

Opinion issuedJune 7, 2012

In The
Court of
Appeals
For The
First District
of Texas
————————————
NO. 01-09-01079-CV
———————————
The City of Houston, Appellant
V.
Christopher
Rhule, Appellee

 

 
On Appeal from the 281st District Court
Harris County, Texas

Trial Court Case No. 0579440
 

 
OPINION ON REHEARING
          Following
the issuance of our opinions in this case on July 21, 2011, appellant, the City
of Houston (“the City”), filed a motion for rehearing and a motion to dismissthe
appeal on jurisdictional grounds.[1] We grant rehearing to
address both the City’s motion for rehearing and its motion to dismiss.  We withdraw our opinion and judgment of July
21, 2011 and issue this opinion and judgment in their stead.  
In its motion to dismiss, the City
contends that the trial court and this Court lack jurisdiction to entertain
this suit because appellee, Christopher Rhule, failed to exhaust his
administrative remedies before bringing the suit.
          In
four issues on appeal, 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 Texas Workers’ Compensation Act (the “Act” or “TWCA”),
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 deny the motion to dismiss and
affirm the judgment of the trial court.
Background
          Rhule,
a firefighter for the Houston Fire Department, suffered a permanent on-the-job
spinal injury on February 25, 1988.  He
timely filed a workers’ compensation claim with the Industrial Accident Board,
now the Texas Workforce Commission (the Commission or the TWC).[2]  The Board ruled in Rhule’s favor and issued
an award that required the City to provide Rhule with “Lifetime Medical Care
and Treatment” for his spinal injury, including pain management.  The City appealed the results of the
administrative proceeding to the 281st District Court of Harris County, in
cause number 89-26686, seeking to set aside the award.
          In
lieu of trying the case to the jury, the parties reached a settlement agreement
which provided that Rhule was to receive $36,000 and that the City was
discharged and released from any claim Rhule might have for workers’
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 [TWCA] with a mutually agreed upon doctor” (the “Settlement Agreement”).  The trial court entered an agreed judgment to
this effect in cause number 89-26686 on August 31, 1990 (the “Agreed
Judgment”).  The Agreed Judgment set
aside the final award made by the Industrial Accident Board in the
administrative proceedings.
The City honored the terms of the
Agreed Judgment for a number of years, including paying Rhule’s bills for office
visits with his agreed-upon treating physician, his pain medication, and the
installation of a pain pump.  Then the
pain pump began to fail. Rhule’s treating physician, Dr. Alvarez, as well asDr.
Elizabeth Duncan, a respected pain specialist hired by the Citywithout Rhule’s
knowledge, both recommended that the pain pump be replaced.  However, the City, which had changed risk managers,
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.[3]In
addition to refusing to replace the pain pump, the City decided to quit paying
for Rhule’s physician visits and his pain medications as not reasonably
necessary.
Rhule eventually filed suit against
the City in the 281st District Court of Harris County, cause number 2005-79440,
for breach of the Settlement Agreement.Rhulesought 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 Settlement Agreement
and actual damages, costs of court, and attorney’s fees.  Rhule also sought a declaratory judgment to
clarify his rights under the Settlement Agreement, specifically concerning 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.[4]  Prior to trial, the City paid for a
replacement pain pump and reinstituted payment for Rhule’s office visits and
pain medications.  It then demanded that
Rhule drop this suit.  Rhule refused.
The jury found that the City failed
to comply with the Settlement Agreement, 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 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.  The City appealed.
MOTION TO DISMISS
In its motion to dismiss for lack
of jurisdiction, filed after our July 21, 2011 opinion issued but before this
Court lost plenary jurisdiction, the City argues that its appeal must be
dismissed for lack of jurisdiction because Rhule’s claim was not a claim for
breach  of contract, but instead was a claim
for denial of benefits; therefore, Rhule’s exclusive remedy lay under the TWCA.  The City argued that Rhule
failed to exhaust his
administrative remedies by failing to first present his claim and dispute to
the Industrial Accident Board, now known as the Department of Insurance—Division
of Workers’ Compensation (DWC) within six months from the time such dispute
arose and prior to filing his suit as required by the statute in effect at the
time of his on-the-job injury.
 
In other words, the City contends
that Rhule was required to treat his claim that the City breached the Settlement
Agreement as a claim that the City improperly denied him benefits, which had to
first be presented to the Industrial Accident Board (“IAB”).  The City makes this argument even though the
claim was originally submitted to the IAB in 1988, the claim was settled, and
the City’s alleged breach occurred in 2004—fourteen years after the agreement
was reached and entered as an Agreed Judgment of the court.  The City ignores the history of the case,
including the fact that Rhule did present his original claim to the IAB and was
awarded lifetime reasonable and necessary medical care by the Board, an award
the City resisted and sued to set aside, resulting in the Settlement Agreement.Rhule
argues that the City should be estopped to deny the history of this case between
its original denial of benefits in 1988 and its breach of the Settlement
Agreement in 2004 and their implications under the TWCA.  We agree with Rhule.
The TWCA specifically provides, in Labor
Code section 408.021, that “[a]n employee who sustains a compensable injury is
entitled to all health care reasonably required by the nature of the injury as
and when needed.” Tex. Labor CodeAnn.
§ 408.021(a) (Vernon 2006).  A
“compensable injury” is defined, in relevant part, as “damage or harm to the
physical structure of the body” that “arises out of and in the course and scope
of employment.”  Id. § 401.011(10), (26) (Vernon Supp. 2011).A “[m]edical benefit”
obtainable under the Act “means payment for health care reasonably required by
the nature of a compensable injury and intended to . . . cure or relieve the
effects naturally resulting from the compensable injury . . . , or . . .
enhance the ability of the employee to return to or retain employment.”  Id.
§ 401.011(31).
Labor Code section 408.005 provides
for “settlements and agreements” of claims for benefits.  See id.
§ 408.005 (Vernon 2006); Act of May 22, 1993, 73rd Leg., ch. 269, §§ 1, 5(2), 6,
1993 Tex. Gen. Laws 987 (adopting Labor Code, effective September 1, 1993, as
non-substantive revision of Texas Workers’ Compensation Act, articles 8308-1.01
et seq., Vernon’s Texas Civil Statutes). In addition to setting out procedures
for reaching valid and binding settlement agreements, section 408.005 provides
that “[a]n employee’s right to medical benefits as provided by Section
408.021may not be limited or terminated.” 
Tex. Labor Code Ann. §
408.005(b).
The law governing compromise
settlement agreements in a workers’ compensation case seeking medical
benefitsfor on-the-job injuries is well established.  In 1976, the Amarillo Court of Civil Appealsobserved
that the predecessor to Labor Code section 408.021, Texas Revised Civil
Statutes Annotated article 8306, section 7,[5] “provided in substance that
the insurance carrier shall furnish such medicines and medical care as may
reasonably be required to cure and relieve at any time after the time of the
injury.” Moore v. Lumbermen’s Mut.Cas.
Co., 533 S.W.2d 171, 173 (Tex. Civ. App.—Amarillo 1976, writ ref’dn.r.e.) (citingTex.
Rev. Civ. Stat. Ann. art.8306, §7). 
Likewise, the court recognized that the predecessor toLabor Code section
408.005, article 8307, section 12, provided that “‘[w]here the liability of the
association (insurer) or the extent of the injury of the employee is uncertain,
indefinite or incapable of being satisfactorily established, the board may
approve any compromise, . . . settlement or commutation thereof made between
the parties.’” Id. (quoting Tex.Rev. Civ. Stat. Ann. art.8306,
§12).
Likewise, “[i]t is well established
that a compromise settlement agreement, when approved by the Board, is binding
upon the parties to it unless and until the agreement is lawfully set
aside.”  Id.; see Cigna Ins. Co. v. Rubalcada,
960 S.W.2d 408, 412 (Tex. App.—Houston [1st Dist.] 1998, no pet.) (holding that
compromise settlement agreement “is binding on the parties and may be set aside
only on grounds that would entitle a party to rescission at common law” and
that it “supersedes the original claim”);Seale
v. Am. Motorist Ins. Co., 798 S.W.2d 382, 386–87 (Tex. App.—Beaumont 1990,
writ denied) (holding workers’ compensation claimant who had obtained district
court judgment awarding her lifetime medical benefits appropriately brought
suit in district court against carrier based upon carrier’s indication it would
not pay for weight reduction treatments in connection with claimant’s back
injury); Esco v. Argonaut Ins. Co.,
405 S.W.2d 860, 863 (Tex. Civ. App.—Beaumont1966, writ ref’dn.r.e.) (holding
that compromise settlement agreement made while workers’ compensation case was
pending and approved by court was valid accord superseding original claim, was
subject only to judicial cancellation for fraud or other equitable grounds, and
was binding on both plaintiff and defendant). 
The grounds for setting aside such a settlement agreement are those that
would entitle a party to rescission at common law, including fraud, mutual
mistake, or other equitable grounds.  See, e.g.,Rubalcada, 960 S.W.2d at 412.
Finally, it is well established
that breach of a settlement agreement reached under the TWCA is not treated
like an initial claim for benefits for an on-the-job injury, for which
administrative remedies must be exhausted.See
Gregson v. Zurich Am. Ins. Co., 322 F.3d 883, 885–87(5th Cir. 2003)
(holding workers’ compensation claimant was not required to initiate and
exhaust administrative procedures with TWC before bringing claims in court
against insurer who had agreed to provide all necessary and reasonable medical
coverage but then denied coverage for prescription medication incident to
claimant’s approved medical treatment; administrative review of insurer’s
denial of such treatment was not available under TWCA).  
The Amarillo Court of Civil Appealsexplained
the law in Barnes v. Bituminous Casualty
Corp. as long ago as 1973:
The defense of lack of trial
court jurisdiction for failure to first secure action by the Industrial
Accident Board on the disputed expense [agreed to under compromise settlement
agreement] will not support . . . summary judgment.  When the compromise settlement agreement
executed by the parties was approved by the Board, there was a valid accord
superseding Barnes’ pending compensation benefits claim and subject only to
judicial cancellation.  Pacific Employers Ins. Co. v. Brannon,
150 Tex. 441, 242 S.W.2d 185 (1951).  The
approved agreement compromised and settled not only Barnes’ disability
benefits, but both past and future medical expense liability as well.  No action has been taken, either in this
proceeding or otherwise, to have the approved settlement agreement judicially
set aside; in fact, plaintiffs’ pleadings are drafted to allege a breach and to
enforce the terms of the approved settlement agreement, and evidence the
opening statement made in their appellate brief that “(t)his is a suit on a
contract.”  So long as the agreement is
subsisting, it is binding upon the parties to it, Lowry v. Anderson-Berney Bldg. Co., 139 Tex. 29, 161 S.W.2d 459
(1942), and the Board has no further jurisdiction of the matter made the
subject of the approved settlement agreement.
 
495 S.W.2d 5, 8 (Tex. Civ. App.—Amarillo 1973, writ
ref’dn.r.e.).
The law set forth in Barnes is still good law today.  There is no question under this law that
Rhule and the City entered into a valid and binding settlement agreement that
superseded the award made to Rhule by the Industrial Accident Board.  Under that agreement, the City obligated
itself to pay for Rhule’s reasonable and necessary medical care for his spinal
injury for life, including the care recommended by an agreed-upon physician, as
set out in the Settlement Agreement, to alleviate Rhule’s ongoing pain
“naturally resulting from the compensable injury” and to “enhance [his] ability
. . . to return to or retain employment.” 
See Tex. Labor Code Ann. § 401.011(31).
There is no contention in this case
that proper procedures were not followed at the time the 1990 Settlement
Agreement was reached and approved by the court as an Agreed Judgment.  Moreover, the City made no attempt to set
aside the Settlement Agreement, and its performance under that Agreement for
fourteen years—well outside the statute of limitations for setting aside such
an agreement—persuasively argues that it recognized the validity and binding
nature of the Agreement. 
The City does not present any
argument or authority that would support ignoring Labor Code sections 408.021,
408.005, and 408.011, which define compensable injuries under the TWCA and
provide for lifetime medical care where reasonably required by the nature of
the injury and for settlement of claims brought under the Act in binding and
valid settlement agreements.Nor does the City present any argument or authority
that would support extending the doctrine of exhaustion of administrative
remedies to claims of breach of a settlement agreement under the TWCA.  Therefore, we hold that the City’s argument
that Rhule’s claim is a claim for denial of benefits subject to the law in
effect in 1988 and that it is not a claim for damages for its breach of the
Settlement Agreement in 2004 is without merit.
Furthermore, the City presents no
argument forwhy it is not estopped to deny the history of this case, and we
hold that it is so estopped.  See Lomas & Nettleton Co. v. Huckabee,
558 S.W.2d 863, 864 (Tex. 1977) (per curiam) (holding homeowners were estopped
to assert claims against escrow agent for second insurer asserting invalidity
of first insurance policy where claims were so inconsistent with homeowners’
prior successful allegation of coverage under first policy as to be repugnant
to justice); Horizon Offshore Contractors,
Inc. v. Aon Risk Servs., 283 S.W.3d 53, 69 (Tex. App.—Houston [14th Dist.]
2009, pet. denied) (stating that doctrine of judicial estoppel bars party who
has made sworn statement in prior proceeding from maintaining contrary position
in subsequent proceeding);Cook
Composites, Inc. v. Westlake Styrene Corp., 15 S.W.3d 124, 136 (Tex.
App.—Houston [14th Dist.] 2000, pet. dism’d) (holding that, under doctrine of
quasi-estoppel, party is precluded from asserting right to disadvantage of
another where doing so would be inconsistent with party’s previous position).
We conclude that the City’s motion
to dismiss this case for lack of jurisdiction due to Rhule’s failure to exhaust
administrative remedies before bringing this suit for breach of the Settlement
Agreement is without merit.  We therefore
deny the motion and turn to the merits of the City’s appeal.
THE CITY’S APPEAL
          On
appeal, the City argues that its conduct in handling medical care for Rhule’s
workers’ 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 TWCA.  It argues thatit is immune to claims fordamages
that exceed remedies allowed by the TWC; that the exclusivity provision in the
TWCA precludes workers who bring claims under the Act from seeking damages for
personal injuries sustained in the course of their employment, including damages
for pain and suffering and mental anguish, which are limited to personal injury
actions;[6] and that the TWCA does not
provide for recovery of attorney’s fees. 
Therefore, it argues,the trial court lacked subject matter jurisdiction
over Rhule’s claims for damages for physical pain and mental anguish, as well
as his claim for attorney’s fees.  Thus,the
court erred in denying the City’s plea to the jurisdiction based on lack of
subject matter jurisdiction.
          Rhule
argues that the City’s immunity to workers’ compensation claims has been waived
by the Legislature, and that, by settling his claims and entering the
Settlement Agreement in accordance with the provisions in the TWCA, the City
waived its immunity both from suit and from liability for breach of that
agreement.  He further argues that his
damages for breach of the Settlement Agreement are contract damages and that a
special relationship exists between the parties to a contractfor the lifetime
provision of medical care reached in accordance with the provisions of the TWCA,such
that foreseeable non-economic damages, including damages for pain and suffering
and mental anguish, are recoverable for its breach.  He argues that, in his own case,pain and
suffering and mental anguish were foreseeable consequences of the City’s breach
of the Settlement Agreement, which provides for lifetime medical care,
including pain management, and, therefore, he is entitled to recover damages
for both his physical and his mental suffering.He also argues that he is
entitled to recover his attorney’s fees incurred as a result of the City’s breach.
          We
consider each of these arguments.
A.   Plea to the Jurisdiction
In its
first issue, the City argues that it has not waived its immunity to Rhule’sdamages
and attorney’s fees claims, and, because of its immunity, the trial court erred
in failing to dismiss Rhule’s suit for lack of jurisdiction.
1.     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 (Tex. 1993).  The
existence of subject matter jurisdiction is a question of law.  State
Dep’t of Highways & 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 from suit defeats a trial court’s subject matter jurisdiction.  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. 
See 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. 
Immunity from liability protects the state from money judgments even if
the Legislature has expressly given consent to sue.  Id.
2.     Waiver
of Immunity
Civil
Practice and Remedies Code section 101.028 waives a municipality’s immunity from
claims under the TWCA.  This statute
provides:
A governmental unit that has workers’
compensation insurance or that accepts the workers’ compensation laws of this
state is entitled to the privileges and immunities granted by the workers’
compensation laws of this state to private individuals and corporations.
 
Tex. Civ. Prac. & Rem. Code Ann.
§ 101.028 (Vernon 2011).  The TWCA, in
turn, provides that “[a]n employee who sustains a compensable injury is
entitled to all health care reasonably required by the nature of the injury as
and when needed,” that “[a]n employee’s right to medical benefits as provided
by section 408.021 may not be limited or terminated,” and that a claim that an
employer limited or terminated medical benefits to which the employee was
entitled may be compromised and settled. 
See Tex. Labor Code Ann. §§ 408.005(b), 408.021.
“When the state contracts, it is liable on contracts made
for its benefit as if it were a private person.”  Gen.
Servs. Comm’n v. Little-Tex Insulation Co., 39 S.W.3d 591, 594 (Tex. 2001)
(citing Fed. Sign v. Tex. S. Univ.,
951 S.W.2d 401, 405 (Tex. 1997)).  Although
by entering into a contract a governmental entity waives its immunity fromliability
for breach of the contract, it “does not, merely by entering into a contract,
waive immunity from suit.”Tex. A&M
Univ.–Kingsville v. Lawson, 87 S.W.3d 518, 520 (Tex. 2002); Little-Tex Insulation Co., 39 S.W.3d at
594.The supreme court has, however, recognized the legislature’s “express
waiver” of a governmental unit’s immunity both from liability and from suit for
workers’ compensation benefits claims.  City of La Porte v. Barfield, 898 S.W.2d
288, 294 (Tex. 1995), superseded by
statute on other grounds, Travis
Cent.Appraisal Dist. v. Norman, 342 S.W.3d 54 (Tex. 2011).Moreover, 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.
The supreme court in Lawson
addressed the reasoning the City uses here. Seeid.
at 521–22.  It acknowledged that “a
suit for breach of a settlement agreement is separate and apart from the suit
on the settled claim,” and it 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 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.
Here, by entering into the Settlement Agreement settling
Rhule’s workers’ compensation claim, the City waived its immunity from
liability under that agreement and became liable as if it were a private
person.  SeeTex. Civ. Prac. &
Rem. Code Ann. § 101.028; Lawson,
87 S.W.3d at 520.  Moreover, the
legislature’s waiver of the City’s immunity from suit for the purposes of
Rhule’s original workers’ compensation claim also waived the City’s immunity
from suit for Rhule’s suit to enforce the Settlement Agreement.  See Tex. Civ. Prac. & Rem. Code Ann. §
101.028; Lawson, 87 S.W.3d at
521.  Thus, we conclude that the City is
liable for breach of the Settlement Agreement just as any private employer
would be liable for breach of an agreement to provide medical benefits due to a
compensable injury under the TWCA.  See Tex.
Civ. Prac. & Rem. Code Ann. § 101.028; Lawson, 87 S.W.3d at 521; 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 workers’ 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.”).
The City argues, however, 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
[Workers’ Compensation] Act.”  Thus, the
City argues that its liability should be limited to the benefits that were
authorized by the Workers’ Compensation Act and that the trial court lacked
subject matter jurisdiction over Rhule’s claims for damages falling outside
those limits, namely, damages for pain and suffering, mental anguish, and
attorney’s fees.
The City’s argument misconstrues
the plain language of the governing statutes and case law set out above, which
unambiguously provides that an employee of a municipality who has suffered an
injury compensable under the TWCA may recover exactly the same damages for
breach of an agreement settling his claims for medical benefits under that Act
as an employee of a private company that breached an agreement to provide
medical benefits under the TWCA.  See SeeTex. Civ.
Prac. & Rem. Code Ann. § 101.028.  Thus, in this case, Rhule may
recover damages from the City for the City’s breach of an agreement to provide
lifetime medical benefits set out in an agreed and duly promulgated judgment
under the TWCA exactly as if the City were a private employer.  The only question remaining, therefore, is
whether an employee whose employer breached an agreement to provide him with
lifetime pain management benefits awarded to him for the compensable injury
under the TWCA is entitled to recover damages for physical pain and mental
anguish he suffered as a result of the breach.[7]
The City cites Reata Construction Corp. v. City of Dallas to support its
claim.  See 197 S.W.3d 371 (Tex. 2006). 
We conclude, however, that Reata
Constructionis distinguishable from the present case, as, in that case, the
City of Dallas waived its immunity merely by seeking affirmative relief, not by
settling a claim by entering a binding and enforceable contract.  See id.
at 373. 
This case is more analogous to
cases interpreting the effect of statutory limitations on recoverable breach of
contract damages underLocal Government Code section 271.153.[8]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). 
We conclude that Rhule established
that the City waived its immunity from suit on his claim for breach of the Settlement
Agreement and that the City is liable for damages on Rhule’s claims like any
private person.  See Little Tex. Insulation Co., 39 S.W.3d at 594; Jones,
8 S.W.3d at 638–39; S. Elec.
Servs., Inc., 273 S.W.3d at 744.Any alleged statutory
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, andit did not err in denying
the City’s plea to the jurisdiction.
We overrule the City’s
first issue.
B.  
Recoverable Damages
          In
its first, second, and third issues, the City argues that claimants are not
entitled to recover damages for past physical pain or for mental anguish in a
suit arising from the settlement of a workers’ compensation claim and that
Rhule is not entitled to recover such damages in this case.  In its second issue, the City argues 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 argues that the exclusivity
provision of the TWCA precludes damages for pain and suffering and mental anguishfor
breach of a settlement agreement under that Act, just as it precludes personal
injury damages for claims for benefits made in administrative proceedings under
the Act. Therefore, it argues, it is immune under the Act from liability to
Rhule to the extent he seeks damages for pain and suffering and mental anguish.However,
we have already determined that the legislature’s waiver of a governmental
entity’s immunity from suit on a workers’ compensation claim also applies to
waive immunity from suit for enforcement of a settlement of that claim and that
the City is liable for breach of that settlement agreement to the extent a
private person would be liable.  See Tex.
Civ. Prac. & Rem. Code Ann. § 101.028; Lawson, 87 S.W.3d at 521–22; Barfield,
898 S.W.2d at 294.The question, therefore, is whetherpain and
suffering and mental anguish damages are recoverable as consequential damages for
breach of a contract for the provision of lifetime medical care, including pain
management, made to settle a claim under the TWCA.  We hold that they are recoverable in an
appropriate case.
1.     Recovery of
Damages for Pain and Suffering and Mental Anguish for Breach of an Agreement
Settling a Workers’ Compensation Claim
 
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). These may include consequential damages, or 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,
however, 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.       
In this regard, damages for mental
suffering may be recoverable for breach of contract, but “the anguish or
distress of mind must be shown to have been such a necessary and natural result
of the breach of contract as that the party breaching it will be held to have
contemplated such mental suffering.”City
of Dallas v. Brown, 150 S.W.2d 129, 131 (Tex. Civ. App.—Dallas 1941, writ
dism’d).Consequential damages for serious physical and mental suffering may,
therefore, be recovered when such suffering is the necessary and foreseeable
result of the defendant’s conduct.  See City of Tyler v. Likes, 962 S.W.2d 489, 495–96 (Tex. 1998)(citing
cases).
          Thus,
the general rule that mental suffering is not allowable as an element of
damages for breach of contract has long been held to be a qualified one.  SeeBrown,
150 S.W.2d at 131.  Rather, the Texas
courts have long upheld mental anguish damages for breach of contract in cases
when there is a “special relationship” between the claimant and the contracting
party,
[in that] the contract is
personal in nature and the contractual duty or obligation is so coupled with
matters of mental concern or solicitude, or with the sensibilities of the party
to whom the duty is owed, that a breach of that duty will necessarily or
reasonably result in mental anguish or suffering, and it should be known to the
parties from the nature of the contract that such suffering will result from
its breach.
 
Pat H.
Foley & Co. v. Wyatt, 442 S.W.2d 904, 906 (Tex. Civ. App.—Houston
[14th Dist.] 1969, writ ref’dn.r.e.) (quotingLamm v. Shingeton, 55 S.E.2d 810 (N.C. 1949)).  The court of appeals specifically observed in
Pat H. Foley that the mental anguish
of the plaintiff was “not founded solely in the tortious act of the defendant”
cemetery operator—who had opened the plaintiff’s son’s casket near the end of
his funeral allowing a grossly offensive odor to escape—but from knowledge of
the anguish that would result if the contracting party failed to fulfill its
contractual obligation in the manner it did. 
Id.at 907. The court also
observed that “[t]he contract was predominantly personal in nature and no
substantial pecuniary loss would follow its breach.”  Id.  The court stated that it could not be said
under the circumstances of the case that non-economic mental anguish damages
were outside the contemplation of the parties at the time the contract was
made.  Id.
          The Texas
Supreme Court applied the foregoing reasoning in the workers’ compensation
area.  It held that the exclusivity
provision of the TWCA does not preclude a claim against insurance carriers for
breach of the duty of good faith and fair dealing or for intentional misconduct
in the processing and paying of a compensation claim under the TWCA.Aranda,748 S.W.2d 210, 214 (1988).  The court stated, “It is well established
under Texas law that ‘accompanying every contract is a common law duty to
perform with care, skill, reasonable expedience and faithfulness the thing
agreed to be done, and a negligent failure to observe any of these conditions
is a tort as well as a breach of
contract.’”  Id.at 212 (quoting Montgomery
Ward & Co. v. Scharrenbeck, 204 S.W.2d 508, 510 (Tex. 1947)); see also Seale, 798 S.W.2d at 390. 
The court held that, because of the
special trust relationship between the insured and the insurer in the workers’
compensation context, “[t]he contract between a compensation carrier and an
employee creates the same type of special relationship that arises under other
insurance contracts.”  Aranda, 748 S.W.2d at 212.  The court explained:
The injured employee, from
the date of his disability, relies on the compensation carrier for weekly
disability benefits and payment of medical expenses.  He is dependent on the carrier for protection
from the economic calamity of disabling injuries.  An arbitrary decision by the carrier to
refuse to pay a valid claim or to delay payment leaves the injured employee
with no immediate recourse.
 
Id.  To establish such an intentional breach or
breach of the duty of good faith and fair dealing that permits the recovery of
non-economic damages in a workers’ compensation case, the claimant must
establish both “(1) the absence of a reasonable basis for denying or delaying
payment of the benefits of the policy and
(2) that the carrier knew or should have known that there was not a reasonable
basis for denying the claim or delaying payment of the claim.”  Id.
at 213.
          Addressing
the exclusivity provision of the TWCA, the court held that remedies afforded by
the Act “are exclusive only if the injury complained of is an injury
contemplated by the Act—a personal
injury sustained in the course of employment.” 
Id. at 214 (citing predecessor
to Labor Code section 408.001, Texas Revised Civil Statutes article 8306,
section 3).  In its view, “[t]he Act was
not intended to shield compensation carriers from the entire field of tort
law.”  Id.;see Reed Tool Co. v.
Copelin, 610 S.W.2d 736, 739 (Tex. 1980).[9]The court held that the
exclusivity provision does not “exempt employers from common law liability for
intentional injuries” and it “cannot be read as a bar to a claim that is not
based on a job-related injury.”Aranda,
748 S.W.2d at 214 (quoting Reed Tool,
610 S.W.2d at 739).  Rather, “an employee
may have one claim against his employer under the Act and another claim at
common law for an intentional tort.”  Id.; see
also Massey v. Armco Steel Co., 652 S.W.2d 932, 933 (Tex. 1983)(holding
that employee may have one claim against his employer under TWCA and another at
common law for intentional tort; claimant is permitted to recover for breach of
good faith and fair dealing or intentional act if separate from compensation
claim and produced independent injury).
Accordingly, the court held that
the TWCA “does not bar a claim against a carrier for breach of the duty of good
faith and fair dealing or for intentional misconduct in the processing of a
compensation claim.”Aranda, 748 S.W.2d
at 214.  Recovery is permitted whenthe
claimant shows that the insurer’s breach of the duty of good faith and fair
dealing or its intentional wrongful act is separate from the compensation claim
and has produced an independent injury.  Id.; Massey,
652 S.W.2d at 933.
Subsequently, in City of Tyler v. Likes, the supreme
court explored the rationale and extent of the exception to the general rule
that limits recovery for breach of contract to economic loss. 
First, it recognized that “Texas
has authorized recovery of mental anguish damages in virtually all personal
injury actions.”  Likes,962 S.W.2d at 495(quoting Krishnan v. Sepulveda, 916 S.W.2d 478, 481 (Tex. 1995)).In addition, it recognized that “[m]ental
anguish is also compensable as the foreseeable result of a breach of duty
arising out of certain special relationships.” 
Id. at 496.  These include the physician-patient
relationship, and “a very limited number of contracts dealing with intensely
emotional non-commercial subjects such as preparing a corpse for burial.”  Id.
The court cautioned, however, that, “[w]ithout intent
or malice on the defendant’s part, serious bodily injury to the plaintiff, or a
special relationship between the two parties,” damages are recoverable for
mental anguish “in only a few types of cases involving injuries of such a
shocking and disturbing nature that mental anguish is a highly foreseeable
result,” such as actions for wrongful death and actions by bystanders for the
injury of a close family member.  Id. at 496.  In distinguishing these cases and disallowing
recovery for mental anguish damages for property destructionin Likes itself, the court reasoned, “While
few persons suffering serious bodily injury would feel made whole by the mere
recovery of medical expenses and lost wages, many whose property has been
damaged or destroyed will be entirely satisfied by recovery of its value.”  Id.at
496–97; see alsoVerkinakis v. Med.
Profiles, Inc., 987 S.W.2d 90, 95 (Tex. App.—Houston [14th Dist.] 1999,
pet. denied) (stating Texas authorizes recovery of damages for mental anguish
“(1) as the foreseeable result of a breach of duty arising out of certain
special relationships, such as the relationship between a physician and a
patient; (2) for some common law torts that generally involve intentional or
malicious conduct such as libel and, by analogy, for violations of certain
statutes such as the DTPA; and (3) in virtually all personal injury cases where
the defendant’s conduct causes serious bodily injury”).  
          In Texas Mutual Insurance Co. v. Ruttiger,
a divided Texas Supreme Court limited Aranda
without overruling it.No. 08-0751, 2011 WL 3796353, at *1 (Tex. Aug. 26, 2011,
rehearing granted).  After a detailed examinationof
the history of the TWCA and of amendments that, in the estimation of the
majority, cured many of the ills in the handling of TWCA claims that it
believedjustified Aranda’s imposition
of a duty of good faith and fair dealing, the majority held that an injured
worker claiming unfair settlement practices under the TWCA has no cause of
action under the provision of the Insurance Code that imposes a duty of good
faith and fair dealing in the handling and settlement of claims.  Id.at
*5–12(overruling Aetna Cas. & Surety
Co. v. Marshall, 724 S.W.2d 770 (Tex. 1987)).  The court did not, however, extend its ruling
to Ruttiger’s claim of breach of the common law duty of good faith and fair
dealing.
The court reasoned, “In the final
analysis, the Aranda cause of action
is a common law one and it is this Court’s prerogative and responsibility to
evaluate whether the cause of action continues to be appropriate.”  Id.
at *23.  However, while the majority was
of the belief “that Texas should join the majority of states that do not allow Aranda-type suits in the workers’
compensation setting,” it ultimately concluded that it was up to the
Legislature to override Aranda if it
so chose and that it had not done so.  Id. 
The court, therefore, remanded the case to the court of appeals, which
had not considered the common law duty of good faith and fair dealing
recognized in Aranda, but only the
violation of the statutory duty of good faith and fair dealing under the
Insurance Code, to determine whether the defendant insurance company had breached
its duty of good faith and fair dealing under the common law.  Id.  Rehearing has been granted by the supreme
court in Ruttiger. 
          We
conclude that the instant case is distinct from Ruttigerin that the act complained of—the City’s breach of the
Settlement Agreement in 2004—occurred outside the context of the administrative
decision-making process under the TWCA and, therefore,is governed by contract
law, rather than by the provisions of the TWCA. 
In addition,what is at issue in this case is not the availability of a
statutory cause of action for unfair settlement practices under the Insurance
Code, but the availability under the common law of non-economic damages for
pain and suffering and mental anguish for breach of a settlement agreement
providing for lifetime medical care,reached in accordance with provisions in
the TWCA, that evinces the type of special relationship recognized in bothArandaand Likes.  See Likes,962
S.W.2d at 496; Aranda, 748 S.W.2d at 214.
Thus, we conclude that recovery of non-economic
damages, including damages for pain and suffering and mental anguish, is
permitted when the claimant shows either that an employer that is party to a
settlement agreement under the TWCA for an injury contemplated by the Actbreached
itscommon law duty of good faith and fair dealing or that it committed an
intentional wrongful act separate from the injured workers’ compensation claim
that produced an independent injury and that the pain and suffering or mental anguish
that followed the breach was a foreseeable result of the breach.  Aranda,
748 S.W.2d at 214; see Massey, 652
S.W.2d at 933 (holding that employee may have one claim against employer under
TWCA and another at common law for intentional tort that produces independent
injury); see also Likes, 962 S.W.2d
at 495 (recognizing compensability for mental anguish arising as foreseeable
result of breach of duty arising out of certain special relationships).
          In
this case, unlike Ruttiger, the
claimant, Rhule, and the City reached a valid and binding settlement agreement
in 1990 in accordance with the provisions of the TWCA for the lifetime provision
of Rhule’s reasonable and necessary medical care, including care for his
permanent pain caused by his compensable on-the-job spinal cord injury.  At thepoint an enforceable contract was
entered between the City and Rhule, the provisions of the TWCA governing the
procedures for resolving claims by injured workers ceased to apply, and the
City became obligated to perform its contractual duties in good faith.  The City performed its obligations under the
Settlement Agreement, including paying for Rhule’sdoctor visits, for his pain
medications, and for the installation of a pain pump, for more than a decade.  
In 2004, the City intentionally
breached the agreement by refusing to pay for replacement of the failing pain
pump, against the recommendation of Rhule’s treating physician, agreed to by
both parties in the Settlement Agreement, and the recommendation of an expert
pain-management physician hired by the City itself and, subsequently, by
refusing to pay for Rhule’sdoctor visits and pain medications.  These intentional acts were entirely separate
and distinct from any acts in connection with the resolution of Rhule’s 1988
claim for compensation for his on-the-job injury in proceedings before the
Industrial Accident Board.   Furthermore,
the City provided no justification for these actions whatsoever other than its
own unilateral determination that coverage of Rhule’s pain pump, doctor visits,
and pain medications was not medically necessary and that it was immune from
liability for its acts.
The City’s breach of the Settlement
Agreement produced entirely foreseeable and necessarily foreseen
consequences:  Rhule suffered severe and
disabling physical pain and mental anguish that interfered with his performance
of his daily activities and his ability to work.  These injuries were precisely of the type for
which recovery is available due to the special relationship that existed
between Rhule and the City and the essentially non-economic nature of the
damages incurred for physical pain and suffering and mental anguish.  
We hold that damages for pain and
suffering and mental anguish arising from breach of the settlement agreement
were recoverable under the circumstances of this case.The
only remaining question, therefore, is whether Rhule proved his entitlement to
damagesfor pain and suffering and mental anguish at trial. 
2.    
Propriety of Jury Charge on Physical
Pain Damages
In its second issue, the City
contends that the trial court erred in submitting a question to the jury that
allowed it to award Rhule damages for physical pain.  
The City objected at trial 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 argued then, and argues now, that the question
was proper.  He 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 managed his pain effectively and allowed
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.
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.
          The
evidence in this case showed that the City not only denied Rhulethe replacement
of his failing pain pump, which had been recommended by his agreed upon
treating physician, Dr. Alvarez, but also refused to pay for his doctor visits
and pain medications, which, the evidence showed, he required in order to
function.  The City also contacted a
respected, board-certified pain-management specialist, Dr. Duncan, for a “peer
review” without Rhule’s knowledge, and asked her to determine whether the use
of the pain pump was necessary and reasonable for Rhule’s care and treatment.  She replied that it was and informed the City
that it could expect batteries in the device to have to be replaced as
“necessary.”  After it received this
answer, the City hired a different physician, Dr. Gary Freeman, who was not a
pain specialist, and claimed to rely upon his opinion in refusing to replace
the pain pump.  When Rhule, who had
engaged an attorney, objected, the City chose a fourth doctor, Dr. Leonard
Herschkowitz, as its medical expert. 
That doctor also opined that replacement of the pain pump, which was
malfunctioning while Rhule’s pain was increasing, was reasonable and necessary
to “allow the gentleman to function.” 
There was additional evidence that Rhule began to experience
excruciating physical pain and inability to work.
          We
hold that the record contained sufficient evidence of pain and suffering caused
by the City’s breach of the Settlement Agreement to support the jury verdict.
          We overrule
the City’s second issue.
3.    
Sufficiency of the 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 in that there was no evidence of Rhule’s propensity
for mental anguish at the time the Settlement Agreement was entered into by the
parties, and, therefore, the trial court should have granted the City’s motion
for judgment notwithstanding the verdict.
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 evidence 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.”  In response to the damages question, the jury
answered that Rhule was entitled to $75,000 for his mental anguish.
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 Texas 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, 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 v. McLure, 121 S.W.3d 709, 713
(Tex. 2003); 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).
“Generally, an award of mental
anguish damages must be supported by direct evidence that the nature, duration,
and severity of mental anguish was sufficient to cause, and caused, either a
substantial disruption in theplaintiff’s daily routine or a high degree of
mental pain and distress.”  Serv. Corp. Int’l v. Guerra, 348 S.W.3d
221, 231 (Tex. 2011) (upholding mental anguish damages award to widow whose
husband’s body was moved by cemetery operator without permission, but
overturning award to decedent’s daughters for legal insufficiency of evidence
to support award); Likes, 962 S.W.2d
at 495;Pat H. Foley & Co., 442
S.W.2d at 907.  Even when an occurrence
is of the type for which mental anguish damages may be awarded, “evidence of
the nature, duration, and severity of the mental anguish is required.”  Guerra,
348 S.W.3d at 231; see alsoVerkinakis,
987 S.W.2d at 95(stating that, while Texas law no longer requires a physical
manifestation of mental anguish, plaintiff “must produce direct evidence of the
nature, duration, and severity of the mental anguish, establishing a
substantial disruption in his or her daily routine”).
At trial, Rhule testified,
regardingthe 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.  He eventually settled
his claim with the City under the terms related in the Agreed Judgment.[10]Rhule 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.  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.”
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
Rhule’s diagnosis of permanent pain requiring lifelong medical care and the anguish
that its decision to breach its duty to perform its obligations under the
contract would cause.  Rhule testified
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, that he could not afford to replace the
pump and provide his medication on his own, and that his functionality was
severely compromised without pain medication.  Knowing these things, the Cityobligated itself
to provide lifetime medical care to Rhule, including pain management care, and
fulfilled its obligations for over a decade, including paying for Rhule’s
doctor visits, medications, and for installation of a pain pump.  Then, when the pump began to fail, the City made
its decisions to refuse to replace the pain pump, to cease paying for doctor
visits, and to cease paying for Rhule’s pain medications, overruling repeated
competent medical recommendations that showed that such medical care continued
to be reasonable and necessary, in conscious disregard that Rhulepredictably would
suffer and did suffer both physical pain and mental anguish as a result of its
actions. 
We conclude that the evidence is
sufficient to show that mental anguish damages werea foreseeable consequence of
the City’s breach of theSettlement Agreement that was within the contemplation
of the City at the time it entered into the Settlement Agreement with Rhule and
that the City nevertheless intentionally breached its duty to provide medical
care, causing Rhule to suffer the mental anguish it necessarily foresaw.
We overrule the City’s third issue.
C.  
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
deny the City’s motion to dismiss for lack of jurisdiction.  We affirm the judgment of the trial court.
 
 
                                                                   Evelyn
V. Keyes
                                                                   Justice

 
Panel consists
of Justices Keyes, Sharp, and Massengale.
 
Justice
Massengale, dissenting.




[1]           A jurisdictional issue may be raised at any
time.  See Tex. Ass’n of Bus.
v. Tex. Air Control Bd., 852 S.W.2d 440, 445 (Tex. 1993).
 


[2]           The Texas Workers’ Compensation
Commission was created in 1989 to replace the Industrial Accident Board.  It was
subsequently abolished effective September 1, 2005, and its functions were
transferred to a new division of the Texas Department of Insurance, the Texas
Workforce Commission.SeeSw. Bell Tel. Co.
v. Mitchell, 276 S.W.3d 443, 444 & n.3 (Tex. 2008) (citingAct of Dec.
12, 1989, 71st Leg., 2d C.S., ch. 1, §§ 2.01-.09, 17.01, 1989 Tex. Gen. Laws 7,
115 (see former Tex Rev. Civ. Stat. Ann.
art. 8308-2.01 et seq., codified in 1993 as Chapter 402 of the Texas Labor Code)
and Act of May 29, 2005, 79th Leg., R.S., ch. 265, §§ 1.003, 8.001, 2005 Tex.
Gen. Laws 469, 469–70, 607–08).


[3]           Rhule alleges, in response to the
City’s motion for rehearing and motion to dismiss, that in 2004 or 2005, the
City changed risk managers and “[t]hose new Risk Managers, Cambridge Integrated
Services Group, instituted a program of negative review of long-term injury
cases” and of “arbitrarily cutting off long term compensation of City of
Houston employees and past employees.”


[4]           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.


[5]           See
Act of Mar. 28, 1917, 35th Leg., R.S., ch. 103, § 7, 1917 Tex. Gen. Laws
269, 272, repealed by Act of Dec. 29,
1989, 71st Leg., 2d C.S., ch. 1, § 16.01(7), 1989 Tex. Gen. Laws 1, 114
(current version at Tex. Lab.Code Ann.
§ 408.021 (Vernon 2006)).


[6]           The exclusivity provision of the TWCA
provides, “Recovery of workers’ compensation benefits is the exclusive remedy
of an employee covered by workers’ compensation insurance coverage or a legal
beneficiary against the employer or an agent or employee of the employer for
the death of or a work-related injury sustained by the employee.” Tex. Labor Code Ann. § 408.001 (Vernon
2006).  The former version of the
exclusivity provision stated that workers whose injuries are subject to the
TWCA “shall have no right of action
against their employer or against any agent, servant or employer of said
employer for damages for personal injuries. . . .”Aranda v. Ins. Co. of N. Am., 748 S.W.2d 210, 214 (Tex. 1988)
(quoting former Tex. Rev. Civ. Stat.
Ann. art.8306, §3 (Vernon Supp. 1988)).


[7]           The dissent adopts the City’s
misconstruction of the law and predicates its argument upon the misconstruction
without referencing or distinguishing the controlling statutes and case law.
 


[8]           We note, however, that this case does
not arise under section 271.153.  That
statute provides waiver of immunity from suit for “[a] local governmental
entity that is authorized by statute or the constitution to enter into a
contract and that enters into a contract subject to … subchapter [I of chapter
271 of the Local Government Code].” SeeTex. Local Gov’t Code Ann. § 271.152
(Vernon 2006).  Chapter 271 governs “a
written contract stating the essential terms of the agreement for providing
goods or services to the local governmental entity.”  Id. § 271.151(2)
(defining “Contract subject to this subchapter”).  Damages for breach of a contract subject to
subchapter 271 are limited to “the balance due and owed by the local
governmental entity under the contract as it may have been amended,” as well as
“the amount owed for change orders or additional work” and interest.  Id.
§ 271.153(a).  Consequential and
exemplary damages and damages for unabsorbed home office overhead are expressly
excluded.  Id. § 271.153(b).  By
contrast, immunity to suit under the TWCA is waived by section 101.028 of the
Civil Practice and Remedies Code.


[9]           We note that Labor Code section 408.006
states, “It is the express intent of the legislature that nothing in this
subtitle shall be construed to limit or expand recovery in cases of mental
trauma injuries.”  Tex. Labor CodeAnn. § 408.006(a)
(Vernon 2006).Mental trauma is compensable under this section, however, only when there
is evidence of an undesigned or untoward event traceable to a definite time,
place, and cause, as opposed to a gradual build-up of emotional stress over a
period of time.  GTE Sw. Inc. v. Bruce, 998 S.W.2d 605, 610 (Tex. 1999); Brown v. Tex. Emp’rs’ Ins. Ass’n, 635
S.W.2d 415, 417 (Tex. 1982): Shannon v. Tex.
Gen. Indem. Co., 889 S.W.2d 662, 664 (Tex. App.—Houston [14th Dist.] 1994,
no writ).


[10]         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 nor the City’s
original attorney testified regarding the circumstances surrounding the
formation of the Settlement Agreement is misleading.


