from the panel majority's contrary conclusion.