

Opinion issued September 8, 2011

In The
Court of
Appeals
For The
First District
of Texas
————————————
NO. 01-10-00773-CV
———————————
Sherrylene Garcia,
Appellant
V.
Shell Oil Company and Gustavo Penilla d/b/a
Quality Turbo Services, Appellees

 

 
On
Appeal from the 125th District Court
Harris
County, Texas

Trial Court Case No. 2009-49030
 

 
O P I
N I O N
Appellant, Sherrylene Garcia, appeals
the trial court’s grants of summary judgment in favor of appellees, Shell Oil
Company and Gustavo Penilla d/b/a Quality Thermo Services.  In one issue, Garcia argues the trial court
erred in granting summary judgment (1) on her sexual harassment claims on the
basis of res judicata and (2) on her intentional infliction of emotional
distress claims on the basis that they are precluded by Title VII of the Civil
Rights Act of 1964 and Chapter 21 of the Texas Labor Code.
We affirm in part and reverse and remand in part.
                                                                                                                                                                
Background
Some time in 2007, Garcia began working for Penilla’s
sole-proprietorship business, Quality Thermo Services.  At the time, Quality Thermo Services was
performing contract work at one of Shell’s buildings.  Garcia alleged that she was sexually harassed
by Penilla and Emerardo Salinas, an employee of Shell.
Garcia filed charges of sexual harassment with the Equal
Employment Opportunity Commission on October 8, 2007 and subsequently received
a right-to-sue letter.  She filed suit
against Shell and Penilla in federal court on May 30, 2008 (“the federal suit”).  Garcia asserted against both Shell and
Penilla claims of (1) sexual harassment under Title VII of the federal
Civil Rights Act of 1964 (“Title VII”) and (2) intentional infliction of
emotional distress under Texas common law.
Shell and Penilla moved for summary judgment on each of Garcia’s
claims in the federal suit.  Shell argued
summary judgment should be granted against Garcia on her Title VII sexual
harassment claim against it because it did not have an employer-employee
relationship with her.  Shell argued
that, because it was not her employer, Garcia could not recover damages from it
under Title VII.  The magistrate judge
agreed and recommended that the federal district court grant summary judgment
on Garcia’s Title VII sexual harassment claims against Shell.[1]
Penilla argued summary judgment should be granted against
Garcia on her sexual harassment claim against him because he was not an
employer as it is defined under Title VII because he did not have the requisite
number of employees.  The magistrate
judge agreed and recommended that the federal district court grant summary
judgment on Garcia’s sexual harassment claims against Penilla.[2]
For Garcia’s state claims of intentional infliction of
emotional distress against Shell and Penilla, the magistrate judge recommended that
the federal district court decline to exercise supplemental jurisdiction over
the claims and dismiss the claims without prejudice.[3]
The district court adopted the recommendations of the
magistrate judge.  In its final judgment,
the district court rendered judgment in favor of Shell and Penilla on Garcia’s
sexual harassment claims and dismissed without prejudice Garcia’s intentional
infliction of emotional distress claims.
A few days later, Garcia filed suit in a Harris County
district court (“the Texas suit”).  Garcia’s
petition in the Texas suit is largely identical to her petition in the federal
suit.  Specifically, she asserts the same
causes of action she had asserted in her federal suit—claims of sexual
harassment under Title VII of the federal Civil Rights Act of 1964[4]
and intentional infliction of emotional distress under Texas common law—against
both defendants.  
Shell moved for summary judgment on Garcia’s claims
against it.  Shell argued that Garcia’s Title
VII sexual harassment claims were barred by res judicata and that her
intentional infliction of emotional distress claim was precluded by Title VII
and Chapter 21 of the Texas Labor Code. 
The trial court granted Shell’s motion for summary judgment on both
claims Garcia asserted against it.  
Penilla subsequently filed a motion for summary judgment
on the same grounds asserted by Shell, namely that Garcia’s Title VII claim
against him was barred by res judicata and her intentional infliction of
emotional distress claim was precluded by Title VII and Chapter 21 of the Texas
Labor Code.  The trial court granted
Penilla’s motion for summary judgment, disposing of all parties and claims.
                                                                                                                                                 
Standard of Review
The summary-judgment
movant must conclusively establish its right to judgment as a matter of
law.  See MMP, Ltd. v. Jones, 710
S.W.2d 59, 60 (Tex. 1986).  Because
summary judgment is a question of law, we review a trial court’s summary
judgment decision de novo.  See
Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005).  In our review, we take the nonmovant’s
competent evidence as true, indulge every reasonable inference in favor of the
nonmovant, and resolve all doubts in favor of the nonmovant.  Diversicare Gen. Partner, Inc. v. Rubio,
185 S.W.3d 842, 846 (Tex. 2005).
To prevail on a
“traditional” summary-judgment motion, asserted under Rule 166a(c), a movant
must prove that there is no genuine issue regarding any material fact and that
it is entitled to judgment as a matter of law. 
See Tex. R. Civ. P.
166a(c); Little v. Tex. Dep’t of Criminal Justice, 148 S.W.3d
374, 381 (Tex. 2004).  A defendant moving
for traditional summary judgment must either (1) disprove at least one
element of the plaintiff’s cause of action or (2) plead and conclusively
establish each essential element of an affirmative defense to rebut the
plaintiff’s cause.  Cathey v. Booth,
900 S.W.2d 339, 341 (Tex. 1995).  
It is an affirmative defense to assert that a claim is
barred by res judicata.  Tex. R. Civ. P. 94.  Accordingly, Shell and Penilla bore the
burden of establishing as a matter of law each of the elements of res judicata.  Travelers
Ins. Co. v. Joachim, 315 S.W.3d 860, 862 (Tex. 2010).  Similarly, Shell and Penilla’s claims that
Garcia’s intentional infliction of emotional distress claims were precluded by Title
VII are pleas in avoidance.  See Woods v. William M. Mercer, Inc.,
769 S.W.2d 515, 517 (Tex. 1988) (holding plea in avoidance is one which avoids
legal effect of cause of action even if all elements were established).  Accordingly, Shell and Penilla bore the
burden of establishing as a matter of law that intentional infliction of
emotional distress was precluded.  See Tex.
R. Civ. P. 94 (identifying a plea in avoidance as affirmative defense).
                                                                                              
Garcia’s Title VII Sexual Harassment Claims
Shell and Penilla asserted in their motions for summary
judgment that Garcia’s Title VII sexual harassment claims brought against them
in the Texas suit were barred by res judicata because judgment was rendered on
these claims in the federal suit.  Garcia
argues on appeal that her Title VII claims are not barred by res judicata
because the claims brought in federal district court were disposed of on
jurisdictional grounds.
Because the first
lawsuit at issue in this case was decided in federal court, federal law
controls the determination of whether res judicata bars the present state court
proceeding.  San Antonio Indep. Sch. Dist. v. McKinney, 936 S.W.2d 279, 281
(Tex. 1996).  Under federal law, res
judicata applies where “(1) the parties are identical or in privity; (2) the
judgment in the prior action was rendered by a court of competent jurisdiction;
(3) the prior action was concluded by a final judgment on the merits; and (4)
the same claim or cause of action was involved in both actions.”  Test
Masters Educ. Servs., Inc. v. Singh, 428 F.3d 559, 571 (5th Cir. 2005).  Like Texas,[5]
the Fifth Circuit has adopted the transactional test of the Restatement
(Second) of Judgments in determining whether res judicata applies.  Id.  “Under the transactional test, a prior
judgment’s preclusive effect extends to all rights of the plaintiff with
respect to all or any part of the transaction, or series of connected
transactions, out of which the original action arose.”  Id.  
The summary
judgment evidence unequivocally establishes that the parties to the federal
suit are identical to the parties to the Texas suit.  It equally establishes that Garcia brought
identical Title VII claims against Shell and Penilla.  The central issue on appeal is whether the
federal district court’s determination that neither Shell nor Penilla were
employers under Title VII—because Shell did not have an
employer-employee relationship with Garcia and because Penilla did not have the
requisite number of employees—was a jurisdictional determination or a ruling on
the merits of Garcia’s sexual harassment claims.
As an initial matter, we note that, contrary to Garcia’s
assertions at trial and on appeal, the federal district court did not “dismiss[]
the case because the court determined that it had no jurisdiction to adjudicate
the case.”  Instead, the final judgment
explicitly stated that it rendered judgment for Shell and Penilla on Garcia’s
sexual harassment claims.  Nevertheless,
if the determination that Shell and Penilla were not employers under Title VII
was a jurisdictional issue, then any judgment on the merits rendered by the
trial court would be void.  See Tex. Constr. Co. v. U.S., 236 F.2d
138, 140 (5th Cir. 1956) (holding when court exceeds its jurisdiction and
issues a judgment, the judgment is void). 
Accordingly, we must determine if the issue of whether Shell and Penilla
were employers under Title VII is a jurisdictional issue.
Title VII concerns discrimination based on sex in the
workplace environment.  42 U.S.C.
§ 2000e-2(a) (2008).  As it applies
to Garcia, Title VII makes it “an unlawful employment practice for an employer . . .
to discriminate against any individual with respect to his compensation, terms,
conditions, or privileges of employment because of such individual’s . . .
sex.”  Id. § 2000e‑2(a)(1). 
An employer is defined as “a person engaged in an industry affecting
commerce who has fifteen or more employees for each working day in each of
twenty or more calendar weeks in the current or preceding calendar year . . . .”  42
U.S.C. § 2000e(b) (2006).  
Determining
whether a defendant is an employer under Title VII involves a two-step
process.  Deal v. State Farm Cnty. Mut. Ins. Co. of Tex., 5 F.3d 117, 118 n.2
(5th Cir. 1993).  “First, the defendant
must fall within the statutory definition. Second, there must be an employment
relationship between the plaintiff and the defendant.”  Id.  This analysis ultimately depends on the
definition of employer under the applicable statute.  See id.
(citing 42 U.S.C. § 2000e(b)).
Penilla argued in
the federal suit that he had fewer than 15 employees and, accordingly, was not
an employer as defined by the statute.[6]  Shell
argued in the federal suit that it was not an employer under Title VII because
it did not have an employer-employee relationship with Garcia.
In 2006, the United States Supreme Court held that the
employee-numerosity requirement “is an element of a plaintiff’s claim for
relief, not a jurisdictional issue.”  Arbaugh v. Y & H Corp., 546 U.S.
500, 516, 126 S. Ct. 1235, 1245 (2006). 
The court noted that the statutory definition of employer “appears in a
separate provision that does not speak in jurisdictional terms or refer in any
way to the jurisdiction of the district courts.”  Id.
at 515, 126 S. Ct. at 1245 (internal quotations omitted).  Accordingly, whether Shell and Penilla qualified
as employers under the statute was an element of Garcia’s claim and not a
jurisdictional issue.  See id.  
The judgment in
the federal suit was rendered by a court of competent jurisdiction and Garcia’s
claims of sexual harassment against Shell and Penilla were concluded by a final
judgment on the merits.  See Test Masters, 428 F.3d at 571.  We hold that Shell and Penilla met their summary
judgment burdens of establishing that Garcia’s Title VII sexual harassment
claims against them were barred by res judicata.
                                                                 
Garcia’s Intentional Infliction of Emotional
Distress Claims
The federal district court dismissed without prejudice
Garcia’s claims of intentional infliction of emotional distress.  Shell and Penilla moved for summary judgment
on these claims in the Texas suit arguing that intentional infliction of
emotional distress is a gap-filler claim and Garcia’s claims were precluded by Title
VII and Chapter 21 of the Texas Labor Code. 
The trial court agreed and granted summary judgment on Garcia’s intentional
infliction of emotional distress claims against Shell and Penilla.
Intentional infliction of emotional distress is a
gap-filler tort: “judicially created for the limited purpose of allowing
recovery in those rare instances in which a defendant intentionally inflicts
severe emotional distress in a manner so unusual that the victim has no other
recognized theory of redress.”  Hoffman-La Roche Inc. v. Zeltwanger, 144
S.W.3d 438, 447 (Tex. 2004).  Where the
gravamen of a complaint is covered by another common-law or statutory tort,
intentional infliction of emotional distress is not available.  Id.  This is true even if plaintiff does not
assert the precluding claim in her petition—such as Chapter 21 of the Texas
Labor Code in this instance—or asserts the displacing claim but does not
prevail—such as Title VII of the Civil Rights Act of 1964 in this instance.  See id.
at 448.  Shell and Penilla argued that
Garcia’s intentional infliction of emotional distress claims against them were precluded
by Title VII and Chapter 21 of the Texas Labor Code.  See
42 U.S.C. § 2000e-2; Tex. Lab. Code
Ann. § 21.051 (Vernon 2006).
The Texas employment discrimination statutes were modeled
after Title VII with the purpose of executing the policies set forth in Title
VII.  Hoffman-La
Roche, 144 S.W.3d at 445.  Due to
their similarity, federal cases analyzing Title VII may be cited as authority
in cases relating to the Texas statutes. 
Id. at 446.  Like the federal statute, Texas law provides,
“An employer commits an unlawful employment practice if because of . . .
sex . . . the employer . . . discriminates in any . . .
manner against an individual in connection with compensation or the terms,
conditions, or privileges of employment.” 
Tex. Lab. Code Ann. § 21.051(1).  Also like the federal statute, Texas defines
employer in this context as “a person who is engaged in an industry affecting
commerce and who has 15 or more employees for each working day in each of 20 or
more calendar weeks in the current or preceding calendar year.”  Tex.
Lab. Code Ann. § 21.002(8) (Vernon Supp. 2010).  Accordingly, for the purposes of this appeal,
we draw no distinction between the federal and state statutes in determining
whether they preclude Garcia’s intentional infliction of emotional distress
claims.
The Texas Supreme Court recently held that a statutory
sexual harassment claim precludes all common-law causes of action for the same
injury.  Waffle House, Inc. v. Williams, 313 S.W.3d 796, 803 (Tex. 2010).  Specifically, the court held, “Today’s
question is whether employer liability for unwanted sexual touching by a
coworker . . . is limited to a tailored [statutory] scheme that specifically
covers employer liability for sexual harassment.  We think the answer should be yes.”  Id.  
Both Shell and Penilla obtained summary judgment on
Garcia’s Title VII claims, however, by arguing that they were not employers as
defined by Title VII.  The issue we must
resolve, then, becomes whether Title VII and the Texas employment
discrimination statutes were meant to preclude common-law causes of action for
non-employers.  We begin by reviewing the
scope and purpose of Title VII and the Texas employment discrimination
statutes.
A.              
Purpose and Scope of Title VII and Chapter 21 of
the Texas Labor Code
Not all claims of sexual harassment are actionable under
the federal or state statutory schemes.  Twigland Fashions, Ltd. v. Miller, 335
S.W.3d 206, 217 (Tex. App.—Austin 2010, no pet.) (citing Meritor Sav. Bank, FSB v. Vinson, 477 U.S. 57, 65, 106 S. Ct. 2399,
2404–05 (1986)).  For example, a sexual
harassment claim under the federal statutory scheme cannot be brought against
the individual who allegedly committed the bad acts.  Grant
v. Lone Star Co., 21 F.3d 649, 653 (5th Cir. 1994).  Instead, a claim of sexual harassment is actionable
under Title VII only against an employer and only when (1) the employer takes a
tangible employment action based on whether the employee submits to the sexual
demand or (2) the sexual harassment is said to constructively alter the
employee’s terms or conditions of employment. 
Twigland Fashions, 335 S.W.3d at
217–18.
Even for employers, Congress placed limitations on who
faces liability.  An employer who has
fewer than fifteen employees does not face liability under Title VII.  See
42 U.S.C. § 2000e(b) (excluding
employers with fewer than 15 employees from definition of employer under act); see also Tex. Lab. Code Ann. § 21.002(8) (placing same
limitations on definition of employer).  The purpose of the employee-numerosity
requirement was “[t]o spare very small businesses from Title VII liability.”  See Arbaugh,
546 U.S. at 504, 126 S. Ct. at 1239.  It
was also put in place to protect small entities from the cost of litigating
discrimination claims.  Miller v. Maxwell’s Int’l Inc., 991 F.2d
583, 587 (9th Cir. 1993).  
In determining that the sexual harassment statutes precluded
state common-law claims, the Texas Supreme Court noted that the state statutes
have caps on compensatory and punitive damages available to a plaintiff that
the common law claims did not have.  Waffle House, 313 S.W.3d at 806–07.  Title VII has similar caps.  See
42 U.S.C. § 1981a(b)(3) (2006).  The
court noted that allowing common law claims to be pursued would allow
plaintiffs to avoid those damage limitations. 
Waffle House, 313 S.W.3d at
807.
With this framework in mind, we turn to each of the
defendants.
B.              
Shell
Garcia brought a claim of intentional infliction of
emotional distress claim against Shell for the harassment she asserts was
committed by its employee, Salinas.  Shell
established in its motion for summary judgment in the federal suit that it was
not Garcia’s employer due to the fact that it did not have an employer-employee
relationship with Garcia.  A claim of
sexual harassment is actionable under Title VII only against the plaintiff’s
employer.  Twigland Fashions, 335 S.W.3d at 217–18.  Shell established it was not Garcia’s
employer.  Accordingly, Shell is not among
the class of defendants to which Title VII is meant to apply.  It follows, then, that Title VII does not
preclude any common law causes of action Garcia brought against Shell.  The federal district court granted summary
judgment on Garcia’s sexual harassment claims against Shell because Shell was
not Garcia’s employer.  Because Garcia’s
claims against Shell are not actionable under Title VII, Title VII cannot preclude
any common-law causes of action against Shell.
C.              
Penilla
Penilla, in contrast, was Garcia’s employer.  The claims of sexual harassment alleged by
Garcia, if proven, would support a finding that the sexual harassment
constructively altered the terms or conditions of her employment.  See id.
(holding sexual harassment is actionable under Title VII when it constructively
alters employee’s terms or conditions of employment).  Penilla obtained summary judgment because he
did not have the requisite number of employees to face liability under the
statutory scheme.  
The purpose of the employee-numerosity requirement was to
spare small businesses from Title VII liability and the costs of litigation.  Arbaugh,
546 U.S. at 504, 126 S. Ct. at 1239; Miller,
991 F.2d at 587.  Exposing small
businesses to liability for sexual harassment under common law claims could potentially
thwart the goal of protecting small businesses from the expenses of litigation
and any subsequent liability.  It could
also allow plaintiffs to avoid the damage caps that otherwise apply to larger
businesses under Title VII and Chapter 21 of the Texas Labor Code.  See Waffle
House, 313 S.W.3d at 807 (holding that allowing common law claims to be
pursued when Title VII applied would allow plaintiffs end-run around damage
caps).  There is reason to believe, then,
that Congress meant to include employers with fewer than 15 employees under the
scope of the statutory scheme—effectively displacing any common law causes of
action that could be brought against them—while also excluding them from
liability under that scheme.
We do not need to resolve this issue, however, on this
appeal.  It is undisputed by the parties
that Penilla’s business, Quality Thermo Services, is a sole proprietorship.  A sole proprietorship does not have a
separate legal existence distinct from the operator of the business.  Ideal
Lease Serv., Inc. v. Amoco Prod. Co., Inc., 662 S.W.2d 951, 952 (Tex. 1983).  Accordingly, any claim against the business
was appropriately brought against Penilla individually.  Penilla was also, however, one of the
individuals who, according to Garcia, committed the acts of sexual harassment
against her.  A sexual harassment claim
cannot be brought under the federal statutory scheme against the individual who
allegedly committed the bad acts.  Grant, 21 F.3d at 653.  Because Garcia’s claims against Penilla as
the individual bad actor are not actionable under Title VII, Title VII cannot preclude
any common-law causes of action against him as the bad actor regardless of
whether they would be precluded in a claim against the business had it been a
separate entity.  See Waffle House, 313 S.W.3d at 803 (holding statutory sexual
harassment claim precludes common-law causes of action for claims against employer); Grant, 21 F.3d at 653 (holding Title VII claim cannot be brought
against individual who committed sexual harassment).
We sustain Garcia’s issue as it relates to her intentional
infliction of emotional distress claims against Shell and Penilla.  We overrule Garcia’s issue as it relates to
her Title VII claims against Shell and Penilla.
                                                                                                                                                                   
Conclusion
We affirm the portion of the judgment of the trial court that
grants summary judgment in favor of Shell and Panilla on Garcia’s claims of
sexual harassment.  We reverse the
judgment of the trial court in all other respects and remand the cause for
further proceedings.
 
                                                                   Laura
Carter Higley
                                                                   Justice

 
Panel consists of Justices Keyes, Higley, and Gamble.[7]




[1]           See Garcia v. Shell Oil Co, No. H-08-1734, 2009 WL
2047898, at *5 (S.D. Tex. July 10, 2009).
 


[2]           Id. at *6.
 


[3]           Id.  
 


[4]           At trial and on appeal, Shell asserts that Garcia’s claim
for sexual harassment in her Texas suit was brought under chapter 21 of the
Texas Labor Code.  We disagree.  In her Texas suit petition, Garcia cites
repeatedly to Title VII and federal case law concerning Title VII.  She repeatedly mentions the federal Civil
Right Act of 1964.  She even quotes the
pertinent language on sexual harassment from the federal statute.  In contrast, Garcia makes no mention of or
citation to chapter 21 of the Texas Labor Code anywhere in her petition.  Accordingly, we treat her claim as a Title
VII claim.  See Yellow Freight Sys., Inc. v. Donnelly, 494 U.S. 820, 826, 110
S. Ct. 1566, 1570 (1990) (holding Title VII claim can be brought in state
courts).


[5]           See Barr v. Resolution
Trust Corp., 837 S.W.2d 627, 631 (Tex. 1992).
 


[6]           It is undisputed by the parties that Penilla’s business,
Quality Thermo Services, is a sole proprietorship.  A sole proprietorship does not have a
separate legal existence distinct from the operator of the business.  Ideal
Lease Serv., Inc. v. Amoco Prod. Co., Inc., 662 S.W.2d 951, 952 (Tex.
1983).  Accordingly, any claim against
the business was appropriately brought against Penilla in his individual
capacity.  In addition, Penilla was one
of the individuals who, according to Garcia, committed the acts of sexual
harassment against her.  A sexual
harassment claim under the federal statutory scheme cannot be brought against
the individual who allegedly committed the bad acts.  Grant
v. Lone Star Co., 21 F.3d 649, 653 (5th Cir. 1994).  So we do not consider whether Penilla faces
liability under the sexual harassment statutes as one of the alleged bad
actors.  Instead, we consider whether
Penilla faces liability as the business entity Quality Thermo Services.  See id.
(holding individual is not liable under Title VII unless he meets definition of
“employer”).


[7]           The Honorable Brent Gamble, judge of the 270th District
Court of Harris County, participating by assignment.


