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Houston Independent School District v. Texas Workforce Commission

Court of Appeals of Texas, Third District, Austin

April 25, 2019

Houston Independent School District, Appellant
Texas Workforce Commission, Appellee


          Before Chief Justice Rose, Justices Kelly and Smith


          Edward Smith, Justice

         The Houston Independent School District (Houston ISD) sued the Texas Workforce Commission to recover allegedly overpaid unemployment taxes. See Tex. Lab. Code §§ 213.071-.074. Both parties moved for summary judgment. After a hearing on the controlling question of law and the undisputed facts, the district court rendered final judgment granting the Workforce Commission's motion, denying Houston ISD's motion, and ordering each party to bear its own costs. Houston ISD now appeals from that judgment. We will affirm.


         In 2011, the Commissioner of Education revoked the accreditation of North Forest Independent School District (North Forest), a school district near Houston. After North Forest's unsuccessful appeal of that revocation, the Commissioner ordered Houston ISD to annex North Forest's territory and to assume its assets and debts. See Tex. Educ. Code § 13.054(a) ("The commissioner by order may annex to one or more adjoining districts a school district that has been rated as academically unacceptable for a period of two years."). The Workforce Commission subsequently billed Houston ISD for unemployment benefits paid to former North Forest employees. Houston ISD refused to remit payment, arguing: (1) it is not responsible for any sums due under governing law, and (2) to the extent it might be responsible, the county commissioners must make that determination. See Tex. Educ. Code § 13.004(a).

         When Houston ISD learned it could not appeal the determination without first paying the allegedly overdue sum, it remitted nearly $4 million in benefits and interest and then filed suit for judicial review district court. See Tex. Lab. Code §§ 213.071-.074 (setting forth procedures by which employer may "bring an action in a court of competent jurisdiction in Travis County against the commission for review of the commissions refusal to allow an adjustment or a refund"). Both parties moved for summary judgment on an undisputed record. The Workforce Commission argued that Texas law renders Houston ISD a "successor employer" responsible for any benefits distributed to North Forest's former employees. See Tex. Lab. Code § 204.086 (rendering employer acquiring "substantially all of the assets of an organization" "liable to the commission for prompt payment of the contribution, penalty, or interest," if at acquisition the acquired employer was indebted to Workforce Commission). Houston ISD disagreed with that construction, arguing that North Forest was not "indebted" at the time of annexation and, regardless, the county commissioners must approve Houston ISD's assumption of any debt. See Tex. Educ. Code § 13.004(a). Both parties moved for summary judgment. The district court granted the Workforce Commission's motion, denied Houston ISD's motion, and rendered final judgment in the Workforce Commission's favor. Houston ISD's motion for new trial was denied by operation of law. Houston ISD perfected timely appeal of final judgment.


         Summary judgment is proper when the evidence before the district court shows there are no disputed issues of material fact and the movant is entitled to judgment as a matter of law. Tex.R.Civ.P. 166a(c). When both parties move for summary judgment on overlapping issues, we undertake de novo review of all evidence and issues presented, and, if the trial court erred, render the judgment the trial court should have rendered. Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005); see also Tex. R. App. P. 43.2(c).


         The parties ask this Court to resolve a single question of law: whether, under relevant provisions of the Labor Code, an annexing school district must reimburse the State for unemployment benefits distributed to former employees of the annexed district after annexation is ordered pursuant to Chapter 13 of the Education Code. See Tex. Educ. Code § 13.054(a). "We review questions of statutory construction de novo, and our primary objective is to give effect to the Legislature's intent as expressed in the language of the statute." Risk Mgmt. Strategies, Inc. v. Texas Workforce Comm'n, 464 S.W.3d 864, 868 (Tex. App.-Austin 2015, pet. dism'd) (citing Railroad Comm'n v. Texas Citizens for a Safe Future & Clean Water, 336 S.W.3d 619, 624 (Tex. 2011); First Am. Title Ins. Co. v. Combs, 258 S.W.3d 627, 632 (Tex. 2008)). "We discern legislative intent from the statute as a whole, not from isolated portions." Id. (citing 20801, Inc. v. Parker, 249 S.W.3d 392, 396 (Tex. 2008)). "Absent an absurd result, we rely on the plain meaning of the text unless a different meaning is supplied by legislative definition or is apparent from the context." Id. (citing City of Rockwall v. Hughes, 246 S.W.3d 621, 625-26 (Tex. 2008)).

         The Texas Unemployment Compensation Act provides short-term financial relief for individuals who become unemployed through no fault of their own. See Keen v. Texas Unemployment Comp. Comm'n, 148 S.W.2d 211, 212 (Tex. App.-Galveston 1941, no writ). The program is funded in part through taxes levied on employers. Lally v. State, 138 S.W.2d 1111, 1112 (Tex. App.-Austin 1940, no writ). By default, a covered employer must remit a contribution calculated as a function of its total payroll, the benefits provided to its former employees in the previous calendar year, and other factors not relevant here. See Tex. Lab. Code § 204.103(a)-(b). In the alternative, Chapter 205 of the Labor Code allows governmental employers to elect "to pay reimbursements for benefits instead of contributions." See id. § 205.001. These "reimbursing employers" must make a payment of 100% of the regular and extended benefits actually paid to former employees during that quarter. See id. § 205.013(a)-(c). In this case, Houston ISD and North Forest each elected classification as reimbursing employers for the pertinent time periods.

         The parties disagree over the proper application of Labor Code Section 204.086 to the facts of this case. The Section governs the collection of taxes from "successor employers" and provides:

An individual or employing unit that acquires the organization, trade, or business or substantially all of the assets of an organization, trade, or business of an employer who, at the time of the acquisition is indebted to the commission for a contribution, a penalty, or interest, is liable to the ...

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