By Christian Dennie
Following his termination by Texas Tech University (“Tech”), Coach Mike Leach (“Leach”), former head football coach at Tech, filed suit in Lubbock County, Texas seeking payment for amounts due and owing under his contract and Tech defended itself by asserting sovereign immunity as an affirmative defense.
The central issue in the case was whether Tech is entitled to sovereign immunity. In Texas, the concept of sovereign immunity embraces two principles: 1) immunity from suit and 2) immunity from liability. Immunity from suit bars an action against the state unless the state expressly consents to the suit (i.e., it is a jurisdictional bar). Immunity from liability, on the other hand, protects the state from judgment even if the legislature has expressly consented to the suit.
In matters relating to contracts entered into by the state (Tech) and a private citizen (Coach Leach), the state waives immunity from liability. However, as pointed out in the seminal case Federal Sign v. Texas Southern University, merely contracting with a private citizen does not waive immunity from suit. Therefore, the focus of contract litigation is whether or not the state has waived immunity from suit, either by statute, resolution, or conduct. In this matter, Coach Leach vigorously argued that Tech waived immunity from suit by conduct. According to Coach Leach’s pleadings, Tech committed the following acts and thereby waived immunity: 1) Tech fraudulently represented it would honor the agreement between the parties; 2) Tech falsely accused Coach Leach of violations of his coaching agreement without adequate investigation only days before a $800,000.00 payment was due to him; 3) Tech made public statements accusing Coach Leach of mistreating a player; and 4) Tech failed to abide by the notice and cure provisions in Coach Leach’s contracting contract.
Texas has few reported decisions where courts have upheld waiver arguments in favor of private citizens. Indeed, in General Services Commission v. Little-Tex Insulation Company, the Texas Supreme Court held that the waiver-by-conduct exception to sovereign immunity could not be judicially adopted in light of the existence of Chapter 107 of the Texas Civil Practice and Remedies Code and Chapter 2260 of the Texas Government Code. Additionally, the court indicated that compliance with the notice and claim procedures of Chapter 2260 of the Texas Government Code (i.e., administrative proceedings) are a mandatory prerequisite before a person can petition to sue the state. However, in Texas Natural Resource Conservation Commission v. IT-Davy, the Texas Supreme Court provides that a waiver-by-conduct theory has potential validity.
This area of Texas law is less than clear and provides for confusion since the adoption of Chapter 2260 of the Texas Government Code. Chapter 2260 of the Texas Government Code provides that the administrative procedures are exclusive and a required prerequisite to bring suit in accordance with Chapter 107 of the Texas Civil Practice and Remedies Code. Although Chapter 2260 of the Texas Government Code provides for an administrative outlet for plaintiffs and Chapter 107 of the Texas Civil Practice and Remedies Code provides a means by which the state can waive immunity, oddly the statute maintains that the provisions of Chapter 2260 of the Texas Government Code and Chapter 107 of the Texas Civil Practice and Remedies Code do not divest the legislature of the authority to grant permission to sue a unit of the state government (i.e., Tech) and does not waive immunity.
On January 20, 2011, the Court of Appeals, Amarillo Division issued its opinion and found that Leach’s claims should be in all things dismissed (other than equitable relief) and Tech is immune from Leach’s breach of contract claim. Leach argued that Tech waived immunity by conduct and set forth the following arguments:
1. The authority granted by the Legislature for Tech to operate the university coupled with Tech’s operating policy and procedures waived immunity.
The Court disagreed with Leach’s characterization of the operating policy and procedures by stating 1) there is not an explicit waiver of immunity in the operating policy and procedures; 2) although Tech’s legal counsel, chancellor, or president thought Leach could prosecute his claims in a court of law, such opinions have no bearing on the Court; and 3) the operating policy and procedures do not clearly and unambiguously waive immunity and do not qualify as an explicit or implicit reference to immunity.
2. The trial court erred in dismissing Leach’s whistleblower claims.
Claims set forth under the Whistleblower Act are not barred by sovereign immunity and those that are damaged enjoy the freedom to file suit. However, the Court concluded that Leach failed to meet the requirements of the statute by failing to make a “report” to an appropriate law enforcement authority as required by Section 554.002(a) of the Texas Government Code. As such, the Court found that Leach’s whistleblower claim was rightfully dismissed.
3. The trial court erred in dismissing Leach’s constitutional claims.
Leach argued that Tech violated the takings clause of the Article 1, Section 17 of the Texas Constitution by removing him from his position as head coach of the Tech football team. The Court concluded that Article 1, Section 17 of the Texas Constitution does not apply to contractual disputes and the present matter is nothing more than a contractual dispute, thus Tech’s purported acts to withhold compensation were not actionable.
Leach argued that Tech denied him due course of law by denying his property rights of 1) continuing employment for a term of years and 2) specific compensation accruing while so employed. The Court found that sovereign immunity bars a trial court from adjudicating lawsuits for monetary damages, but does not prohibit Leach from seeking declaratory relief. Therefore, Leach cannot seek damages for Tech’s alleged acts, but can seek legal relief and a declaration that Leach was denied due course of law.
Tech also set forth an appeal relating to Leach’s breach of contract claim. The trial court allowed Leach to pursue a breach of contract claim against Tech and, therefore, Tech appealed based on a plea of jurisdiction. The Court simply and summarily disposed of Leach’s claim for breach of contract by stating his argument that Tech accepted benefits from the contract and, thus, waived immunity is unfounded. The Court of Appeals punted on the issue and chose to have the matter decided by the Texas Supreme Court or Texas Legislature by following General Services Commission v. Little-Tex Insulation Company.
On February 17, 2011, the Texas Supreme Court denied Coach Leach’s appeal by denying his petition for review. As a result of the Texas Supreme Court’s decision to pass on review of the case, the decision rendered by the Court of Appeals is good law in the State of Texas. These decisions raise a number of questions: 1) Will coaches be deterred from accepting a job in the State of Texas from a state institution when a similar job is available at a private institution or in another state?; 2) Will state institutions honor contractual agreements with coaches in light of this ruling?; and 3) How can coaches adequately protect themselves in the case of termination? History has shown that most institutions will buyout a coach’s contract when the agreement calls for the institution to do so (i.e., Texas A&M University and Dennis Franchione). Institutions are now left with options that provide negotiating power when a coach is terminated and, specifically, in situations where the release is not amicable. Thus, attorneys and agents representing coaches are left with the difficult position of placing language in the coach’s contractual agreement that waives immunity from suit.
Dennie is an attorney at Barlow Garsek & Simon, LLP, a full-service civil boutique law firm providing a wide range of litigation, transactional and business-oriented services. He can be reached at email@example.com