Opinion
No. 05-20-00494-CV
10-29-2021
The EMPLOYEES' RETIREMENT FUND OF the CITY OF DALLAS, Appellant v. The CITY OF DALLAS, Appellee
Charles Alfred "Cal" Estee, Cypress, Kathleen M. Fones, for Appellee. Seth M. Roberts, Stefan Prentiss Smith, Taylor F. Brinkman, Thomas F. Loose, Dallas, for Appellant.
Charles Alfred "Cal" Estee, Cypress, Kathleen M. Fones, for Appellee.
Seth M. Roberts, Stefan Prentiss Smith, Taylor F. Brinkman, Thomas F. Loose, Dallas, for Appellant.
Before Justices Schenck, Pedersen, III, and Garcia
OPINION
Opinion by Justice Schenck
This case concerns the validity of a City of Dallas (the "City") ordinance imposing term limits for The Employees' Retirement Fund of the City of Dallas's (the "Fund") elected board members. On cross-motions for summary judgment, the trial court granted the City's motion and denied the Fund's. The Fund appeals that judgment and urges in its first five issues that (1) the trial court erred in granting the City's motion for summary judgment and in denying its cross-motion, (2) the trial court lacked jurisdiction to grant summary judgment on the City's counterclaims, (3) the City purported to amend the Fund's governing document without obtaining the necessary approvals, (4) the trial court erred in impliedly holding the ordinance at issue applies retroactively, and (5) the trial court erred in granting the City summary judgment on its request for injunctive relief. In its final issue, the Fund requests that, should this Court reverse the trial court's judgment, we remand the case to the trial court to consider awarding the Fund reasonable and necessary attorney's fees pursuant to the Declaratory Judgments Act. See TEX. CIV. PRAC. & REM. CODE ANN. § 37.009. We reverse the trial court's judgment in favor of the City, render judgment in favor of the Fund, declare section 8-1.5(a-1) of the Dallas City Code (the "City Code") void and unenforceable, and remand the case to the trial court to consider the issue of attorney's fees.
BACKGROUND
In 1943, the City established the Fund to provide retirement, disability, and survivor benefits to the City's civilian employees and their beneficiaries. The Fund is a trust fund. DALLAS , TEX. , CITY CODE § 40A-2(a).
The terms of the Fund's governance are set forth in a trust document (the "Trust Document"). The Trust Document has been codified as Chapter 40A of the City Code. Among other things, the Trust Document sets forth the method for amending the Trust Document and establishes the composition, terms, and remuneration of the Fund's board. Id. §§ 40A-2, 40A-3, 40A-35. The Trust Document, at all times relevant here, mandated a three-step process for amending the Trust Document. More particularly, the Trust Document "may not be amended except by a proposal initiated by either the board or the city council that results in an ordinance approved by the board, adopted by the city council, and approved by a majority of the voters voting at a general or special election." Id. § 40A-35(a).
For cities with a population of 290,000 or more, Article 6243d, section 1 of the civil statutes provides:
Before said pension plan as devised and formulated by the governing body of such city or town shall become effective, said entire pension plan shall be submitted in ordinance form by said governing body to the qualified electors of such city or town and be approved by said qualified electors at an election duly held.
Tex. Rev. Civ. Stat. Ann. art. 6243d, § 1.
The Trust Document specifies that the Fund is to be administered by a seven-member board. Id. § 40A-2(c)(1). Three of the members are appointed by the Dallas City Council ("City Council"), three are elected by active members of the Fund, and the final member is the City Auditor, who sits ex officio. Id. § 40A-2(c)(1)(A)–(C). The Fund's board is the only City board that splits decision-making authority between elected and appointed members. Qualifications for appointed members are primarily set forth in Chapter 8 of the City Code, entitled "Boards and Commissions." See id. § 8-1.4. Qualifications for elected members are set forth in Chapter 40A of the City Code, the Trust Document. See id. § 40A-2.
The only specification within Chapter 40A concerning appointed board members is a permissive one that allows for the appointment of city council members. Id. § 40A-2(c)(1)(A).
In 2016, the City and the Fund began discussing revisions to the Trust Document that primarily concerned restructuring benefits into a two-tiered system to better manage costs. These changes were adopted and approved under Ordinance No. 30162 in compliance with the Trust Document's mandated three-step approval process. Before Ordinance No. 30162 was finalized, the City proposed amending section 40A-3 of the Trust Document, which sets forth the terms, remuneration, and method of selecting the Fund's board members, to include a term limits provision for elected board members. The City removed the proposed term limits provision from the final draft of the ordinance because the Fund's board members had not studied term limits and did not have an adequate time to do so before the ordinance was to be finalized.
Thereafter, the City adopted Ordinance No. 30555, which, among other things, contained the term limits provision the City had proposed be included in Ordinance No. 30162. This new ordinance was codified in Chapter 8 of the City Code ("Boards and Commissions"), with section 8-1.5(a-1) containing the term limits provision. Id. § 8-1.5(a-1). Section 8-1.5(a-1) specifically references the Fund's board and provides:
A person who has served on the board of the employees' retirement fund pursuant to section 40A-3(a)(1) of this code,[ ] as amended, for three consecutive terms, of whatever length of time, will not again be eligible to serve on that same board until at least one term has elapsed, whether service was as a member, chair, or other position on the board.
Section 40A-3(a)(1) concerns the terms of the elected board members. Id. § 40A-3(a)(1).
Id. The City enacted this term limits provision without the approval of the Fund's board or the voters and, in doing so, specifically recommended that the term limits provision be added to Chapter 8 of the City Code because there was resistance from the Fund's long-term board members when the City proposed adding it to the Trust Document (Chapter 40A) itself.
The City Council is authorized to amend Chapter 8 of the City Code with the approval of a majority of the City Council members.
Two months later, the City Secretary informed the Fund's executive director that term limits had been enacted and that two of the elected members were not eligible to run for additional terms. The Fund disputed the validity of the new term limits and, after attempts to resolve the dispute with the City failed and the City threatened suit if the elected members did not withdraw from the Fund's board at the expiration of their terms, it filed suit seeking a declaration that the City's attempted amendment to impose term limits for elected board members is void and unenforceable because the City did not comply with the mandated three-step process set forth in section 40A-35 of the Trust Document. The City filed counterclaims seeking a declaration to the contrary and requesting that the Fund be enjoined from seating two of the elected members for additional terms and to prevent those members from holding over past the expiration of their current terms.
As stated previously, the trial court resolved this case on cross-motions for summary judgment. This appeal followed.
DISCUSSION
In its first and third issues, the Fund asserts the trial court erred in granting the City's motion for summary judgment and in denying the Fund's motion because, in enacting section 8-1.5(a-1) of the City Code, the City effectively amended the Trust Document without complying with the Trust Document's amendment process.
I. Standard of Review
We review the granting of a motion for summary judgment de novo. Merriman v. XTO Energy, Inc. , 407 S.W.3d 244, 248 (Tex. 2013). Where, as here, the parties file cross-motions for summary judgment, and the trial court grants one and denies the other, we review the summary judgment evidence supporting the motions and determine all questions presented and preserved. Kaufman Cty. v. Combs , 393 S.W.3d 336, 341 (Tex. App.—Dallas 2012, pet. denied) (citing Jones v. Strauss , 745 S.W.2d 898, 900 (Tex. 1988) ). Upon review of the summary judgment record, we may affirm the judgment, or reverse and render the judgment the trial court should have entered. Gramercy Ins. Co. v. Auction Fin. Program, Inc. , 52 S.W.3d 360, 363 (Tex. App.—Dallas 2001, pet. denied).
II. Nature of the Fund
The Texas Trust Code (Chapters 111 through 117 of the Texas Property Code) applies to pension trusts. TEX. PROP. CODE § 121.003. The Fund is a pension trust. DALLAS , TEX. , CITY CODE § 40A-2. A trust may be amended only by following the amendment process set forth in the trust document itself. PROP. § 111.0035(b) (providing, with certain exceptions not applicable here, that terms of trust prevail over any provisions of this subtitle). When the terms of a trust set out a specific method or manner in which the trust may be amended, the Texas Trust Code indicates that those terms are controlling and must be followed. Runyan v. Mullins , 864 S.W.2d 785, 789 (Tex. App.—Fort Worth 1993, writ denied) (citing predecessor to section 111.0035(b)). Any attempt to amend a term of a trust that does not comply with the specific procedure set forth in the trust instrument is ineffective. See Jinkins v. Jinkins , 522 S.W.3d 771, 782 (Tex. App.—Houston [1st Dist.] 2017, no pet.).
Here, the Trust Document specifies the procedure by which the trust may be amended. More particularly, section 40A-35(a) of the City Code, titled "Amendment to this Chapter," states:
Except as provided in Subsection (b)[ ] of this section, this chapter may not be amended except by a proposal initiated by either the board or the city council that results in an ordinance approved by the board, adopted by the city council, and approved by a majority of the voters voting at a general or special election.
Subsection (b) provides:
A provision of this chapter, other than this section, that is determined by the board to require amendment in order to comply with federal law may be amended by ordinance of the city council, without voter approval, upon recommendation of the board. The board shall recommend the exact amending language to be included in the ordinance, which language may not be limited or added to by the city council. An amendment may be made under this subsection only to the extent necessary to comply with federal law.
Dallas , Tex. , City Code § 40A-2(b). Subsection (b) is not implicated in this case.
DALLAS , TEX. , CITY CODE § 40A-35(a).
III. Was the Enactment of Term Limits an Unauthorized Amendment to the Trust Document?
It is undisputed that the City did not go through the process specified in section 40A-35 of the City Code in enacting section 8-1.5(a-1). Thus, the issue presented is whether the City's enactment of section 8-1.5(a-1) was an attempt to amend the Trust Document without the required approvals. This issue presents a purely legal question of law that we review de novo.
As an initial matter, we note the Trust Document regulates elected board members and sets forth their qualifications for office. Id. §§ 40A-2, 40A-3, 40A-4. Elected board members must be employees from different departments of the City who are elected by members of the retirement fund and who are members of the retirement fund. Id. § 40A-2(c). The Trust Document specifies that the Fund's board, not the City Council, shall determine the time, method, and manner of election to the board. Id. § 40A-4(a)(11).
In resolving the issue presented here, we must determine whether the imposition of term limits impacts the eligibility or qualification requirements for the Fund's elected board members. The following persuasive authorities indicate that the amendment here operates as an eligibility requirement in conflict with the controlling Trust Document.
In United States Term Limits, Inc. v. Thornton , the United States Supreme Court held that an Arkansas law prohibiting otherwise eligible congressional candidates from appearing on the general election ballot if they had already served two Senate terms or three House terms was an impermissible attempt to add qualifications to congressional office rather than a permissible exercise of the State's Elections Clause power to regulate the times, places and manner of holding elections for Senators and Representatives. 514 U.S. 779, 115 S.Ct. 1842, 131 L.Ed.2d 881 (1995). The court determined that the imposition of term limits on candidates for the United States Congress was a substantive qualification rendering a class of potential candidates ineligible for ballot position. Id. at 835, 115 S.Ct. 1842. Because qualifications for United States Senators and Representatives are set forth in the Constitution, any law purporting to impose term limits must satisfy the constitutional amendment process. Id. at 837, 115 S.Ct. 1842. States cannot impose qualifications for the office beyond what is set forth in the United States Constitution. Id. The imposition of term limits would affect a fundamental change in the constitutional framework that must pass through the amendment procedures set forth in the Constitution itself. Id. The Court concluded that the imposition of term limits, under the rubric of state law, was simply an attempt to accomplish indirectly what the State of Arkansas could not accomplish directly. Id. at 829, 115 S.Ct. 1842.
Similarly, with respect to candidate eligibility, the Texas Supreme Court in Borroughs v. Lyles held as void a statute making a person holding a public office ineligible to run for any other public office, the term of which would begin before the expiration of the term of the original office, without first resigning from the office to which he or she had been elected because that statute sought to impose an additional test of eligibility , other than what is prescribed by the constitution. 142 Tex. 704, 181 S.W.2d 570, 574 (1944) ; see also State ex rel. Candler v. Court of Civil Appeals, Fourth Dist. of Tex. , 123 Tex. 549, 75 S.W.2d 253, 257 (1934) (Constitution having prescribed requisite qualifications for Governor and having fixed grounds of ineligibility, it is beyond the power of Legislature to add another ground for disqualification); Dickson v. Strickland , 114 Tex. 176, 265 S.W. 1012, 1015–16 (1924) (noting where constitution declares qualifications for office, it is not within power of Legislature to change or add to them).
Here, the City's amendment to Chapter 8 of its City Code unilaterally imposed a new qualification for elected Fund board members. The imposition of term limits for elected Fund board members added a substantive qualification for office that rendered a class of potential candidates ineligible and effected a fundamental change to the Trust Document, which must follow the amendment process set out in the Trust Document itself. The City did not follow the amendment process set out in section 40A-35 of the City Code. Rather, in enacting section 8-1.5(a-1), the City attempted to accomplish indirectly what it was prohibited from doing directly. Accordingly, we sustain the Fund's first and third issues. In light of our disposition of the Fund's first and third issues, we pretermit consideration of its second, fourth and fifth issues. TEX. R. APP. P. 47.1.
In its second issue, the Fund asserts the trial court's judgment contravenes the Fund's interpretation of Chapter 40A, which controls. In its fourth issue, the Fund asserts the trial court erred by impliedly holding the attempted amendment applies retroactively. In its fifth issue, the Fund asserts the trial court erred in granting the City's request for injunctive relief.
IV. Attorney's Fees
In its sixth issue, the Fund urges that, if this Court reverses the trial court's judgment in favor of the City and renders judgment for the Fund, it should remand the case to the trial court so that attorney's fees may be awarded pursuant to section 37.009 of the Texas Civil Practice and Remedies Code, governing costs and attorney's fees in declaratory judgment actions. TEX. CIV. PRAC. & REM. CODE ANN. § 37.009. The Declaratory Judgments Act allows a court to award costs and reasonable attorney's fees as are equitable and just in declaratory judgment actions. Id. Because we reverse the trial court's judgment and render judgment in favor of the Fund, we remand the issue of attorney's fees under the Declaratory Judgments Act to the trial court for its consideration in light of our opinion. See N. Tex. Mun. Water Dist. v. Ball , 466 S.W.3d 314, 323–24 (Tex. App.—Dallas 2015, no pet.).
We sustain the Fund's sixth issue.
CONCLUSION
We reverse the trial court's judgment granting the City's motion for summary judgment and denying the Fund's motion for summary judgment. Further, we render judgment in favor of the Fund and declare that the City's attempt to impose term limits on the elected members of the Fund's board by amending Chapter 8 of the City Code is invalid and that City Code section 8-1.5(a-1) is void and unenforceable. We remand the case to the trial court to determine the amount of attorney's fees, if any, to which the Fund is entitled.