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Texas Employers Fined By OSHA When a Temporary Construction Worker Is Injured After Being Denied Safety Equipment

OSHA News Release: Texas worker injured after being denied safety equipment; employers cited [07/22/2015]

Texas worker injured after being denied safety equipment; employers cited

OSHA fines Cotton Commercial USA and Gardia Construction more than $367K

HOUSTON — Despite his request for a safety harness, a temporary worker without fall protection on a roof later fell 12 feet through the roof. His fall resulted in his hospitalization with fractured arms and severe contusions.

The employer, Cotton Commercial USA Inc. in Katy, Texas, waited three days to report the injury, an investigation by the U.S. Department of Labor’s Occupational Safety and Health Administration found. Federal law requires employers to report such incidents within 24 hours.

OSHA today fined Cotton Commercial $362,500 for seven safety violations, including one willful and four willful egregious. The violations include failing to provide fall protection for four workers, failure to promptly report the hospitalization of an employee resulting from a workplace incident, and not training employees in the use of fall protection and ladders. Cotton Commercial citations are available here.

Gardia Construction, which provided the laborers to Cotton Commercial, received a citation for one serious violation and a fine of $4,900, for failing to conduct frequent and regular inspections of the job site where its laborers worked. The Gardia citations are available here.

“Falls kill workers, but they are preventable,” said Assistant Secretary for Occupational Safety and Health Dr. David Michaels. “Cotton Commercial denied its workers the safety equipment they are required to provide, and the company intentionally waited several days to report the incident and misled OSHA’s inspectors.”

Staffing agencies and host employers are jointly responsible for maintaining a safe work environment for temporary workers. This includes ensuring that OSHA’s training, hazard communications and record-keeping requirements are fulfilled. And for construction workers, this responsibility includes ensuring that frequent and regular inspections of worksites are conducted.

“Cotton Commercial was well aware of how to prevent safety hazard and, in fact, on the following day Cotton made sure all workers were provided with the required safety equipment. It shouldn’t have to take a serious injury for a company to comply with the law,” said OSHA Regional Administrator John Hermanson.

Cotton Commercial employs about 227 workers and operates throughout the U.S. The company provides remediation services for commercial and residential structures damaged from disasters. At the time of the accident, Texas Mutual provided company employees with workers compensation insurance. Its current provider is Affordable Insurance of Texas. Gardia Construction, located in Gretna, La., employs about 80 workers and provides labor to Cotton Commercial. Gardia does not carry workers compensation insurance.

Both employers have 15 business days from receipt of its citations to comply, request an informal conference with OSHA’s Houston South area director, or contest the citations and penalties before the independent Occupational Safety and Health Review Commission.

To ask questions, obtain compliance assistance, file a complaint, or report amputations, eye loss, workplace hospitalizations, fatalities or situations posing imminent danger to workers, the public should call OSHA’s toll-free hotline at 800-321-OSHA (6742) or the agency’s Houston South office at 281-286-0583 or its Houston North office at 281-591-2438.

Under the Occupational Safety and Health Act of 1970, employers are responsible for providing safe and healthful workplaces for their employees. OSHA’s role is to ensure these conditions for America’s working men and women by setting and enforcing standards, and providing training, education and assistance. For more information, visit http://www.osha.gov.

OSHA News Release: [07/22/2015]
Contact Name: Diana Petterson or Juan Rodriguez
Phone Number: (972) 850-4710 or x4709
Email: Petterson.Diana@dol.gov or Rodriguez.Juan@dol.gov
Release Number: 15-1411-DAL

Williams, McClure & Parmelee is dedicated to high quality legal representation of businesses and insurance companies in a variety of matters. We are experienced Texas civil litigation attorneys based in Fort Worth who know Texas courts and Texas law. For more information, please contact the law firm at 817-335-8800. The firm’s new office location is 5601 Bridge Street, Suite 300, Fort Worth, Texas 76112.

Jul 22nd, 2015 Construction Law, Employment Law Defense, Insurance Defense Litigation, Nonsubscriber Law, Workers' Compensation Defense

Striking an Expert Witness in Texas Insurance Indemnity Lawsuit

File: 061624F – From documents transmitted: 04/24/2008
AFFIRMED and Opinion issued April 24, 2008
In The
Court of Appeals
Fifth District of Texas at Dallas
……………………….
No. 05-06-01624-CV
……………………….
WILLIAM BOBBORA AND JAMES THEODORE JONGEBLOED, Appellants
V.
UNITRIN INSURANCE SERVICES F/K/A TRINITY UNIVERSAL
INSURANCE COMPANY, Appellee
…………………………………………………….
On Appeal from the 160th Judicial District Court
Dallas County, Texas
Trial Court Cause No. 04-12458-H
…………………………………………………….
OPINION
Before Justices Moseley, FitzGerald, and Mazzant
Opinion By Justice Moseley
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Unitrin Insurance Services f/k/a Trinity Universal Insurance Company sued William Bobbora and James Theodore
Jongebloed for breach of indemnity agreements, and obtained a jury verdict against Jongebloed. In his first issue, Jongebloed
contends the trial court erred by striking his expert witness. In his second issue, Jongebloed challenges an instruction in the
jury charge. For the reasons set forth herein, we conclude Jongebloed has failed to preserve his first issue for review, and we
resolve Jongebloed’s second issue against him. We affirm the trial court’s judgment.
I. BACKGROUND
Boborra and his wife owned some convenience stores that sold motor vehicle fuel. The stores bought bonds from
Unitrin under which Unitrin, as surety, guaranteed the payment of motor vehicle fuel taxes owed by the stores. Bobbora and
Jongebloed signed indemnity agreements by which they agreed to indemnify Unitrin for “any and all disbursements made by
[Unitrin] in good faith” under those bonds. At issue here are three of these indemnity agreements.
The State claimed that the stores failed to pay their fuel taxes, and the State seized some store accounts and assets. Later,
the State sought payment from Unitrin under the bonds for more than $500,000 for unpaid fuel taxes. Unitrin sought
indemnity from Bobbora and Jongebloed and investigated the amounts owed. The State eventually sued Unitrin. Unitrin
settled the suit regarding some of the stores. The State obtained a judgment regarding other stores, and Unitrin reached a
settlement with the State as to that judgment.
Unitrin sued Bobbora and Jongebloed alleging breach of the indemnity agreements, seeking just over $500,000 for the
amounts it paid the State under the bonds. It also sought expenses in connection with the settlement of the claims under the
bonds, prejudgment interest, and attorney’s fees. Bobbora and Jongebloed initially answered, asserting “defenses and pleas.”
They also asserted counterclaims, one of which was “breach of duty of good faith and fair dealing,” arising from Unitrin’s
“failure to properly evaluate and investigate [the State’s] claim . . . and the amount of credits and offsets due [their
companies] . . . .” Another counterclaim was “bad faith/fraud.”
Bobbora filed for bankruptcy protection, automatically staying the suit. The suit was abated and closed, but
subsequently was reopened and returned to the docket. See Footnote 1 Jongebloed alone filed a second amended answer in
which no counterclaim was asserted. However, Jongebloed asserted the “defenses” of bad faith, lack of good faith, and
breach of the duty of good faith and fair dealing, and he asserted a “credit for payments made.” Before trial, Jongebloed
designated Terry McGee as an expert witness. Unitrin objected and challenged the admissibility of his opinion. After a
hearing, the trial court signed an order striking McGee. See Footnote 2
The case proceeded to a jury trial. The jury found that Unitrin acted in good faith in making payments to the State under
the bonds and that Jongebloed failed to comply with the indemnity agreements. (No liability question was submitted as to
Bobbora.) The jury awarded Unitrin just over $500,000.00 as damages for Jongebloed’s failure to comply with the indemnity
agreements and just over $29,000.00 for investigating and settling claims under the bonds. The trial court rendered judgment
on the jury’s verdict in favor of Unitrin and against Jongebloed in the amount of $529,948.02; the trial court also awarded
pre- and postjudgment interest and attorney’s fees. Appellants’ motion for new trial was denied. This appeal followed. See
Footnote 3
II. EXCLUSION OF EXPERT WITNESS
In his first issue, Jongebloed challenges the trial court’s order striking his expert witness, McGee. Jongebloed argues his
designation of McGee was “procedurally correct” and that McGee was qualified to testify and his testimony was both
relevant and reliable. Unitrin argues, in part, that Jongebloed failed to preserve this error for review by failing to make an
offer of proof of McGee’s testimony.
To preserve error concerning the exclusion of evidence, the complaining party must actually offer the evidence and
secure an adverse ruling from the court. See Fletcher v. Minn. Min. & Mfg. Co., 57 S.W.3d 602, 607 (Tex. App.-Houston [1st
Dist.] 2001, pet. denied). While the reviewing court may be able to discern from the record the nature of the evidence and the
propriety of the trial court’s ruling, without an offer of proof, we can never determine whether exclusion of the evidence was
harmful. See id. at 608 Thus, when evidence is excluded by the trial court, the proponent of the evidence must preserve the
evidence in the record in order to complain of the exclusion on appeal. Id. at 606. See Tex. R. Evid. 103(a), (b). An offer of
proof preserves error for appeal if: (1) it is made before the court, the court reporter, and opposing counsel, outside the
presence of the jury; (2) it is preserved in the reporter’s record; and (3) it is made before the charge is read to the jury.
Fletcher, 57 S.W.3d at 607. When no offer of proof is made before the trial court, the party must introduce the excluded
testimony into the record by a formal bill of exception. See Sw. Country Enters., Inc. v. Lucky Lady Oil Co., 991 S.W.3d 490,
494-95 (Tex. App.-Fort Worth 1999, pet. denied). A formal bill of exception must be presented to the trial court for its
approval, and, if the parties agree to the contents of the bill, the trial court must sign the bill and file it with the trial court
clerk. Bryan v. Watumull, 230 S.W.3d 503, 516 (Tex. App.-Dallas 2007, pet. denied). See Tex. R. App. P. 33.2(c). Failure to
demonstrate the substance of the excluded evidence results in waiver. See Sw. Country Enters., Inc., 991 S.W.2d at 494. See
also Tex. R. App. P. 33.1(a)(1)(B).
As noted above, the record on appeal does not contain a reporter’s record of the hearing on the challenge to McGee. The
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clerk’s record contains an unsworn “Expert Report Prepared by Terry L. McGee” that was attached to Jongebloed’s Second
Supplemental Disclosure Responses. Jongebloed attached this discovery as part of his filed response to Unitrin’s challenge to
McGee. However, filing a document with the trial court is not a sufficient offer of proof. See Malone v. Foster, 956 S.W.2d
573, 577 (Tex. App.-Dallas 1997) (holding deposition on file with trial court not sufficient to make proper bill of exception;
citing McInnes v. Yamaha Motor Corp., U.S.A., 673 S.W.2d 185, 187 (Tex. 1984)), aff’d, 977 S.W.2d 562 (Tex. 1998). There
is nothing in the record showing an offer of proof, a bill of exception, or that the expert report was brought to the trial court’s
attention. Without an offer of proof, Jongebloed has failed to preserve his complaint for review. See Tex. R. Evid. 103; Tex.
R. App. P. 33.1(a)(1)(B); Fletcher, 57 S.W.3d at 607. We need not address Jongebloed’s first issue.
III. JURY CHARGE INSTRUCTION
In his second issue, Jongebloed argues the trial court gave an improper instruction in Question No. 1, specifically, the
italicized language below:
Did [Unitrin] act in good faith in making payments to the State of Texas under the respective bonds?
“Good faith”refers to conduct which is honest in fact, free of improper motive or wilful ignorance of the
facts at hand. It does not require proof of a “reasonable” investigation by the surety.
A.
Applicable Law and Standard of Review
A trial court must submit “such instructions and definitions as shall be proper to enable the jury to render a verdict.”
Tex. R. Civ. P. 277. An instruction is proper if it: (1) assists the jury, (2) accurately states the law, and (3) finds support in the
pleadings and evidence. In re Commitment of Almaguer, 117 S.W.3d 500, 502 (Tex. App.-Beaumont 2003, pet. denied)
(citing Union Pac. R.R. Co. v. Williams, 85 S.W.3d 162, 166 (Tex. 2002)). Rule 277 affords the trial court considerable
discretion in deciding what jury instructions are necessary and proper. Id. (citing Williams, 85 S.W.3d at 166). We review a
trial court’s decision to submit or refuse a particular instruction under an abuse of discretion standard. Shupe v. Lingafelter,
192 S.W.3d 577, 579 (Tex. 2006) (per curiam).
B.
Discussion
At trial, Jongebloed objected as follows to the inclusion of the second sentence:
[W]e have an objection to the definition of good faith that’s being used. We believe the good faith is
defined only by the first sentence that’s there . . . .
The language which is included after that, although it is referenced by the State of Texas, by the Texas
Supreme Court in the Associated Indemnity case [that is, Associated Indemnity Corp. v. CAT Contracting,
Inc., 964 S.W.2d 276, 285 (Tex. 1998)], it seems to be only instructive. It’s not a definition. . . .
The trial court overruled this objection. In his motion for new trial, Jongebloed argued that the second sentence was an
incorrect statement of the law, and, even if correct, it was an improper comment on the weight of the evidence because it was
surplusage.
The instruction in Question No. 1 was taken verbatim from Associated Indemnity Corp. In that case, the supreme court
considered a surety’s duty of good faith to its principal. It concluded that, although no such duty existed at common law, such
a duty did exist as a contract condition in the indemnity agreement before it where the indemnitee was given express
authority to settle claims made in good faith. See id. at 278. The issue before the court was a sufficiency of the evidence
challenge to the trial court’s finding that the surety “acted in bad faith in investigating and settling the claims” with the owner.
Id. at 282. The court analyzed “the appropriate definition of ‘good faith’ (and conversely, ‘bad faith’) under these
circumstances.” Id. at 284. The court considered whether a reasonable investigation was required and rejected that argument,
stating, “[I]n the surety context[,] bad faith requires more than an unreasonable or negligent investigation; it requires wilful
misconduct or improper motive.” Id. Relying on cases concerning settlement of claims by indemnitees in the commercial
paper context, the court said:
We hold that “good faith” in the surety agreement before us refers to conduct which is honest in fact, free
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of improper motive or wilful ignorance of the facts at hand. It does not require proof of a “reasonable”
investigation by the surety. Stating the proposition conversely for purposes of our evidentiary review for this
particular case, “bad faith” means more than merely negligent or unreasonable conduct; it requires proof of an
improper motive or wilful ignorance of the facts.
Id. at 285 (emphasis added).
Here, Bobbora and Jongebloed agreed to indemnify Unitrin for “any and all disbursements made by [Unitrin] in good
faith” under the bonds. The trial court’s submission assisted the jury in understanding the legal meaning of “good faith” in the
surety context and accurately stated the law from Associated Indemnity Corp. See id. Also, it is supported by Jongebloed’s
pleading that Unitrin settled the claims with the State giving rise to the claims at bar “without proper justification and that
such settlements were unreasonable when made” and evidence of Unitrin’s investigation of the amounts owed. Accordingly,
we conclude that, under the facts of this case, submission of the second sentence meets the standard for submitting a proper
instruction or definition. See In re Commitment of Almaguer, 117 S.W.3d at 502.
In reaching this conclusion, we necessarily reject Jongebloed’s argument that the second sentence “directly contradicts
the court’s definition of good faith.” He posits “what is wilful ignorance if it is not the failure to make a reasonable effort to
learn the facts?” The Texas Supreme Court has answered this question adversely to Jongebloed in the surety context, holding
that the indemnitee’s discretion is “limited only by the bounds of fraud.” Assoc. Indem. Corp., 964 S.W.2d at 284 (quoting
Cent. Sur. & Ins. Corp. v. Martin, 224 S.W.2d 773, 776-77 (Tex. Civ. App.-Beaumont 1949, writ ref’d)). As explained more
fully in outlining the standards for good or bad faith in the commercial paper context:
(1) The test is good or bad faith and not diligence or negligence. ([2]) Knowledge of facts merely sufficient to
cause one of ordinary prudence to make inquiry, with failure to make such inquiry, is not evidence of bad
faith. (3) Even gross negligence is not the same thing as bad faith, although it may be evidence tending to
prove bad faith. (4) To constitute evidence of bad faith, the facts known to the taker must be such as
reasonably to form the basis for an inference that in acquiring the instrument with knowledge of such facts he
acted in dishonest disregard of the rights of defendant. (5) Wilful ignorance is the equivalent of bad faith and
bad faith may be shown by a wilful disregard of and refusal to learn the facts when available and at hand.
Citizens Bridge Co. v. Guerra, 152 Tex. 361, 371, 258 S.W.2d 64, 69 (1953) (quoted in part in Associated Indemnity Corp.,
964 S.W.2d at 285).
We also necessarily reject Jongebloed’s argument that the complained-of sentence in the charge is surplusage because
the jury was not asked, in Question No. 1, whether Unitrin conducted a reasonable investigation. The issue being tried was
Unitrin’s good faith, and the instruction as worded informed the jury that whether the surety conducted a reasonable
investigation was not part of that inquiry.
Finally, Jongebloed argues the italicized sentence in the charge is a comment on the weight of the evidence. However, as
noted above, Jongebloed did not object to the charge on this ground before the court read the charge to the jury. Rule of civil
procedure 272 requires a party to object to the court’s charge, either orally or in writing, before the court reads the charge to
the jury. Tex. R. Civ. P. 272; Mitchell v. Bank of Am., N.A., 156 S.W.3d 622, 627 (Tex. App.-Dallas 2004, pet. denied) (citing
State Dep’t of Highways & Pub. Transp. v. Payne, 838 S.W.2d 235, 241 (Tex. 1992)). If the party does not present the
objection to the court before the court reads the charge to the jury, he waives his objection. Tex. R. Civ. P. 274; Mitchell, 156
S.W.3d at 627; Kirkpatrick v. Mem’l Hosp. of Garland, 862 S.W.2d 762, 769 (Tex. App.-Dallas 1993, writ denied). We
conclude Jongebloed has failed to preserve this complaint for review.
We conclude the complained-of sentence meets the standard of a proper instruction or definition. Therefore, we
conclude the trial court did not abuse its discretion in including this sentence in the definition of “good faith.” We resolve
Jongebloed’s second issue against him.
IV. CONCLUSION
Having concluded Jongebloed failed to preserve his first issue for review and resolved Jongebloed’s second issue against
him, we affirm the trial court’s judgment.
JIM MOSELEY
JUSTICE
061624f.p05
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Footnote 1
In an Order Granting Relief from Stay, the bankruptcy judge modified the automatic stay “to authorize and permit [Unitrin]
to proceed to trial in [this case] against Defendant James Theodore Jongebloed.” The bankruptcy judge further ordered “that
if the Trustee elects to pursue the Debtor’s counterclaims against [Unitrin] or abandons the counterclaims or sells the
counterclaims to third party [sic], [Unitrin] shall have the right without further order of this Court to liquidate its claim for
purposes of offset.” The bankruptcy judge also ordered that Unitrin “may take the deposition of [Bobbora] in [this suit] under
the provisions of the Texas Rules of Civil Procedure without further order of this Court.” The case was reopened and
returned to the active docket “so that [Unitrin] can proceed against Defendant James Theodore Jongebloed.”
Footnote 2
No record of this hearing was made.
Footnote 3
Although the style of the case continued to include Bobbora, the only defendant specifically mentioned in subsequent
pleadings was Jongebloed. The judgment states that Jongebloed appeared for trial; it does not so state as to Bobbora, and
indeed does not mention Bobbora. The judgment recites that “it finally disposes of all claims and all parties and is
appealable” and “[a]ll relief not expressly granted herein is denied.” We conclude from the record Bobbora was not part of
the case that was tried and that the judgment is final. See Moritz v. Preiss, 121 S.W.3d 715, 719 (Tex. 2003) (applying
presumption of finality to judgments following trial on merits to judgment not naming all defendants). Both Bobbora and
Jongebloed are listed on the notice of appeal and in appellants’ brief as appellants. Therefore, we retain the style of the case,
as they do, but our opinion addresses the complaints on appeal only as to Jongebloed because no error would result in harm
to Bobbora.
File Date[04/24/2008]
File Name[061624F]
File Locator[04/24/2008-061624F]
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Jul 22nd, 2015 Insurance Defense Litigation

City of Colleyville, Texas Annual Financial Report 2014

CITY OF
COLLEYVILLE, TEXAS
COMPREHENSIVE ANNUAL FINANCIAL REPORT
YEAR ENDED SEPTEMBER 30, 2014
Prepared by
Finance Department
Terry Leake
Assistant City Manager/Chief Financial Officer
Karen Hines
Finance Manager

CITY OF COLLEYVILLE, TEXAS
TABLE OF CONTENTS
YEAR ENDED SEPTEMBER 30, 2014
Page
Number
INTRODUCTORY SECTION
Letter of Transmittal …………………………………………………………………………………………….. 3 – 6
Organizational Chart …………………………………………………………………………………………….. 7
Certificate of Achievement ……………………………………………………………………………………. 8
Principal Officials ………………………………………………………………………………………………… 9
FINANCIAL SECTION
Independent Auditors’ Report………………………………………………………………………………… 13 – 15
Management’s Discussion and Analysis …………………………………………………………………. 19 – 27
Basic Financial Statements
Statement of Net Position …………………………………………………………………………………… 30 – 31
Statement of Activities ……………………………………………………………………………………….. 32 – 33
Balance Sheet – Governmental Funds ………………………………………………………………….. 34 – 35
Statement of Revenues, Expenditures and Changes in
Fund Balances – Governmental Funds ………………………………………………………………. 36 – 37
Reconciliation of the Statement of Revenues, Expenditures
and Changes in Fund Balance of Governmental Funds to the
Statement of Activities …………………………………………………………………………………….. 38
Statement of Revenues, Expenditures and Changes in
Fund Balances – Budget and Actual – General Fund …………………………………………… 39
CITY OF COLLEYVILLE, TEXAS
TABLE OF CONTENTS
(Continued)
YEAR ENDED SEPTEMBER 30, 2014
Page
Number
FINANCIAL SECTION (Continued)
Basic Financial Statements (Continued)
Statement of Net Position – Proprietary Funds………………………………………………………. 40
Statement of Revenues, Expenses and Changes in
Fund Net Position – Proprietary Funds ………………………………………………………………. 41
Statement of Cash Flows – Proprietary Funds ……………………………………………………….. 42 – 43
Statement of Fiduciary Net Position – Fiduciary Funds ………………………………………….. 44
Notes to the Financial Statements ………………………………………………………………………… 45 – 68
Required Supplementary Information
Schedule of Funding Progress for the Retirement Plan …………………………………………… 71
Nonmajor Governmental Funds
Combining Balance Sheet …………………………………………………………………………………… 74 – 79
Combining Statement of Revenues, Expenditures and
Changes in Fund Balances ……………………………………………………………………………….. 80 – 85
Schedule of Revenues, Expenditures and Changes in
Fund Balance – Budget and Actual – Debt Service Fund …………………………………….. 86
Agency Funds
Combining Statement of Fiduciary Net Position ……………………………………………………. 88
Combining Statement of Changes in Assets and Liabilities …………………………………….. 89
CITY OF COLLEYVILLE, TEXAS
TABLE OF CONTENTS
(Continued)
YEAR ENDED SEPTEMBER 30, 2014
Page
STATISTICAL SECTION (Unaudited) Exhibit/Table Number
Net Position by Component ………………………………………………………….. 1 92 – 93
Changes in Net Position ……………………………………………………………….. 2 94 – 97
Fund Balances – Governmental Funds …………………………………………… 3 99
Changes in Fund Balances – Governmental Funds ………………………….. 4 100 – 101
Assessed Value and Estimated Actual Value
of Taxable Property…………………………………………………………………… 5 102
Direct and Overlapping Property Tax Rates ……………………………………. 6 103
Principal Property Taxpayers ………………………………………………………… 7 104
Property Tax Levies and Collections ……………………………………………… 8 105
Principal Water Customers …………………………………………………………… 9 106
Ratios of Outstanding Debt by Type ……………………………………………… 10 107
Ratios of General Bonded Debt Outstanding…………………………………… 11 108
Direct and Overlapping Governmental Activities Debt …………………….. 12 109
Legal Debt Margin Information …………………………………………………….. 13 110
Pledged Revenue Coverage ………………………………………………………….. 14 112 – 113
Demographic and Economic Statistics …………………………………………… 15 114
Principal Employers …………………………………………………………………….. 16 115
Fulltime Equivalent City Government Employees by
Function/Program …………………………………………………………………….. 17 116
Operating Indicators by Function/Program …………………………………….. 18 117
Capital Asset Statistics by Function/Program………………………………….. 19 118
CITY OF COLLEYVILLE, TEXAS
TABLE OF CONTENTS
(Continued)
YEAR ENDED SEPTEMBER 30, 2014
Page
Number
COMPLIANCE
Independent Auditors’ Report on Internal Control Over Financial
Reporting and on Compliance and Other Matters Based on an
Audit of Financial Statements Performed in Accordance with
Government Auditing Standards ………………………………………………………………………….. 121 – 122
1
INTRODUCTORY SECTION
2
THIS PAGE INTENTIONALLY LEFT BLANK
Integrity Service Innovation
January 27, 2015
To the Citizens of the City of Colleyville:
The Comprehensive Annual Financial Report of the City of Colleyville (the “City”) for the fiscal year ended
September 30, 2014, is hereby submitted. Responsibility for both the accuracy of the data, and completeness and
fairness of the presentation, including all disclosures, rests with the City. To the best of our knowledge and belief,
the enclosed data are accurate in all material respects and are reported in a manner designed to present fairly the
financial position, results of operations and cash flows of the various funds of the City. All disclosures necessary
to enable the reader to gain an understanding of the City’s financial activities have been included.
In developing and evaluating the City’s accounting system, consideration is given to the adequacy of internal
accounting controls. These controls are designed to provide reasonable, but not absolute, assurance regarding
the safeguarding of assets against loss from unauthorized use or disposition, and the reliability of financial
records for preparing financial statements and maintaining accountability for assets. The concept of
reasonable assurance recognizes that the cost of a control should not exceed the benefits likely to be derived,
and the evaluation of costs and benefits requires estimates and judgments by management. We believe that
the City’s current system of internal controls adequately safeguards assets and provides reasonable assurance
of proper recording of financial transactions.
As required by the City’s charter, the financial statements have been audited by Pattillo, Brown & Hill,
L.L.P., a firm of certified public accountants. The goal of the independent audit was to provide reasonable
assurances that the financial statements of the City of Colleyville for the fiscal year ended September 30,
2014, are free of material misstatement. The independent audit involved examining on a test basis, evidence
supporting the amounts and disclosures in the financial statements; assessing the accounting principles used
and significant estimates made by management; and evaluating the overall financial statement presentation.
The independent auditor concluded, based upon the audit, that there was a reasonable basis for rendering an
unmodified opinion that the City of Colleyville’s financial statements for fiscal year ended September 30,
2014, are presented in conformity with generally accepted accounting principles (GAAP).
As required by GAAP, management provides a narrative introduction, overview and analysis to
accompany the basic financial statements in the form of Management’s Discussion and Analysis
(MD&A). This letter of transmittal is designed to complement the MD&A and should be read in
conjunction with it. The City’s MD&A can be found immediately following the independent auditors
report.
3
100 Main Street Colleyville, Texas 76034 817.503.1000 Colleyville.com
4
PROFILE OF THE GOVERNMENT
On January 10, 1956, the City of Colleyville was incorporated and adopted a home-rule charter on
January 15, 1977. It has a Council-Manager form of government with policy making and legislative
authority vested in a governing body consisting of a Mayor and six Council members. The Mayor and
Council are responsible for passing ordinances, adopting the budget, appointing board and committee
members, and hiring the City Manager. The City Manager is responsible for carrying out the policies
and ordinances of the Mayor and Council, overseeing the day-to-day operations of the City, and
appointing department heads. The Mayor and six Council members are elected on an at large, nonpartisan
basis for three year terms. The three year terms are staggered so that the Mayor and City
Council persons from Place 1 and 2 are elected in year one, City Council persons from Places 3 and 4
are elected in year two, and City Council persons from Places 5 and 6 are elected in year three.
The City provides a full range of municipal services. These services include police and fire protection,
municipal court, streets, drainage utility, leisure services (parks and recreation, Colleyville Center and
library), water and sewer, engineering/community development, and general administrative services.
Based upon the criterion set forth in generally accepted accounting principles, the following
organizations are includable within the City’s reporting entity:
Entity Method of Inclusion
Colleyville Economic Development Corporation (CEDC) Blended
Colleyville Crime Control and Prevention District Blended
Colleyville Tax Investment Financing Reinvestment Zone
Zone Number One (TIF) Discretely Presented
The City Charter of the City of Colleyville establishes the fiscal year as October 1 through September
30. The Charter requires the City Manager to submit a proposed budget and accompanying budget
message to the City Council each year and the proposed budget is presented to the City Council at a
budget work session. After public hearings at two consecutive regular City Council meetings, the
Council may adopt the proposed budget, with or without amendment. The budget ordinance is to be
adopted no later than the 30th day of September and requires an affirmative vote of a majority of the
Council. The City maintains budgetary control by adopting an annual operating budget for the General
Fund, Debt Service Fund, Drainage Utility Fund, and Water and Sewer Enterprise Fund. Detail control
is maintained at the line item level by encumbering available funds at the time a purchase order is
written. Encumbrances lapse at fiscal year-end, but can be re-appropriated through a budget amendment
during the following fiscal year. The City Manager is authorized to transfer budgeted amounts between
departments within any fund. However, any revisions that alter the total expenditures of any fund must
be approved by the City Council.
LOCAL ECONOMY
The City of Colleyville is a residential-oriented community located 11 miles northeast of the City of Fort
Worth, 22 miles northwest of Dallas and 5 miles west of Dallas/Fort Worth International Airport in
Northeast Tarrant County. Relocations of residents to the City continued in fiscal year 2014, as did
commercial development. During the fiscal year, the City issued 108 residential building permits and
the average square footage of a residence was almost five thousand square feet.
5
In Fiscal Year 2014, Whole Foods opened in an existing shopping center which brought additional sales
tax and new tenants to Colleyville. Major transportation projects which were in progress were Phase I
of State Highway 26 / Colleyville Boulevard, the utility relocations for further phases of State Highway
26 / Colleyville Boulevard, and the roundabout at the Jackson Road and Cheek-Sparger Road
intersection. There is also an update to the comprehensive master plan that will include preparation of a
common vision and goals, future land uses, downtown revitalization, transportation, corridor
recommendations for Colleyville Boulevard, coordination with ongoing utility infrastructure planning,
retail opportunities and economic development, and the development of future land use
recommendations.
For the Future. In Fiscal Year 2015, the aforementioned transportation projects will be complete and
improvements to Pleasant Run Road the rehabilitation of Jackson Road and reconstruction of streets in
the Kingston neighborhood, one of Colleyville’s earliest subdivisions. Noted by the many citizens
responding to the 2014 Citizen Survey, trail improvements are a top priority and trail segments will be
constructed on Pleasant Run from Mission Lane to Bogart Drive and the trail spur at the Webb House on
the Cotton Belt Trail. There is also an update to the City Park, improvements and amenities added to the
trail head at L.D. Lockett Park and the Cotton Belt Trail, and a playground at the Pleasant Run soccer
complex.
LONG TERM FINANCIAL PLANNING
In Fiscal Year 2005, the City Council adopted a Fund Balance Policy requiring a ninety day reserve for
fund balance in both the General Fund and the Utility Fund. In Fiscal Year 2011, the policy was
updated to reflect the designations of non-spendable, restricted, committed, assigned and unassigned as
required by GASB 54 and was reviewed for update in Fiscal Year in 2014. At the end of Fiscal Year
2014, both the General Fund and the Utility Fund have a fund balance in excess of the required three
month reserve. Amount in excess of the reserve may be used to fund one-time capital expenditures.
In Fiscal Year 2010, the City Council adopted a strategic plan, which incorporated strategic points to
achieve the City’s vision. In August 2012, Council affirmed and slightly modified the strategic points to
the following:
 Make a long-term commitment to economic development and promote a more diversified tax
base
 Fostering excellence in core service delivery
 Protect and preserve Colleyville’s neighborhoods
 Deliver sustainable government
 Brand Colleyville with a unique identity
In the area of sustainable government, a long-term Information Systems Management Strategic Plan was
adopted as was the Parks and Recreation Master Plan. These two plans, which were adopted in Fiscal
Year 2011 and Fiscal Year 2012, respectively, identify annual improvements over the next five years
and accompanied by funding sources. In the Fiscal Year 2011 budget, a transition was made to
performance based budgeting, with links to specific performance indicators to measure the efficiency
and effectiveness of service delivery. There is an annual update to the six-year General Fund budget
forecast that is presented to City Council as a part of the budget process.
6
As a part of the Fiscal Year 2008 budget process, the Mayor and Council and City Staff embarked upon
developing a multi-year streets capital improvements program, with input from an appointed citizen
committee that reviewed street infrastructure needs and financing opportunities. In Fiscal Year 2013,
there was an update to this plan and it was expanded to include water, wastewater, drainage, trails, and
sidewalks. The recommendations were incorporated into an infrastructure program that was approved by
Council as a part of the Fiscal Year 2014 budget process.
AWARDS AND ACKNOWLEDGEMENTS
Awards. The Government Finance Officers Association of the United States and Canada (GFOA)
awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Colleyville
for its comprehensive annual financial report for the fiscal year ended September 30, 2013. This was the
twenty fourth consecutive year that the City has received this prestigious award. In order to be awarded
a Certificate of Achievement, a government must publish an easily readable and efficiently organized
comprehensive annual financial report. This report must satisfy both generally accepted accounting
principles and applicable legal requirements.
A Certificate of Achievement is valid for a period of one year only. We believe that our current
comprehensive annual financial report continues to meet the Certificate of Achievement Program’s
requirements and we are submitting it to GFOA to determine its eligibility for another certificate.
In addition, the City also received the GFOA’s Distinguished Budget Presentation award for its annual
budget dated October 1, 2013. In order to qualify for this award, the City’s budget document was
judged to be proficient in several categories, including as a policy document, a financial plan, an
operations guide, and a communications device. The City received the silver member designation for the
Texas Comptroller’s Leadership Circle for online financial transparency.
Acknowledgements. The preparation of this report could not be accomplished on a timely basis
without the dedicated endeavors of the entire staff of the Finance Department. We would like to express
our sincere appreciation to all employees who contributed to the preparation. Additionally, we would
also like to thank the Mayor, City Council, and City Manager for their support in planning and
conducting the financial operations of the City in a responsible and progressive manner.
Respectfully submitted,
Terry Leake
Assistant City Manager/Chief Financial Officer
Karen Hines
Finance Manager
7
CITY
COUNCIL
CITIZENS OF COLLEYVILLE
ZONING BOARD
OF
ADJUSTMENT
PLANNING AND
ZONING
COMMISSION
LIBRARY
BOARD
AD HOC
COMMITTEES
PARKS AND
RECREATION
BOARD
SIGN BOARD
OF APPEALS
CRIME
CONTROL AND
PREVENTION
DISTRICT
TAX
INCREMENT
FINANCING
DISTRICT
CITY
MANAGER
Jennifer Fadden
CITY ATTORNEY
Matthew Boyle
MUNICIPAL
JUDGE
Michael Newman
COLLEYVILLE CENTER
MANAGER
Leslie Hill
HUMAN RESOURCES
DIRECTOR
Michelle Reyes
LIBRARY, PARKS AND
RECREATION
DIRECTOR
Mary Rodne
COMMUNICATIONS
DIRECTOR
Mona Gandy
COMMUNITY
DEVELOPMENT
DIRECTOR
Ron Ruthven
ASSISTANT CITY
MANAGER/
CHIEF FINANCIAL
OFFICER
Terry Leake
POLICE CHIEF
Michael Holder
ECONOMIC
DEVELOPMENT
DIRECTOR
Marty Wieder
PUBLIC
WORKS
DIRECTOR
Bob Lowry
FIRE CHIEF
Brian Riley
FINANCE MANAGER
Karen Hines
CITY SECRETARY
Amy Shelley
WATER AND WASTEWATER OPERATIONS
STREET MAINTENANCE
DRAINAGE
BUILDING MAINTENANCE
FLEET MAINTENANCE
ENGINEERING & CONSTRUCTION INSPECTION
OPERATIONS
INSPECTIONS
INVESTIGATIONS
EMERGENCY MANAGEMENT
UTILITY BILLING
MUNICIPAL COURT
PATROL
INVESTIGATIONS
CODE ENFORCEMENT
BUILDING INSPECTION
PLANNING
INFORMATION
SERVICES MANAGER
Chris Pena
MARKETING
STRATEGIC SERVICES
MANAGER
Adrienne Lothery
GIS
COLLEYVILLE
ECONOMIC
DEVELOPMENT
CORPORATION
8
Government Finance Officers Association
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
City of Colleyville
Texas
For its Comprehensive Annual
Financial Report
for the Fiscal Year Ended
September 30, 2013
9
CITY OF COLLEYVILLE, TEXAS
HOME RULE, COUNCIL – MANAGER
FORM OF GOVERNMENT
CITY OFFICIALS
YEAR ENDED SEPTEMBER 30, 2014
David Kelly
Mayor
Carol Wollin
Councilmember, Place 1
Chuck Mogged
Councilmember, Place 2
Chris Putnam
Councilmember, Place 3
Jody Short
Councilmember, Place 4
Tom Hart
Councilmember, Place 5
Mike Taylor
Mayor Pro Tem and
Councilmember, Place 6
Jennifer Fadden
City Manager
Terry Leake
Assistant City Manager/Chief Financial Officer
Karen Hines
Finance Manager
10
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11
FINANCIAL SECTION
12
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INDEPENDENT AUDITORS’ REPORT
To the Honorable Mayor and
Members of the City Council
City of Colleyville, Texas
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities, the
business-type activities, the discretely presented component unit, each major fund, and the aggregate
remaining fund information of City of Colleyville, Texas, as of and for the year ended September 30,
2014, and the related notes to the financial statements, which collectively comprise the City of
Colleyville, Texas’ basic financial statements as listed in the table of contents.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements
in accordance with accounting principles generally accepted in the United States of America; this
includes the design, implementation, and maintenance of internal control relevant to the preparation and
fair presentation of financial statements that are free from material misstatement, whether due to fraud or
error.
Auditors’ Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We
conducted our audit in accordance with auditing standards generally accepted in the United States of
America and the standards applicable to financial audits contained in Government Auditing Standards,
issued by the Comptroller General of the United States. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial statements are free from
material misstatement.
13
14
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditor’s judgment,
including the assessment of the risks of material misstatement of the financial statements, whether due to
fraud or error. In making those risk assessments, the auditor considers internal control relevant to the
entity’s preparation and fair presentation of the financial statements in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also
includes evaluating the appropriateness of accounting policies used and the reasonableness of significant
accounting estimates made by management, as well as evaluating the overall presentation of the financial
statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinions.
Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects,
the respective financial position of the governmental activities, the business-type activities, the discretely
presented component unit, each major fund, and the aggregate remaining fund information of the City of
Colleyville, Texas, as of September 30, 2014, and the respective changes in financial position, and,
where applicable, cash flows thereof and the respective budgetary comparison for the General Fund, for
the year then ended in accordance with accounting principles generally accepted in the United States of
America.
Change in Accounting Principle
As discussed in Note I to the financial statements, in 2014 the City adopted new accounting
guidance, GASB Statement No. 65, Items Previously Reported as Assets and Liabilities. Our opinion is
not modified with respect to this matter.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the
management’s discussion and analysis on pages 19-27 and the Schedule of Funding Progress for the
Texas Municipal Retirement System on page 71 be presented to supplement the basic financial
statements. Such information, although not a part of the basic financial statements, is required by the
Governmental Accounting Standards Board, who considers it to be an essential part of financial
reporting for placing the basic financial statements in an appropriate operational, economic, or historical
context. We have applied certain limited procedures to the required supplementary information in
accordance with auditing standards generally accepted in the United States of America, which consisted
of inquiries of management about the methods of preparing the information and comparing the
information for consistency with management’s responses to our inquiries, the basic financial
statements, and other knowledge we obtained during our audit of the basic financial statements. We do
not express an opinion or provide any assurance on the information because the limited procedures do
not provide us with sufficient evidence to express an opinion or provide any assurance.
15
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the City of Colleyville, Texas’ basic financial statements. The introductory section,
combining and individual nonmajor fund financial statements and schedules, and statistical section, are
presented for purposes of additional analysis and are not a required part of the basic financial statements.
The combining and individual nonmajor fund financial statements and schedules are the
responsibility of management and were derived from and relate directly to the underlying accounting and
other records used to prepare the basic financial statements. Such information has been subjected to the
auditing procedures applied in the audit of the basic financial statements and certain additional
procedures, including comparing and reconciling such information directly to the underlying accounting
and other records used to prepare the basic financial statements or to the basic financial statements
themselves, and other additional procedures in accordance with auditing standards generally accepted in
the United States of America. In our opinion, the combining and individual nonmajor fund financial
statements and schedules are fairly stated in all material respects in relation to the basic financial
statements as a whole.
The introductory and statistical sections have not been subjected to the auditing procedures
applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or
provide any assurance on them.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated
January 27, 2015, on our consideration of the City of Colleyville, Texas’ internal control over financial
reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and
grant agreements and other matters. The purpose of that report is to describe the scope of our testing of
internal control over financial reporting and compliance and the results of that testing, and not to provide
an opinion on internal control over financial reporting or on compliance. That report is an integral part of
an audit performed in accordance with Government Auditing Standards in considering City of
Colleyville, Texas’ internal control over financial reporting and compliance.
Waco, Texas
January 27, 2015
16
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17
MANAGEMENT’S
DISCUSSION AND ANALYSIS
18
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19
Management’s Discussion and Analysis
As management of the City of Colleyville, we offer readers of the City’s financial statement this
narrative overview and analysis of the financial activities of the City for the fiscal year ended September
30, 2014. We encourage readers to consider the information presented here in conjunction with
additional information that we have furnished in our letter of transmittal, which can be found on pages 3
– 6 of this report.
FINANCIAL HIGHLIGHTS
 The assets of the City of Colleyville exceeded its liabilities as of September 30, 2014,
by $181,580,171 (net position). Of this amount, $32,758,533 (unrestricted net
position) may be used to meet the City’s ongoing obligations to citizens and creditors
in accordance with the City’s fund designation and fiscal policies.
 The City’s total net position increased by $12,643,668.
 As of the close of the current fiscal year, the City of Colleyville’s governmental funds
reported combined ending fund balances of $36,026,409. Of this amount,
$10,080,617 is unassigned fund balance available for use within the City’s fund
designation and fiscal policies.
 As of September 30, 2014, unreserved, unassigned fund balance for the General Fund
was $10,080,617 or 54.4% of the total General Fund budgeted expenditures and other
financing uses.
OVERVIEW OF THE FINANCIAL STATEMENTS
This discussion and analysis is intended to serve as an introduction to the City’s basic financial
statements. The City’s basic financial statements are comprised of three components: (1) governmentwide
financial statements, (2) fund financial statements and (3) notes to the financial statements. This
report also contains other supplementary information in addition to the basic financial statements
themselves.
Government-wide financial statements – The government-wide financial statements, which begin on
page 30 of this report, are designed to provide readers with a broad overview of the City’s finances, in a
manner similar to a private-sector business.
The Statement of Net Position presents information on all of the City’s assets, liabilities, and deferred
inflows/outflows of resources, with the difference between the two reported as net position. Over time,
increases or decreases in net position may serve as a useful indicator of whether the financial position of
the City is improving or deteriorating.
The Statement of Activities presents information showing how the City’s net position changed during
the fiscal year. All changes in net position are reported when the underlying event giving rise to the
change occurs, regardless of the timing of related cash flows.
20
Thus, revenues and expenses are reported in this statement for some items that will only result in cash
flows in the future fiscal periods (e.g., uncollected taxes and earned but unused compensated absences).
Both of the government-wide financial statements distinguish functions of the City that are principally
supported by taxes and intergovernmental revenues (governmental activities) from functions that are
intended to recover all or a significant portion of their costs through user fees and charges (business-type
activities). The governmental activities of the City include General Government, Community
Development and Engineering, Fire and Rescue, Leisure Services, Maintenance, Municipal Court,
Police, and Streets and Drainage. The business-type activities of the City include Water and
Wastewater, and Drainage Utility.
Fund financial statements – A fund is a grouping of related accounts that is used to maintain control
over resources that have been segregated for specific activities or objectives. The City, like other state
and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related
legal requirements. All funds of the City can be divided into two categories – governmental funds and
proprietary funds.
Governmental Funds – Governmental funds are used to account for essentially the same functions
reported as governmental activities in the government-wide financial statements. However, unlike the
government-wide financial statements, governmental fund financial statements focus on current sources
and uses of spendable resources, as well as on balances of spendable resources available at the end of
the fiscal year. Such information may be useful in evaluating a government’s near-term financing
requirements.
Because the focus of governmental funds is narrower than that of the government-wide financial
statements, it is useful to compare the information presented for governmental funds with similar
information presented for governmental activities in the government-wide financial statements. By
doing so, readers may better understand the long-term impact of the government’s near-term financing
decisions. Both the governmental funds balance sheet and the governmental fund statements of
revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this
comparison between governmental funds and governmental activities.
Beginning on page 34 of this report, information is presented separately in the Governmental Fund
Balance Sheet and in the Governmental Fund Statement of Revenues, Expenditures, and Changes in
Fund Balances for the General Fund, Capital Projects and Debt Service Fund, all of which are
considered to be major funds. Data from the other governmental funds are combined into a single,
aggregated presentation. Individual fund data for each of these non-major governmental funds is
provided in the form of combining statements elsewhere in this report.
Proprietary Funds – The City maintains one type of proprietary fund. Enterprise Funds are used to
report the same functions presented as business-type activities in the government-wide financial
statements. The City uses Enterprise Funds to account for the Water and Wastewater and Drainage
Utility Funds.
Proprietary funds provide the same type of information as the government-wide financial statements,
only in more detail. The basic proprietary fund financial statements which begin on page 40 of this
report provide separate information for the Water and Wastewater and Drainage Utility Enterprise Funds
since these are considered to be major funds of the City.
Notes to the Financial Statements – The notes provide additional information that is essential to a full
understanding of the data provided in the government-wide and fund financial statements. The notes to
the financial statements can be found on pages 45 – 68 of this report.
21
Other Information – In addition to the basic financial statements and accompanying notes, this report
also presents combining fund statements and schedules that further support the information in the
financial statements. The combining fund statements and schedules for nonmajor funds are presented
immediately following the notes to the financial statements beginning on page 74 of this report.
GOVERNMENTAL-WIDE FINANCIAL ANALYSIS
As noted earlier, net position may serve over time as a useful indicator of government’s financial
position. In the case of the City of Colleyville, assets exceeded liabilities by $181,580,171 as of
September 30, 2014.
The largest portion of the City’s net position ($131,321,212) reflects its investments in capital assets
(e.g., land, building, equipment, improvements, construction in progress and infrastructure), less any
outstanding debt used to acquire those assets. The City uses these capital assets to provide service to
citizens; consequently, these assets are not available for future spending. Although the City’s
investment in its capital assets is reported net of related debt, it should be noted that the resources
needed to repay this debt must be provided from other sources, since the capital assets themselves
cannot be used to liquidate these liabilities.
CITY OF COLLEYVILLE’S NET POSITION
2014 2013 2014 2013 2014 2013
Current and other assets $ 38,081,951 $ 34,107,679 $ 16,207,650 $ 15,392,384 $ 54,289,601 $ 49,500,063
Capital assets 105,718,089 101,978,118 43,861,991 42,436,223 149,580,080 144,414,341
Total assets 143,800,040 136,085,797 60,069,641 57,828,607 203,869,681 193,914,404
Deferred outflow of resources – – 116,835 – 116,835 –
Total deferred outflow
of resources – – 116,835 – 116,835 –
Other liabilities 3,511,944 3,413,370 2,100,979 2,600,746 5,612,923 6,014,116
Long-term liabilities 15,102,680 16,461,152 1,690,742 2,255,194 16,793,422 18,716,346
Total liabilities 18,614,624 19,874,522 3,791,721 4,855,940 22,406,345 24,730,462
Net position:
Net investment in
capital assets 89,754,051 84,414,252 41,567,161 39,269,943 131,321,212 123,684,195
Restricted 17,500,426 13,116,403 – – 17,500,426 13,116,403
Unrestricted 17,930,939 18,680,620 14,827,594 13,702,724 32,758,533 32,383,344
Total net position $ 125,185,416 $ 116,211,275 $ 56,394,755 $ 52,972,667 $ 181,580,171 $ 169,183,942
Governmental Activities Business-type Activities Totals
A portion of the City’s net position ($17,500,426) represents resources that are subject to external
restriction on how they may be used. The remaining balance ($32,758,533) of unrestricted net position
may be used to meet the City’s ongoing obligation to citizens and creditors in accordance with the City’s
fund designation and fiscal policies.
As of September 30, 2014, the City has positive balances in all three categories of net position, both for
the City as a whole, as well as for its governmental and business-type activities separately. The increase
of $9,132,953 in net position relating to governmental activities is primarily due to the acquisition of
infrastructure improvements from developer contributions, increases in cash due to increases in sales
tax, property tax, and building related revenues, and repayment of long term debt. The increase in net
position of business type activities ($3,510,715) is related to the contributions of water and sewer
infrastructure improvements from developers, repayment of long term debt and from water sales, as a
tiered rate structure has been in place since December 2012, whereby customers who have monthly use
greater than 20,000 gallons pay higher rates in increasing tiers.
22
Analysis of the City’s Operations – The following table provides a summary of the City’s operations
for the year ended September 30, 2014. Governmental activities increased the City of Colleyville’s net
position by $9,132,953. Business-type activities contributed an increase to the City’s net position of
$3,510,715.
CITY OF COLLEYVILLE’S CHANGES IN NET POSITION
2014 2013 2014 2013 2014 2013
Revenues:
Program revenues:
Charges for services $ 3,977,375 $ 3,410,235 $ 15,729,482 $ 15,590,354 $ 19,706,857 $ 19,000,589
Operating grants
and contributions 486,869 468,361 – – 486,869 468,361
Capital grants
and contributions 5,943,465 1,158,050 2,707,835 876,660 8,651,300 2,034,710
General revenues:
Ad valorem taxes 12,950,832 12,497,692 – – 12,950,832 12,497,692
Sales taxes 6,472,195 5,902,557 – – 6,472,195 5,902,557
Franchise taxes 2,172,801 2,074,731 – – 2,172,801 2,074,731
Other taxes 98,160 68,592 – – 98,160 68,592
Investment earnings 39,697 77,269 23,655 38,987 63,352 116,256
Miscellaneous 61,643 85,562 – – 61,643 85,562
Gain on sale of
capital assets 810,020 – 40,814 103,437 850,834 103,437
Total revenues 33,013,057 25,743,049 18,501,786 16,609,438 51,514,843 42,352,487
Expenses:
General government 4,103,928 4,075,001 – – 4,103,928 4,075,001
Community development
and engineering 1,613,311 1,429,755 – – 1,613,311 1,429,755
Fire and rescue 4,625,036 4,529,225 – – 4,625,036 4,529,225
Leisure services 3,776,068 4,106,822 – – 3,776,068 4,106,822
Maintenance 575,696 494,545 – – 575,696 494,545
Municipal court 501,604 586,709 – – 501,604 586,709
Police 5,019,343 4,961,444 – – 5,019,343 4,961,444
Streets and drainage 4,128,365 5,322,510 – – 4,128,365 5,322,510
Water and wastewater – – 13,238,893 12,544,530 13,238,893 12,544,530
Drainage – – 571,886 707,647 571,886 707,647
Interest on
long-term debt 717,045 724,458 – – 717,045 724,458
Total expenses 25,060,396 26,230,469 13,810,779 13,252,177 38,871,175 39,482,646
Increases in net position
before transfers 7,952,661 ( 487,420) 4,691,007 3,357,261 12,643,668 2,869,841
Transfers 1,180,292 1,112,540 ( 1,180,292) ( 1,112,540) – –
Change in net position 9,132,953 625,120 3,510,715 2,244,721 12,643,668 2,869,841
Net position, beginning 116,211,275 115,586,155 52,972,667 50,727,946 169,183,942 166,314,101
Prior period adjustments ( 158,812) – ( 88,627) – ( 247,439) –
Net position, ending $ 125,185,416 $ 116,211,275 $ 56,394,755 $ 52,972,667 $ 181,580,171 $ 169,183,942
Governmental Activities Business-type Activities Totals
23
FINANCIAL ANALYSIS OF THE GOVERNMENT’S FUNDS
Governmental funds – The focus of the City of Colleyville’s governmental funds is to provide
information on near-term inflows, outflows, and balances of spendable resources. Such information is
useful in assessing the City’s financing requirements. In particular, unassigned fund balance may serve
as a useful measure of a government’s net resources available for spending at the end of the fiscal year.
At the end of the current fiscal year, the City of Colleyville’s governmental funds reported combined
ending fund balances of $36,026,409. Approximately 28% of this total amount ($10,080,617)
constitutes unassigned fund balance. The remainder of the fund balance ($25,945,792 ) is reserved to
indicate that it is not available for new spending because it has already been committed to pay for
encumbrances or debt service or to provide for other items. Refer to page 34 of this report for a more
detailed presentation of governmental fund balances.
The decrease of approximately $921,000 in unassigned fund balance in the governmental funds for
fiscal year 2014 is due to a number of the following factors. In the General Fund, the City’s original
budgeted expenditures exceeded budgeted revenues by $(996,880), due to a planned utilization of
$1,000,000 surplus fund balance in the adopted Fiscal Year 2014 General Fund budget to fund a portion
of the $2.9 million street rehabilitation budget, which included a one-time increase of $500,000. This
planned utilization of fund balance in the General Fund was included in the ten year financial forecast,
and the fiscal year 2014 ending fund balance is greater than the three month policy requirement. The
actual decrease to fund balance for the General Fund was ($926,589) for Fiscal Year 2014, primarily due
to greater than anticipated revenues from sales taxes, ambulance revenues, building permits, property
taxes and reductions to overall departmental expenditures. This was $73,411 less than the adopted
utilization of $1 million surplus fund balance in the Fiscal Year 2014 budget. Also included was City
Council approved authorization to provide for a transfer of unspent street maintenance funds at the end
of the fiscal year ($1,903,179) and the authorized transfer of the difference in total revenues and
expenditures of the General Fund to the Capital Projects Fund ($3,308,352) for use in future CIP street
rehabilitation projects and other capital projects. This transfer was funded by the revenue increases
beyond budgeted revenues, the gain of over $800,000 on the sale of the land where the former City Hall
was located, which was not anticipated during Fiscal Year 2014 budget adoption. The aforementioned
year end transfers to the Capital Projects Fund resulted in a net increase of $3,755,890 to that fund
balance, and will be used for future street capital projects. As the aforementioned transfers from the
General Fund to the Capital Projects Fund were contained within funds that are in the governmental
fund classification, there was not a major increase or decrease reflected in the unrestricted total for
governmental funds. Additionally, there was a utilization of $152,666 of surplus fund balance in the
adopted Fiscal Year 2014 Debt Service budget for the second year lease payment on the radio tower and
equipment due to the current level of existing fund balance and declining future debt obligations. The
actual Fiscal Year 2014 decrease to fund balance for the Debt Service Fund was ($29,133) due to greater
than anticipated property tax collections.
Proprietary funds – The City’s proprietary fund statements beginning on page 40 of this report provide
the same type of information found in the government-wide financial statements, but in more detail.
Unrestricted net position of the respective major proprietary funds are Water and Wastewater
($13,291,151), and Drainage Utility ($1,536,443). The Water and Wastewater Fund experienced an
increase in total net position of $3,160,217 during Fiscal Year 2014 due to revenue from the pass
through of the Trinity River Authority wastewater rate increase and the receipt of developer
contributions from the ten new subdivisions, which accounted for approximately $2.4 million. The
Drainage Utility fund’s net position increased by $350,498, due to increased service charge revenue
from new accounts and reductions to expenditures.
24
Governmental Activities – There was an increase in revenues from sales tax due to improving
economic conditions and the capital grants category from increased developer contributions and impact
fees stemming from new development and the addition of ten subdivisions in Colleyville in FY 2014.
There was an increase in license and permit revenues due to an increase of 5 residential building permits
from FY 2013 and additional commercial construction. The property tax base increased approximately
$124 million (3.3%), due to the new residential and commercial construction, and the current year tax
collection rate was over 99.68% of the levy.
In FY 2013, there was a compensation and classification study performed. There was funding in the
Fiscal Year 2014 budget, for bringing employees to the market minimum at a maximum of ten percent
of current salary. There was the addition of three firefighter/paramedics, one police property room clerk
and a plans examiner. There was additional funding of $.5 million in the Street department for the street
overlay budget, which would overlay approximately two miles of city streets. Also, major capital
equipment to be used by the Public Works department was acquired, replacement of audio-video
equipment throughout the City, and an update to the comprehensive master plan.
Business-type Activities – The City has two enterprise operations, the Water and Wastewater Fund and
the Drainage Utility Fund. Total operating revenues of the Water and Sewer fund were $14,789,614 for
the fiscal year. Water revenues decreased due to Stage 1 restrictions due to drought conditions that
limited outdoor watering to two days a week. Wastewater revenues increased due to a rate increase in
December 2013, which passed through a rate increase from the Trinity River Authority, the City’s
provider of treated wastewater. The coverage ratio for debt for this fund was 4.25 for the fiscal year,
exclusive of transfers. The slight increase in the Drainage Utility Fund’s revenues was due to new
residential and commercial construction.
Increases in the Water and Wastewater Fund expenses relate to the increase in cost of purchased water and
treatment of wastewater from Trinity River Authority. The Authority’s rate increase relates to higher cost
for electricity, debt issuance for plant expansion and rehabilitation of aging infrastructure, replacement of
system-wide aging infrastructure and compliance with federal water and wastewater mandates.
General Fund Budgetary Highlights – The City made revisions to the original appropriations
approved by the City Council which resulted in an increase to the General Fund budget of $245,000 for
transfers to the Capital Projects Funds ($200,000) for future expenditures for the SH 26 reconstruction
and ($45,000) to the Capital Equipment Replacement Fund for building inspection software. Also
included with this revision was a City Council adopted authorization to transfer unspent street
resurfacing appropriations to the Capital Projects fund and the difference between total revenues and
expenses for future street capital projects ($3,308,352). This transfer was funded primarily by the
receipt of higher than anticipated sales tax, permit revenues, property tax collections, inspection fees
from the ten new subdivisions, ambulance collections, the revenue from the sale of land of former City
Hall site, and lower than anticipated expenditures due to vacancies. This accounted for the variance in
transfers out from the adopted budget.
In Fiscal Year 2013, there was a compensation and classification study performed. There are funds
included in the Fiscal Year 2014 budget, for bringing employees to the market minimum at a maximum
of ten percent of current salary. Additionally, there was the addition of three firefighter/paramedics, one
police property room clerk, and plans examiner. The level of funding for street maintenance and
rehabilitation was increased by $500,000 to $2.9 million to address needs on the City’s streets.
25
The General Fund’s overall budgeted revenue increased by $1,724,059. Major increases in General
Fund property taxes are due to the declining allocation of the interest and sinking fund rate (Debt
Service portion) to repayment of debt and an increase to the operations and maintenance portion of the
rate (General fund portion), as the total tax rate was unchanged from the prior year. There was a
budgetary and actual increase in sales tax revenue due to improving economic conditions and the
opening of Whole Foods in July 2014. Also, revenue increases were derived from the increase in the
transfer from the Utility Fund for the administrative and franchise fee that is based upon prior year’s
operating revenues due to the implementation of tiered water rates in Fiscal Year 2013. Also included is
the $1,000,000 drawdown of General Fund balance, which funded the increase in the street overlay
budget.
Refer to the General Fund Statement of Revenue, Expenditures and Changes in Fund Balances – Budget
and Actual on page 39 of this report for a detailed presentation of the actual General Fund operations
compared to both the original and final budget for fiscal year 2014.
CAPITAL ASSETS
The City of Colleyville’s investment in capital assets for its governmental and business-type activities as
of September 30, 2014, amounts to $149,580,080 (net of accumulated depreciation). This investment in
capital assets includes land, building, equipment, improvements other than buildings, infrastructure, and
construction work in progress. Major capital asset events occurring during the current fiscal year
included the following:
 Capitalized almost $4.9 million in street improvements and developer contributions,
primarily with the completion of ten new subdivisions.
 Capitalized approximately $2.4 million in water and wastewater system developer
contributions and,
 Capitalized approximately $125,000 in park improvements.
CITY OF COLLEYVILLE’S CAPITAL ASSETS AT YEAR-END
2014 2013 2014 2013 2014 2013
Land $ 9,178,641 $ 9,293,654 $ 304,839 $ 304,839 $ 9,483,480 $ 9,598,493
Buildings and improvements 46,132,834 45,763,755 53,922 53,922 46,186,756 45,817,677
Equipment 10,773,596 10,806,868 2,133,927 1,981,088 12,907,523 12,787,956
Infrastructure/water
distribution sewer collection 84,231,649 79,371,164 72,218,901 69,730,952 156,450,550 149,102,116
Construction in progress 3,831,697 1,796,099 1,715,997 1,114,303 5,547,694 2,910,402
Less: accumulated
depreciation ( 48,430,328) ( 45,053,422) ( 32,565,595) ( 30,748,881) ( 80,995,923) ( 75,802,303)
Total capital assets $ 105,718,089 $ 101,978,118 $ 43,861,991 $ 42,436,223 $ 149,580,080 $ 144,414,341
Governmental Activities Business-type Activities Totals
Additional information on the City’s capital assets can be found in Note 4, pages 57 – 59 of this report.
26
DEBT ADMINISTRATION
At the end of the current fiscal year, the City of Colleyville had total bonded debt, notes payable and
capital lease obligations of $18,189,038. Of this amount, $7,660,000 represents bonded debt backed by
the full faith and credit of the government, $7,330,000 represents bonds secured by sales tax revenues,
$1,310,000 represents bonds secured solely by water and sewer revenues, and $915,000 represents
bonds secured solely by drainage utility system revenues. The City’s capitalized lease obligations of
$974,038 pertain to the prior year lease purchase of a fire pumper truck and mid-mount aerial platform
fire apparatus, and P25 radio tower and equipment conversion.
OUTSTANDING DEBT AT YEAR-END
BONDS, NOTES AND CAPITALIZED LEASE OBLIGATIONS PAYABLE
2014 2013 2014 2013 2014 2013
General obligation bonds
and certificates of
obligation $ 7,660,000 $ 8,675,000 $ – $ – $ 7,660,000 $ 8,675,000
Sales tax revenue bonds 7,330,000 7,600,000 – – 7,330,000 7,600,000
Revenue bonds payable – – 2,225,000 3,220,000 2,225,000 3,220,000
Capitalized lease
obligations 974,038 1,301,624 – – 974,038 1,301,624
$ 15,964,038 $ 17,576,624 $ 2,225,000 $ 3,220,000 $ 18,189,038 $ 20,796,624
Governmental Activities Business-type Activities Totals
The City’s General Obligation, Tax and Water Works and Sewer System Certificates of Obligation, and
Water Works and Sewer System Revenue Bond ratings are listed below.
Standard
Fitch ICBA & Poor’s
General Obligation Bonds AAA AAA
Water Revenue Bonds AAA AAA
During Fiscal Year 2014, the City retained its existing General Obligation bond ratings during the
biannual ratings surveillance process conducted by the rating agencies. The City’s Water Revenue
bonds were upgraded to AAA by Standard & Poor’s and Fitch Ratings reaffirmed their existing AAA
rating. These are the highest bond ratings assigned to municipal debt by both agencies. Additional
information on the City of Colleyville’s long term-debt can be found in footnote 4 on pages 60 – 65 of
this report.
27
ECONOMIC FACTORS AND NEXT YEAR’S BUDGETS AND RATES
The Fiscal Year 2015 General Fund budget including transfers is based on a projected revenue increase
of 7.1% as compared to the Fiscal Year 2014 adopted budget. There is a 7.2% increase projected in
General Fund property tax revenue, due to a declining portion of the total tax rate committed to debt
service repayment (interest and sinking portion) thereby increasing the amount allocated to the General
Fund (operations and maintenance portion), and a 4.7% increase in valuation. This is the largest
revenue source and comprises 54% of General Fund revenues. The total tax rate for Fiscal Year 2015 is
$.3559, which is unchanged since Fiscal Year 2008. Approximately 14% of General Fund revenues are
sales taxes, budgeted at a 11.3% increase over the Fiscal Year 2014 budget, due to improving economic
conditions and the recent opening of Whole Foods. There continues to be planned utilization of
$1,000,000 surplus fund balance in the adopted Fiscal Year 2015 General Fund budget to provide
funding for a portion of the $3.0 million street rehabilitation budget. Additionally, there is a utilization
of $152,666 of fund balance in the adopted Fiscal Year 2015 Debt Service budget for the third year lease
payment on the radio tower and equipment due to the current level of existing fund balance. The use of
unassigned fund balance in both funds is contained in the ten year financial plan.
In FY 2013, there was a compensation and classification study performed. There continues to be
funding included in the Fiscal Year 2015 budget, for bringing the remaining employees to the market
minimum at a maximum of ten percent of current salary. Additionally, there is the addition of three
firefighter/paramedics, one police officer, and an economic development coordinator. There are
technology audio visual upgrades planned for the Municipal Courtroom and Police briefing room and
the first phase of a fiber connectivity project between City buildings, to reduce the need for third party
leased fiber.
Slight revenue growth in the Water and Wastewater Fund will come from additional residential and
commercial customers and the continued use of a tiered water rate structure. There was also the
incorporation of the pass through of projected Trinity River Authority (TRA) rate increases to maintain
the financial stability of the Water and Wastewater Fund in future years.
REQUEST FOR INFORMATION
The financial report is designed to provide our citizens, customers, investors and creditors with a general
overview of the City’s finances. If you have questions about this report or need any additional
information, contact Terry Leake, Assistant City Manager/Chief Financial Officer, at 100 Main Street,
Colleyville, Texas 76034, or call (817) 503-1115.
28
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29
BASIC
FINANCIAL STATEMENTS
Governmental
Activities
Business-type
Activities
ASSETS
Cash and equivalents $ 20,516,799 $ 5,064,510
Investments 15,865,130 7,117,823
Receivables (net of allowances for uncollectibles of $341,247)
Accounts 83,105 2,517,940
Property taxes 177,656 –
Loans 200,000 –
Due from other governments 1,221,332 –
Inventories 1,269 135,391
Accrued interest 16,660 9,258
Restricted assets:
Cash and equivalents 1,362,728
Capital assets:
Land 9,178,641 304,839
Buildings and improvements 46,132,834 53,922
Equipment 10,773,596 2,133,927
Infrastructure/water distribution/sewer collection 84,231,649 72,218,901
Construction in progress 3,831,697 1,715,997
Less: accumulated depreciation ( 48,430,328) ( 32,565,595)
Total capital assets 105,718,089 43,861,991
Total assets 143,800,040 60,069,641
DEFERRED OUTFLOWS OF RESOURCES
Deferred charge on refunding – 116,835
Total deferred outflows of resources – 116,835
LIABILITIES
Accounts payable 1,169,762 795,424
Accrued liabilities 374,439 47,962
Unearned revenues 827 –
Accrued interest payable 99,086 13,967
Advances from developers 193,442 69,000
Escrow funds – 26,613
Customer deposits 65,098 442,785
Noncurrent liabilities:
Due within one year 1,609,290 705,228
Due in more than one year 15,102,680 1,690,742
Total liabilities 18,614,624 3,791,721
NET POSITION
Net investment in capital assets 89,754,051 41,567,161
Restricted:
Debt service 831,073 –
Court security and technology 109,766 –
Grant programs 9,190 –
Leisure services 224,064 –
Economic development 2,733,995 –
Streets and drainage 12,188,836 –
Police 1,403,502 –
Unrestricted 17,930,939 14,827,594
Total net position $ 125,185,416 $ 56,394,755
The accompanying notes are an integral part of these financial statements.
CITY OF COLLEYVILLE, TEXAS
STATEMENT OF NET POSITION
SEPTEMBER 30, 2014
30
Total Component Units
$ 25,581,309 17,473,529
22,982,953 376,099
2,601,045 –
177,656 –
200,000 –
1,221,332 –
136,660 –
25,918 414
1,362,728 –
9,483,480 1,845,976
46,186,756 –
12,907,523 –
156,450,550 8,055,352
5,547,694 –
( 80,995,923) ( 221,374)
149,580,080 9,679,954
203,869,681 27,529,996
116,835 26,120
116,835 26,120
1,965,186 456,744
422,401 –
827 –
113,053 15,394
262,442 –
26,613 –
507,883 –
2,314,518 565,000
16,793,422 3,209,876
22,406,345 4,247,014
131,321,212 5,905,078
831,073 –
109,766 –
9,190 –
224,064 –
2,733,995 –
12,188,836 –
1,403,502 –
32,758,533 17,404,024
$ 181,580,171 $ 23,309,102
31
Functions/Programs Expenses Charges for Services
Operating Grants
and Contributions
Capital Grants and
Contributions
Primary government
Governmental activities:
General government $ 4,103,928 $ 15,000 $ 8 ,449 $ –
Community development 1,613,311 1,387,329 – –
Fire and rescue 4,625,036 377,021 1 1,030 –
Leisure services 3,776,068 510,991 3 66,741 511,449
Maintenance 575,696 – – –
Municipal court 501,604 1,268,447 – –
Police 5,019,343 71,022 1 00,649 –
Streets and drainage 4,128,365 347,565 – 5,432,016
Interest on long-term debt 717,045 – – –
Total governmental activities 25,060,396 3,977,375 4 86,869 5,943,465
Business-type activities:
Water and wastewater 13,238,893 14,789,614 – 2,707,835
Drainage 571,886 939,868 – –
Total business-type activities 13,810,779 15,729,482 – 2,707,835
Total primary government $ 38,871,175 $ 19,706,857 $ 4 86,869 $ 8,651,300
Component unit
Tax increment financing $ 799,787 $ – $ – $ –
Total component unit $ 799,787 $ – $ – $ –
General revenues:
Taxes:
Property taxes, levied for general purposes
Property taxes, levied for debt service
TIF taxes
Sales taxes
Franchise taxes
Other taxes
Investment earnings
Miscellaneous
Gain on sale of capital assets
Transfers
Total general revenues and transfers
Change in net position
Net position – beginning
Prior period adjustment
Net position – ending
The accompanying notes are an integral part of these financial statements.
CITY OF COLLEYVILLE, TEXAS
STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED SEPTEMBER 30, 2014
Program Revenue
32
Governmental
Activities
Business-type
Activities Total Component Units
$( 4,080,479) $ – $( 4,080,479) $ –
( 225,982) – ( 225,982) –
( 4,236,985) – ( 4,236,985) –
( 2,386,887) – ( 2,386,887) –
( 575,696) – ( 575,696) –
766,843 – 766,843 –
( 4,847,672) – ( 4,847,672) –
1,651,216 – 1,651,216 –
( 717,045) – ( 717,045) –
( 14,652,687) – ( 14,652,687) –
– 4 ,258,556 4,258,556 –
– 3 67,982 367,982 –
– 4 ,626,538 4,626,538 –
( 14,652,687) 4 ,626,538 ( 10,026,149) –
– – – ( 799,787)
– – – ( 799,787)
11,800,735 – 11,800,735 –
1,150,097 – 1,150,097 –
– – – 4,756,672
6,472,195 – 6,472,195 –
2,172,801 – 2,172,801 –
98,160 – 98,160 –
39,697 2 3,655 63,352 11,142
61,643 – 61,643 –
810,020 4 0,814 850,834 –
1,180,292 ( 1 ,180,292) – –
23,785,640 ( 1 ,115,823) 22,669,817 4,767,814
9,132,953 3 ,510,715 12,643,668 3,968,027
116,211,275 5 2,972,667 169,183,942 19,409,147
( 158,812) ( 8 8,627) ( 247,439) ( 68,072)
$ 125,185,416 $ 5 6,394,755 $ 181,580,171 $ 23,309,102
Net (Expense) Revenue and Changes in Net Position
Primary Government
33
General Capital Projects Debt Service
ASSETS
Cash and cash equivalents $ 3,276,418 $ 8,546,621 $ 902,356
Investments 7,848,839 4,316,555 –
Receivables (net of allowances for uncollectibles)
Accounts 83,105 – –
Taxes 149,987 – 27,669
Loans 200,000 – –
Due from other governments 642,282 – 134
Inventories 1,269 – –
Accrued interest 9,542 3,230 –
Total assets $ 12,211,442 $ 12,866,406 $ 930,159
LIABILITIES
Accounts payable $ 622,166 $ 545,400 $ –
Accrued liabilities 356,076 – –
Unearned revenue 827 – –
Advances from developers 47,548 132,170 –
Customer deposits 65,098 – –
Total liabilities 1,091,715 677,570 –
DEFERRED INFLOWS OF RESOURCES
Unavailable revenue – property taxes 149,987 – 27,669
Unavailable revenue – municipal fines 15,813 – –
Unavailable revenue – ambulance fees 58,505 – –
Total deferred inflows of resources 224,305 – 27,669
FUND BALANCES
Non-spendable:
Inventories 1,269 – –
Restricted:
Streets and drainage – 12,188,836 –
Debt service – – 902,490
Court security and technology – – –
Grant programs – – –
Leisure services – – –
Economic development – – –
Police – – –
Committed:
Strategic incentives 295,198 – –
Sales tax incentives 518,338 – –
Leisure services – – –
Capital projects – – –
Assigned:
Capital projects – – –
Recycling – – –
Leisure services – – –
Unassigned 10,080,617 – –
Total fund balances 10,895,422 12,188,836 902,490
Total liabilities, deferred inflows of resources, and fund balances $ 12,211,442 $ 12,866,406 $ 930,159
Amounts reported for governmental activities in the statement of net assets are different because:
Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds.
Other long-term assets are not available to pay for current-period expenditures and, therefore are deferred in the funds.
Long-term liabilities are not due and payable in the current period and, therefore, are not reported in the funds.
Net position of governmental activities
The accompanying notes are an integral part of these financial statements.
CITY OF COLLEYVILLE, TEXAS
BALANCE SHEET
GOVERNMENTAL FUNDS
SEPTEMBER 30, 2014
34
Other Governmental
Total Governmental
Funds
$ 7,791,404 $ 20,516,799
3,699,736 15,865,130
– 83,105
– 177,656
– 200,000
578,916 1,221,332
– 1,269
3,888 16,660
$ 12,073,944 $ 38,081,951
$ 2,196 $ 1,169,762
18,363 374,439
– 827
13,724 193,442
– 65,098
34,283 1,803,568
– 177,656
15,813
– 58,505
– 251,974
– 1,269
– 12,188,836
– 902,490
109,766 109,766
9,190 9,190
224,064 224,064
2,733,995 2,733,995
1,403,502 1,403,502
– 295,198
– 518,338
1,191,200 1,191,200
5,602,036 5,602,036
751,902 751,902
1,627 1,627
12,379 12,379
– 10,080,617
12,039,661 36,026,409
$ 12,073,944
105,718,089
251,974
( 16,811,056)
$ 125,185,416
35
General Capital Projects Debt Service
REVENUES
Taxes $ 17,471,967 $ – $ 1,154,810
Fees and fines 925,868 – –
Licenses and permits 1,090,012 – –
Intergovernmental – 550,679 –
Charges for services 1,553,714 – –
Capital improvement fees – 333,496 –
Donations – – –
Investment earnings 22,728 2,944 881
Miscellaneous 61,643 – –
Total revenues 21,125,932 887,119 1,155,691
EXPENDITURES
Current:
General government 3,629,590 11,993 –
Community development and engineering 1,312,081 130,057 –
Fire and rescue 4,159,264 7,500 –
Leisure services 2,334,112 1,403 –
Maintenance 570,011 – –
Municipal court 370,233 – –
Police 4,090,489 5,502 –
Streets and drainage 1,823,463 232,168 –
Debt service:
Principal – – 1,342,586
Interest and other charges – – 343,420
Capital outlay 226,680 1,954,134 –
Total expenditures 18,515,923 2,342,757 1,686,006
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES 2,610,009 ( 1,455,638) ( 530,315)
OTHER FINANCING SOURCES (USES)
Proceeds from long-term debt, net – – –
Payment to bond escrow agent – – –
Sale of capital assets 844,956 – –
Transfers in 1,116,974 5,211,528 501,182
Transfers out ( 5,498,528) – –
Total other financing sources and uses ( 3,536,598) 5,211,528 501,182
NET CHANGE IN FUND BALANCES ( 926,589) 3,755,890 ( 29,133)
FUND BALANCES, BEGINNING 11,822,011 8,432,946 931,623
FUND BALANCES, ENDING $ 10,895,422 $ 12,188,836 $ 902,490
The accompanying notes are an integral part of these financial statements.
FOR THE YEAR ENDED SEPTEMBER 30, 2014
CITY OF COLLEYVILLE, TEXAS
STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
36
Other
Governmental
Total
Governmental
Funds
$ 3,120,467 $ 21,747,244
117,953 1,043,821
– 1,090,012
6,275 556,954
23,850 1,577,564
– 333,496
918,613 918,613
13,144 39,697
15,000 76,643
4,215,302 27,384,044
105,036 3,746,619
164,451 1,606,589
7,981 4,174,745
366,798 2,702,313
– 570,011
130,794 501,027
611,324 4,707,315
– 2,055,631
– 1,342,586
372,808 716,228
1,069,694 3,250,508
2,828,886 25,373,572
1,386,416 2,010,472
7,330,000 7,330,000
( 7,600,000) ( 7,600,000)
80,077 925,033
525,650 7,355,334
( 676,514) ( 6,175,042)
( 340,787) 1,835,325
1,045,629 3,845,797
10,994,032 32,180,612
$ 12,039,661 $ 36,026,409
37
Net change in fund balances – total governmental funds: $ 3,845,797
Governmental funds report capital outlays as expenditures. However, in the
statement of activities, the cost of those assets is allocated over their estimated
useful lives and reported as depreciation expense. ( 1,005,501)
The net effect of transactions involving capital assets is to increase net position. 4,745,472
Revenues, in the statement of activities, that do not provide current financial
resources, are not reported as revenues in the funds. ( 41,492)
The issuance of long-term debt (e.g., bonds, leases) provides current financial
resources to governmental funds, while the repayment of the principal of longterm
debt consumes the current financial resources of governmental funds. 1,599,828
Some expenses reported in the statement of activities do not require the use of
current financial resources and therefore are not reported as expenditures in
governmental funds. ( 11,151)
$ 9,132,953
The accompanying notes are an integral part of these financial statements.
FOR THE YEAR ENDED SEPTEMBER 30, 2014
Amounts reported for governmental activities in the Statement of Activities (pages 32
– 33) are different because:
CITY OF COLLEYVILLE, TEXAS
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
TO THE STATEMENT OF ACTIVITIES
Change in net position of governmental activities
38
Variance with
Final Budget –
Actual Positive
Original Final Amounts (Negative)
REVENUES
Taxes $ 16,625,028 $ 16,625,028 $ 17,471,967 $ 846,939
License and permits 738,751 738,751 1,090,012 351,261
Fees and fines 824,500 824,500 925,868 101,368
Charges for services 1,124,494 1,124,494 1,553,714 429,220
Investment earnings 35,000 35,000 22,728 ( 12,272)
Other 54,100 54,100 61,643 7,543
Total revenues 19,401,873 19,401,873 21,125,932 1,724,059
EXPENDITURES
Current:
General government 3,775,235 3,775,235 3,629,590 145,645
Community development and engineering 1,427,061 1,472,061 1,312,081 159,980
Fire and rescue 4,259,224 4,259,224 4,159,264 99,960
Leisure services 2,629,474 2,629,474 2,334,112 295,362
Maintenance 589,135 589,135 570,011 19,124
Municipal court 389,410 389,410 370,233 19,177
Police 4,172,062 4,172,062 4,090,489 81,573
Streets and drainage 3,840,966 3,840,966 1,823,463 2,017,503
Capital outlay 209,400 209,400 226,680 ( 17,280)
Total expenditures 21,291,967 21,336,967 18,515,923 2,821,044
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES ( 1,890,094) ( 1,935,094) 2,610,009 4,545,103
OTHER FINANCING SOURCES (USES)
Transfers in 1,130,214 1,130,214 1,116,974 ( 13,240)
Transfers out ( 242,000) ( 442,000) ( 5,498,528) ( 5,056,528)
Sale of capital assets 5,000 5,000 844,956 839,956
Total other financing sources and uses 893,214 693,214 ( 3,536,598) ( 4,229,812)
NET CHANGE IN FUND BALANCE ( 996,880) ( 1,241,880) ( 926,589) 315,291
FUND BALANCE, BEGINNING 11,822,011 11,822,011 11,822,011 –
FUND BALANCE, ENDING $ 10,825,131 $ 10,580,131 $ 10,895,422 $ 315,291
The notes to the financial statements are an integral part of this statement.
Budgeted Amounts
CITY OF COLLEYVILLE, TEXAS
STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCE – BUDGET AND ACTUAL
FOR THE YEAR ENDED SEPTEMBER 30, 2014
GENERAL FUND
39
Water and
Wastewater Drainage Utility Total
ASSETS
Current assets:
Cash and cash equivalents $ 3,787,566 $ 1,276,944 $ 5,064,510
Investments 6,898,260 219,563 7,117,823
Accounts receivable, net of allowances 2,414,044 103,896 2,517,940
Inventories 135,391 – 135,391
Restricted assets:
Cash and cash equivalents 1,362,728 – 1,362,728
Total current assets 14,597,989 1,600,403 16,198,392
Non-current assets:
Accrued interest receivable 8,967 291 9,258
Capital assets:
Land and improvements 304,839 – 304,839
Buildings 53,922 – 53,922
Utility system 68,090,537 4,128,364 72,218,901
Equipment and furniture 1,652,954 480,973 2,133,927
Construction in progress 1,571,392 144,605 1,715,997
Less accumulated depreciation ( 31,193,328) ( 1,372,267) ( 32,565,595)
Total non-current assets 40,489,283 3,381,966 43,871,249
Total assets 55,087,272 4,982,369 60,069,641
DEFERRED OUTLOWS OF RESOURCES
Deferred charge on refunding 111,818 5,017 116,835
Total deferred outflows of resources 111,818 5,017 116,835
LIABILITIES
Current liabilities:
Accounts payable 751,458 43,966 795,424
Accrued liabilities 40,889 7,073 47,962
Accrued interest payable 8,675 5,292 13,967
Advances from developers 69,000 – 69,000
Escrow funds 26,613 – 26,613
Customer deposits 442,785 – 442,785
Compensated absences 17,641 2,587 20,228
Revenue bonds payable 460,000 225,000 685,000
Total current liabilities 1,817,061 283,918 2,100,979
Non-current liabilities:
Compensated absences 70,562 10,350 80,912
Revenue bonds payable 919,830 690,000 1,609,830
Total non-current liabilities 990,392 700,350 1,690,742
Total liabilities 2,807,453 984,268 3,791,721
NET POSITION
Net investment in capital assets 39,100,486 2,466,675 41,567,161
Unrestricted 13,291,151 1,536,443 14,827,594
Total net position $ 52,391,637 $ 4,003,118 $ 56,394,755
The accompanying notes are an integral part of these financial statements.
SEPTEMBER 30, 2014
Enterprise Funds
CITY OF COLLEYVILLE, TEXAS
STATEMENT OF NET POSITION
PROPRIETARY FUNDS
40
Water and
Wastewater Drainage Utility Total
OPERATING REVENUES
Metered water sales $ 10,481,393 $ – $ 10,481,393
Wastewater service charges 3,459,501 – 3,459,501
Drainage service charges – 927,356 927,356
Other charges and services 821,258 12,512 833,770
Miscellaneous 27,462 – 27,462
Total operating revenues 14,789,614 939,868 15,729,482
OPERATING EXPENSES
Personnel services 1,447,666 298,866 1,746,532
Maintenance and contractual services 9,670,393 92,399 9,762,792
Materials and supplies 213,690 25,692 239,382
Depreciation and amortization 1,867,549 120,803 1,988,352
Total operating expenses 13,199,298 537,760 13,737,058
OPERATING INCOME 1,590,316 402,108 1,992,424
NON-OPERATING REVENUES (EXPENSES)
Interest and investment revenues 22,107 1,548 23,655
Interest expense and fiscal charges ( 39,595) ( 34,126) ( 73,721)
Gain (loss) on disposal of property 40,814 – 40,814
Total non-operating revenues (expenses) 23,326 ( 32,578) ( 9,252)
INCOME BEFORE CONTRIBUTIONS
AND TRANSFERS 1,613,642 369,530 1,983,172
Capital contributions 2,707,835 – 2,707,835
Transfers out ( 1,161,260) ( 19,032) ( 1,180,292)
CHANGE IN NET POSITION 3,160,217 350,498 3,510,715
TOTAL NET POSITION, BEGINNING 49,299,109 3,673,558 52,972,667
PRIOR PERIOD ADJUSTMENT ( 67,689) ( 20,938) ( 88,627)
TOTAL NET POSITION, ENDING $ 52,391,637 $ 4,003,118 $ 56,394,755
The accompanying notes are an integral part of these financial statements.
CITY OF COLLEYVILLE, TEXAS
STATEMENT OF REVENUES, EXPENSES
AND CHANGES IN FUND NET POSITION
PROPRIETARY FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2014
Enterprise Funds
41
Water and Drainage
Wastewater Utility Totals
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from customers $ 1 4,790,412 $ 942,652 $ 1 5,733,064
Cash paid to suppliers for goods and services ( 1 0,116,720) ( 75,191) ( 1 0,191,911)
Cash paid to employees for services ( 1 ,418,145) ( 301,747) ( 1 ,719,892)
Net cash provided by operating activities 3 ,255,547 565,714 3 ,821,261
CASH FLOWS FROM NONCAPITAL
FINANCING ACTIVITIES
Transfers out ( 1 ,161,260) ( 19,032) ( 1 ,180,292)
Net cash used for noncapital
financing activities ( 1 ,161,260) ( 19,032) ( 1 ,180,292)
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Acquisition of capital assets ( 5 96,456) ( 103,113) ( 6 99,569)
Gain/(loss) on sale of asset 4 0,814 – 4 0,814
Principal paid on debt ( 7 75,000) ( 220,000) ( 9 95,000)
Interest paid on debt ( 3 9,595) ( 34,126) ( 7 3,721)
Net cash used for capital and
related financing activities ( 1 ,370,237) ( 357,239) ( 1 ,727,476)
CASH FLOWS FROM INVESTING ACTIVITIES
(Purchase) sale of investments ( 7 67,983) ( 102,665) ( 8 70,648)
Earnings on investments 2 2,107 1,548 2 3,655
Net cash provided (used) by investing activities ( 7 45,876) ( 101,117) ( 8 46,993)
NET INCREASE IN CASH
AND CASH EQUIVALENTS ( 2 1,826) 88,326 6 6,500
CASH AND CASH EQUIVALENTS, BEGINNING 5 ,172,120 1,188,618 6 ,360,738
CASH AND CASH EQUIVALENTS, ENDING $ 5 ,150,294 $ 1,276,944 $ 6 ,427,238
Enterprise Funds
CITY OF COLLEYVILLE, TEXAS
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2014
42
Water and Drainage
Wastewater Utility Totals
Reconciliation of operating income (loss) to net cash
provided (used) by operating activities:
Operating income $ 1 ,590,316 $ 402,108 $ 1 ,992,424
Adjustments to reconcile operating income (loss)
to net cash provided by (used for) operating activities:
Depreciation and amortization expense 1 ,867,549 120,803 1 ,988,352
Changes in assets and liabilities:
Decrease (increase) in assets:
Accounts receivable 7 98 2,784 3 ,582
Inventory 3 1,926 – 3 1,926
Accrued interest receivable ( 2 ,040) ( 213) ( 2 ,253)
Increase (decrease) in liabilities:
Accounts payable ( 1 97,464) 42,212 ( 1 55,252)
Accrued liabilities ( 2 4,681) ( 1,794) ( 2 6,475)
Compensated absences payable ( 4 ,840) 1,087 ( 3 ,753)
Customer deposits ( 1 ,299) – ( 1 ,299)
Accrued interest payable ( 4 ,718) ( 1,273) ( 5 ,991)
Net cash provided by operations $ 3 ,255,547 $ 565,714 $ 3 ,821,261
Noncash investing, capital, and financing activities:
Contributions of capital assets $ 2 ,707,835 $ – $ 2 ,707,835
The notes to the financial statements are an integral part of this statement.
CITY OF COLLEYVILLE, TEXAS
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
Enterprise Funds
FOR THE YEAR ENDED SEPTEMBER 30, 2014
(Continued)
43
Agency Fund
ASSETS
Cash and investments $ 25,511
Total assets $ 25,511
LIABILITIES
Due to other agencies and individuals $ 25,511
Total liabilities $ 25,511
The accompanying notes are an integral part of these financial statements.
CITY OF COLLEYVILLE, TEXAS
STATEMENT OF FIDUCIARY NET POSITION
FIDUCIARY FUNDS
SEPTEMBER 30, 2014
44
45
CITY OF COLLEYVILLE, TEXAS
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2014
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The City of Colleyville Home Rule Charter was adopted by the voters at an election held on
January 15, 1977. The City operates under a Council-Manager form of government.
The accounting policies of the City of Colleyville, Texas (the “City”) conform to generally
accepted accounting principles as applicable to governmental units. The following is a summary
of the more significant of such policies:
A. Reporting Entity
As required by generally accepted accounting principles, these financial statements present
the government and its component units, entities for which the government is considered to
be financially accountable. Blended component units, although legally separate entities are,
in substance, part of the government’s operations and so data from these units are combined
with data of the primary government. Each directly presented component unit, on the other
hand, is reported in a separate column in the combined financial statements to emphasize it is
legally separate from the government. Each blended component unit has a September 30
year-end.
Blended Component Unit – The Colleyville Economic Development Corporation (CEDC)
was incorporated on September 3, 1996, as a nonprofit industrial development corporation
under the Development Corporation Act of 1979 (“Act”). The CEDC operates under a seven
(7) member Board of Directors appointed by the City Council. Each of the directors shall be
a resident of the City. The Corporation is organized exclusively for the purposes of
benefiting and accomplishing public purposes of and to act on behalf of, the City, and the
specific purposes for which the Corporation is organized. This includes municipal park
improvements, the purchase of land and improvements for additional neighborhood parks,
the construction of a community center and library. Although it is legally separate from the
City, the CEDC is reported as if it were part of the primary government, because CEDC is
financing public improvements and the City is the primary beneficiary of the services
provided.
Blended Component Unit – Colleyville Crime Control and Prevention District (the District)
was formed under Chapter 363 of the Texas Local Government Code, the Crime Control and
Prevention District Act. The District is organized to act on behalf of the City for financing,
development of crime control throughout the City. The District is governed by a sevenmember
board consisting of all members of the City Council. The District is reported as a
part of the primary government because it provides services entirely for the City.
46
Discretely Presented Component Unit – Colleyville Tax Increment Financing Reinvestment
Zone Number One (the TIF) was formed to make public improvements, under the authority
of the Tax Increment Financing Act. The TIF is governed by a nine-member board
consisting of five members appointed by the City Council and one member each appointed
by the four other participating taxing entities. The primary government appoints a voting
majority of the unit’s governing body and the City has a potential economic benefit from this
unit. Therefore, the TIF is presented in the accompanying financial statements as a discretely
presented component unit. Complete financial statements for the TIF may be obtained from
the City of Colleyville Finance Department, 100 Main Street, Colleyville, Texas 76034.
B. Government-wide Fund Financial Statements
The government-wide financial statements (i.e., the statement of net position and the
statement of activities) report information on all of the nonfiduciary activities of the primary
government and its component units. For the most part, the effect of interfund activity has
been removed from these statements. Governmental activities, which normally are supported
by taxes and intergovernmental revenue, are reported separately from business-type
activities, which rely to a significant extent on fees and charges for support. Likewise, the
primary government is reported separately from certain legally separate component units for
which the primary government is financially accountable.
The statement of activities demonstrates the degree to which the direct expenses of a given
function or segment are offset by program revenue. Direct expenses are those that are clearly
identifiable with a specific function or segment. Program revenue includes 1) charges to
customers or applicants who purchase, use, or directly benefit from goods, services, or
privileges provided by a given function or segment, and 2) grants and contributions that are
restricted to meeting the operational or capital requirements of a particular function or
segment. Taxes and other items not properly included among program revenue are reported
instead as general revenue.
Separate financial statements are provided for governmental funds, proprietary funds, and
fiduciary funds, even though the latter are excluded from the government-wide financial
statements. Major individual governmental funds and major individual Enterprise Funds are
reported as separate columns in the fund financial statements.
C. Measurement Focus, Basis of Accounting and Financial Statement Presentation
The government-wide financial statements are reported using the economic resources
measurement focus and the accrual basis of accounting, as are the proprietary fund and
fiduciary fund financial statements, except for Agency Funds, which have no measurement
focus. Revenues are recorded when earned and expenses are recorded when a liability is
incurred, regardless of the timing of related cash flows. Property taxes are recognized as
revenue in the year for which they are levied. Grants and similar items are recognized as
revenue as soon as all eligibility requirements imposed by the provider have been met.
47
Governmental fund financial statements are reported using the current financial resources
measurement focus and the modified accrual basis of accounting. Revenues are recognized
as soon as they are both measurable and available. Revenues are considered to be available
when they are collectible within the current period or soon enough thereafter to pay liabilities
of the current period. For this purpose, the government considers revenue to be available if
collected within 60 days of the end of the current fiscal period. Expenditures generally are
recorded when a liability is incurred, as under accrual accounting. However, debt service
expenditures, as well as expenditures related to compensated absences and claims and
judgments, are recorded only when payment is due.
Property taxes, franchise taxes, sales taxes, and interest associated with the current fiscal
period are all considered to be susceptible to accrual and so have been recognized as revenue
of the current fiscal period. All other revenue items are considered to be measurable and
available only when cash is received by the City.
GOVERNMENTAL FUNDS
Governmental Funds are those through which most governmental functions of the City
are financed. The acquisition, use, and balances of the City’s expendable financial
resources and the related liabilities (except those accounted for in the proprietary fund
type) are accounted for through governmental funds. The measurement focus is upon
determination of changes in financial position, rather than upon net income
determination. The following are the City’s governmental fund types:
The City reports the following major governmental funds:
The General Fund – is the general operating fund of the City. It is used to
account for all financial resources except those required to be accounted for in
another fund.
The Debt Service Fund – is used to account for the acquisition of resources
for, and the payment of, general long-term debt principal and interest, and
related costs.
The Capital Projects Fund – is used to account for financial resources to be
used for the acquisition or construction of general major capital facilities.
Financing is provided primarily by the sale of general obligation bonds and
developer contributions.
Additionally, the City also reports the following fund type:
The Special Revenue Fund – accounts for the revenues and expenditures
associated with a special project or purpose.
PROPRIETARY FUNDS
Proprietary Funds are used to account for activities that are similar to those often found
in the private sector. The measurement focus is upon determination of net income and
capital maintenance.
48
The City reports the following major proprietary funds:
The Water and Wastewater Fund – is used to account for operations (a) that
are financed and operated in a manner similar to private business enterprises –
where the intent of the governing body is that the costs (expenses, including
depreciation) of providing goods or services to the general public on a
continuing basis be financed or recovered primarily through user charges; or
(b) where the governing body has decided that periodic determination of
revenue earned, expenses incurred, and/or net income is appropriate for
capital maintenance, public policy, management control, accountability, or
other purposes. This fund is used to account for water and wastewater
operations.
The Drainage Utility Fund – is used to account for the establishment and
maintenance of drainage facilities within the municipal boundaries of the City.
All activities necessary to provide such facilities are accounted for in this
fund, included but not limited to, administration, operations, maintenance,
billing and collections.
FIDUCIARY FUNDS
Agency Fund – Fiduciary Funds are used to account for assets held by the
City in a trustee capacity or as an agent on behalf of others. Agency funds are
custodial in nature and do not present results of operations or have a
measurement focus. The City has two agency funds: Employee Activity and
the Sesquicentennial Fund. These funds are held for the benefit of City
employees and to benefit the City’s historical purposes.
As a general rule, the effect of interfund activity has been eliminated from the governmentwide
financial statements. Exceptions to this general rule are charges between the City’s
water and wastewater function and various other functions of the government. Elimination
of these charges would distort the direct costs and program revenue reported for the various
functions concerned.
Amounts reported as program revenues include: 1) charges to customers or applicants for
goods, services, or privileges provided, 2) operating grants and contributions, and 3) capital
grants and contributions, including special assessments. Internally dedicated resources are
reported as general revenues rather than as program revenue. Likewise, general revenue
includes all taxes.
Proprietary funds distinguish operating revenues and expenses from nonoperating items.
Operating revenues and expenses generally result from providing services and producing and
delivering goods in connection with a proprietary fund’s principal ongoing operations. The
principal operating revenues of the City’s Enterprise Funds are charges to customers for sales
and services. Operating expenses for Enterprise Funds include the cost of sales and services,
administrative expenses, and depreciation on capital assets. All revenue and expenses not
meeting this definition are reported as nonoperating revenue and expenses.
49
D. Cash and Cash Equivalents
For purposes of the statement of cash flows, the Enterprise Fund considers all highly liquid
investments (investments with original maturities less than 90 days, including restricted
assets) to be cash equivalents.
E. Investments
In accordance with GASB Statement No. 31, the City’s general policy is to report money
market investments and short-term participating interest-earning investment contracts at
amortized cost and to report nonparticipating interest-earning investment contracts using a
cost-based measure. However, if the fair value of an investment is significantly affected by
the impairment of the credit standing of the issuer or by other factors, it is reported at fair
value. All other investments are reported at fair value unless a legal contract exists which
guarantees a higher value. The term “short-term” refers to investments, which have a
remaining term of one year or less at time of purchase. The term “nonparticipating” means
that the investment’s value does not vary with market interest rate changes.
F. Receivables and Payables
Activity between funds that are representative of lending/borrowing arrangements
outstanding at the end of the fiscal year are referred to as either “due to/from other funds”
(i.e., the current portion of interfund loans) or “advances to/from other funds” (i.e., the
noncurrent portion of interfund loans). All other outstanding balances between funds are
reported as “due to/from other funds.” Any residual balances outstanding between the
governmental activities and business-type activities are reported in the government-wide
financial statements as “internal balances.”
Advances between funds, as reported in the fund financial statements, are offset by a fund
balance reserve account in applicable governmental funds to indicate that they are not
available for appropriation and are not expendable available financial resources.
The allowance for utility receivables is the total of final bills that have been sent out by the
City. Final bills are bills that have been sent out to customers that have notified the City of a
discontinuation of service. Ambulance receivables in excess of 180 days comprise the
ambulance allowance for uncollectables. The allowance for uncollectable accounts for
capias warrants is set at 90% of outstanding receivables.
Property taxes are levied on October 1 and attach as an enforceable lien on property as of
January 1. Statements are mailed on October 1, or as soon thereafter as possible, and are due
upon receipt. All unpaid taxes become delinquent if not paid before February 1 of the
following year.
G. Inventories
Inventories in the Enterprise Fund are valued at cost (first-in, first-out method).
50
H. Capital Assets
Capital assets, which include property, plant, equipment and infrastructure assets (e.g. roads,
bridges, sidewalks and similar items) are reported in the applicable governmental or
business-type activities columns in the government-wide financial statements. The City
defines capital assets as assets with an initial, individual cost of more than $5,000 (amount
not rounded) and an estimated useful life in excess of one year. Such assets are recorded at
historical cost or estimated historical cost if purchased or constructed. Donated capital assets
are recorded at estimated fair market value at the date of donation.
The costs of normal maintenance and repairs that do not add to the value of the asset or
materially extend assets’ lives are not capitalized.
Major outlays for capital assets and improvements are capitalized as projects are constructed.
Property, plant and equipment is depreciated using the straight-line method over the
following estimated useful lives:
Assets Years
Buildings 15 – 50
Improvements 20 – 50
Equipment 5 – 10
Infrastructure (streets and drainage) 50
Water distribution/sewer collection 5 – 40
I. Compensated Absences
City employees are granted vacation and sick pay in varying amounts. In the event of
termination, an employee is paid for all accumulated, unused vacation. Vacation pay is
accrued as it vests to the employee. Sick pay is recorded when paid or upon retirement when
a maximum of 90 days is paid. The accrued sick pay is not recorded, as the City’s policy is
not to compensate employees upon separation of services with the City, except for
retirement, and such amounts are not considered material. All vacation pay is accrued when
incurred in the government-wide and proprietary fund financial statements.
J. Long-term Obligations
In the government-wide financial statements and proprietary fund types in the fund financial
statements, long-term debt and other long-term obligations are reported as liabilities in the
applicable governmental activities, business-type activities, or proprietary fund type statement
of net position.
In the fund financial statements, the face amount of debt issued is reported as other financing
sources for the governmental fund types.
For governmental fund types, bond premiums and discounts, as well as issuance costs, are
recognized during the current period. Bond proceeds are reported as another financing source.
Issuance costs, even if withheld from the actual net proceeds received, are reported as
expenditures. For proprietary fund types, bond premiums and discounts, as well as issuance
costs, are charged to current operations rather than being deferred and amortized due to the
relatively immaterial effect on the basic financial statements taken as a whole.
51
K. Fund Balance Classification
The governmental fund financial statements present fund balances based on classifications that
comprise a hierarchy that is based primarily on the extent to which the City is bound to honor
constraints on the specific purposes for which amounts in the respective governmental funds
can be spent. The classifications used in the governmental fund financial statements are as
follows:
 Nonspendable: This classification includes amounts that cannot be spent because
they are either (a) not in spendable form or (b) are legally or contractually required to
be maintained intact. Nonspendable items are not expected to be converted to cash or
are not expected to be converted to cash within the next year.
 Restricted: This classification includes amounts for which constraints have been
placed on the use of the resources either (a) externally imposed by creditors, grantors,
contributors, or laws or regulations of other governments, or (b) imposed by law
through constitutional provisions or enabling legislation.
 Committed: This classification includes amounts that can be used only for specific
purposes pursuant to constraints imposed by board resolution of the City Council, the
City’s highest level of decision making authority. These amounts cannot be used for
any other purpose unless the Council removes or changes the specified use by taking
the same type of action that was employed when the funds were initially committed.
This classification also includes contractual obligations to the extent that existing
resources have been specifically committed for use in satisfying those contractual
requirements.
 Assigned: This classification includes amounts that are constrained by the City’s
intent to be used for a specific purpose but are neither restricted nor committed. This
intent can be expressed by the City’s Assistant City Manager/Chief Financial Officer.
 Unassigned: This classification includes the residual fund balance for the General Fund.
The unassigned classification also includes negative residual fund balance of any other
governmental fund that cannot be eliminated by offsetting of assigned fund balance
amounts.
When an expenditure is incurred for purposes for which both restricted and unrestricted fund
balance is available, the City considers restricted funds to have been spent first. When an
expenditure is incurred for which committed, assigned, or unassigned fund balances are
available, the City considers amounts to have been spent first out of committed funds, then
assigned funds, and finally unassigned funds.
L. Minimum Unassigned Fund Balance
It is the goal of the City to achieve and maintain an unassigned fund balance in the General
Fund equal to three months of that year’s budgeted expenditures for both the General and
Utility Funds. The City Council may declare a fiscal emergency and withdraw any amount
of the unassigned General and Utility Funds’ balances for purposes of addressing the fiscal
emergency. Any such action must also provide for necessary appropriations to restore the
designated fund balance to the balance within a three-year period.
52
M. Net Position Flow Assumption
Sometimes the City will fund outlays for a particular purpose from both restricted (e.g.,
restricted bond or grant proceeds) and unrestricted resources. In order to calculate the
amounts to report as restricted – net position and unrestricted – net position in the
government-wide and proprietary fund financial statements, a flow assumption must be made
about the order in which the resources are considered to be applied. It is the City’s policy to
consider restricted – net position to have been depleted before unrestricted – net position is
applied.
N. Deferred Outflows/Inflows of Resources
In addition to assets, the statement of financial position will sometimes report a separate
section for deferred outflows of resources. This separate financial statement element,
deferred outflows of resources, represents a consumption of net position that applies to a
future period(s) and so will not be recognized as an outflow of resources
(expense/expenditure) until then. The government only has one item that qualifies for
reporting in this category. It is the deferred charge on refunding reported in the governmentwide
statement of net position. A deferred charge on refunding results from the difference in
the carrying value of refunded debt and its reacquisition price. This amount is deferred and
amortized over the shorter of the life of the refunded or refunding debt.
In addition to liabilities, the statement of financial position will sometimes report a separate
section for deferred inflows of resources. This separate financial statement element, deferred
inflows of resources, represents an acquisition of net position that applies to a future
period(s) and so will not be recognized as an inflow of resources (revenue) until that time.
The government has only one type of item, which arises only under a modified accrual basis
of accounting, that qualifies for reporting in this category. Accordingly, the item, unavailable
revenue, is reported only in the governmental funds balance sheet. The governmental funds
report unavailable revenues from two sources: property taxes, municipal fines and ambulance
fees. These amounts are deferred and recognized as an inflow of resouces in that period that
the amounts become available.
O. Estimates
The preparation of financial statements, in conformity with generally accepted accounting
principles, requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosures of contingent liabilities at the date of the
financial statements and the reported amounts of revenue and expenses during the reporting
period. Actual amounts could differ from those estimates.
P. Risk Management
Insurance coverage for property, liability and workers’ compensation is provided by the
Texas Municipal League Intergovernmental Risk Pool, a state insurance pool. Contributions
to the Risk Pool for workers’ compensation are based on the City’s past claims history. The
Risk Pool is self-sustaining through members’ contributions and maintains insurance to limit
risk of loss with an external insurance company. Settlement claims have not exceeded
aggregate limits in the past three fiscal years.
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2. RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS
Explanation of Certain Differences Between the Governmental Fund Balance Sheet and the
Government-wide Statement of Net Position
The governmental fund balance sheet includes a reconciliation between fund balance – total
governmental funds and net position – governmental activities as reported in the governmentwide
statement of net position. One element of that reconciliation explains, “Long-term
liabilities are not due and payable in the current period and therefore are not reported in the
funds.” The details of this $(16,811,056) difference are as follows:
Bonds payable $( 14,990,000)
Capital leases payable ( 974,038)
Accrued interest payable ( 99,086)
Compensated absences ( 747,932)
Net adjustment to reduce fund balance – total
governmental funds to arrive at net assets –
governmental activities $( 16,811,056)
Explanation of Certain Differences Between the Governmental Fund Statement of Revenue,
Expenditures and Changes in Fund Balances and the Government-wide Statement of Activities
The governmental fund statement of revenue, expenditures and changes in fund balances includes
a reconciliation between net changes in fund balances – total governmental fund and changes in
net position of governmental activities as reported in the government-wide statement of activities.
One element of that reconciliation explains, “Governmental funds report capital outlays as
expenditures. However, in the statement of activities the cost of those assets is allocated over their
estimated useful lives and reported as depreciation expense.” The details of this $(1,005,501)
difference are as follows:
Capital outlay $ 3,064,252
Depreciation expense ( 4,069,753)
Net adjustment to increase net changes in fund balances –
total governmental funds to arrive at changes in net
assets of governmental activities $( 1,005,501)
Another element of that reconciliation states, “Revenues in the statement of activities that do not
provide current financial resources are not reported as revenues in the funds.” The details of this
$(41,492) difference are as follows:
Property taxes $( 53,256)
Ambulance revenue 1,395
Adjudicated fines 10,369
Net adjustment to increase net changes in fund balances –
total governmental funds to arrive at changes in net
assets of governmental activities $( 41,492)
54
Another element of that reconciliation states, “The issuance of long-term debt (e.g., bonds,
leases) provides current financial resources to governmental funds, while the repayment of the
principal of long-term debt consumes the current financial resources of governmental funds.”
Neither transaction, however, has any effect on net position. The details of this $1,599,828
difference are as follows:
Principal payments and refundings $ 1,329,828
Debt refunding – proceeds ( 7,330,000)
Payment to escrow agent 7,600,000
Net adjustment to reduce fund balance -total
governmental funds to arrive at net assets –
governmental activities $ 1,599,828
Another element of that reconciliation states, “Some expenses reported in the statement of
activities do not require the use of current financial resources, and therefore are not reported as
expenditures in governmental funds.” The details of this ($11,151) difference are as follows:
Compensated absences $( 23,092)
Accrued interest 11,941
Net adjustment to decrease net changes in fund balances –
total governmental funds to arrive at changes in net
assets of governmental activities $( 11,151)
3. STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY
A. Budgetary Information
The City Council follows these procedures in establishing budgetary data reflected in the
basic financial statements:
(1) Prior to September 1, the City Manager submits to the City Council a
proposed operating budget for the fiscal year commencing the following
October 1. The operating budget includes proposed expenditures and the
means of financing them.
(2) Public hearings are conducted to obtain taxpayer comments.
(3) Prior to September 30, the budget is legally enacted through passage of an
ordinance.
(4) The City Manager is authorized to transfer budgeted amounts between
departments within any fund; however, any revisions that alter the total
expenditures of any fund must be approved by the City Council.
(5) Formal budgetary integration is employed as a management control device
during the year for the General, Debt Service, and Enterprise Funds.
Budgetary control is maintained at the fund level.
55
Internal budgets are prepared and reviewed by the City Council for
expenditures of Special Revenue Funds. These budgeted expenditures are not
formally adopted by the City Council. No budgets were prepared for revenue
of these funds for the year ended September 30, 2014.
(6) Budgets for the General and the Debt Service Funds are adopted on a basis
consistent with generally accepted accounting principles (GAAP). Formal
budgeted amounts are as amended by the City Council for the General, Debt
Service and Enterprise Funds.
(7) Budgetary data for the Capital Projects Fund has not been presented in the
accompanying basic financial statements, as such funds are budgeted over the
life of the respective project and not on an annual basis. Accordingly, formal
budgetary integration of the Capital Projects Fund is not employed and
comparison of actual results of operations to budgetary data for such fund is
not presented.
(8) Budgetary data for the Enterprise and Drainage Utility Funds has not been
presented since the reporting on such budgets is not legally required.
Expenditures Over Appropriations
Capital Outlay expenditures in the general government function exceeded appropriations
by $17,280. This overage was funded by under spending in other functions.
4. DETAILED NOTES ON ALL FUNDS
Deposits and Investments
As of September 30, 2014, the City had the following investments:
Fair Weighted Average
Investment Type Value Maturity (Days)
LOGIC $ 23,826,230 59
U. S. Treasuries and Agencies 23,149,366 372
Total fair value $ 46,975,596
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The Public Funds Investment Act (Government Code Chapter 2256) contains specific provisions
in the areas of investment practices, management reports and establishment of appropriate
policies. Among other things, it requires the City to adopt, implement, and publicize an
investment policy. That policy must address the following areas: (1) safety of principal and
liquidity, (2) portfolio diversification, (3) allowable investments, (4) acceptable risk levels, (5)
expected rates of return, (6) maximum allowable stated maturity of portfolio investments, (7)
maximum average dollar-weighted maturity allowed based on the stated maturity date for the
portfolio, (8) investment staff quality and capabilities, and (9) bid solicitation preferences for
certificates of deposit. Statutes authorize the City to invest in (1) obligations of the U. S.
Treasury, certain U. S. agencies, and the State of Texas; (2) certificates of deposit, (3) certain
municipal securities, (4) money market savings accounts, (5) repurchase agreements, (6) bankers
acceptances, (7) Mutual Funds, (8) investment pools, (9) guaranteed investment contracts, and
(10) common trust funds. The Act also requires the City to have independent auditors perform
test procedures related to investment practices as provided by the Act. The City is in substantial
compliance with the requirements of the Act and with local policies.
The City’s investment pools are 2a7-like pools. A 2a7-like pool is one which is not registered
with the Securities and Exchange Commission (“SEC”) as an investment company, but
nevertheless has a policy that it will, and does, operate in a manner consistent with the SEC’s
Rule 2a7 of the Investment Company Act of 1940.
Interest Rate Risk. In accordance with its investment policy, the government manages its
exposure to declines in fair market values by limiting the average dollar weighted maturity of its
investment portfolios to a maximum of 540 days.
Custodial Credit Risk. The City maintains a cash and investment pool that combines cash of the
various funds in order to maximize investment opportunities. The City’s policy and state statutes
require that all deposits in financial institutions be insured by the Federal Depository Insurance
Corporation (FDIC) or fully collateralized as per the Public Funds Collateral Act. The City’s
deposits were fully insured or collateralized as required by state statutes as of September 30,
2014.
Credit Risk. It is the City’s policy to limit its investments to investment types with an
investment quality rating not less than A or its equivalent by a nationally recognized statistical
rating organization. The City’s investment pools are rated as follows by Standard & Poor’s
Investors Service.
LOGIC AAAm
U. S. Treasuries and Agencies AA+
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Receivables
Receivables as of year-end for the government’s individual major funds, nonmajor funds and
enterprise funds in the aggregate, including the applicable allowances for uncollectible accounts,
are as follows:
Capital Debt Nonmajor Water and Drainage
General Projects Service Funds Wastewater Utility Total
Receivables:
Accounts $ 555,973 $ – $ – $ – $ 2,440,124 $ 103,896 $ 3,099,993
Taxes 149,987 – 27,669 – – – 177,656
Due from other
governments 642,282 – 134 578,916 – – 1,221,332
Loans 200,000 – – – – – 200,000
Accrued interest 9,542 3,230 – 3,888 8,967 291 25,918
Gross receivables 1,557,784 3,230 27,803 582,804 2,449,091 104,187 4,724,899
Less: allowance for
uncollectibles ( 472,868) – – – ( 26,080) – ( 498,948)
Net total receivables $ 1,084,916 $ 3,230 $ 27,803 $ 582,804 $ 2,423,011 $ 104,187 $ 4,225,951
Governmental Funds Enterprise Funds
The City’s property tax is levied each October 1 on the assessed value listed as of the prior
January 1 for all real property and certain personal property located in the City. Tax liens attach
as of January 1. The assessed value, net of exemptions, upon which the fiscal 2014 levy was
based, was $3,915,488,086.
Property taxes are limited by the Texas constitution to $2.50 per $100 of assessed valuation and
by City Charter to $1.50 per $100 valuation. Also, the tax rate set per budget year shall not
result in property tax revenue increase greater than seven percent of the total property tax
revenue collected in the preceding budget year, adjusted for new construction, unless authorized
by the voters of the City at a special election. The combined tax rate to finance general
governmental service and debt service for the year ended September 30, 2014, was $.3559 per
$100 of assessed valuation.
Taxes are due by January 31 following the levy date. Tax collections, including related penalties
and interest, was $13,004,088 for the year ended September 30, 2014. Property taxes receivable
at September 30, 2014, were $177,656.
The appraisal of property within the City is the responsibility of a countywide appraisal district
as required by legislation passed by the Texas Legislature. The appraisal district is required
under such legislation to assess all property within the appraisal district on the basis of 100% of
its appraised value and is prohibited from applying any assessment ratios. The value of property
within the appraisal district must be reviewed every three years; however, the City may, at its
own expense, require annual reviews of appraised values. The City may challenge appraised
values established by the appraisal district through various appeals and, if necessary, legal action.
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Capital Assets
Capital asset activity for the year ended September 30, 2014, was as follows:
Primary Government
Beginning Ending
Balance Increases Decreases Balance
Governmental activities:
Capital assets, not being depreciated:
Land $ 9,293,654 $ – $( 115,013) $ 9,178,641
Construction in progress 1,796,099 2,056,132 ( 20,534) 3,831,697
Total assets not being depreciated 11,089,753 2,056,132 ( 135,547) 13,010,338
Capital assets, being depreciated:
Buildings and improvements 45,763,755 369,079 – 46,132,834
Machinery and equipment 10,806,868 581,083 ( 614,355) 10,773,596
Infrastructure 79,371,164 4,860,485 – 84,231,649
Total capital assets being depreciated 135,941,787 5,810,647 ( 614,355) 141,138,079
Less accumulated depreciation:
Buildings and improvements ( 14,468,175) ( 1,478,711) – ( 15,946,886)
Machinery and equipment ( 7,826,632) ( 905,809) 692,848 ( 8,039,593)
Improvements other than buildings ( 22,758,615) ( 1,685,234) – ( 24,443,849)
Total accumulated depreciation ( 45,053,422) ( 4,069,754) 692,848 ( 48,430,328)
Total capital assets being depreciated, net 90,888,365 1,740,893 78,493 92,707,751
Governmental activities capital
assets, net $ 101,978,118 $ 3,797,025 $( 57,054) $ 105,718,089
Beginning Ending
Balance Increases Decreases Balance
Business-type activities:
Capital assets, not being depreciated:
Land $ 304,839 $ – $ – $ 304,839
Construction in progress 1,114,303 601,694 – 1,715,997
Total assets not being depreciated 1,419,142 601,694 – 2,020,836
Capital assets, being depreciated:
Buildings and improvements 53,922 – – 53,922
Machinery and equipment 1,981,088 317,761 ( 164,922) 2,133,927
Improvements other than buildings 69,730,952 2,487,949 – 72,218,901
Total capital assets being depreciated 71,765,962 2,805,710 ( 164,922) 74,406,750
Less accumulated depreciation:
Buildings and improvements ( 48,951) ( 622) – ( 49,573)
Machinery and equipment ( 2,565,370) ( 186,968) 164,922 ( 2,587,416)
Improvements other than buildings ( 28,134,560) ( 1,794,046) – ( 29,928,606)
Total accumulated depreciation ( 30,748,881) ( 1,981,636) 164,922 ( 32,565,595)
Total capital assets being depreciated, net 41,017,081 824,074 – 41,841,155
Business-type activities capital assets, net $ 42,436,223 $ 1,425,768 $ – $ 43,861,991
59
Beginning Ending
Balance Increases Decreases Balance
Component unit:
Capital assets, not being depreciated:
Construction in progress $ 5,893,512 $ 2,161,840 $ – $ 8,055,352
Total assets not being depreciated 5,893,512 2,161,840 – 8,055,352
Capital assets, being depreciated:
Improvements other than buildings $ 1,808,520 $ 37,456 $ – $ 1,845,976
Total capital assets being depreciated 1,808,520 37,456 – 1,845,976
Less accumulated depreciation:
Improvements other than buildings $( 180,852) $( 40,522) $ – $( 221,374)
Total accumulated depreciation ( 180,852) ( 40,522) – ( 221,374)
Total capital assets being depreciated, net 1,627,668 ( 3,066) – 1,624,602
Component unit capital assets, net $ 7,521,180 $ 2,158,774 $ – $ 9,679,954
Depreciation expense was charged to functions/programs of the primary government as follows:
Governmental activities:
General government $ 410,956
Community Development 4,873
Fire and rescue 445,486
Leisure services 1,070,645
Maintenance 5,029
Police 306,610
Streets and drainage 1,826,154
Total depreciation expense – governmental activities $ 4,069,753
Business-type activities:
Water and wastewater $ 1,861,548
Drainage utility 120,088
Total depreciation expense – business-type activities $ 1,981,636
Construction Commitments
The government has active construction projects as of September 30, 2014. The major projects
are listed as follows:
Remaining
Project Spent-to-date Commitment
Jackson/Cheek Sparger roundabout $ 1,730,538 $ 422,985
Hwy 26 waterline/sewerline relocation project 624,875 2,344,985
Total $ 2,355,413 $ 2,767,970
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Interfund Transactions
The composition of interfund transfers as of September 30, 2014, is as follows:
Interfund Transfers
Nonmajor
Capital Debt Government
General Projects Service Funds Total
Transfer Out:
General $ – $ 5,211,528 $ – $ 287,000 $ 5,498,528
Nonmajor governmental – – 501,182 175,332 676,514
Drainage fee – – – 19,032 19,032
Water and wastewater 1,116,974 – – 44,286 1,161,260
Total Transfers Out $ 1,116,974 $ 5,211,528 $ 501,182 $ 525,650 $ 7,355,334
Transfer In
The transfer of $1,116,974 from the Utility Fund to the General Fund represents the 2014
Administrative transfer and the franchise fee based on gross water and wastewater revenue of the
prior year’s audited financial statements. The transfer of $5,498,528 from the General Fund to
the Capital Projects and nonmajor governmental funds represents transfers for capital
replacement. The transfer of $501,182 from the Crime District to the Debt Service Fund is for
the repayment of debt. All principal and interest is paid from the Debt Service Fund’s bank
account.
Long-term Liabilities
General Obligation Bonds
The government issues general obligation bonds to provide funds for the acquisition and
construction of major capital facilities. General obligation bonds have been issued for
governmental activities. The original amount of general obligation bonds issued in prior years
was $29,315,000.
General obligation bonds are direct obligations and pledge the full faith and credit of the
government. These bonds generally are issued as 20-year serial bonds with equal amounts of
principal maturing each year. General obligation bonds currently outstanding are as follows:
Purpose Interest Rates Amount
Governmental activities 2% – 5% $ 14,990,000
$ 14,990,000
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Long-term liability activity for the year ended September 30, 2014, was as follows:
Balance Balance Amounts
September 30, September 30, Due Within
2013 Additions Retirements Refunded 2014 One Year
Governmental activities
General obligation bonds and
certificates of obligation $ 8,675,000 $ – $ 1,015,000 $ – $ 7,660,000 $ 740,000
Premium on bonds 4,593 – 4,593 – – –
Sales tax revenue bonds 7,623,186 7,330,000 23,186 7,600,000 7,330,000 395,000
Capital lease obligations 1,301,624 – 327,586 – 974,038 324,704
Compensated absences 724,840 375,359 352,267 – 747,932 149,586
Total governmental activities 18,288,706 7,705,359 1,682,095 7,600,000 16,711,970 1,609,290
Business-type activities
Revenue bonds and certificates
of obligation 3,220,000 – 995,000 – 2,225,000 685,000
Premium on bonds 79,805 – 9,975 – 69,830 –
Compensated absences 104,893 43,094 46,847 – 101,140 20,228
Total business-type activities 3,404,698 43,094 1,051,822 – 2,395,970 705,228
Total primary government $ 21,693,404 $ 7,748,453 $ 2,733,917 $ 7,600,000 $ 19,107,940 $ 2,314,518
Component unit
Tax increment financing fund
revenue bonds $ 4,225,000 $ – $ 555,000 $ – $ 3,670,000 $ 565,000
Bond premium 125,852 – 20,976 – 104,876 –
Total component unit $ 4,319,508 $ – $ 544,632 $ – $ 3,774,876 $ 565,000
For the governmental activities, compensated absences are generally liquidated by the General
Fund.
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Governmental activities long-term liabilities at September 30, 2014, consisted of the following:
$2,915,000 Series 2006 General Obligation Refunding bonds
due in annual installments of $25,000 to $540,000 through
February 15, 2019; interest at 3.64%. 2,475,000
$4,325,000 Series 2007 General Obligation Bonds due in
annual installments of $50,000 to $555,000 through February
15, 2027; interest at 4.00% to 5.00%. 4,275,000
$1,435,000 Series 2011 General Obligation Refunding Bonds
due in annual installments of $135,000 to $800,000 through
February 15, 2020; interest at 2.00% to 4.00%. 910,000
Total General Obligation Bonds and Certificates of Obligation $ 7,660,000
General obligation bonds and certificates of obligation serviced by property tax revenue:
$9,570,000 Series 2013 Colleyville Economic Development
Corporation Refunding and Improvement Sales Tax Revenue
Bonds due in annual installments of $340,000 to $635,000
through February 15, 2029; interest at 2.88% $ 7,330,000
Total Revenue Bonds $ 7,330,000
The government issued $7,330,000 of sales tax revenue refunding bonds to provide resources to
purchase U. S. Government State and Local Government securities that were placed in an
irrevocable trust for the purchase of generating resources for all future debt service payments of
$7,600,000 of sales tax revenue refunding. As a result, the refunded bonds are considered to be
defeased and the liability has been removed from the governmental activities column of the
statement of net position. The reacquisition price exceeded the net carrying amount of the old
debt by $270,000. This amount is being netted against the new debt and amortized over the
remaining life of the new debt, which is shorter than the life of the old debt issued. This advance
refunding was undertaken to reduce total debt service payments over the next 15 years by
$693,082 and resulted in an economic gain of $539,838.
The funds utilized for the repayment of long-term liabilities for governmental activities are the
Debt Service Fund, the Crime District Fund and the Colleyville Economic Development
Corporation.
The City’s defeased debt as of September 30, 2014, was $10,770,000.
Business-type activities long-term liabilities at September 30, 2014, consisted of the following:
$1,890,000 Series 2010 Waterworks and Wastewater System
Refunding Bonds due in annual installments of $155,000 to
$580,000 through January 1, 2018; interest at 2.00% – 3.00%. 1,310,000
Total Water and Wastewater Fund $ 1,310,000
Water and Wastewater Fund:
63
Drainage Utility Fund:
$1,135,000 Series 2011 Waterworks and Wastewater System
Refunding Bonds due in annual installments of $105,000 to
$225,000 through February 15, 2021; interest at 3.47%. $ 915,000
Total Drainage Utility Fund $ 915,000
Total Business-type activities $ 2,225,000
The ordinances authorizing the issuance of Waterworks and Wastewater System Revenue Bonds
created the Interest and Sinking Fund and Reserve Fund. The gross revenue of the waterworks
and wastewater system, after deduction of reasonable expenses of operations and maintenance,
are pledged to such funds in amounts equal to the total annual principal and interest requirements
of the bonds and amounts required to maintain the Reserve Fund. At September 30, 2014, the
City was in compliance with these requirements.
The City’s component unit, the Tax Increment Financing District, long-term liabilities at
September 30, 2014, consisted of the following:
$4,225,000 Series 2011 Refunding Bonds due in installments
of $490,000 to $665,000 beginning in 2012 through February
15, 2020; interest at 2.0% to 4.0%. $ 3,670,000
Total Tax Increment Financing District $ 3,670,000
Tax Increment Financing District
September 30, Principal Interest Principal Interest
2015 $ 740,000 $ 278,384 $ 395,000 $ 205,416
2016 770,000 251,258 410,000 193,824
2017 795,000 223,179 420,000 181,872
2018 810,000 194,388 425,000 169,704
2019 850,000 163,825 445,000 157,176
2020-2024 2,105,000 542,900 2,430,000 582,624
2025-2029 1,590,000 97,400 2,805,000 206,712
$ 7,660,000 $ 1,751,334 $ 7,330,000 $ 1,697,328
Governmental Activities
General
Obligation Bonds and
Certificates of Obligation Revenue Bonds
64
September 30, Principal Interest
2015 $ 685,000 $ 57,947
2016 450,000 42,446
2017 460,000 28,291
2018 265,000 16,899
2019 115,000 10,670
2020-2024 250,000 8,675
$ 2,225,000 $ 164,928
Business-type Activities
Revenue Bonds
September 30, Principal Interest
2015 $ 565,000 $ 114,675
2016 585,000 97,425
2017 600,000 79,650
2018 615,000 61,425
2019 640,000 39,400
2020-2024 665,000 13,300
$ 3,670,000 $ 405,875
Discretely Presented Component Unit –
Tax Increment Financing Fund
Revenue Bonds
Capital Leases
The City has entered into lease agreements as lessee for financing and acquisition of equipment
for the Fire Department. These lease agreements qualify as capital leases for accounting
purposes and, therefore, have been recorded at the present value of its future minimum lease
payments as of the inception date.
The assets acquired through capital leases are as follows:
Governmental
Activities
Asset:
Machinery and equipment $ 2,564,713
Less: accumulated depreciation ( 518,333)
Total $ 2,046,380
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The future minimum lease obligations and the net present value of these minimum lease
payments as of September 30, 2014, were as follows:
Governmental
Activities
2015 $ 363,808
2016 314,086
2017 161,419
2018 116,839
2019 116,839
Total minimum lease payments 1,072,991
Less: amount representing interest ( 98,953)
Present value of minimum lease payments $ 974,038
Employees’ Retirement System
Plan Description
The City provides pension benefits for all of its eligible employees through a non-traditional, joint
contributory, hybrid defined benefit plan in the statewide Texas Municipal Retirement System
(TMRS), an agent multiple-employer public employee retirement system. The plan provisions that
have been adopted by the City are within the options available in the governing state statutes of
TMRS.
TMRS issues a publicly available comprehensive annual financial report that includes financial
statements and required supplementary information (RSI) for TMRS; the report also provides
detailed explanations of the contributions, benefits and actuarial methods and assumptions used by
the System. This report may be obtained from TMRS’ website at www.TMRS.com.
The plan provisions are adopted by the governing body of the City, within the options available in
the state statutes governing TMRS. Plan provisions for the City were as follows:
Plan Year 2012 Plan Year 2013 Plan Year 2014
Employee deposit rate 7.0% 7.0% 7.0%
Matching ratio (city to employee) 2 to 1 2 to 1 2 to 1
Years required for vesting 5 5 5
Service retirement eligibility
(expressed as age/years of service) 60/5, 0/20 60/5, 0/20 60/5, 0/20
Updated service credit 100% repeating, 100% repeating, 100% repeating,
transfers transfers transfers
Annuity increase (to retirees) 0% of CPI 0% of CPI 0% of CPI
66
Contributions
Under the state law governing TMRS, the contribution rate for each city is determined annually by
the actuary, using the Entry Age Normal (EAN) cost method (EAN was first used in the December
31, 2013 valuation; previously, the Projected Unit Credit actuarial cost method had been used).
This rate consists of the normal cost contribution rate and the prior service cost contribution rate,
which is calculated to be a level percent of payroll from year to year. The normal cost contribution
rate for an employee is the contribution rate which, if applied to a member’s compensation
throughout their period of anticipated covered service with the municipality, would be sufficient to
meet all benefits payable on their behalf. The salary-weighted average of the individual rates is the
total normal cost rate. The prior service contribution rate amortizes the unfunded (overfunded)
actuarial liability (asset) over the applicable period for that city. Both the normal cost and prior
service contribution rates include recognition of the projected impact of annually repeating
benefits, such as Updated Service Credits and Annuity Increases.
The City contributes to the TMRS Plan at an actuarially determined rate. Both the employees
and the City make contributions monthly. Since the City needs to know its contribution rate in
advance for budgetary purposes, there is a one-year delay between the actuarial valuation that
serves as the basis for the rate and the calendar year when the rate goes into effect. The annual
pension cost and net pension obligation/(asset) are as follows:
Accounting Annual Percentage Net
Year Pension of APC Pension
Ending Cost (APC) Contributed Obligation
09/30/12 $ 817,843 100% –
09/30/13 743,803 100% –
09/30/14 754,871 100% –
The required contribution rates for fiscal year 2014 were determined as part of the December 31,
2011 and 2012 actuarial valuations. Additional information as of the latest actuarial valuation,
December 31, 2013, also follows:
Actuarial Valuation Date 12/31/11 12/31/12 12/31/13
Actuarial cost method Projected Unit Credit Projected Unit Credit Entry Age Normal
Amortization method Level percent Level percent Level percent
of payroll of payroll of payroll
Asset valuation method 10-year smoothed 10-year smoothed 10-year smoothed
market market market
Actuarial Assumptions:
Investment rate of return 7.0% 7.0% 7.0%
Projected salary increases varies by age varies by age varies by age
and service and service and service
Inflation 3.0% 3.0% 3.0%
Cost-of-living adjustments 0% 0% 0%
GASB 25 Equivalent Single 27.3 years; 26.8 years; 27.7 years;
amortization period closed period closed period closed period
Amortization period for
new gains/losses 25 years 25 years 25 years
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Funded Status and Fund Progress
The funded status as of December 31, 2013, the most recent actuarial valuation date, is presented
as follows:
Acturarial accrued liability (AAL) $ 42,047,025
Acturarial value of plan assets 43,722,138
Unfunded (overfunded) actuarial accrued liability (UAAL) ( 1,675,113)
Funded ratio (actuarial value of plan assets/ALL) 104.0%
Covered payroll (annual payroll of active
employees covered plan) 10,452,089
UAAL as a percentage of covered payroll ( 16.0%)
Actuarial valuations involve estimates of the value of reported amounts and assumptions about
the probability of events far into the future. Actuarially determined amounts are subject to
continual revision as actual results are compared to past expectations and new estimates are
made about the future. Actuarial calculations are based on the benefits provided under the terms
of the substantive plan in effect at the time of each valuation, and reflect a long-term perspective.
Consistent with that perspective, actuarial methods and assumptions used include techniques that
are designed to reduce short-term volatility in actuarial accrued liabilities and the actuarial value
of assets.
The schedule of funding progress, presented as Required Supplementary Information following
the notes to the financial statements, presents multi-year trend information about whether the
actuarial value of plan assets is increasing or decreasing over time relative to the actuarial
accrued liability of benefits.
Water and Wastewater Contracts
The City has two contracts with the Trinity River Authority of Texas (TRA) for the purchase of treated
water and for the transportation, treatment and disposal of sanitary sewage and other waste. The initial
terms of the contracts are 35 and 50 years, and they expire in 2014 and 2023. While the provisions of
each of the contracts vary, each contract basically requires the City to pay varying amounts based on
the costs associated with water purchased and sewage transported and/or treated and disposed. The
cost includes the City’s proportionate share of TRA’s operating and maintenance expenses, related debt
service costs, and certain other miscellaneous charges. Purchases of treated water and charges for the
transportation, treatment and disposal of sewage and other wastes during fiscal year 2014 amounted to
approximately $7,315,501 and $1,899,907, respectively.
Advances from Developers
Developers are required by ordinance to construct perimeter streets and related storm drainage
facilities. The developer may request a waiver from the Council for the construction requirements
and instead deposit escrow funds with the City equal to one-half of the estimated cost of
construction, which are utilized by the City to complete the project at some later date. At September
30, 2014, developers had escrowed $3,004,790 with the City in connection with developer
agreements.
Contingent Liabilities
The City has been named as a defendant or co-defendant in a number of legal actions. While the
outcome of these cases is not known at this time, City management believes that any awards to
insured parties which must be paid in excess of amounts covered by insurance will not be
material to the financial position of the City.
68
Risk Financing and Insurance
The City is exposed to various risks of loss related to torts, theft of, damage to, and destruction
of assets; errors and omissions; injuries to employees; and natural disasters. During the fiscal
year 1974, the City joined the Texas Municipal League Workers Compensation Joint Insurance
Fund for risks related to employees. During the fiscal year 1992, the City joined the Texas
Municipal League Joint Insurance Fund for risks related to general liability, property and errors
and omissions. Premiums are paid to the Pool, which retains a limit of loss. Reinsurance
companies insure the risks beyond those limits. The City retains, as a risk, only the deductible
amount of each policy. There have been no significant reductions in insurance coverage and no
settlements exceeded insurance coverage in the past three fiscal years.
Other Postemployment Benefits
Supplemental Death Benefits Fund
The City also participates in the cost sharing multiple-employer defined benefit group term life
insurance plan operated by the Texas Municipal Retirement System (TMRS) known as the
Supplemental Death Benefits Fund (SDBF). The City elected, by ordinance to provide group
term life insurance coverage to both current and retired employees. The City may terminate
coverage under and discontinue participation in the SDBF by adopting an ordinance before
November 1 of any year to be effective the following January 1.
The death benefit for active employees provides a lump sum payment approximately equal to the
employee’s annual salary (calculated based on the employee’s actual earnings, for the 12-month
period preceding the month of death); retired employees are insured for $7,500; this coverage is
an “other postemployment benefit,” or OPEB.
The City’s contributions to the TMRS SDBF for the years ended 2014, 2013, and 2012 were
$16,837, 15,132, and $14,480, respectively, which equaled the required contributions each year.
Annual Actual
Accounting Required Contribution Percentage
Year Contribution Made of ARC
Ending (Rate) (Rate) Contributed
09/30/12 .013% .013% 100%
09/30/13 .015% .015% 100%
09/30/14 .016% .016% 100%
Schedule of Contribution Rates
Prior Year Adjustment – Change in Accounting Principles
As a result of implementing GASB Statement 65, the City has decreased beginning net position
as of October 1 2014 by $158,812 for the governmental activities and $88,627 for the businesstype
activities. These decreases result from no longer deferring and amortizing bond issuance
costs.
Further, the City has reclassified its deferred loss on bond refunding, previously reported as a
component of long-term debt, to deferred outflows of resources in the government-wide
statements in accordance with GASB 65. The effect of this change increases the long-term
liabilities of the business-type activities by $133,525, and corresponds to an increase in deferred
outflows of resources as of October 1, 2014.
69
REQUIRED
SUPPLEMENTARY INFORMATION
70
THIS PAGE INTENTIONALLY LEFT BLANK
71
CITY OF COLLEYVILLE, TEXAS
REQUIRED SUPPLEMENTARY INFORMATION
TEXAS MUNICIPAL RETIREMENT SYSTEM
SCHEDULE OF FUNDING PROGRESS
Unfunded
Actuarial Actuarial Actuarial Actuarial Annual Accrued Liability
Valuation Value of Accrued Funded Accrued Covered as a Percentage
Date Assets Liability Ratio Liability Payroll of Covered Payroll
12/31/2011 38,477,205 36,643,865 1 05.0% ( 1,833,340) 9,661,349 ( 1 9.0%)
12/31/2012 41,091,987 38,639,275 1 06.3% ( 2,452,712) 9,940,381 ( 2 4.7%)
12/31/2013 43,722,138 42,047,025 1 04.0% ( 1,675,113) 10,542,089 ( 1 6.0%)
72
NONMAJOR GOVERNMENTAL FUNDS
SPECIAL REVENUE FUNDS
Special Revenue Funds are used to account for specific revenues that are legally restricted to
expenditure for particular purposes.
Voluntary Park – This fund is used to account for the operations for which voluntary
contributions by citizens are used. Contributions are used primarily to support park
activities.
Voluntary Library – This fund is used to account for the operations for which voluntary
contributions by citizens are used. Contributions are used primarily to support library
activities.
Police Asset Forfeiture –This fund is used to account for activity related to seizure of assets
in criminal-related activities.
Tree Preservation – This fund is used to account for operations related to replacement of
trees, which are eliminated due to commercial development. Contributions are received from
entities that are developing the property.
Library Donation – This fund is used to account for private and corporate donations for
capital purchases related to the library building for the City.
Recreational Event – This fund is used to account for activities related to special events for
the City.
Colleyville Center Development – This fund is used to account for contributions received to
construct a community center.
Recycling – This fund is used to account for the promotion of recycling activities in the City
of Colleyville. Contributions are received from the holder of the City’s recycling franchise.
LEOSE (Law Enforcement Officer Standards and Education) – This fund is used to
account for activities related to the continuing education of qualified law enforcement
officers as funded by the State of Texas LEOSE Account.
Colleyville Economic Development – This fund is used to account for the use of bond
proceeds and sales tax revenues for municipal park improvements, the purchase of land and
equipment for additional neighborhood parks and for the construction of a community center
and library.
Crime District – This fund is used to account for the Colleyville Crime Control and
Prevention District formed to act on behalf of the City for financing the development of
crime control throughout the City.
73
Kidsville Maintenance – This fund is used to account for contributions received for the
maintenance of Kidsville Playground.
Special Donations – This fund is used to account for various donations made to the City for
specific projects.
Court Technology – This fund is used to account for the collection and use of fines collected to
be specifically used on technology for the court.
Court Security – This fund is used to account for the collection and use of fines collected to be
specifically used for security purposes.
TDPA Grant – This fund is used to account for grant proceeds received for the acquisition of
equipment and expenditures relating to fire and rescue.
Public Art – This fund is used to account for the acquisition of art to be placed in City owned
facilities with high public visibility.
Juvenile Case Manager – This fund is used to account for staff, whose primary role is handling
juvenile defendants in terms of teen court dockets, all school violations including truancy, failure
to attend school and parental noncompliance violations, and mandatory classes for drug, tobacco
and alcohol defendants, as permitted by state statute.
CAPITAL PROJECTS FUNDS
Capital Projects Funds are used to account for the acquisition and construction of major capital
facilities other than those financed by proprietary funds and trust funds.
Colleyville Tomorrow Fund – is used to account for proceeds received on gas leases on Cityowned
property to be used for capital purchases.
Parks Tomorrow Fund – This fund is used to account for proceeds received on gas leases on
City-owned parks property for parks capital projects.
Park Land Dedication Fund – This fund is used to account for the acquisition of land for new
park sites and to make improvements to or expand existing parks to better serve new
development. Fees collected from the developers of residential and commercial development
finance the improvements.
Colleyville Economic Development Corporation (CEDC) – This fund is used to account for
financial resources to be used for the acquisition or construction or CEDC capital facilities.
Financing is provided primarily by the revenue from certificate of obligation bonds.
Capital and Cable Equipment Replacement – This fund is used to account for the replacement
of cable equipment and other capital equipment.
Kimzey Park – This fund is used to account for the construction of Kimzey Park. The source of
funding was a Texas Parks and Wildlife state grant.
Voluntary Park
Voluntary
Library
Police Asset
Forfeiture
ASSETS
Cash and cash equivalents $ 161,080 $ 44,837 $ 4,188
Investments 599,816 358,841 –
Due from other governments – – –
Accrued interest 648 423 –
Total assets $ 761,544 $ 404,101 $ 4,188
LIABILITIES
Accounts payable $ – $ – $ –
Accrued liabilities – – –
Advances from developers – – –
Total liabilities – – –
FUND BALANCES
Restricted – – 4,188
Committed 761,544 404,101 –
Assigned – – –
Total fund balances 761,544 404,101 4,188
Total liabilities and fund balances $ 761,544 $ 404,101 $ 4,188
CITY OF COLLEYVILLE, TEXAS
COMBINING BALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS
SEPTEMBER 30, 2014
Special Revenue Funds
74
Tree
Preservation
Library
Donation
Recreational
Event
Colleyville
Center
Development Recycling LEOSE
$ 39,279 $ 135,259 $ 4,475 $ 5,857 $ 1,627 $ 1,057
– – – – – –
– – – – – –
– – – – – –
$ 39,279 $ 135,259 $ 4,475 $ 5,857 $ 1,627 $ 1,057
$ – $ – $ – $ – $ – $ –
– – – – – –
13,724 – – – – –
13,724 – – – – –
– 135,259 – 5,857 – 1,057
25,555 – – – – –
– – 4,475 – 1,627 –
25,555 135,259 4,475 5,857 1,627 1,057
$ 39,279 $ 135,259 $ 4,475 $ 5,857 $ 1,627 $ 1,057
Special Revenue Funds
75
Colleyville
Economic
Development Crime District
Kidsville
Maintenance
ASSETS
Cash and cash equivalents $ 1,910,535 $ 1,150,357 $ 20,426
Investments 511,531 – –
Due from other governments 313,595 265,321 –
Accrued interest 209 – –
Total assets $ 2,735,870 $ 1,415,678 $ 20,426
LIABILITIES
Accounts payable $ 1,875 $ 122 $ –
Accrued liabilities – 16,242 –
Advances from developers – – –
Total liabilities 1,875 16,364 –
FUND BALANCES
Restricted 2,733,995 1,399,314 20,426
Committed – – –
Assigned – – –
Total fund balances 2,733,995 1,399,314 20,426
Total liabilities and fund balances $ 2,735,870 $ 1,415,678 $ 20,426
NONMAJOR GOVERNMENTAL FUNDS
SEPTEMBER 30, 2014
(Continued)
CITY OF COLLEYVILLE, TEXAS
COMBINING BALANCE SHEET
Special Revenue Funds
76
Special
Donations
Court
Technology Court Security TDPA Grant Public Art
Juvenile Case
Manager
$ 62,522 $ 28,672 $ 73,039 $ 8 ,133 $ 7 ,904 $ 10,196
– – – – – –
– – – – – –
– – – – – –
$ 62,522 $ 28,672 $ 73,039 $ 8 ,133 $ 7 ,904 $ 10,196
$ – $ – $ – $ – $ – $ 20
– – 393 – – 1,728
– – – – – –
– – 393 – – 1,748
62,522 28,672 72,646 8 ,133 – 8,448
– – – – – –
– – – – 7 ,904 –
62,522 28,672 72,646 8 ,133 7 ,904 8,448
$ 62,522 $ 28,672 $ 73,039 $ 8 ,133 $ 7 ,904 $ 10,196
Special Revenue Funds
77
Colleyville
Tomorrow
Parks
Tomorrow
Park Land
Dedication
ASSETS
Cash and cash equivalents $ 1,848,708 $ 1,196,364 $ 625,363
Investments 374,803 – 1,404,434
Due from other governments – – –
Accrued interest 434 – 1,529
Total assets $ 2,223,945 $ 1,196,364 $ 2,031,326
LIABILITIES
Accounts payable $ – $ – $ –
Accrued liabilities – – –
Advances from developers – – –
Total liabilities – – –
FUND BALANCES
Restricted – – –
Committed 2,223,945 1,196,364 2,031,326
Assigned – – –
Total fund balances 2,223,945 1,196,364 2,031,326
Total liabilities and fund balances $ 2,223,945 $ 1,196,364 $ 2,031,326
SEPTEMBER 30, 2014
Capital Project Funds
CITY OF COLLEYVILLE, TEXAS
COMBINING BALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS
(Continued)
78
CEDC Capital
Project
Capital and
Cable
Equipment
Replacement Kimzey Park
Total
Governmental
Funds
$ 146,825 $ 301,125 $ 3 ,576 $ 7,791,404
– 450,311 – 3,699,736
– – – 578,916
– 645 – 3,888
$ 146,825 $ 752,081 $ 3 ,576 $ 12,073,944
$ – $ 179 $ – $ 2,196
– – – 18,363
– – – 13,724
– 179 – 34,283
– – – 4,480,517
146,825 – 3 ,576 6,793,236
– 751,902 – 765,908
146,825 751,902 3 ,576 12,039,661
$ 146,825 $ 752,081 $ 3 ,576 $ 12,073,944
Capital Project Funds
79
Voluntary Park
Voluntary
Library
Police Asset
Forfeiture
REVENUES
Taxes $ – $ – $ –
Fees and fines – – –
Intergovernmental – – –
Charges for services – – –
Donations 157,816 157,816 –
Investment earnings 1,599 404 –
Miscellaneous – – –
Total revenues 159,415 158,220 –
EXPENDITURES
Current:
General government – – –
Community development and engineering – – –
Fire and rescue – – –
Leisure services 25,645 142,433 –
Municipal court – – –
Police – – 2,499
Debt service:
Interest and other charges – – –
Capital outlay – – –
Total expenditures 25,645 142,433 2,499
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES 133,770 15,787 ( 2,499)
OTHER FINANCING SOURCES (USES)
Proceeds from long-term debt, net – – –
Payment to bond escrow agent
Sale of capital assets – – –
Transfers in – – –
Transfers out – – –
Total other financing sources and uses – – –
NET CHANGE IN FUND BALANCES 133,770 15,787 ( 2,499)
FUND BALANCES, BEGINNING 627,774 388,314 6,687
FUND BALANCES, ENDING $ 761,544 $ 404,101 $ 4,188
Special Revenue Funds
NONMAJOR GOVERNMENTAL FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2014
CITY OF COLLEYVILLE, TEXAS
COMBINING STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
80
Tree
Preservation
Library
Donation
Recreational
Event
Colleyville
Center
Development Recycling LEOSE
$ – $ – $ – $ – $ – $ –
– – – – – –
– – – – – 4,002
– – – – – –
20,852 34,973 8,075 7,000 – –
– – – – – –
– – – – 15,000 –
20,852 34,973 8,075 7,000 15,000 4,002
– – – – 11,052 –
– – – – – –
– – – – – 740
– 27,155 3,600 7,000 – –
– – – – – –
– – – – – 10,561
– – – – – –
– – – – – –
– 27,155 3,600 7,000 11,052 11,301
20,852 7,818 4,475 – 3,948 ( 7,299)
– – – – – –
– – – – – –
– – – – – –
– – – – – –
– – – – – –
20,852 7,818 4,475 – 3,948 ( 7,299)
4,703 127,441 – 5,857 ( 2,321) 8,356
$ 25,555 $ 135,259 $ 4,475 $ 5,857 $ 1,627 $ 1,057
Special Revenue Funds
81
Colleyville
Economic
Development Crime District
Kidsville
Maintenance
REVENUES
Taxes $ 1,673,351 $ 1,447,116 $ –
Fees and fines – – –
Intergovernmental – – –
Charges for services – – –
Donations – – –
Investment earnings 2,477 871 –
Miscellaneous – – –
Total revenues 1,675,828 1,447,987 –
EXPENDITURES
Current:
General government – – –
Community development and engineering 164,451 – –
Fire and rescue – – –
Leisure services 131,068 – –
Municipal court – – –
Police – 585,892 –
Debt service:
Interest and other charges 372,808 – –
Capital outlay 115,547 218,892 –
Total expenditures 783,874 804,784 –
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES 891,954 643,203 –
OTHER FINANCING SOURCES (USES)
Proceeds from long-term debt, net 7,330,000 – –
Payment to bond escrow agent ( 7,600,000) – –
Sale of capital assets – 50,709 –
Transfers in – – –
Transfers out ( 165,332) ( 511,182) –
Total other financing sources and uses ( 435,332) ( 460,473) –
NET CHANGE IN FUND BALANCES 456,622 182,730 –
FUND BALANCES, BEGINNING 2,277,373 1,216,584 20,426
FUND BALANCES, ENDING $ 2,733,995 $ 1,399,314 $ 20,426
COMBINING STATEMENT OF REVENUES, EXPENDITURES
FOR THE YEAR ENDED SEPTEMBER 30, 2014
Special Revenue Funds
AND CHANGES IN FUND BALANCES
CITY OF COLLEYVILLE, TEXAS
NONMAJOR GOVERNMENTAL FUNDS
(Continued)
82
Special
Donations
Court
Technology Court Security TDPA Grant Public Art
Juvenile Case
Manager
$ – $ – $ – $ – $ – $ –
– 30,261 2 2,585 – – 65,107
2,273 – – – – –
– 23,850 – – – –
20,632 – – – – –
– – – – – –
– – – – – –
22,905 54,111 2 2,585 – – 65,107
– – – – – –
– – – – – –
7,241 – – – – –
6,383 – – – – –
– 52,941 2 3,848 – – 54,005
805 – – – – –
– – – – – –
– – – – – –
14,429 52,941 2 3,848 – – 54,005
8,476 1,170 ( 1 ,263) – – 11,102
– – – – – –
– – – – – –
– – – – – –
– – – – – –
– – – – – –
– – – – – –
8,476 1,170 ( 1 ,263) – – 11,102
54,046 27,502 7 3,909 8 ,133 7,904 ( 2,654)
$ 62,522 $ 28,672 $ 7 2,646 $ 8 ,133 $ 7,904 $ 8,448
Special Revenue Funds
83
Colleyville
Tomorrow
Parks
Tomorrow
Park Land
Dedication
REVENUES
Taxes $ – $ – $ –
Fees and fines – – –
Intergovernmental – – –
Charges for services – – –
Donations – – 5 11,449
Investment earnings 2,052 1,153 2 ,715
Miscellaneous – – –
Total revenues 2,052 1,153 5 14,164
EXPENDITURES
Current:
General government – – –
Community development and engineering – – –
Fire and rescue – – –
Leisure services 14,926 6,088 –
Municipal court – – –
Police – – –
Debt service:
Interest and other charges – – –
Capital outlay 247,882 – 1 09,378
Total expenditures 262,808 6,088 1 09,378
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES ( 260,756) ( 4,935) 4 04,786
OTHER FINANCING SOURCES (USES)
Proceeds from long-term debt, net – – –
Payment to bond escrow agent – – –
Sale of capital assets – – –
Transfers in 228,650 – –
Transfers out – – –
Total other financing sources and uses 228,650 – –
NET CHANGE IN FUND BALANCES ( 32,106) ( 4,935) 4 04,786
FUND BALANCES, BEGINNING 2,256,051 1,201,299 1 ,626,540
FUND BALANCES, ENDING $ 2,223,945 $ 1,196,364 $ 2 ,031,326
CITY OF COLLEYVILLE, TEXAS
COMBINING STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
NONMAJOR GOVERNMENTAL FUNDS
(Continued)
FOR THE YEAR ENDED SEPTEMBER 30, 2014
Capital Project Funds
84
CEDC Capital
Project
Capital and
Cable
Equipment
Replacement Kimzey Park
Total
Governmental
Funds
$ – $ – $ – $ 3,120,467
– – – 117,953
– – – 6,275
– – – 23,850
– – – 918,613
– 1,873 – 13,144
– – – 15,000
– 1,873 – 4,215,302
– 93,984 – 105,036
– – – 164,451
– – – 7,981
2,500 – – 366,798
– – – 130,794
– 11,567 – 611,324
– – – 372,808
4,500 373,495 – 1,069,694
7,000 479,046 – 2,828,886
( 7,000) ( 477,173) – 1,386,416
– – – 7,330,000
– – – ( 7,600,000)
– 29,368 – 80,077
– 297,000 – 525,650
– – – ( 676,514)
– 326,368 – ( 340,787)
( 7,000) ( 150,805) – 1,045,629
153,825 902,707 3,576 10,994,032
$ 146,825 $ 751,902 $ 3,576 $ 12,039,661
Capital Project Funds
85
Variance with
Budget –
Positive
Budget Actual (Negative)
REVENUES
Taxes $ 1,029,974 $ 1 ,154,810 $ 1 24,836
Investment earnings 1,975 8 81 ( 1 ,094)
Total revenues 1,031,949 1 ,155,691 1 23,742
EXPENDITURES
Debt service:
Principal retirement 1,342,586 1 ,342,586 –
Interest and fiscal charges 343,211 3 43,420 ( 2 09)
Total expenditures 1,685,797 1 ,686,006 ( 2 09)
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES ( 653,848) ( 5 30,315) 1 23,533
OTHER FINANCING SOURCES
Transfers in 501,182 5 01,182 –
Total other financing sources 501,182 5 01,182 –
NET CHANGE IN FUND BALANCE ( 152,666) ( 2 9,133) 1 23,533
FUND BALANCE, BEGINNING 931,623 9 31,623 –
FUND BALANCE, ENDING $ 778,957 $ 9 02,490 $ 1 23,533
FOR THE YEAR ENDED SEPTEMBER 30, 2014
CITY OF COLLEYVILLE, TEXAS
DEBT SERVICE FUND
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE – BUDGET AND ACTUAL
86
87
AGENCY FUNDS
Employee Activity Fund – This fund is used to account for funds held by the City for the benefit
of employees of the City.
Sesquicentennial Fund – This fund is used to account for funds held by the City for the benefit
of the City of Colleyville’s historical purposes.
Employee
Activity Sesquicentennial
Fund Fund Total
ASSETS
Cash and cash equivalents $ 7,106 $ 18,405 $ 25,511
Total assets $ 7,106 $ 18,405 $ 25,511
LIABILITIES
Due to other agencies and individuals $ 7,106 $ 18,405 $ 25,511
Total liabilities $ 7,106 $ 18,405 $ 25,511
CITY OF COLLEYVILLE, TEXAS
COMBINING STATEMENT OF FIDUCIARY NET POSITION
AGENCY FUNDS
SEPTEMBER 30, 2014
88
Balance Balance
10/01/13 Additions Deletions 09/30/14
Cash and cash equivalents $ 6,410 $ 3,264 $ 2,568 $ 7,106
Total assets $ 6,410 $ 3,264 $ 2,568 $ 7,106
Due to other agencies and individuals $ 6,410 $ 3,264 $ 2,568 $ 7,106
Total liabilities $ 6,410 $ 3,264 $ 2,568 $ 7,106
Balance Balance
10/01/13 Additions Deletions 09/30/14
Cash and cash equivalents $ 17,873 $ 532 $ – $ 18,405
Total assets $ 17,873 $ 532 $ – $ 18,405
Due to other agencies and individuals $ 17,873 $ 532 $ – $ 18,405
Total liabilities $ 17,873 $ 532 $ – $ 18,405
Balance Balance
10/01/13 Additions Deletions 09/30/14
Cash and cash equivalents $ 24,283 $ 3,796 $ 2,568 $ 25,511
Total assets $ 24,283 $ 3,796 $ 2,568 $ 25,511
Due to other agencies and individuals $ 24,283 $ 3,796 $ 2,568 $ 25,511
Total liabilities $ 24,283 $ 3,796 $ 2,568 $ 25,511
Employee Activity Fund
Sesquicentennial Fund
Total Agency Funds
CITY OF COLLEYVILLE, TEXAS
COMBINING STATEMENT OF CHANGES IN
AGENCY FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2014
ASSETS AND LIABILITIES
89
90
THIS PAGE INTENTIONALLY LEFT BLANK
91
STATISTICAL SECTION
This part of the City of Colleyville, Texas’ comprehensive annual financial report
presents detailed information as a context for understanding what the information in the
financial statements, note disclosures, and required supplementary information says about
the government’s overall financial health.
Contents Page
Financial Trends 92
These schedules contain trend information to help the reader
understand how the government’s financial performance and wellbeing
have changed over time.
Revenue Capacity 102
These schedules contain information to help the reader assess the
government’s most significant local revenue source, the property
tax.
Debt Capacity 107
These schedules present information to help the reader assess the
affordability of the government’s current levels of outstanding debt
and the government’s ability to issue additional debt in the future.
Demographic and Economic Information 114
These schedules offer demographic and economic indicators to
help the reader understand the environment within which the
government’s financial activities take place.
Operating Information 116
These schedules contain service and infrastructure data to help the
reader understand how the information in the government’s financial
report relates to the services the government provides and the
activities it performs.
Sources: Unless otherwise noted, the information in these schedules is derived from the
comprehensive annual financial reports for the relevant year.
2005 2006 2007
Governmental activities:
Net investment in capital assets $ 60,884,756 $ 66,991,146 $ 71,824,719
Restricted for:
Debt service 896,130 937,578 1,032,586
Court security and technology – – –
Grant programs – – –
Leisure services – – –
Economic development – – –
Streets and drainage – – –
Police – – –
Unrestricted 19,132,376 19,002,816 21,987,778
Total governmental activities net position $ 80,913,262 $ 86,931,540 $ 94,845,083
Business-type activities:
Net investment in capital assets $ 24,827,365 $ 25,919,619 $ 32,804,703
Restricted for:
Debt service 670,571 882,821 1,080,751
Unrestricted 16,374,236 19,253,772 13,626,274
Total business-type activities net position $ 41,872,172 $ 46,056,212 $ 47,511,728
Primary government:
Net investment in capital assets $ 85,712,121 $ 92,910,765 $ 104,629,422
Restricted for:
Debt service 1,566,701 1,820,399 2,113,337
Court security and technology – – –
Grant programs – – –
Leisure services – – –
Economic development – – –
Streets and drainage – – –
Police – – –
Unrestricted 35,506,612 38,256,588 35,614,052
Total primary government net position $ 122,785,434 $ 132,987,752 $ 142,356,811
Note: The City implemented GASB 54 in fiscal year 2011 to provide clearer fund balance classifications.
Prior years were not restated.
Fiscal Year
CITY OF COLLEYVILLE, TEXAS
NET POSITION BY COMPONENT
(Accrual Basis of Accounting)
92
TABLE 1
2008 2009 2010 2011 2012 2013 2014
$ 77,484,725 $ 79,243,497 $ 81,970,674 $ 83,166,142 $ 83,211,988 $ 84,414,252 $ 89,754,051
889,689 1,040,896 1,057,699 1,106,893 1,159,092 857,143 831,073
– – – 153,420 91,637 101,411 109,766
– – – 23,208 21,116 16,489 9,190
– – – 201,184 207,736 207,770 224,064
– – – 1,863,900 1,998,845 2,277,373 2,733,995
– – – 6,428,106 8,192,568 8,432,946 12,188,836
– – – 994,913 1,143,454 1,223,271 1,403,502
21,862,136 27,498,864 25,936,703 17,837,593 19,559,719 18,680,620 17,930,939
$ 100,236,550 $ 107,783,257 $ 108,965,076 $ 111,775,359 $ 115,586,155 $ 116,211,275 $ 125,185,416
$ 39,442,148 $ 39,174,562 $ 39,080,043 $ 38,892,098 $ 38,395,708 $ 39,269,943 $ 41,567,161
1,024,349 987,181 983,225 662,050 – – –
7,837,790 8,127,736 7,747,336 10,111,776 12,332,238 13,702,724 14,827,594
$ 48,304,287 $ 48,289,479 $ 47,810,604 $ 49,665,924 $ 50,727,946 $ 52,972,667 $ 56,394,755
$ 116,926,873 $ 118,418,059 $ 121,050,717 $ 122,058,240 $ 121,607,696 $ 123,684,195 $ 131,321,212
1,914,038 2,028,077 2,040,924 1,768,943 1,159,092 857,143 831,073
– – – 153,420 91,637 101,411 109,766
– – – 23,208 21,116 16,489 9,190
– – – 201,184 207,736 207,770 224,064
– – – 1,863,900 1,998,845 2,277,373 2,733,995
– – – 6,428,106 8,192,568 8,432,946 12,188,836
– – – 994,913 1,143,454 1,223,271 1,403,502
29,699,926 35,626,600 33,684,039 27,949,369 31,891,957 32,383,344 32,758,533
$ 148,540,837 $ 156,072,736 $ 156,775,680 $ 161,441,283 $ 166,314,101 $ 169,183,942 $ 181,580,171
Fiscal Year
93
2005 2006 2007
EXPENSES
Governmental activities:
General government $ 2,245,964 $ 2,729,064 $ 2,438,051
Community Development and Engineering 1,164,345 1,267,136 1,523,768
Fire and rescue 3,325,103 3,814,585 3,790,831
Leisure services 2,923,958 3,513,992 3,525,094
Maintenance 364,434 383,504 434,984
Municipal court 238,874 270,345 262,198
Police 3,533,083 3,801,644 4,232,185
Streets and drainage 2,970,475 2,932,465 2,890,995
Interest on long-term debt 1,190,857 1,142,043 1,032,374
Total governmental activities expenses 17,957,093 19,854,778 20,130,480
Business-type activities:
Water and wastewater 8,962,630 9,428,373 9,337,282
Drainage 550,005 548,963 671,773
Interest on long-term debt – 440,703 400,752
Total business-type activities expenses 9,512,635 10,418,039 10,409,807
Total primary government program expenses $ 27,469,728 $ 30,272,817 $ 30,540,287
PROGRAM REVENUES
Governmental activities:
Charges for services:
General government $ 6,000 $ 6,000 $ 6,000
Community Development and Engineering 1,515,052 2,163,596 1,454,744
Fire and rescue 136,498 239,386 303,868
Leisure services 386,658 448,606 424,024
Municipal court 492,805 813,781 932,452
Police 95,234 70,899 81,054
Streets and drainage 336,111 472,860 355,157
Operating grants and contributions 523,704 399,819 431,683
Capital grants and contributions 3,283,774 4,355,357 5,372,281
Total governmental activities program revenues 6,775,836 8,970,304 9,361,263
CITY OF COLLEYVILLE, TEXAS
CHANGES IN NET POSITION
(Accrual Basis of Accounting)
Fiscal Year
94
2008 2009 2010 2011 2012 2013 2014
$ 2,814,874 $ 2,945,481 $ 2,691,905 $ 2,715,154 $ 3,125,214 $ 4,075,001 $ 4,103,928
1,481,124 1,530,901 1,645,221 1,402,669 1,397,839 1,429,755 1,613,311
3,958,111 4,113,793 4,419,945 4,421,496 4,321,929 4,529,225 4,625,036
4,033,105 3,941,259 4,118,769 4,191,960 4,124,619 4,106,822 3,776,068
417,265 455,752 423,783 412,513 400,306 494,545 575,696
324,020 291,724 302,756 303,839 319,445 586,709 501,604
4,657,438 4,841,217 4,836,274 4,878,055 4,579,570 4,961,444 5,019,343
3,129,730 3,503,519 3,885,182 3,657,591 3,073,530 5,322,510 4,128,365
1,101,714 1,051,180 1,000,061 849,390 780,029 724,458 717,045
21,917,381 22,674,826 23,323,896 22,832,667 22,122,481 26,230,469 25,060,396
11,179,548 10,612,372 11,242,553 12,009,187 12,258,587 12,544,530 13,238,893
593,600 658,016 572,234 742,160 723,994 707,647 571,886
362,642 331,361 296,288 – – – –
12,135,790 11,601,749 12,111,075 12,751,347 12,982,581 13,252,177 13,810,779
$ 34,053,171 $ 34,276,575 $ 35,434,971 $ 35,584,014 $ 35,105,062 $ 39,482,646 $ 38,871,175
$ 16,000 $ 15,000 $ 15,000 $ 97,234 $ 28,408 $ 15,000 $ 15,000
1,332,453 666,914 647,298 868,363 1,146,518 927,690 1,387,329
250,814 271,216 235,225 305,882 335,308 308,339 377,021
563,738 6,595,487 468,426 1,213,167 520,433 501,260 510,991
1,171,919 1,002,008 1,213,178 970,143 1,015,804 1,271,095 1,268,447
79,699 51,631 94,059 70,709 81,056 70,513 71,022
358,688 215,619 345,780 296,350 338,845 316,338 347,565
1,856,567 713,189 543,516 822,056 490,069 468,361 486,869
3,973,954 360,023 423,873 405,347 381,308 1,158,050 5,943,465
9,603,832 9,891,087 3,986,355 5,049,251 4,337,749 5,036,646 10,407,709
TABLE 2
Fiscal Year
95
2005 2006 2007
PROGRAM REVENUES
Business-type activities:
Charges for services:
Water and wastewater $ 9,856,889 $ 12,357,576 $ 9,127,470
Drainage 675,045 830,292 841,972
Capital grants and contributions 844,256 1,100,354 1,561,255
Total business-type activities program revenues 11,376,190 14,288,222 11,530,697
Total primary government program revenues $ 18,152,026 $ 23,258,526 $ 20,891,960
NET (EXPENSE) REVENUES
Governmental activities $( 11,181,257) $( 10,884,474) $( 10,769,217)
Business-type activities 1,863,555 3,870,183 1,120,890
Total primary government net expense ( 9,317,702) ( 7,014,291) ( 9,648,327)
GENERAL REVENUES AND OTHER CHANGES IN NET POSITION
Governmental activities:
Taxes
Property 8,938,888 9,483,546 10,153,775
Franchise 1,477,749 1,790,543 1,779,376
Sales 3,801,369 4,355,627 4,674,068
Other 53,974 76,005 89,132
Investment earnings 443,570 904,361 1,224,361
Miscellaneous 153,947 65,313 97,963
Gain on sale of capital assets – – –
Transfers 464,393 532,357 664,085
Total governmental activities 15,333,890 17,207,752 18,682,760
Business-type activities:
Investment earnings 377,064 846,214 998,710
Gain on sale of capital assets – – –
Transfers ( 464,393) ( 532,357) ( 664,085)
Total business-type activities ( 87,329) 313,857 334,625
Total primary government 15,246,561 17,521,609 19,017,385
CHANGE IN NET POSITION
Governmental activities 4,152,633 6,323,278 7,913,543
Business-type activities 1,776,226 4,184,040 1,455,515
Total primary government $ 5,928,859 $ 10,507,318 $ 9,369,058
Note: See Table 9 for information about Water and Wastewater Charges for services
CITY OF COLLEYVILLE, TEXAS
CHANGES IN NET POSITION
Fiscal Year
(Accrual Basis of Accounting)
96
(continued)
2008 2009 2010 2011 2012 2013 2014
$ 11,114,892 $ 11,303,868 $ 11,414,425 $ 14,355,418 $ 14,034,600 $ 14,661,491 $ 14,789,614
859,013 874,637 897,361 903,089 918,323 928,863 939,868
1,415,785 63,293 147,014 168,365 169,464 876,660 2,707,835
13,389,690 12,241,798 12,458,800 15,426,872 15,122,387 16,467,014 18,437,317
$ 22,993,522 $ 22,132,885 $ 16,445,155 $ 20,476,123 $ 19,460,136 $ 21,503,660 $ 28,845,026
$( 12,313,549) $( 12,783,739) $( 19,337,541) $( 17,783,416) $( 17,784,732) $( 21,193,823) $( 14,652,687)
1,253,900 640,049 347,725 2,675,525 2,139,806 3,214,837 4,626,538
( 11,059,649) ( 12,143,690) ( 18,989,816) ( 15,107,891) ( 15,644,926) ( 17,978,986) ( 10,026,149)
11,367,967 12,121,420 12,557,716 12,414,948 12,414,457 12,497,692 12,950,832
1,818,060 2,017,440 1,867,065 2,031,268 2,207,463 2,074,731 2,172,801
4,740,964 4,718,976 4,936,484 5,056,597 5,495,730 5,902,557 6,472,195
82,532 74,198 75,365 80,731 65,808 68,592 98,160
804,864 471,524 76,968 95,822 108,192 77,269 39,697
96,348 77,854 82,833 55,454 74,041 85,562 61,643
116,112 25,237 65,306 – 147,969 – 810,020
841,936 823,797 857,622 858,879 1,081,868 1,112,540 1,180,292
19,868,783 20,330,446 20,519,359 20,593,699 21,595,528 21,818,943 23,785,640
380,595 168,940 15,158 38,674 4,084 38,987 23,655
– – 15,864 – – 103,437 40,814
( 841,936) ( 823,797) ( 857,622) ( 858,879) ( 1,081,868) ( 1,112,540) ( 1,180,292)
( 461,341) ( 654,857) ( 826,600) ( 820,205) ( 1,077,784) ( 970,116) ( 1,115,823)
19,407,442 19,675,589 19,692,759 19,773,494 20,517,744 20,848,827 22,669,817
7,555,234 7,546,707 1,181,818 2,810,283 3,810,796 625,120 9,132,953
792,559 ( 14,808) ( 478,875) 1,855,320 1,062,022 2,244,721 3,510,715
$ 8,347,793 $ 7,531,899 $ 702,943 $ 4,665,603 $ 4,872,818 $ 2,869,841 $ 12,643,668
Fiscal Year
TABLE 2
97
98
THIS PAGE INTENTIONALLY LEFT BLANK
TABLE 3
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
General fund
Non-spendable $ – $ – $ – $ – $ – $ – $ 2,147 $ 132,664 $ 1,759 $ 1,269
Restricted – – – – – – – – – –
Committed – – – – – – 706,942 813,536 813,536 813,536
Assigned – – – – – – – – – –
Unassigned 6,850,731 7,575,662 8 ,495,329 8,717,398 8,207,420 8 ,813,597 10,223,232 11,762,625 11,006,716 10,080,617
Total general fund $ 6,850,731 $ 7,575,662 $ 8 ,495,329 $ 8,717,398 $ 8,207,420 $ 8 ,813,597 $ 10,932,321 $ 12,708,825 $ 11,822,011 $ 10,895,422
All other governmental funds
Non-spendable $ – $ – $ – $ – $ – $ – $ – $ – $ – $ –
Restricted 2,959,583 1,082,681 1 ,254,686 987,681 1,121,567 1 ,154,570 10,853,638 12,894,768 13,190,883 17,571,843
Committed – – – – – – 5,967,620 6,193,060 6,262,082 6,793,236
Assigned – – – – – – 1,148,548 954,818 910,611 765,908
Unassigned – – – – – – ( 4,975) –
Unassigned, reported in:
Special revenue funds 3,251,861 4,760,679 4 ,814,412 5,696,905 7,267,350 5 ,664,493 – – – –
Capital projects funds 7,438,437 7,012,225 9 ,055,431 7,811,492 12,369,631 1 1,524,206 – – – –
Total all other
governmental funds $ 13,649,881 $ 12,855,585 $ 1 5,124,529 $ 14,496,078 $ 20,758,548 $ 1 8,343,269 $ 17,969,806 $ 20,042,646 $ 20,358,601 $ 25,130,987
Note: This schedule does not restate prior years for Special Revenue and Capital Projects Funds.
The City implemented GASB 54 in fiscal year 2011 to provide clearer fund balance classifications. Prior years were not restated.
(Modified Accrual Basis of Accounting)
Fiscal Year
CITY OF COLLEYVILLE, TEXAS
FUND BALANCES
GOVERNMENTAL FUNDS
LAST TEN FISCAL YEARS
99
TABLE 4
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
REVENUES
Taxes $ 14,277,010 $ 1 5,708,945 $ 1 6,701,290 $ 17,975,445 $ 1 8,889,480 $ 1 9,353,358 $ 1 9,627,734 $ 2 0,235,012 $ 2 0,541,466 $ 2 1,747,244
Developer contributions 274,996 5 49,911 6 83,425 226,488 – – – – – –
Licenses, fees and permits 1,359,329 1 ,931,265 1 ,244,218 1,113,595 6 46,302 6 07,132 9 23,590 1 ,130,426 8 57,135 1 ,090,012
Capital improvement fees 366,111 4 82,860 3 89,657 358,688 2 08,622 3 34,075 2 81,260 3 22,498 3 00,900 3 33,496
Drainage fees – – – – – – – – – –
Fines and penalties 513,129 8 41,595 9 65,416 1,203,260 1 ,028,425 1 ,244,146 9 98,221 1 ,051,899 1 ,000,954 1 ,043,821
Charges for services 940,212 1 ,173,394 1 ,190,327 1,322,732 7 ,129,322 9 17,884 1 ,694,993 1 ,030,439 1 ,321,927 1 ,577,564
Interest 443,570 9 04,361 1 ,224,361 804,864 4 71,524 7 6,968 9 5,823 1 10,550 7 7,269 3 9,697
Intergovernmental 167,293 5 ,409 4 ,361 1,437,935 3 50,468 1 00,807 5 41,709 1 24,056 7 6,506 5 56,954
Donations 502,789 3 96,627 7 35,756 548,093 4 01,432 3 79,853 6 02,401 4 06,789 4 87,066 9 18,613
Miscellaneous 183,902 8 3,730 1 07,700 116,280 1 55,100 9 7,833 7 0,453 8 9,041 1 00,562 7 6,643
Total revenues 19,028,341 2 2,078,097 2 3,246,511 25,107,380 2 9,280,675 2 3,112,056 2 4,836,184 2 4,500,710 2 4,763,785 2 7,384,044
EXPENDITURES
General government 1,873,091 2 ,107,398 2 ,247,359 2,537,699 2 ,639,218 2 ,423,869 2 ,383,276 2 ,753,457 3 ,171,582 3 ,746,619
Comm Development/Eng 1,160,232 1 ,265,251 1 ,467,216 1,462,566 1 ,531,785 1 ,642,047 1 ,397,256 1 ,396,259 1 ,429,574 1 ,606,589
Fire 3,166,840 3 ,657,554 3 ,517,817 3,755,575 3 ,840,118 3 ,955,407 3 ,972,053 3 ,888,225 4 ,062,535 4 ,174,745
Police 3,293,320 3 ,558,154 3 ,961,975 4,395,056 4 ,588,576 4 ,552,947 4 ,596,862 4 ,304,710 4 ,670,639 4 ,707,315
Leisure services 2,388,761 2 ,838,637 2 ,913,798 3,171,514 3 ,058,332 3 ,173,352 3 ,177,878 3 ,049,908 3 ,035,583 2 ,702,313
Streets and drainage 1,656,187 1 ,604,425 1 ,485,756 1,649,037 1 ,917,536 2 ,297,719 2 ,052,298 1 ,388,970 3 ,597,965 2 ,055,631
Municipal court 238,245 2 70,037 2 52,961 323,059 2 91,893 3 02,172 3 02,666 3 19,084 5 86,911 5 01,027
Maintenance 357,983 3 77,144 4 15,708 410,636 4 49,806 4 17,946 4 05,911 3 94,830 4 89,685 5 70,011
Capital outlay 1,459,940 4 ,491,341 6 ,337,656 5,150,286 2 ,759,774 4 ,935,053 2 ,510,027 2 ,515,115 2 ,668,074 3 ,250,508
Debt service:
Interest 1,289,866 1 ,141,817 1 ,094,001 2,584,790 1 ,033,148 9 44,751 8 38,320 7 57,594 6 97,140 7 16,228
Principal 1,573,308 1 ,929,047 2 ,005,204 1,189,798 2 ,275,553 2 ,180,061 2 ,259,004 2 ,007,585 2 ,246,921 1 ,342,586
Total expenditures 18,457,773 2 3,240,805 2 5,699,451 26,630,016 2 4,385,739 2 6,825,324 2 3,895,551 2 2,775,737 2 6,656,609 2 5,373,572
CITY OF COLLEYVILLE, TEXAS
CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
LAST TEN FISCAL YEARS
(Modified Accrual Basis of Accounting)
100
TABLE 4
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
EXCESS OF REVENUES
OVER (UNDER)
EXPENDITURES $ 570,568 $( 1 ,162,708) $( 2 ,452,940) $( 1,522,636) $ 4 ,894,936 $( 3 ,713,268) $ 9 40,633 $ 1 ,724,973 $( 1 ,892,824) $ 2 ,010,472
OTHER FINANCING
SOURCES (USES)
Bonds issued 9,570,000 – 9 ,890,000 – – – 2 ,945,000 – –
Refunding bonds – – – – – – – – – 7 ,330,000
Notes payable 94,187 – – – – – – – –
Capital lease – 4 08,716 – 176,150 – 9 81,238 – 8 94,534 2 09,425
Sale of capital assets – 1 52,270 8 ,800 98,168 3 3,759 6 5,306 7 ,098 1 47,969 – 9 25,033
Premium on bond issue 6 ,561 – –
Payments to escrow ( 7,450,606) – ( 4 ,921,334) – – – ( 3 ,012,910) – – ( 7 ,600,000)
Transfers in 1,675,954 2 ,203,261 1 ,637,154 2,082,101 2 ,338,776 1 ,884,896 2 ,458,396 3 ,893,584 4 ,189,380 7 ,355,334
Transfers out ( 1,211,561) ( 1 ,670,904) ( 9 73,069) ( 1,240,165) ( 1 ,514,979) ( 1 ,027,274) ( 1 ,599,517) ( 2 ,811,716) ( 3 ,076,840) ( 6 ,175,042)
Total other financing
sources (uses) 2,677,974 1 ,093,343 5 ,641,551 1,116,254 8 57,556 1 ,904,166 8 04,628 2 ,124,371 1 ,321,965 1 ,835,325
NET CHANGE IN
FUND BALANCES $ 3,248,542 $( 6 9,365) $ 3 ,188,611 $( 406,382) $ 5 ,752,492 $( 1 ,809,102) $ 1 ,745,261 $ 3 ,849,344 $( 5 70,859) $ 3 ,845,797
DEBT SERVICE AS
A PERCENTAGE
OF NONCAPITAL
EXPENDITURES 16.8% 16.4% 16.0% 17.6% 15.3% 14.3% 14.5% 13.6% 12.3% 9.3%
Note: Capital Outlay does not include contributed capital assets received from developers.
LAST TEN FISCAL YEARS
(Modified Accrual Basis of Accounting)
CITY OF COLLEYVILLE, TEXAS
CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
101
TABLE 5
Estimated
Less: Total Taxable Total Actual
Fiscal Residential Personal Tax-exempt Assessed Direct Taxable
Year Property Property Property Value Tax Rate Value
2005 2,793,606,203 78,255,043 219,264,381 2,652,596,865 0.3474 2,652,596,865
2006 3,015,929,674 79,122,702 221,809,521 2,873,242,855 0.3474 2,873,242,855
2007 3,229,353,459 86,080,918 228,115,791 3,087,318,586 0.3474 3,087,318,586
2008 3,531,988,996 97,998,283 228,915,486 3,401,071,793 0.3559 3,401,071,793
2009 3,748,968,313 99,556,111 230,676,995 3,617,847,429 0.3559 3,617,847,429
2010 3,907,288,105 95,261,420 237,293,931 3,765,255,594 0.3559 3,765,255,594
2011 3,917,415,346 92,176,541 253,414,335 3,756,177,552 0.3559 3,756,177,552
2012 3,941,020,477 89,758,416 277,077,387 3,753,701,506 0.3559 3,753,701,506
2013 3,997,250,723 91,264,033 296,807,896 3,791,706,860 0.3559 3,791,706,860
2014 4,129,613,419 93,604,217 307,729,550 3,915,488,086 0.3559 3,915,488,086
Source: Tarrant Appraisal District
Note:
CITY OF COLLEYVILLE, TEXAS
ASSESSED VALUE AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY
LAST TEN FISCAL YEARS
Property in Tarrant County is reassessed once every two years. The Appraisal District assesses property at 100 percent of actual value for residential and
personal. Tax rates are per $100 of assessed value.
102
TABLE 6
General Grapevine- Hurst-Euless
Operations and Obligation Total Birdville Carroll Colleyville Bedford Keller Tarrant County Tarrant County
Fiscal Maintenance Debt Direct Independent Independent Independent Independent Independent Tarrant College Hospital
Year Rate Service Rate School District School District School District School District School District County District District
2005 0.29072 0 .05668 0.34740 1.6170 1.9350 1.70000 1.7105 1.6975 0 .27250 0.139380 0.235397
2006 0.27771 0 .06969 0.34740 1.6170 1.9350 1.70000 1.7230 1.7158 0 .27250 0.139380 0.235397
2007 0.27873 0 .06867 0.34740 1.5650 1.7950 1.57430 1.5976 1.6080 0 .27150 0.139380 0.235397
2008 0.28299 0 .07291 0.35590 1.4050 1.4650 1.29000 1.3037 1.3574 0 .26650 0.139380 0.230397
2009 0.28860 0 .06731 0.35590 1.4100 1.4150 1.29000 1.2955 1.4169 0 .26400 0.137960 0.227897
2010 0.29864 0 .05726 0.35590 1.4050 1.4150 1.29000 1.2955 1.4863 0 .26400 0.137670 0.227897
2011 0.29758 0 .05832 0.35590 1.4250 1.4150 1.29000 1.2882 1.5306 0 .26400 0.137600 0.227900
2012 0.30881 0 .04709 0.35590 1.4350 1.4150 1.32010 1.4140 1.5400 0 .26400 0.148970 0.227897
2013 0.31385 0 .04205 0.35590 1.4350 1.4000 1.32010 1.4075 1.5400 0 .26400 0.148970 0.227897
2014 0.32442 0 .03148 0.35590 1.4350 1.4000 1.32010 1.3875 1.5400 0 .26400 0.149500 0.227897
Source: Tarrant Appraisal District
Notes: Overlapping rates are those of local and county governments that apply to property owners within the City of Colleyville, Texas. Not all school district overlapping rates apply to all
Colleyville property owners because the City is served by five different independent school districts; for example, although the county property tax rates apply to all City property
owners, the Grapevine-Colleyville Independent School District rates apply only to the approximately two-thirds of City property owners whose property is located within that school
district’s geographic boundaries.
CITY OF COLLEYVILLE, TEXAS
DIRECT AND OVERLAPPING PROPERTY TAX RATES
LAST TEN FISCAL YEARS
City Direct Rates Overlapping Rates
103
TABLE 7
Percentage Percentage
of Total City of Total City
Taxable Taxable Taxable Taxable
Assessed Assessed Assessed Assessed
Taxpayer Value Value Value Value
Melvin & Martindale $ 2 4,300,000 0.64% $ 4,594,495 0 .17%
Toll Dallas TX LLC 1 6,368,368 0.43% – – %
Oncor Electric Delivery 1 6,288,033 0.43% 16,670,636 0 .63%
Lifetime Fitness Real Estate 1 2,304,570 0.32% – – %
AC Village Park Partners LLC 1 0,430,264 0.28% – – %
RCC Village Properties 8 ,831,175 0.23% – – %
Wal-Mart Real Estate Business Trust 8 ,769,804 0.23% – – %
Colleyville Riverwalk LP 6 ,054,975 0.16% – – %
Leonard Hudson 4 ,830,200 0.13% – – %
Donald and Gina Wilson 4 ,337,800 0.11% – – %
Albertsons – – % 9,450,228 0 .36%
Village Management, LTD. – – % 4,794,100 0 .18%
Uhlmann-Colleyville, LLC – – % 6,093,083 0 .23%
Colleyville Plaza LP – – % 6,500,480 0 .25%
Industrial Bank Japan Trust, Co. – – % 5,145,107 0 .19%
Market Street – – % 6,033,600 0 .23%
Broughton LTD Partnership – – % 7,391,268 0 .28%
Broadland Limited Partnership – – % 5,510,559 0 .21%
Total $ 1 12,515,189 2.97% $ 72,183,556 2 .73%
Source: Tarrant Appraisal District
2014 2005
CITY OF COLLEYVILLE, TEXAS
PRINCIPAL PROPERTY TAXPAYERS
CURRENT YEAR AND NINE YEARS AGO
104
TABLE 8
Taxes Levied Collections
Fiscal for the Percentage in Subsequent Percentage
Year Ended Fiscal Year Amount of Levy Years Amount of Levy
2005 9,201,770 9,109,752 99.1% 8 5,530 9,195,283 99.93%
2006 9,981,646 9,906,769 99.2% 6 8,541 9,975,310 99.94%
2007 10,725,345 10,592,222 98.8% 1 24,651 10,716,873 99.92%
2008 12,024,882 11,903,333 99.0% 1 09,102 12,012,435 99.90%
2009 12,875,919 12,734,871 98.9% 1 25,669 12,860,540 99.88%
2010 13,351,922 13,166,515 98.6% 1 64,082 13,330,597 99.84%
2011 13,183,932 13,063,575 99.1% 9 5,672 13,159,247 99.81%
2012 13,163,735 13,082,029 99.4% 4 3,962 13,125,991 99.71%
2013 13,291,462 13,207,902 99.4% 6 2,362 13,270,264 99.84%
2014 13,722,602 13,681,269 99.7% – 13,681,269 99.70%
Sources: Tarrant County Appraisal District and City of Colleyville Finance Department.
Fiscal Year of the Levy
Collected With the
Total Collections to Date
CITY OF COLLEYVILLE, TEXAS
PROPERTY TAX LEVIES AND COLLECTIONS
LAST TEN FISCAL YEARS
105
TABLE 9
Percentage Percentage
of Total City of Total City
Water Water Water Water
Taxpayer Usage Usage Usage Usage
Grapevine-Colleyville ISD 31,982,000 1.40% 42,168,500 1 .94%
Lifetime Fitness 11,434,600 0.50% 14,291,700 0 .66%
Town Center 6,854,800 0.30% 6,526,000 0 .30%
Market Street 5,704,500 0.25% 5,705,600 0 .26%
Bluebonnet Hills 4,913,700 0.22% 5,923,300 0 .27%
Toll Dallas 4,591,600 0.20% – – %
Wash Depot 4,482,100 0.20% 4,573,400 0 .21%
Shadowood Trail 4,265,400 0.19% 5,595,500 0 .26%
Westmont 3,789,600 0.17% 2,956,700 0 .14%
Woodland Hills 3,554,600 0.16% 3,940,900 0 .18%
Whittier Heights 3,447,800 0.15% – – %
Broughton Maint Assoc 3,443,500 0.15% – – %
Villas at Oak Point 3,279,900 0.14% – – %
Monterra 2,811,800 0.12% – – %
La Hacienda Ranch 2,774,200 0.12% 3,464,300 0 .16%
Clairemont 2,616,100 0.11% – – %
Timarron 2,193,100 0.10% – – %
Highland Meadows Church 2,165,800 0.09% 4,425,300 0 .20%
Rio Mambo 1,794,500 0.08% – – %
Albertsons (Glade Rd) 1,692,500 0.07% 7,832,600 0 .36%
Total 107,792,100 4.72% 107,403,800 4 .94%
Source: City utility billing records
2014 2005
CITY OF COLLEYVILLE, TEXAS
PRINCIPAL WATER CUSTOMERS
CURRENT YEAR AND NINE YEARS AGO
106
TABLE 10
General Sales Tax Water and Sewer Drainage Total Percentage
Fiscal Obligation Revenue Capital Revenue Revenue Capital Primary of Personal Per
Year Bonds Bonds Leases Bonds Bonds Leases Government Income Capita
2005 11,995,000 14,980,000 69,187 8,160,000 2,515,000 41,077 37,760,264 3.28% 1,798
2006 10,665,000 14,760,000 404,395 7,365,000 2,365,000 26,933 35,586,328 2.96% 1,640
2007 17,770,000 10,372,462 349,189 6,540,000 2,205,000 13,140 37,249,791 2.89% 1,682
2008 16,275,000 9,795,916 430,549 5,840,000 2,040,000 – 34,381,465 2.65% 1,528
2009 14,665,000 9,199,370 359,996 5,200,000 1,870,000 – 31,294,366 2.52% 1,388
2010 13,300,000 8,572,824 1,151,173 4,520,000 1,695,000 – 29,238,997 2.32% 1,282
2011 11,463,786 8,271,278 972,170 3,600,000 1,550,000 – 25,857,234 1.73% 1,131
2012 9,933,921 7,954,732 1,709,120 2,850,000 1,345,000 – 23,792,773 1.57% 1,037
2013 8,639,056 7,623,186 1,301,624 2,085,000 1,135,000 – 20,783,866 1.37% 900
2014 7,660,000 7,330,000 974,038 1,379,830 915,000 – 18,258,868 1.16% 769
Notes: Details regarding the City’s outstanding debt can be found in the notes to the financial statements.
See Table 14 for personal income and population data.
CITY OF COLLEYVILLE, TEXAS
RATIOS OF OUTSTANDING DEBT BY TYPE
LAST TEN FISCAL YEARS
Governmental Activities Business-type Activities
107
TABLE 11
Percentage of
General Less Amounts Actual Taxable
Fiscal Obligation Restricted to Value of Per
Year Bonds Repaying Principal Total Property Capita
2005 11,955,000 989,618 10,965,382 0.41% 522
2006 10,665,000 1,082,681 9,582,319 0.33% 442
2007 17,770,000 1,254,686 16,515,314 0.53% 746
2008 16,275,000 987,681 15,287,319 0.45% 679
2009 14,665,000 1,121,567 13,543,433 0.37% 601
2010 13,300,000 1,154,570 12,145,430 0.32% 533
2011 11,463,786 1,188,907 10,274,879 0.27% 449
2012 9,933,921 1,239,412 8,694,509 0.23% 379
2013 8,639,056 931,623 7,707,433 0.20% 334
2014 7,660,000 902,490 6,757,510 0.17% 285
Notes:
Details regarding the City’s outstanding debt can be found in the notes to the financial statements.
See Table 5 for property value data.
Population data can be found in Table 14.
General Bonded Debt Outstanding
CITY OF COLLEYVILLE, TEXAS
RATIOS OF GENERAL BONDED DEBT OUTSTANDING
LAST TEN FISCAL YEARS
108
TABLE 12
Estimated
Share of
Estimated Direct and
Debt Percentage Overlapping
Outstanding Applicable Debt
Debt repaid with property taxes
Birdville Independent School District $ 1 88,860,198 0.080% $ 1 51,088
Carroll Independent School District 2 26,024,791 0.460% 1 ,039,714
Grapevine-Colleyville Independent School District 3 38,573,481 21.490% 7 2,759,441
Hurst-Euless-Bedford Independent School District 2 90,687,648 1.650% 4 ,796,346
Keller Independent School District 6 54,308,399 3.210% 2 1,003,300
Tarrant County 3 17,820,000 3.070% 9 ,757,074
Tarrant County College District 7 ,935,000 3.050% 2 42,018
Tarrant County Hospital District 2 4,425,000 3.060% 7 47,405
Subtotal overlapping debt 1 10,496,386
City direct debt 1 1,330,000 100.000% 1 5,964,038
Total direct and overlapping debt $ 1 26,460,242
Sources:
Government Unit
Assessed value data used to estimate applicable percentages provided by the Tarrant County Appraisal District
and debt outstanding data provided by each governmental unit.
CITY OF COLLEYVILLE, TEXAS
DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT
AS OF SEPTEMBER 30, 2014
109
TABLE 13
Assessed value $ 3,915,488,086
Debt limit (2.5% of assessed value) 97,887,202
Debt applicable to limit:
General obligation bonds 7,660,000
Less: Amount set aside for
repayment of general
obligation debt ( 902,490)
Total net debt applicable to limit 6,757,510
Legal debt margin $ 91,129,692
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Debt limit $ 66,314,922 $ 71,831,071 $ 77,182,965 $ 85,026,795 $ 87,755,997 $ 94,131,390 $ 93,904,439 $ 93,842,538 $ 94,792,672 $ 97,887,202
Total net debt applicable to limit 10,999,111 9,582,319 15,745,132 15,287,139 13,543,433 12,145,430 10,321,093 8,735,588 7,743,377 6,757,510
Legal debt margin $ 55,315,811 $ 62,248,752 $ 61,437,833 $ 69,739,656 $ 74,212,564 $ 81,985,960 $ 83,583,346 $ 85,106,950 $ 87,049,295 $ 91,129,692
Total net debt applicable to the limit
as a percentage of debt limit. 16.59% 13.34% 20.40% 17.98% 15.43% 12.90% 10.99% 9.31% 8.17% 6 .90%
Note:
Under state finance law, the City’s outstanding general obligation debt should not exceed 2.50 percent of total assessed property value.
Fiscal Year
CITY OF COLLEYVILLE, TEXAS
LEGAL DEBT MARGIN INFORMATION
LAST TEN FISCAL YEARS
Legal Debt Margin Calculation for Fiscal Year 2014
110
111
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Utility Less: Net
Fiscal Service Operating Available
Year Charges Expenses Revenue Principal Interest Coverage
2005 10,198,733 7,251,998 2,946,735 765,000 361,976 1,819,759
2006 13,136,476 8,067,565 5,068,911 795,000 329,451 3,944,460
2007 10,046,030 8,040,621 2,005,409 825,000 296,546 883,863
2008 11,452,268 9,670,881 1,781,387 700,000 265,658 815,729
2009 11,458,282 8,943,803 2,514,479 640,000 241,223 1,633,256
2010 11,427,074 9,458,355 1,968,719 680,000 213,358 1,075,361
2011 14,391,910 10,120,678 4,271,232 920,000 57,819 3,293,413
2012 14,036,325 10,395,517 3,640,808 750,000 77,947 2,812,861
2013 14,698,914 10,707,017 3,991,897 765,000 58,430 3,168,467
2014 14,811,721 11,331,749 3,479,972 775,000 44,137 2,660,835
Notes:
Details regarding the City’s outstanding debt can be found in the notes to the financial statements. Operating Debt Service
Water Revenue Bonds
PLEDGED REVENUE COVERAGE
LAST TEN FISCAL YEARS
CITY OF COLLEYVILLE, TEXAS
112
TABLE 14
Drainage Drainage Net
Service Operations Available Sales Tax
Charges Expenses Revenue Principal Interest Coverage Increment Principal Interest Coverage
7 10,265 338,310 3 71,955 175,000 116,432 80,523 982,844 210,000 387,085 385,759
8 97,606 444,700 4 52,906 150,000 111,252 191,654 1,132,094 240,000 402,929 489,165
9 22,123 462,387 4 59,736 160,000 104,206 195,530 1,208,379 255,000 391,366 562,013
9 02,232 510,259 3 91,973 165,000 96,984 129,989 1,300,260 270,000 380,013 650,247
8 89,163 500,677 3 88,486 170,000 90,138 128,348 1,264,385 275,000 368,195 621,190
8 99,870 484,712 4 15,158 175,000 82,930 157,228 1,317,161 290,000 356,290 670,871
9 05,271 551,049 3 54,222 152,163 58,979 143,080 1,319,517 300,000 344,195 675,322
9 20,682 531,705 3 88,977 205,000 51,244 132,733 1,426,909 315,000 331,588 780,321
9 30,427 541,598 3 88,829 210,000 41,733 137,096 1,534,635 330,000 318,365 886,270
9 41,416 416,957 5 24,459 220,000 35,398 269,061 1,673,351 – 138,390 1,534,961
Operating expenses do not include interest, depreciation, or amortization expenses.
Debt Service Debt Service
Drainage Revenue Bonds Sales Tax Bonds
113
TABLE 15
Tarrant
Per Capita County
Calendar Personal Personal Unemployment
Year Population Income Income Rate
2005 21,000 165,008 54,820 5.1%
2006 21,700 167,009 55,485 4.5%
2007 22,150 175,008 58,142 4.3%
2008 22,500 173,853 57,758 5.1%
2009 22,550 166,063 55,170 8.2%
2010 22,807 166,063 55,354 7.9%
2011 22,860 199,168 65,516 8.3%
2012 22,950 199,168 65,516 6.2%
2013 23,090 199,168 65,516 6.0%
2014 23,740 200,822 66,060 5.0%
Sources:
CITY OF COLLEYVILLE, TEXAS
DEMOGRAPHIC AND ECONOMIC STATISTICS
LAST TEN FISCAL YEARS
Population – North Central Texas Council of Governments, personal income – City of Colleyville
Economic Development Department, Unemployment Rate – Texas Workforce Commission
(unemployment rate is not available solely for the City of Colleyville)
114
TABLE 16
Percentage Percentage
of Total City of Total City
Employer Employees Employment Employees Employment*
Grapevine Colleyville ISD 611 11.8% 720 – %
Market Street 325 6.3% 400 – %
Lifetime Fitness 230 4.5% – – %
City of Colleyville 190 3.7% 162 – %
Kroger – – % 150 – %
Whole Foods Market 125 2.4% – – %
Albertsons 110 2.1% 200 – %
Covenant Christian Academy 130 2.5% 80 – %
LaHacienda Ranch 100 1.9% 100 – %
Walmart Neighborhood Market 72 1.4% – – %
Sonshine Academy 60 1.2% 40 – %
US Memory Care 60 1.2% – – %
Mac’s Steak and Seafood – – % 60 – %
Compass Christian Church 50 1.0% – – %
Total 2,063 39.9% 1,912 – %
Source: City Economic Development Division
*This information is unavailable.
CITY OF COLLEYVILLE, TEXAS
PRINCIPAL EMPLOYERS
CURRENT YEAR AND NINE YEARS AGO
2014 2005
115
Function/Program 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
General government
Management services 6 6 5 5 4 4 4 4 4 4
Finance/court 7 7 6 6 6 6 6 6 8 8
Planning 3 3 3 3 3 2 2 2 2 4
Building 5 5 5 6 6 5 4 3 3 3.5
Other 5 5 6 6.5 7.5 9.5 11 11 13 12
Police
Officers 31 32 35 37 38 38 38 39 40 41
Civilians 10 11 13 14 14 13 6 6 6 6.5
Fire
Firefighters and officers 33 33 33 33 33 33 33 35 36 38
Civilians 1 1 1 1 1 2 1 1 1 1
Other public works
Engineering 5 5 5 5 5 4 4.5 3 3 4
Other 3 3 3 3 3 3 3 3 3 3
Streets 10 10 10 10 10 10 10 10 7 8
Parks and recreation 12.5 12.5 13.5 13.5 13.5 16.5 16 16 16 16
Library 5.5 5.5 7.5 8 8 9.5 11.5 11.5 12 13
Colleyville center 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5 3.5 4
Water/wastewater 25.5 28 29 29 29 28 24 25 23 25
Drainage 6 6 6 6 6 6 6 6 7 6
Total 173.0 177.5 185.5 190.5 191.5 194.0 184.5 185.5 187.5 196.5
Source: City Human Resources Office
Notes: A fulltime employee is scheduled to work 2080 hours per year (including vacation and sick leave). Fulltime equivalent employment is
calculated by dividing total labor hours by 2080.
TABLE 17
Fulltime Equivalent Employees as of September 30,
CITY OF COLLEYVILLE TEXAS
FULLTIME EQUIVALENT CITY GOVERNMENT EMPLOYEES
BY FUNCTION/PROGRAM
LAST TEN FISCAL YEARS
116
TABLE 18
Function/Program 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
General government
Building permits issued 2 45 2 70 1 40 1 31 9 0 7 7 1 04 1 55 1 03 1 08
Building inspections conducted 8 ,734 9 ,599 8 ,941 8 ,108 5 ,641 6 ,149 6 ,737 8 ,310 8 ,292 7 ,807
Police
Physical arrests 4 04 4 85 6 66 5 14 8 09 7 64 6 66 6 53 6 32 8 63
Calls for service 1 0,668 1 0,546 1 7,629 1 5,292 2 3,480 1 2,242 2 7,254 4 8,076 6 1,270 5 8,522
Traffic violations 7 ,311 1 1,218 1 2,438 1 5,621 1 2,550 1 3,822 1 1,354 1 1,980 1 1,766 1 9,955
Fire
Emergency responses 5 10 6 56 7 15 6 81 7 37 7 62 8 30 7 24 5 57 6 27
Ambulance calls 6 09 5 89 6 30 6 67 6 93 7 51 7 65 8 03 8 29 9 50
Inspections 5 60 3 12 5 03 6 66 7 96 7 84 3 97 3 42 3 06 3 17
Other public works
Street resurfacing (miles) 3 3 4 .5 8 .5 1 3.9 8 .0 6 .2 1 .0 4 .0 1 .7
Parks and recreation
Athletic field participants 6 90 6 02 4 ,960 5 ,159 4 ,617 4 ,296 4 ,378 3 ,946 4 ,287 4 ,315
Community center rentals 5 80 6 37 5 92 6 27 5 07 3 73 4 10 4 04 3 98 4 12
Library
Volumes in collection 3 4,656 4 3,378 4 6,311 5 0,348 5 4,659 5 8,147 6 2,997 6 5,740 6 9,736 7 4,525
Total volumes borrowed 1 39,130 1 77,087 1 97,712 2 11,674 2 38,459 2 44,458 2 35,238 2 44,613 2 50,737 2 34,667
Water
Customers 8 ,271 8 ,561 8 ,700 8 ,893 8 ,960 9 ,014 9 ,103 9 ,285 9 ,396 9 ,507
Average daily consumption
(thousands of gallons) 5 ,951 8 ,081 5 ,123 6 ,619 6 ,578 5 ,990 7 ,928 7 ,217 6 ,785 6 ,539
Peak daily consumption
(thousands of gallons) 1 6,126 1 6,732 1 3,068 1 6,764 1 6,674 1 8,207 1 8,935 1 8,707 1 7,052 1 5,204
Wastewater
Customers 7 ,563 7 ,761 7 ,966 8 ,138 8 ,315 8 ,389 8 ,457 8 ,603 8 ,731 8 ,817
Source: Various City departments
CITY OF COLLEYVILLE, TEXAS
OPERATING INDICATORS BY FUNCTION/PROGRAM
LAST TEN FISCAL YEARS
117
Function/Program 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Police
Stations 1 1 1 1 1 1 1 1 1 1
Patrol units 7 7 1 0 1 3 1 3 1 3 1 3 1 2 1 2 1 2
Fire
Stations 2 2 2 3 3 3 3 3 3 3
Public works
Streets (miles) 3 00 3 07 3 11 3 12 3 12 3 18 2 82 2 82 2 82 2 83
Streetlights 8 60 9 90 1 ,011 1 ,010 1 ,168 1 ,188 1 ,169 1 ,169 1 ,175 1 ,175
Traffic signals 2 2 2 2 2 2 2 2 2 2
Parks and recreation
Acreage 2 12 2 12 2 24 2 24 2 24 2 24 2 24 2 24 2 24 2 24
Playgrounds 5 5 6 6 6 6 6 6 6 6
Baseball/softball diamonds 9 9 9 9 9 9 9 9 9 9
Soccer fields 1 4 1 4 1 4 1 4 1 4 1 4 1 4 1 4 1 4 1 4
Community centers 1 1 1 1 1 1 1 1 1 1
Water
Water mains (miles) 1 73 1 75 1 91 1 92 1 99 2 00 1 95 2 01 2 02 2 04
Fire hydrants 1 ,149 1 ,206 1 ,254 1 ,271 1 ,340 1 ,345 1 ,362 1 ,389 1 ,389 1 ,403
Storage capacity 4 ,900 4 ,900 4 ,900 4 ,900 9 ,900 9 ,900 9 ,400 9 ,400 9 ,400 9 ,400
(thousands of gallons)
Wastewater
Sanitary sewers (miles) 1 50 1 54 1 63 1 64 1 66 1 70 1 62 1 69 1 70 1 72
Storm sewers (miles) 5 7 5 8 5 9 5 9 6 3 6 3 5 8 6 4 5 8 6 0
Source: Various City departments
Note: No capital asset indicators are available for the general government or library function.
Fiscal Year
TABLE 19
CITY OF COLLEYVILLE, TEXAS
CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM
LAST TEN FISCAL YEARS
118
119
COMPLIANCE
120
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INDEPENDENT AUDITORS’ REPORT ON INTERNAL CONTROL OVER FINANCIAL
REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT
OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH
GOVERNMENT AUDITING STANDARDS
To the Honorable Mayor and
Members of the City Council
City of Colleyville, Texas
We have audited, in accordance with the auditing standards generally accepted in the United
States of America and the standards applicable to financial audits contained in Government Auditing
Standards issued by the Comptroller General of the United States, the financial statements of the
governmental activities, the business-type activities, the discretely presented component unit, each major
fund, and the aggregate remaining fund information of the City of Colleyville, Texas (the “City”), as of
and for the year ended September 30, 2014, and the related notes to the financial statements, which
collectively comprise the City’s basic financial statements, and have issued our report thereon dated
January 27, 2015.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the City’s
internal control over financial reporting (internal control) to determine the audit procedures that are
appropriate in the circumstances for the purpose of expressing our opinions on the financial statements,
but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control.
Accordingly, we do not express an opinion on the effectiveness of the City’s internal control.
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to prevent, or
detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a
combination of deficiencies, in internal control, such that there is a reasonable possibility that a material
misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a
timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control
that is less severe than a material weakness, yet important enough to merit attention by those charged
with governance.
121
122
Our consideration of internal control was for the limited purpose described in the first paragraph
of this section and was not designed to identify all deficiencies in internal control that might be material
weaknesses or, significant deficiencies. Given these limitations, during our audit we did not identify any
deficiencies in internal control that we consider to be material weaknesses. However, material
weaknesses may exist that have not been identified.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City’s financial statements are free
from material misstatement, we performed tests of its compliance with certain provisions of laws,
regulations, contracts, and grant agreements, noncompliance with which could have a direct and material
effect on the determination of financial statement amounts. However, providing an opinion on
compliance with those provisions was not an objective of our audit, and accordingly, we do not express
such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that
are required to be reported under Government Auditing Standards.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and
compliance and the results of that testing, and not to provide an opinion on the effectiveness of the
entity’s internal control or on compliance. This report is an integral part of an audit performed in
accordance with Government Auditing Standards in considering the entity’s internal control and
compliance. Accordingly, this communication is not suitable for any other purpose.
Waco, Texas
January 27, 2015

Jul 22nd, 2015 Texas Tidbits: Past and Present

Why Are We Letting Government Handle This?

QUOTES ON LIBERTY AND JUSTICE, TRUTH AND DUTY:

“Few men desire liberty; most men wish only for a just master.”

-Sallust

“At the heart of western freedom and democracy is the belief that the individual man … is the touchstone of value, and all society, groups, the state, exist for his benefit. Therefore the enlargement of liberty for individual human beings must be the supreme goal and abiding practice of any western society.” Speech, University of Capetown, June 6, 1966

-Robert F. Kennedy, U.S. Senator

“Political correctness is tyranny with manners.” Speaking before the Arizona State Legislature

-Charlton Heston

“For us, warriors are not what you think of as warriors. The warrior is not someone who fights, because no one has the right to take another life. The warrior, for us, is one who sacrifices himself for the good of others. His task is to take care of the elderly, the defenseless, those who can not provide for themselves, and above all, the children, the future of humanity.”

-Sitting Bull

“Americans are so enamoured of equality they would rather be equal in slavery than unequal in freedom.”

-Alexis de Tocqueville

“It is sobering to reflect that one of the best ways to get yourself a reputation as a dangerous citizen these days is to go about repeating the very phrases which our founding fathers used in the struggle for independence.”

-Charles A. Beard

“Democracy, then, in the centralizing, pattern-making, absolutist shape which we have given to it is, it is clear, the time of tyranny’s incubation.”

-Bertrand de Jouvenel

“Let freedom ring from the prodigious hilltops of New Hampshire. Let freedom ring from the mighty mountains of New York. Let freedom ring from the heightening Alleghenies of Pennsylvania! Let freedom ring from the snowcapped Rockies of Colorado! Let freedom ring from the curvaceous slopes of California! But not only that; let freedom ring from Stone Mountain of Georgia! Let freedom ring from Lookout Mountain of Tennessee! Let freedom ring from every hill and every molehill of Mississippi. From every mountainside, let freedom ring. And when this happens, when we let freedom ring, when we let it ring from every village and every hamlet, from every state and every city, we will be able to speed up that day when all of God’s children, black men and white men, Jews and Gentiles, Protestants and Catholics, will be able to join hands and sing in the words of the old negro spiritual, “Free at last! Free at last! Thank God Almighty, we are free at last!” I Have A Dream speech

-Martin Luther King Jr.

“Come and take it”

American Rebel slogan used in 1778 at Fort Morris in Georgia during the American Revolution

“Come and take it”

Texas Rebel slogan used in 1835 at the Battle of Gonzales during the Texas Revolution

“It is necessary for every American, with becoming energy to endeavor to stop the dissemination of principles evidently destructive of the cause for which they have bled. It must be the combined virtue of the rulers and of the people to do this, and to rescue and save their civil and religious rights from the outstretched arm of tyranny, which may appear under any mode or form of government.” History of the Rise, Progress, and Termination of the American Revolution, 1805

-Mercy Warren

“We . . . declared our independence 200 years ago, and we are not about to lose it now to paper shufflers and computers.”

-Gerald Ford

“Freedom and justice cannot be parceled out in pieces to suit political convenience. I don’t believe you can stand for freedom for one group of people and deny it to others.”

-Coretta Scott King

“We have the right as individuals to give away as much of our own money as we please in charity; but as members of Congress we have no right to appropriate a dollar of the public money.”

-David Crockett

“Soldiers–By your conduct you have given another evidence of the daring courage and heroic endurance which actuate you in this great struggle for the independence of your country.”

-William Scurry

“The right of self-defense cannot be transferred in the social contract.” Hobbes on Resistance: Defying the Leviathan

-Susanne Sreedhar

“If there’s a common thread in these lessons, it’s having a common sense and a level-headed approach to life. In our day, when men are obsessing about finding themselves, their holy grail of a woman, and their “passion,” the Greatest Generation’s uncomplicated approach to life is refreshing. They didn’t go on a diet, they simply ate whole food; they didn’t exercise, they worked around the house; they didn’t obsess about their relationships, they just found a gal they loved and married her. They always looked sharp, but never fussed with fashion trends. They didn’t mull over which appliance better suited their personality and image, they just bought the machine that worked the best. They didn’t think about how to get things done, they just got em’ done. When Joe Foss, a celebrated and daring WWII pilot and then governor of South Dakota was asked if he missed his younger days, he said, “Oh no. I’m not a guy who missed anything from anywhere. I’ve always been a guy who just gets up and goes.” Instead of spending you time navel gazing your life away, just get up and go!” The Greatest Generation

-Tom Brokaw

“The grateful hearts of millions will ever bless you for struggling so long and so nobly for the right of self government.”

Rev. William H. Platt

“Evil men do not understand justice, But those who seek the Lord understand all things.”

-Isaiah 30:18

“Success is to be measured not so much by the position that one has reached in life as by the obstacles which he has overcome while trying to succeed.”

-Booker T. Washington

“Yes there’s a lady that stands in a harbor for what we believe. And there’s a bell that still echoes the price that it cost to be free.” Where The Stars And Stripes And Eagles Fly

-Aaron Tippen

“The issue today is the same as it has been throughout all history, whether man shall be allowed to govern himself or be ruled by a small elite.”

-Thomas Jefferson

“The crisis of our revolution is at hand. Great disasters have overtaken us…With you rest the hopes of our nation, and upon your action depends the fate of our people….”

-Kirby Smith

“In almost all matters, the real question should be: why are we letting government handle this?”

-Harry Browne

“Texas has yet to learn submission to any oppression, come from what source it may.”

-Sam Houston

“Silence helps the oppressors.”

-Leslie Meisels, Holocaust Survivor

“The Constitution of the United States was made not merely for the generation that then existed, but for posterity- unlimited, undefined, endless, perpetual posterity.”

-Henry Clay

“Nations are beginning to look to some vague organization, some nebulous course of humanity, to pay their bills and tell them what to do. This is not local self-government. It is not American. It is not the method which has made this country what it is. We can not maintain the western standard of civilization on that theory. If it is supported at all, it will have to be supported on the principle of individual responsibility.” Foundations of the Republic Address at Arlington National Cemetery , May 30, 1925

-Calvin Coolidge

“Stop all the lies about history…let it be…. You know it’s unfair. You can bury your head in the sand. I think we’re all going to disagree…but I think it’s fair for everyone to be able to talk about history. In pursuit of justice and liberty…it is time for everyone to learn out about our history. Give peace a chance. Can’t we all just get along? Why can’t you understand why?”

-Patrick Buffo

“The supply of government exceeds the demand.”

-Lewis H. Lapham II, Editor, Harper’s Magazine, and Author

“Oh, I am arm’d with more than complete steel, The justice of my quarrel.” Catch-22

-Joseph Heller

“No people in the history of the world have ever been so misunderstood, so misjudged, and so cruelly maligned.”

-John B. Gordon

“All laws which are repugnant to the Constitution are null and void.” Marbury vs Madison

-U.S. Supreme Court

“The politician attempts to remedy the evil by increasing the very thing that caused the evil in the first place: legal plunder.”

-Frédéric Bastiat

“I only regret that I have but one life to lose for my country.”

-Nathan Hale

“We must remember that any oppression, any injustice, any hatred, is a wedge designed to attack our civilization.” Greeting to the American Committee for the Protection of the Foreign-born, January 9, 1940

-Franklin D. Roosevelt

Jul 22nd, 2015 Interesting Quotes in History

Who is Covered in the Employee Polygraph Protection Act of 1988 (EPPA)–Texas Employment Law

Employee Polygraph Protection Act of 1988 (EPPA)
(29 USC §2001 et seq.(http://www4.law.cornell.edu/uscode/29/2001.html); 29 CFR Part 801(http://www.dol.gov/cgi-bin/leave-dol.asp?exiturl=http://s.dol.gov/8T&exitTitle=www.ecfr.gov&fedpage=yes))

Who is Covered

The Employee Polygraph Protection Act (EPPA) is administered by the Wage and Hour Division (WHD). The EPPA applies to most private employers. The law does not cover federal, state, and local government agencies.

Basic Provisions/Requirements

The EPPA prohibits most private employers from using lie detector tests, either for pre‑employment screening or during the course of employment. Employers generally may not require or request any employee or job applicant to take a lie detector test, or discharge, discipline, or discriminate against an employee or job applicant for refusing to take a test or for exercising other rights under the Act.

Employers may not use or inquire about the results of a lie detector test or discharge or discriminate against an employee or job applicant on the basis of the results of a test, or for filing a complaint or for participating in a proceeding under the Act.

Subject to restrictions, the Act permits polygraph (a type of lie detector) tests to be administered to certain job applicants of security service firms (armored car, alarm, and guard) and of pharmaceutical manufacturers, distributors, and dispensers.

Subject to restrictions, the Act also permits polygraph testing of certain employees of private firms who are reasonably suspected of involvement in a workplace incident (theft, embezzlement, etc.) that resulted in specific economic loss or injury to the employer.

Where polygraph examinations are allowed, they are subject to strict standards for the conduct of the test, including the pretest, testing, and post‑testing phases. An examiner must be licensed and bonded or have professional liability coverage. The Act strictly limits the disclosure of information obtained during a polygraph test.

Employee Rights

The EPPA provides that employees have a right to employment opportunities without being subjected to lie detector tests, unless a specific exemption applies. Where polygraph examinations are allowed, they are subject to strict standards at the pre-test, testing, and post-testing stages. Specific notices must be given to employees or prospective employees. The Act also provides employees the right to file a lawsuit for violations of the Act. In addition, the Wage and Hour Division accepts complaints of alleged EPPA violations.

Recordkeeping, Reporting, Notices and Posters

Notices and Posters

Poster. Every employer subject to EPPA shall post and keep posted on its premises a notice explaining the Act. The notice must be posted in a prominent and conspicuous place in every establishment of the employer where it can readily be observed by employees and applicants for employment. There is no size requirement for the poster.

The EPPA poster is available in English(http://www.dol.gov/whd/regs/compliance/posters/eppa.htm) and Spanish(http://www.dol.gov/whd/regs/compliance/posters/eppaspan.htm). Posting of the EPPA poster in Spanish is optional.

Notices. There are specific notices that must be given to examinees and examiners in instances where polygraph tests are permitted:

When a polygraph test is administered pursuant to the economic loss or injury exemption, the employer is required to provide the examinee with a statement prior to the test, in a language understood by the examinee, which fully explains the specific incident or activity being investigated and the basis for testing particular employees. The statement must contain, at a minimum, the following information:

An identification with particulars on the specific economic loss or injury to the business of the employer
A description of the employee’s access to the property that is the subject of the investigation
A detailed description of the basis of the employer’s reasonable suspicion that the employee was involved in the incident or activity under investigation
The signature of a person (other than the polygraph examiner) authorized to legally bind the employer

Every employer who requests an employee or prospective employee to submit to a polygraph examination, pursuant to the ongoing investigation, drug manufacturer, or security services EPPA exemptions, must provide:

Reasonable written notice of the date, time, and place of the examination and the examinee’s right to consult with legal counsel or an employee representative before each phase of the test.
Written notice of the nature and characteristics of the polygraph instrument and examination
Extensive written notice explaining the examinee’s rights, including a list of prohibited questions and topics, the examinee’s right to terminate the examination, and the examinee’s right to file a complaint with the Department of Labor alleging violations of EPPA

Employers must also provide written notice to the examiner identifying the persons to be examined.

Recordkeeping

In the limited instances where EPPA permits the administration of polygraph tests, recordkeeping requirements apply both to employers and polygraph examiners. Employers and polygraph examiners must retain required records for a minimum of three years from the date the polygraph examination is conducted (or from the date the examination is requested if no examination is conducted).

Employers investigating an economic loss or injury must maintain a copy of the statement that sets forth the specific incident or activity under investigation and the basis for testing that particular employee and proof of service of that statement to the examinee.

Employers who manufacture, distribute, or dispense controlled substances must maintain records specifically identifying the loss or injury in question and the nature of the employee’s access to the person or property that is the subject of the investigation.

Every employer who requests an employee or prospective employee to submit to a polygraph examination pursuant to the ongoing investigation, drug manufacturer, or security services EPPA exemptions must maintain:

A copy of the written statement that sets forth the time and place of the examination and the examinee’s right to consult with counsel
A copy of the written notice provided by the employer to the examiner identifying the persons to be examined
Copies of all opinions, reports or other records furnished to the employer by the examiner relating to such examinations

All polygraph examiners must maintain all opinions, reports, charts, written questions, lists, and other records relating to polygraph tests of such persons, as well as records of the number of examinations conducted during each day, and the duration of each test period.

All exempt private sector employers and polygraph examiners retained to administer examinations to persons identified by employers must keep the required records safe and accessible at the place or places of employment or business or at one or more established central recordkeeping offices where employment or examination records are customarily maintained. If the records are maintained at a central recordkeeping office, other than in the place or places of employment or business, such records must be made available within 72 hours following notice from the Secretary of Labor or an authorized representative such as Wage and Hour Division personnel.

Reporting

There are no reporting requirements under EPPA.

Penalties/Sanctions

The Secretary of Labor can bring court action to restrain violators and assess civil money penalties up to $10,000 per violation. An employer who violates the law may be liable to the employee or prospective employee for appropriate legal and equitable relief, which may include employment, reinstatement, promotion, and payment of lost wages and benefits.

Any person against whom a civil money penalty is assessed may, within 30 days of the notice of assessment, request a hearing before an Administrative Law Judge. If dissatisfied with the Administrative Law Judge’s decision, such person may request a review of the decision by the Administrative Review Board which the Secretary of Labor has designated to issue final agency decisions. Final determinations on violations are enforceable through the courts.

Relation to State, Local, and Other Federal Laws

The law does not preempt any provision of any state or local law or any collective bargaining agreement that is more restrictive with respect to lie detector tests.

Compliance Assistance Available

More detailed information, including copies of explanatory brochures and regulatory and interpretative materials, may be obtained from a local Wage and Hour office(http://www.dol.gov/whd/america2.htm).

The Department of Labor provides employers, workers, and others with clear and easy-to-access information and assistance on how to comply with the Employee Polygraph Protection Act. Compliance assistance related to the Act, including the Employee Polygraph Protection Act (EPPA) Fact Sheet(http://www.dol.gov/whd/regs/compliance/whdfs36.pdf), and regulatory and interpretive materials, is available on the Compliance Assistance “By Law”(http://www.dol.gov/compliance/laws/comp-eppa.htm) Web page.

DOL Contacts

Wage and Hour Division(http://www.dol.gov/whd/)
Contact WHD(http://www.dol.gov/whd/contactform.asp)
Tel: 1-866-4USWAGE (1-866-487-9243); TTY: 1-877-889-5627

Jul 22nd, 2015 Employment Law Defense

Claim Against Texas Workers’ Compensation Defense Attorney– Venue and Jurisdiction in Texas Workers’ Compensation Litigation–Texas Case Law

Zenith Star Insurance Company, Appellant v. Glen Wilkerson and Davis and Wilkerson, P.C., Appellees

03-03-00586-CV

COURT OF APPEALS OF TEXAS, THIRD DISTRICT, AUSTIN

March 25, 2004, Filed

FROM THE DISTRICT COURT OF TRAVIS COUNTY, 250TH JUDICIAL DISTRICT. NO. GN-204445, HONORABLE PETE LOWRY, JUDGE PRESIDING.

DISPOSITION: Affirmed.

JUDGES: Before Justices Kidd, B. A. Smith and Pemberton.

OPINIONBY: Bea Ann Smith

OPINION:

This case requires us to consider to what lengths an attorney must go to zealously represent his client and avoid legal-malpractice liability. It involves a claim by Zenith Star Insurance Company (Zenith) that its lawyer, Glen Wilkerson, n1 committed legal malpractice in a suit seeking workers’ compensation benefits by failing to advance two theories–that venue under the workers’ compensation scheme is jurisdictional and that a plaintiff’s misidentification of a defendant is an affirmative defense. In the original suit seeking benefits, Zenith initially prevailed on a plea to the jurisdiction in a Guadalupe County district court. The Fourth Court of Appeals upheld that decision, but Zenith lost on remand after the court of appeals reversed its decision sua sponte and a jury found in favor of the worker on the merits of the case. Zenith alleges that Wilkerson’s negligence proximately caused its damages in the form of losing at trial on remand. The district court granted summary judgment in favor of Wilkerson. We conclude as a matter of law that Wilkerson was not negligent in failing to assert the jurisdiction and misidentification theories and that such failure was not the proximate cause of Zenith’s injury. Therefore, we affirm the summary judgment granted by the district court.

n1 Zenith sued both Glen Wilkerson and his law firm, Davis & Wilkerson, P.C. For the sake of convenience, we will refer to Mr. Wilkerson and the law firm collectively as Wilkerson.

BACKGROUND

While driving his employer’s vehicle, Leon Galpin suffered injuries that rendered him a quadriplegic. He brought a claim to recover lifetime benefits before the Texas Workers’ Compensation Commission (the Commission) under the labor code. See Tex. Lab. Code Ann. § 409.003 (West 1996). Zenith is the workers’ compensation insurance carrier for Galpin’s employer, and Wilkerson represented Zenith in the administrative proceedings before the Commission. After a contested-case hearing, the Commission appeals panel affirmed the conclusion of the hearing officer denying benefits to Galpin. In July 1997, Galpin timely filed a suit for judicial review in the district court of Bexar County against “Zenith Insurance Company.” See id. § 410.252(a) (West Supp. 2004) n2 (to seek judicial review of Commission ruling, party must file suit no later than fortieth day after date on which decision of appeals panel was filed with division of hearings). Zenith’s original answer, prepared by Wilkerson, acknowledged that “Zenith Star Insurance Company,” not “Zenith Insurance Company,” was the proper defendant, and that Galpin had sued the wrong defendant. Galpin eventually moved to substitute Zenith Star Insurance Company for Zenith Insurance Company as the proper party defendant pursuant to stipulation of the parties.

n2 The current labor code is cited for convenience because the substantive portions of the relevant sections have not changed since the time Galpin brought this suit. When an issue turns on a portion of the statute that has been amended since Galpin’s suit was filed, the statute as it previously appeared will be cited.

On Zenith’s behalf, Wilkerson filed a plea to the jurisdiction based on Galpin’s failure to “simultaneously” file a copy of his petition with the Commission, see id. § 410.253 (West Supp. 2004), and a motion to transfer venue because Galpin had not filed suit in the county where he resided at the time of the injury, see id. § 410.252(b)(1) (West Supp. 2004) n3 (party bringing judicial-review suit must file petition with appropriate court in county where employee resided at time of injury or death). The Bexar County court granted the venue transfer to Guadalupe County pursuant to an agreed order but did not dispose of Zenith’s plea to the jurisdiction, noting that Zenith did not waive or abandon its plea by virtue of the transfer. The Guadalupe County district court granted Zenith’s motion to dismiss for lack of subject-matter jurisdiction in March 1998.

n3 Former section 410.252 read:

410.252 Time for Filing Petition; Venue

(a) A party may seek judicial review by filing suit not later than the 40th day after the date on which the decision of the appeals panel was filed with the division.

(b) The party bringing suit to appeal the decision must file a petition with the appropriate court in:

(1) the county where the employee resided at the time of the injury or death, if the employee is deceased; or

(2) in the case of an occupational disease, in the county where the employee resided on the date the disability began or any county agreed to by the parties.

Act of May 12, 1993, 73d Leg., R.S., ch. 269, § 1, sec. 410.252, 1993 Tex. Gen. Laws 987, 1209. The section was amended in 2003 by the addition of subsections (c) and (d):

(c) If a suit under this section is filed in a county other than the county described by Subsection (b), the court, on determining that it does not have jurisdiction to render judgment on the merits of the suit, shall transfer the case to a proper court in a county described by Subsection (b). Notice of the transfer of a suit shall be given to the parties. A suit transferred under this subsection shall be considered for all purposes the same as if originally filed in the court to which it is transferred.

(d) If a suit is initially filed within the 40-day period in Subsection (a), and is transferred under Subsection (c), the suit is considered to be timely filed in the court to which it is transferred.

Act of May 28, 2003, 78th Leg., R.S., ch. 663, § 1, sec. 410.252, 2003 Tex. Gen. Laws 2082, 2082 (codified at Tex. Lab. Code Ann. § 410.252 (West Supp. 2004)).

Galpin appealed the Guadalupe County court’s final judgment to the Fourth Court of Appeals in San Antonio. On January 27, 1999, that court affirmed the dismissal of Galpin’s suit for want of jurisdiction, holding that the requirements of section 410.253 of the labor code, requiring a copy of the petition to be simultaneously filed with the Commission, were mandatory and jurisdictional. See Galpin v. Zenith Ins. Co., 993 S.W.2d 146, 146-47 (Tex. App.–San Antonio 1999, no pet.). On February 4, 1999, the Texas Supreme Court issued an opinion in Albertson’s, Inc. v. Sinclair, 984 S.W.2d 958, 958-59 (Tex. 1999), holding that failure to timely file a copy of the petition with the Commission does not deprive a trial court of jurisdiction to review the denial of benefits. In light of Albertson’s, the Fourth Court of Appeals on its own motion withdrew its original opinion in Galpin and substituted a new opinion on February 26, 1999, remanding the cause to the trial court. See Galpin, 933 S.W.2d at 147. On remand, a jury found in favor of Galpin, and Zenith was ordered to pay him lifetime benefits.

About sixteen months later, Galpin [*6] filed suit in Bexar County alleging that Zenith was acting in bad faith by failing to pay the benefits ordered under the final judgment. The case was transferred to Travis County. Zenith responded by filing a motion for summary judgment, seeking a declaration that the final judgment rendered by the district court in Guadalupe County was void because the court lacked jurisdiction on two grounds: failure to timely file suit in the proper county and failure to timely file suit against the proper defendant. The Travis County court denied Zenith’s motion. That suit is still pending.

Zenith then filed this legal-malpractice action against Wilkerson in Travis County, asserting that it would have prevailed in the underlying litigation but for Wilkerson’s failure to plead or otherwise raise the following defensive legal theories: the Guadalupe County district court lacked jurisdiction because (1) the suit was initially filed in the wrong county, and (2) the suit was initially brought against the wrong defendant. Wilkerson filed a motion for summary judgment, which the trial court granted. In one issue, Zenith appeals the summary judgment, asserting that the evidence created a fact issue on negligence and that, therefore, Wilkerson was not entitled to judgment as a matter of law.

DISCUSSION

Standard of review

Because the propriety of a summary judgment is a question of law, we review the trial court’s decision de novo. Natividad v. Alexsis, Inc., 875 S.W.2d 695, 699 (Tex. 1994); Texas Dep’t of Ins. v. American Home Assurance Co., 998 S.W.2d 344, 347 (Tex. App.–Austin 1999, no pet.). The standards for reviewing a motion for summary judgment are well established: (1) the movant has the burden of showing that no genuine issue of material fact exists and that it is entitled to judgment as a matter of law; (2) in deciding whether there is a disputed material fact issue precluding summary judgment, evidence favorable to the nonmovant will be taken as true; and (3) every reasonable inference must be indulged in favor of the nonmovant and any doubts resolved in its favor. Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548-49 (Tex. 1985).

Legal malpractice

A legal-malpractice action is based on negligence. Cosgrove v. Grimes, 774 S.W.2d 662, 664 (Tex. 1989). A lawyer in Texas is held to the standard of care that would be exercised by a reasonably prudent attorney:

If an attorney makes a decision which a reasonably prudent attorney could make in the same or similar circumstance, it is not an act of negligence even if the result is undesirable. Attorneys cannot be held strictly liable for all of their clients’ unfulfilled expectations. An attorney who makes a reasonable decision in the handling of a case may not be held liable if the decision later proves to be imperfect. The standard is an objective exercise of professional judgment, not the subjective belief that his acts are in good faith.

Id. at 665. The attorney’s conduct must be evaluated by the fact-finder based on the information the attorney has at the time of the alleged act of negligence. Id. at 664. To recover on a negligence claim, the plaintiff must prove four elements: (1) that there is a duty owed to him by the defendant, (2) a breach of that duty, (3) that the breach proximately caused the plaintiff injury, and (4) that damages occurred. Id. at 665 (citing McKinley v. Stripling, 763 S.W.2d 407 (Tex. 1989)). Zenith asserts that summary judgment was improper because Wilkerson failed to sustain his burden to show that there is no fact issue on the elements of breach and proximate cause in light of Zenith’s evidence in the form of a lawyer’s affidavit opining that Wilkerson’s errors constituted negligence and caused Zenith’s injury. We will address the elements of breach and proximate cause as they pertain to venue and misidentification separately.

Venue

Zenith asks this Court to remand this cause because the question of whether Wilkerson was negligent with respect to its first “defense”–that filing suit in the wrong venue deprived the trial court of subject-matter jurisdiction–is a fact question to be decided by a jury and cannot be decided as a matter of law. We turn to this defense first as it relates to the breach element of malpractice.

Because a lawyer is held to the standard of care that would be exercised by a reasonably prudent attorney, expert testimony of an attorney is usually necessary to establish the standard of skill and care ordinarily exercised by an attorney. Hall v. Rutherford, 911 S.W.2d 422, 424 (Tex. App. –San Antonio 1995, writ denied). To establish compliance with the standard, expert testimony is also usually required. Jatoi v. Decker, Jones, McMackin, Hall & Bates, 955 S.W.2d 430, 434 (Tex. App.–Fort Worth 1997, writ denied). Once the defendant in a legal malpractice suit has submitted expert testimony on the standard of care, the plaintiff is then required to controvert the expert testimony with other expert testimony. Id. (citing Anderson v. Snider, 808 S.W.2d 54, 55 (Tex. 1991)). Zenith cites Wilkerson’s summary-judgment motion, which was not supported by expert testimony going to the venue defense. n4 Wilkerson rejoins that expert testimony is required only when the issue of an attorney’s negligence is a question of fact, not when it is a question of law.

n4 Wilkerson’s motion was accompanied by his own affidavit but spoke only to the misidentification defense, not to the venue defense.

Wilkerson cites a legal-malpractice treatise requiring two issues to be resolved when an attorney is charged with an error regarding the failure to raise a defensive legal theory: first, whether the attorney erred; and second, whether such error was caused by the attorney’s negligence. Ronald E. Mallen & Jeffrey M. Smith, Legal Malpractice § 33.11 (5th ed. 2000). The first issue is a question of law, while the second is one of fact. Id. Before the second question can be reached, a court must initially determine whether the attorney erred, which is a question of law for the court. Id.; see Campbell v. Doherty, 899 S.W.2d 395, 398 (Tex. App.–Houston [14th Dist.] 1995, writ denied) (upholding summary judgment for defendant in legal malpractice action after finding that jury instruction, to which attorney allegedly failed to object, was legally correct). Wilkerson could only have erred by failing to assert the “defenses” about which Zenith complains if such defenses were legally valid. Whether a defense is legally valid is a question of law. See Mallen & Smith § 33.11. As Wilkerson sums up, “if Wilkerson was correct on the law, he could not be negligent.” We agree.

Zenith insists that the law about whether venue is jurisdictional was settled when Galpin’s lawsuit was filed and that it compelled a reasonable attorney to advance the defense or be subject to malpractice liability. Zenith cites Federal Underwriters Exchange v. Pugh and several opinions from various court of appeals for this proposition. See 174 S.W.2d 598, 600 (Tex. 1943); e.g., Castillo v. Allied Ins. Co., 537 S.W.2d 486, 487 (Tex. Civ. App.–Amarillo 1976, writ ref’d n.r.e.); Leadon v. Truck Ins. Exch., 253 S.W.2d 903, 904-05 (Tex. Civ. App.–Galveston 1952, no writ); Garrett v. Hartford Accident & Indem. Co., 107 S.W.2d 726, 728 (Tex. Civ. App.–Eastland 1937, no writ). While noting that the settled law prior to 1931 dictated that filing suit in the statutory venue was jurisdictional, see Mingus v. Wadley, 115 Tex. 551, 285 S.W. 1084, 1088 (Tex. 1926), overruled by Dubai Petroleum Co. v. Kazi, 12 S.W.3d 71, 76 (Tex. 2000), Pugh actually reversed that law in response to an amendment to the statute allowing a court to transfer a case filed in the wrong venue to the proper court. Pugh, 174 S.W.2d at 600. The intermediate-court cases Zenith cites are not on point, as they speak to a court’s lack of subject-matter jurisdiction when a party misses the statutory time limit by first filing suit in federal court, not when a party files in the wrong county. See Leadon, 253 S.W.2d at 904-05; Garrett, 107 S.W.2d at 728. Castillo, while somewhat on point, merely reinforces Pugh by noting that the venue statute specifically allows transfer of a case to the proper venue. Castillo, 537 S.W.2d at 487. Thus, if the law was “settled” on the topic of venue in workers’ compensation cases after Pugh, it cut against Zenith’s interpretation by holding that venue was not jurisdictional, and a suit filed in a non-mandatory county could be transferred to the county of mandatory venue.

Yet, continues Zenith, even if Pugh was the controlling law at the time of the underlying judicial proceedings, the legislature amended section 410.252 in 1989 to remove the language allowing transfer to the proper court. See Act of Dec. 12, 1989, 71st Leg., 2d C.S., ch. 1, § 16.01(11), 1989 Tex. Gen. Laws 1, 114, amended by Act of May 12, 1993, 73d Leg., R.S., ch. 269, § 1, sec. 410.252, 1993 Tex. Gen. Laws 987, 1209. Thus, it implies, Mingus was reinstated as the controlling law, and proper venue once again became jurisdictional. See Mingus, 285 S.W. at 1088. We reject this argument. The legislature’s enactment of a new workers’ compensation statute that omitted language allowing for the transfer of a case filed in the wrong county does not mean that the legislature intended to overrule Pugh. Nothing in the new law’s language indicates the legislative intent to make filing in the mandatory venue jurisdictional. n5 Moreover, courts must liberally construe workers’ compensation legislation in favor of the worker. See Lujan v. Houston Gen. Ins. Co., 756 S.W.2d 295, 297 (Tex. 1988). We conclude that, contrary to Zenith’s assertion, the law at the time Galpin filed suit did not provide that venue was jurisdictional; if anything, the law was unsettled at the least, if not settled in the opposite vein.

n5 Indeed, evidence of contrary legislative intent is revealed in the Guide to Worker’s Compensation Reform, authored by some of the 1989 act’s primary sponsors, in which the authors write in terms of “mandatory venue” for suits under the act. See John T. Montford, Will Barber, & Robert Duncan, Guide to Texas Workers’ Comp Reform § 6.61 (1991). The use of “mandatory venue” implies that venue under the act is no greater an obstacle to recovery for a plaintiff than venue is in other civil suits, which allow for the transfer by a party of a case to a county of mandatory venue. See Tex. Civ. Prac. & Rem. Code Ann. § § 15.001 (proper venue is that required by statute prescribing mandatory venue), .016 (action must be brought in county required by statute’s mandatory-venue provision), .063 (court shall transfer action to county of proper venue if county in which action is pending is not county of proper venue) (West 2002); Tex. R. Civ. P. 86 (objection to improper venue must be made by written motion prior to or concurrently with any other plea, pleading, or motion other than special-appearance motion). Furthermore, the heading of the statute in place during the relevant proceedings reads, “Time for Filing Petition; Venue.” See Act of Dec. 12, 1989, 71st Leg., 2d C.S., ch. 1, § 16.01(11), 1989 Tex. Gen. Laws 1, 114, amended by Act of May 12, 1993, 73d Leg., R.S., ch. 269, § 1, sec. 410.252, 1993 Tex. Gen. Laws 987, 1209 (emphasis added).

Even if the effect of filing suit in the wrong county was unsettled, the question of whether venue was jurisdictional remains a question of law. Courts routinely decide unsettled questions of law, weighing arguments and authority on both sides of an issue and determining which is the legally correct outcome. To resolve this question of law, we review opinions issued during and after the pendency of these proceedings. n6

n6 This is not a situation where during the relevant time when an attorney was allegedly negligent there was clear, controlling authority requiring an action that the attorney failed to take. Under such circumstances, the attorney would most likely have committed error, even despite later controlling authority reversing the state of law after the mandate in the underlying case had issued. However, such are not the facts of this case; rather, the state of the law was at least unclear, and in any event did not require the actions now advanced by Zenith.

The supreme-court case Albertson’s v. Sinclair, on which the San Antonio court of appeals based its sua sponte reversal in Galpin’s appeal, spoke specifically to the question of whether a plaintiff’s timely filing of a copy of its petition with the Commission is jurisdictional. However, the language and reasoning of the opinion indicate a broader application. While concluding that the Commission filing requirement is mandatory, the Court also stated that “just because a statutory requirement is mandatory does not mean that compliance with it is jurisdictional.” Albertson’s, 984 S.W.2d at 961 (citing Hines v. Hash, 843 S.W.2d 464, 467 (Tex. 1992)). “When the statute is silent about consequences of noncompliance, we look to the statute’s purpose in determining the proper consequences of noncompliance. [Citations omitted.] Further, we liberally construe workers’ compensation legislation to carry out its evident purpose of compensating injured workers and their dependents.” Id. Finally, the Court concluded that, even though the filing requirement is mandatory, “nevertheless, the liberal construction we must give workers’ compensation laws precludes a jurisdictional interpretation.” Id. The liberal construction we too must give workers’ compensation laws compels the similar conclusion that, while venue in a particular county is mandatory, it is not jurisdictional.

In a case directly on point, this Court has since held that section 410.252(b) of the labor code applies to the venue of an appeal to the district court, but not to the court’s jurisdiction to hear a particular type of case. Hartford Underwriters Ins. Co. v. Hafley, 96 S.W.3d 469, 473 (Tex. App.–Austin 2002, no pet.) (citing Dubai Petroleum Co. v. Kazi, 12 S.W.3d 71 (Tex. 2000)). Looking to the terms of the statute, we concluded in Hafley that “the section heading describes it as a venue provision. By its language, the section does not limit or create specific powers in a specific district court, nor does it indicate that other district courts should be denied jurisdiction over worker’s compensation appeals.” Id. “When a statutory prerequisite to suit is such that it affects only venue, without making any substantive change in the court’s inherent power, it should not be held jurisdictional. . . . Therefore, raises a question of venue, rather than subject-matter jurisdiction.” Id. We hold that, as a matter of law, Zenith had no valid jurisdictional defense resting on a claim of mandatory venue. Wilkerson did not err in failing to assert this non-viable legal defense.

We now turn to Zenith’s claim that Wilkerson’s failure to assert the venue defense proximately caused it to lose on remand. To address this claim, we assume for the sake of argument that Wilkerson did breach the standard of care he owed to Zenith. Even if Wilkerson could have validly advanced the venue defense, Zenith would also have to prove that Wilkerson’s omission was the proximate cause of its damages. When a legal-malpractice claim arises from prior litigation, the plaintiff has the burden to prove that but for the attorney’s negligence, the plaintiff would be entitled to judgment, and to show what amount he would have recovered in the judgment. Hall, 911 S.W.2d at 424; Mackie v. McKenzie, 900 S.W.2d 445, 449 (Tex. App.–Texarkana 1995, writ denied). Whether the attorney’s negligence is the but-for, or proximate, cause of the client’s unsuccessful suit is usually a question of fact. See Millhouse v. Wiesenthal, 775 S.W.2d 626, 627 (Tex. 1989) (recognizing general rule that causation is fact question, but finding that causation in appellate legal- malpractice case is question of law); Mackie, 900 S.W.2d at 449. “Nonetheless, causation may be determined as a matter of law if the circumstances are such that reasonable minds could not arrive at a different conclusion.” Mackie, 900 S.W.2d at 449 (citing Missouri Pac. R.R. Co. v. American Statesman, 552 S.W.2d 99, 105 (Tex. 1977)); see Swinehart v. Stubbeman, McRae, Sealy, Laughlin & Browder, Inc., 48 S.W.3d 865, 875 (Tex. App.–Houston [14th Dist.] 2001, pet. denied) (summary judgment proper if it is shown that attorney’s act or omission was not cause of damages to client); MND Drilling Corp. v. Lloyd, 866 S.W.2d 29, 32 (Tex. App.–Houston [14th Dist.] 1987, no writ).

Because the “defense”–that Galpin’s filing in the wrong county deprived the Bexar County court of jurisdiction–was not a legally valid defense, we conclude that no reasonable mind could conclude that but for Wilkerson’s failure to assert this “defense,” Zenith would ultimately have prevailed. Even if the original trial court had adopted Zenith’s venue argument and granted a plea to the jurisdiction on that ground, the only reasonable conclusion is that when Galpin appealed the case, the San Antonio court of appeals would have ultimately held, in light of Albertson’s, that the jurisdictional defense of venue was invalid, as discussed above. Because Zenith’s ultimate victory hinged on the availability of this “defense,” which is a question of law, our holding as to the availability of that defense makes the question of whether a failure to assert it resulted in Zenith’s loss also a question of law.

Zenith alternatively argues that Wilkerson should have advanced the failure to bring suit in the proper county as an “affirmative defense,” because it would have defeated Galpin’s right to go forward with his suit. See Dubai, 12 S.W.3d at 76-77 (right of plaintiff to maintain suit, though sometimes treated as going to question of jurisdiction, more appropriately goes to right of plaintiff to relief). Although we agree with Zenith that bringing suit in the county of mandatory venue is necessary, any reasonable attorney receiving an answer alleging such an “affirmative defense” would file a motion to transfer venue to the proper county. Wilkerson’s filing of a motion to transfer venue to the statutorily mandated county was not negligent, but rather competent and appropriate under the circumstances. n7 We overrule Zenith’s issue as it relates to Wilkerson’s failure to advance venue as a jurisdictional defense.

n7 In rejecting Zenith’s arguments, we note our reluctance to condone a rule that subjects competent attorneys to liability for failing to assert every conceivable defense tactic under the sun, despite the availability of alternative, well-known tools such as motions to transfer venue. The practice of law is adversarial enough without attorneys having to eschew expense-and time-saving measures such as agreed motions to transfer venue. Had Wilkerson pursued the venue-is-jurisdictional defense, he might even have been subject to sanctions for asserting a frivolous defense.

Misidentification

Zenith also urges that the trial court improperly granted summary judgment because there is a fact issue on the elements of breach and proximate cause with respect to Wilkerson’s failure to assert the “defense” of misidentification of the defendant in the underlying action. Citing Roberts v. Tarrant County Junior College, 842 S.W.2d 835, 836-37 (Tex. App.–Fort Worth 1992, writ denied), Zenith asserts that the failure to properly name the correct defendant in a petition deprives the court of jurisdiction to hear the case. See also Brown v. McMillan Material Co., 108 S.W.2d 914, 916 (Tex. Civ. App.–Eastland 1937, writ ref’d) (holding former act’s requirement that suit be filed against proper defendant within twenty days was jurisdictional). However, Zenith ignores precedent from the supreme court holding that if a plaintiff can prove that the proper defendant was not prejudiced by a mistake in the pleading misidentifying it, then limitations would not operate to bar the suit. See Enserch Corp. v. Parker, 794 S.W.2d 2, 4-5 (Tex. 1990) (citing Cont’l S. Lines, Inc. v. Hilland, 528 S.W.2d 828, 831 (Tex. 1975)); see also Flour Bluff Indep. Sch. Dist. v. Bass, 47 Tex. Sup. Ct. J. 310, 2004 Tex. LEXIS 164 (Feb. 27, 2004) (per curiam) (statute of limitations tolled in misidentification cases if there are two separate, but related, entities that use similar trade name and correct entity had notice of suit and was not misled or disadvantaged by mistake); Chilkewitz v. Hyson, 22 S.W.3d 825, 830 (Tex. 1999) (same); Ealey v. Insurance Co. of N. Am., 660 S.W.2d 50, 52 (Tex. 1983) (erroneous identification by insurance carrier of itself in petition did not disadvantage defendant, where petition and prior proceedings before Industrial Accident Board made it clear which party was appealing Board’s decision); Sanchez v. Aetna Cas. & Surety Co., 543 S.W.2d 888, 890 (Tex. Civ. App.–San Antonio 1976, writ ref’d n.r.e.) (same).

Zenith’s argument relies on the presumption that, had Wilkerson asserted the defense that the wrong arm of the Zenith companies had been sued, or had he moved to dismiss the suit because of the misidentification, Galpin’s suit would have been disposed of and Zenith ultimately would have prevailed. However, even if Wilkerson had proceeded as Zenith now claims he should have, Galpin would still have been able to amend his pleadings and sue the proper Zenith company under supreme-court precedent allowing the tolling of limitations when a party has been misidentified and there is no prejudice to that party by the mistake. See Enserch, 794 S.W.2d at 5; Hilland, 528 S.W.2d at 831. The evidence shows that Zenith would not have been prejudiced, n8 and we conclude that Zenith’s misidentification argument has no merit on either the breach or proximate-cause prongs of a negligence claim. We overrule Zenith’s issue as it relates to the misidentification theory.

n8 The record indicates that both “Zenith Insurance Company” and “Zenith Star Insurance Company” were indicated on different filings by both sides in the Commission proceedings. Also, Wilkerson directed all of his communication, oral and written, to Zenith Insurance Company throughout the administrative and judicial proceedings. Wilkerson’s affidavit states that Zenith personnel were aware of the misidentification immediately and consented to the substitution of “Zenith Star” as the proper defendant.

CONCLUSION

As a matter of law, Wilkerson did not breach the duty of care owed to Zenith nor did Wilkerson’s representation proximately cause Zenith’s alleged injury. We affirm the district court’s grant of summary judgment in favor of Wilkerson.

Bea Ann Smith, Justice

Jul 22nd, 2015 Workers' Compensation Defense

Cursed is He Who Distorts the Justice Due a Stranger, Orphan, and Widow

QUOTES ON LIBERTY AND JUSTICE, TRUTH AND DUTY:

“It’s sad that governments are chiefed by the double tongues.”

-Ten Bears, Comanche leader

“The truth is the kindest thing we can give folks in the end.”

-Harriet Beecher Stowe

“For this future emancipation, we have to rule out ideologies that aim at reinforcing the state, the police and controls in general, and at reducing liberty.”

-André Thirion

“I ask you…to adopt the principles proclaimed by yourselves, by your revolutionary fathers, and by the old bell in Independence Hall….” Southern Loyalists’ Convention. Philadelphia, 1866

-Frederick Douglass

“Love of justice in the generality of men is only the fear of suffering from injustice.”

-François Duc de La Rochefoucauld

” ‘Cursed is he who distorts the justice due a stranger, orphan, and widow.’ And all the people shall say, ‘Amen.’ ”

-Deuteronomy 27:19

“The Liberty Bell is a very significant symbol for the entire democratic world.” Philadelphia Inquirer, July 4, 1993

-Nelson Mandela

“Our liberties, once lost, may be lost forever.”

-A. H. Stephens

“If you are neutral in situations of injustice, you have chosen the side of the oppressor.”

-Desmond Tutu.

“For this future emancipation, we have to rule out ideologies that aim at reinforcing the state, the police and controls in general, and at reducing liberty.”

-André Thirion

“An oppressed people are authorized whenever they can to rise and break their fetters.”

-Henry Clay

“A man who would not love his forefather’s grave is worse than a wild animal.”

-Chief Joseph leader of the Wal-lam-wat-kain (Wallowa) band of Nez Perce

“While the common man takes the hits, our Founding Fathers are rolling in their graves. It’s time we stand up for what we believe. You’re bringing this nation to its knees and I want my country back….Whatever happened to Made in the USA? I am not pointing fingers or spreading hate. This is the land of the free, not a welfare state. When we bleed, it’s Red White and Blue. I dare you to mess with the military’s pay, or take our seniors’ benefits away. Folks like me will not take it lying down. I’m tired of hearing we have to keep God out of everything, so we don’t offend anyone. If you had any sense, you would get on your knees and pray that He comes back to save us today.”

-Matt Dylan

“Liberty, in its last analysis, is but the sweat of the poor and the blood of the brave.”

-Robert Toombs

“I live in a crazy time.”

-Anne Frank

“The urge to save humanity is almost always a false front for the urge to rule.”

-H.L. Mencken

“That dream was a prophecy; it came to me in my cell to comfort me when all the world was against me and death staring me in the face. It gave me hope, and strength, and courage, without which I should certainly have sickened and died during my long confinement. Something tells me I will spend the remainder of my days in peace, and with my family and friends. My life, since the war commenced, has been a turbulent one, full of danger and attended throughout with narrow escapes and reckless adventures, but much of it is known only to myself and it will die with me.” Wartime Diary

-R.R. Hancock

“The danger of the past was that men became slaves. The danger of the future is that man may become robots.”

-Erich Fromm

“…tell them when I come hom I intend to bee independent…. Liberty is the word with me.” Soldier’s letter home, June 8, 1863

– James N. Levi

“It is not the business of government to make men virtuous or religious, or to preserve the fool from the consequences of his own folly. Government should be repressive no further than is necessary to secure liberty by protecting the equal rights of each from aggression on the part of others, and the moment governmental prohibitions extend beyond this line they are in danger of defeating the very ends they are intended to serve.”

-Henry George

“But let justice roll on like a river, righteousness like a never-failing stream!”

-Amos 5:24

Jul 22nd, 2015 Interesting Quotes in History

ERISA Litigation and Significant Issues in Litigation–DOL- Employment Law For Texas Employers

Fulghum v. Embarq Corp. (10th Cir.)
The merits issue in this case is whether participants were promised and are entitled under the employer’s plan to certain lifetime medical and life insurance benefits upon retirement. The district court dismissed the case as untimely, agreeing with the majority of courts that hold that the “fraud or concealment” exception to the ERISA section 413’s six-year statute of limitations requires an affirmative act of “fraudulent concealment” separate from the underlying misrepresentation constituting the alleged breach of fiduciary duty. It also decided the claims were untimely because they accrued at the time of the misrepresentation of lifetime benefits, more than six years before suit was brought. The court issued its initial decision on February 14, 2013, and it issued a decision denying reconsideration on July 16, 2013. A notice of appeal was timely filed on September 17, 2013. On December 18, 2013, the Secretary filed an amicus brief arguing that the district court erred in concluding that the “fraud or concealment” standard for statute of limitations purposes only applies when a fiduciary takes steps in additional affirmative steps to conceal the fiduciary misrepresentation. Plan Benefits Security Division

Fuller v. Sun Trust Banks (11th Cir.)

This case involves both the three-year and six-year statutes of limitations under section 413 of ERISA. Appellant’s brief was filed on February 12, 2013, and the Secretary filed an amicus brief in support of the plaintiff-appellant on March 12, 2013. The brief argued, with respect to the three-year actual knowledge standard, that the district court wrongly applied a constructive knowledge standard by relying on certain documents attached to the motion to dismiss that plaintiff never saw, and that she would not have had actual knowledge of all the elements of the alleged fiduciary breach even if she had reviewed those documents. The brief did not address the six-year statute of limitations issues. Oral argument, in which the Secretary participated, was held on November 7, 2013. Plan Benefits Security Division

Hi-Lex Controls, Inc. v. Blue Cross and Blue Shield of Michigan (6th Cir.)

In this private action, the court found that Blue Cross violated its fiduciary duties by charging health care plans sponsors hidden administrative fees and ordered Blue Cross to reimburse the sponsor $5.1 million. The court held that the claims were not time-barred under ERISA’s three or six-year statute of limitations because ERISA’s “fraud or concealment” exception to the normal statutory period applied. In so holding, the district court relied on a Second Circuit decision construing the exception more leniently than the construction applied by other circuits. On December 10, 2013, the Secretary filed an amicus brief agreeing with the court’s analysis of the statute of limitations issue, and also taking the position that the court was correct in deciding that Blue Cross acted as a fiduciary and committed a fiduciary breach in collecting the hidden fees from the plan assets it controlled. Plan Benefits Security Division

In re Revstone Casting Fairfield (N.D. Tex.)

On February 25, 2013, the Secretary obtained an inspection warrant that allowed the Department and an appraiser entry on to property owned by the Revstone Casting Fairfield Plan, in order for the appraiser to prepare a valuation of the property. See also Perez v. Hofmeister, Section K. Financial Institution and Service Provider Cases. Dallas and Chicago Offices

Solis v. Rice (N.D. Ohio)

On January 23, 2013, the court entered an amendment to a consent order and judgment, entered on November 25, 2003, involving the Ohio Industries, Inc. Group Medical, Dental and Weekly Disability Income Plan and the Ohio Locomotive Crane Co., Inc. Savings Investment Plan. The amendment, which appoints a new independent fiduciary to replace the one who withdrew, provides for the new fiduciary to accept $29,562.83 in funds ($25,314.46 for the Group Medical, Dental and Weekly Disability Income Plan and $4,248.37 for the Savings Investment Plan) distributed from Ohio Industries’ bankruptcy case. In addition, the independent fiduciary is to secure unclaimed funds in the name of the plans from the State of Ohio and distribute these assets, along with the bankruptcy funds, to the plans’ participants. Cleveland Office

Smith v. Aegon (6th Cir.)

This is an appeal from a district court decision dismissing an ERISA pension benefits case brought in Kentucky based on a forum selection clause that was incorporated into the plan more than seven years after the participant retired, which clause required him to file suit in Ohio rather than Kentucky. The plaintiff filed his opening brief on July 22, 2013. On August 12, 2013, the Secretary filed an amicus brief arguing that ERISA invalidates the forum selection clause. Plan Benefits Security Division

In re Ormet Corporation (Bankr. Del.)

On November 15, 2013, the Secretary filed two objections in the Ormet Corporation Chapter 11 bankruptcy proceeding. Ormet was an Ohio corporation with four affiliated companies. It had approximately 14 employee benefit plans, some of which were subject to ERISA. The Secretary’s first objection involved the debtors’ motion for the approval of the sale of all of its assets relating to one of its facilities, including the transfer of employee benefit plans. The Secretary objected to the motion because the debtors’ filings failed to include sufficient information for the Secretary to determine whether the sale would violate any provisions of ERISA, including its COBRA provisions, or to determine whether the buyer would incur any successor liability. The Secretary also objected based on the debtors’ attempt to disclaim all ERISA liability with respect to the buyer and non-debtor third parties. In addition, the Secretary also objected to the debtors’ second emergency motion, which sought relief from its current obligations to several ERISA-covered plans and attempted to disclaim all COBRA obligations and some of its plan payment obligations. Chicago Office

In re Robert Plan Corp. (Bankr. E.D.N.Y.)

This case involves an ongoing dispute with a Chapter 7 trustee over a bankruptcy court’s jurisdiction to approve payments to the trustee and his retained professionals for work performed in terminating the debtor’s 401(k) plan. On October 26, 2010, the bankruptcy court held that it had core jurisdiction to rule on the fee requests, but avoided ruling on whether it had jurisdiction to determine the amount of the fees to be paid using plan assets. On March 1, 2011, the bankruptcy court issued a first interim fee award to the trustee and his professionals in amounts greater than the Secretary believed appropriate, but consistent with the October 2010 Order, and refused the trustee’s request to rule on what amounts were payable by the plan. On December 11, 2011, the Secretary filed an objection to the second interim fee request by the trustee and his law firm and a final fee application by the auditor and pension consultant assisting the trustee. On August 20, 2012, the bankruptcy court overruled the Secretary’s objections and granted the fee applications. Departing from the terms of the 2010 Order, which had stated that “[a]ny order awarding fees would contain no determination of whether Plan funds could be used to satisfy the award,” the bankruptcy court expressly provided in the August 2012 decision that the trustee could use plan funds to pay the professionals, thereby effectively asserting jurisdiction over the ERISA plan and its assets. The interim fee award to the trustee of $132,378.24 resulted in an effective hourly rate of approximately $2,000 per hour. As a portion of the relief granted in the 2012 decision was interlocutory, on September 4, 2012, the Secretary filed a motion for leave to appeal to the district court. On September 14, 2012, the trustee filed an opposition to the Secretary’s motion. On September 27, 2012, the Secretary filed a motion for leave to file a reply brief, to which the trustee filed an opposition on October 4, 2012. On April 9, 2013, rather than rule on the Secretary’s request to file a reply brief, the district court granted the Secretary’s request to appeal solely that portion of the August 2012 decision that asserted the bankruptcy court’s jurisdiction to order the payment of fees from plan assets; it determined that the issues regarding the amount of the compensation of the trustee and his law firm would be appealable at a later date when final orders of compensation were issued in the bankruptcy case. The Secretary filed its appeal brief on April 30, 2013, and the trustee filed an opposition on May 15, 2013. The district court has not yet issued an opinion. Plan Benefits Security Division

In re Saetveit (Bankr. D. Colo.)

The Secretary filed a joint stipulation as to non-dischargeability of debt in December 2013 in the bankruptcy case of William Roger Saetveit, a fiduciary responsible, along with others, for committing a series of ERISA violations in the course of investing plan assets and allowing plan participants to direct their plan account assets into a hedge fund that later was revealed to be a Ponzi scheme. Saetveit, the fiduciary debtor, was grossly negligent with regard to his responsibilities as a plan fiduciary and thus committed defalcation. Denver Office

Schoenfeld v. Perez (9th Cir.)

This is an appeal from a case brought by the Secretary in which the Secretary successfully argued that fiduciaries breached their duties to an ESOP by allowing the corporate sponsor to withdraw funds from the ESOP to pay corporate expenses and that the debt is non-dischargeable under the bankruptcy code because of defalcation. The appellants filed their brief on August 20, 2013, and the Secretary filed a response brief on extension on October 25, 2013. San Francisco Office and Plan Benefits Security Division

In re Thelen LLP (Bankr. S.D.N.Y.)

Thelen LLP, a major national law firm and Chapter 7 debtor, was the sponsor and plan administrator for three ERISA-covered plans: a 401(k) plan, a defined benefit plan, and a cash balance plan. Pursuant to section 704(a)(11) of the Bankruptcy Code, Thelen’s Chapter 7 trustee became obligated to fulfill the plan administrator role. On or about July 13, 2010, the trustee filed a motion seeking payment from the plans for legal services provided by Fox Rothschild LLP (“Fox”), the trustee’s law firm. The trustee filed motions on January 13, 2011, and October 13, 2011, seeking: (i) authorization to terminate the plans; (ii) authorization for the plans to pay for services provided by professionals retained by the trustee; (iii) the retention of an independent fiduciary to terminate the plans and pay retained professionals from plan assets; and (iv) to quash an administrative subpoena issued by the Secretary to the trustee. On March 17, 2011, and February 10, 2012, the Secretary objected to the jurisdiction of the bankruptcy court to approve the payment of the fees and expenses of Fox and the other professionals, the appointment of the independent fiduciary, and the quashing of the subpoena. On October 20, 2011, the PBGC filed an objection to the appointment of an independent fiduciary and the failure of the trustee to sign a trusteeship agreement for the transfer of the defined benefit plan to the PBGC for termination. On May 17, 2012 a consensual order was entered by the district court providing for, among other things: (i) a withdrawal of the reference of the motions from the bankruptcy court to the district court; (ii) the appointment of an independent fiduciary for the cash balance and the 401(k) plans to terminate those plans and to pay the plan professionals (including Fox); (iii) fixing Fox’s fees at $125,000, less than half of what Fox would have claimed; (iv) the assignment of the defined benefit plan to the PBGC; and (v) the Secretary’s release of her prohibited transaction claims and certain other claims against the trustee and Fox. The independent fiduciary is now in the process of terminating the cash balance and 401(k) plans; termination of the 401(k) plan is near completion. Plan Benefits Security Division

Jul 22nd, 2015 Collections and Foreign Judgments, Contracts and Commercial Litigation, Employment Law Defense, Insurance Defense Litigation

Excess Insurer’s Rights to Reimbursement in Texas Insurance Litigation

IN THE SUPREME COURT OF TEXAS

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No. 02-0730

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Excess Underwriters at Lloyd’s, London and Certain Companies Subscribing Severally But Not Jointly to Policy No. 548/TA4011F01, Petitioners,

Frank’s Casing Crew & Rental Tools, Inc., Respondent

════════════════════════════════════════════════════

On Petition for Review from the

Court of Appeals for the Fourteenth District of Texas

════════════════════════════════════════════════════

Argued February 15, 2006

Justice O’Neill delivered the opinion of the Court, joined by Chief Justice Jefferson, Justice Medina, Justice Johnson, and Justice Willett.

Justice Hecht delivered a dissenting opinion, joined by Justice Green.

Justice Wainwright delivered a dissenting opinion.

Justice Brister did not participate in the decision.

On January 6, 2006, we granted respondent’s motion for rehearing. We now withdraw our opinion issued May 27, 2005, and substitute the following.

In Texas, an insurer that settles a claim against its insured when coverage is disputed may seek reimbursement from the insured should coverage later be determined not to exist if the insurer “obtains the insured’s clear and unequivocal consent to the settlement and the insurer’s right to seek reimbursement.” Tex. Ass’n of Counties County Gov’t Risk Mgmt. Pool v. Matagorda County, 52 S.W.3d 128, 135 (Tex. 2000). In this case, which involves excess coverage, the insured consented to the settlement but not to the excess insurer’s asserted reimbursement right. We must decide whether to recognize an exception to the rule in Matagorda County and imply a reimbursement obligation when the policy involves excess coverage, the insurer has no duty to defend under the policy, and the insured acknowledges that the claimant’s settlement offer is reasonable and demands that the insurer accept it. Because none of these distinctions alleviates the concerns that drove the Court’s analysis in Matagorda County, we decline to recognize such an exception. We further hold that the excess insurers failed to establish that Louisiana law regarding an insurer’s right to reimbursement differs from Texas law. Accordingly, we affirm the court of appeals’ judgment.

Background

Frank’s Casing Crew & Rental Tool, Inc. fabricated a drilling platform for ARCO/Vastar. When the platform collapsed, ARCO sued Frank’s Casing and several others. Frank’s Casing had a $1 million primary liability policy, and excess coverage up to $10 million with Excess Underwriters at Lloyd’s, London, and Certain Companies Subscribing Severally But Not Jointly To Policy No. 548/TA4011F01 (collectively “excess underwriters”). The excess policy did not require the underwriters to assume control of the defense or the settlement of any claims, but did give them the right to associate with defense counsel retained by Frank’s Casing or the primary insurer if it was reasonably likely that the excess coverage layer would be reached. After Frank’s Casing notified the excess underwriters of ARCO’s claims, the underwriters issued reservation-of-rights letters asserting that coverage for ARCO’s claims was “limited or negated” under the policy’s terms.

The primary carrier retained defense counsel for Frank’s Casing. As trial approached, ARCO offered to settle its claims against Frank’s Casing for $9.9 million, an amount within the excess policy limits. Frank’s Casing rejected the offer without passing it on to the excess underwriters. Two weeks before trial, the excess underwriters contacted ARCO directly, without Frank’s Casing’s knowledge, and attempted to settle claims the underwriters were willing to concede were covered. No agreement was reached. ARCO later made an $8.8 million global settlement offer to all of the defendants, about $7.55 million of which was allocated to Frank’s Casing. The excess underwriters offered to pay two-thirds of this amount if Frank’s Casing and its primary carrier would pay the balance, and further agreed to waive all coverage defenses if Frank’s Casing accepted that proposal. Alternatively, the excess underwriters offered to pay $5 million and defer all coverage issues to be resolved in arbitration. Frank’s Casing rejected both proposals, insisting that it was covered under the excess policy and therefore the underwriters were obligated to fund the entire settlement.

Shortly before trial, the excess underwriters retained counsel to associate with Frank’s Casing and its primary carrier in defending against ARCO’s claims. As trial began, it quickly became clear that Frank’s Casing was ARCO’s primary target, prompting Frank’s Casing’s in-house counsel to contact ARCO and solicit a settlement demand within the excess coverage limits. Frank’s Casing’s counsel suggested that something in the $7 million range would be reasonable. ARCO responded with a $7.5 million demand. Frank’s Casing forwarded ARCO’s demand to the excess underwriters with a letter suggesting that the settlement offer was a reasonable one that the underwriters should accept. The letter reiterated Frank’s Casing’s disagreement with the underwriters’ coverage position, and stated that Frank’s Casing was looking to the underwriters to fund the settlement. In their response two days later, the underwriters agreed that the case should be settled, but noted that coverage issues remained. The underwriters offered to fund the entire settlement if Frank’s Casing would agree to reserve those issues for resolution later. Frank’s Casing rejected the underwriters’ proposal, contending that the excess insurance policies obligated the underwriters to fund the settlement. In response, the excess underwriters advised Frank’s Casing that they would pay $7.5 million to settle the claim, less any contribution from the primary carrier, and then seek reimbursement from Frank’s Casing. Within hours, the underwriters contacted ARCO and orally accepted its settlement offer, and the primary carrier tendered its remaining policy limits of approximately $500,000. A written settlement agreement among ARCO, Frank’s Casing, and the excess underwriters preserved “any claims that exist presently” between Frank’s Casing and the underwriters. Before that agreement was executed, the excess underwriters filed this suit.

Both Frank’s Casing and the excess underwriters filed a series of cross motions for partial summary judgment. The trial court initially granted the underwriters’ motions on their right to reimbursement. It also granted their motions for partial summary judgment on coverage, and another concluding that the excess underwriters were entitled to $7,013,612 in damages on their reimbursement claim. Before a final judgment was entered, this Court issued Texas Association of Counties County Government Risk Management Pool v. Matagorda County, declining to recognize an implied-in-fact, an implied-in-law, or an equitable reimbursement right outside of the insurance policy’s provisions. 52 S.W.3d at 128. In light of our decision, the trial court ordered Frank’s Casing to file a motion for new trial only on the reimbursement issue. Frank’s Casing filed the motion and the trial court granted it, withdrew its prior order, and signed a take-nothing judgment in Frank’s Casing’s favor. The court of appeals affirmed. 93 S.W.3d 178. We granted the excess underwriters’ petition for review to decide whether our decision in Matagorda County allows the underwriters to assert a reimbursement right under the circumstances presented.

Reimbursement Under Texas Law

In Matagorda County, we examined an insurer’s asserted reimbursement right in similar, though not identical, circumstances. 52 S.W.3d at 129. There, the Texas Association of Counties (TAC) provided law-enforcement liability coverage to Matagorda County, but the policy excluded coverage for claims “arising out of jail.” When three inmates who had been assaulted by other prisoners in the County’s jail sued the County, TAC initially denied coverage based on the jail exclusion. After some negotiation, TAC agreed to pay defense costs, subject to a reservation of rights to preserve its coverage contest, and filed suit against the County seeking a declaratory judgment that the inmates’ claims were not covered. Ultimately, the plaintiffs in the underlying suit offered to settle for $300,000, an amount within TAC’s policy limits. Although the County did not dispute the reasonableness of the proposed settlement, the County refused to fund or contribute to it, insisting that the claims were covered. At this point, TAC issued a second reservation-of-rights letter, again reserving its right to continue to deny coverage, but adding a statement that it was not waiving “any of its rights to pursue full recovery of this settlement amount from the County . . . in the declaratory judgment action.” Id. at 130. TAC settled the case, then amended its pending declaratory judgment action to seek reimbursement.

We held that, under the circumstances presented, TAC had not established a right to reimbursement. Id. at 133. First, we held that TAC could only reserve rights that were expressed in the policy, and TAC’s policy did not contain a right of reimbursement. Id. at 131 (stating “a unilateral reservation-of-rights letter cannot create rights not contained in the insurance policy”). Second, we held that neither the County’s silence in response to TAC’s reservation of rights, nor its failure to contest the settlement’s reasonableness, were sufficient to create an implied-in-fact reimbursement obligation that did not appear in the policy. Id. at 132–33. Third, we held that TAC had not established a right to reimbursement under quasi-contractual theories of quantum meruit or unjust enrichment. Id. at 134–35. Finally, we held that an insurer could impose a reimbursement obligation on its insured by either drafting policies to specifically include a reimbursement right, or by obtaining the insured’s “clear and unequivocal consent to the settlement and the insurer’s right to seek reimbursement.” Id. at 135.

Our analysis in Matagorda County highlighted the dilemma faced by both insurer and insured when a claimant presents a settlement demand within policy limits and coverage is uncertain. Id. (stating “[w]e recognize that, however the issue is resolved, either insurers or insureds will face a difficult choice when coverage is questioned”). On one hand, an insurer that rejects a reasonable offer within policy limits risks significant potential liability for bad-faith insurance practices if it does not ultimately prevail in its coverage contest. Id.; see G.A. Stowers Furniture Co. v. Am. Indem. Co., 15 S.W.2d 544, 547 (Tex. Comm’n App. 1929, holdings approved). Denying a reimbursement right in this situation in effect creates coverage in those cases where coverage is ultimately determined not to exist. At the same time, imposing an extra-contractual reimbursement obligation places the insured in a highly untenable position. See Matagorda County, 52 S.W.3d at 135. The insured is forced “to choose between rejecting a settlement within policy limits or accepting a possible financial obligation to pay an amount that may be beyond its means, at a time when the insured is most vulnerable.” Id. at 134.

We resolved this quandary in Matagorda County, determining that the risk of coverage uncertainties was best placed with the insurer. Id. We reasoned that “[r]equiring the insurer, rather than the insured, to choose a course of action is appropriate because the insurer is in the business of analyzing and allocating risk and is in the best position to assess the viability of its coverage dispute.” Id. at 135. An insurer in this situation has a number of options. If the insurer assesses its coverage position as strong, it may refuse to participate in settlement and rely on its coverage action, leaving the insured to negotiate a settlement with its own resources. Or, an insurer may seek prompt resolution of its coverage dispute, a course we have encouraged insurers in this position to take. Id. at 135 (citing State Farm Fire & Cas. Co. v. Gandy, 925 S.W.2d 696, 714 (Tex. 1996); Farmers Tex. County Mut. Ins. Co. v. Griffin, 955 S.W.2d 81, 84 (Tex. 1997)). Or, if an insurer’s coverage position is difficult to assess, as is sometimes the case, the insurer can leverage the coverage dispute during settlement negotiations to lower the claimant’s demand; by paying the negotiated claim, the insurer eliminates its own potential bad-faith liability, saves defense costs, and avoids protracted coverage litigation with its insured. Or, at the outset, the insurer may include a reimbursement right in the policy, which may yield a lower premium than a policy that does not contain such a right.

By contrast, recognizing an extra-contractual reimbursement right leaves insureds with fewer options and creates a number of potential problems. As we noted in Matagorda County, allowing an insurer to settle claims and then sue its policyholder “foster[s] conflict and distrust in the relationship between an insurer and its insured,” a situation that has been widely rejected in analogous contexts. Id. at 134; see also Medina v. Herrera, 927 S.W.2d 597, 604 (Tex. 1996). For example, courts have long declined to allow insurers to seek equitable subrogation against their insureds. See Phonenix Ins. Co. v. Erie & W. Transp. Co., 117 U.S. 312, 320–25 (1886). Strong public policy reasons support that rule:

The fiduciary relationship between insurer and insured is fraught with conflicting interests . . . . [B]ecause of the fiduciary relationship, the insurer would be able to secure information from its insured under the guise of policy provisions available for later use in a subrogation action against the insured. [Further], the right to sue [its] own insured could be interpreted by an insurer as judicial sanction to breach the policy of insurance.

Stafford Metal Works, Inc. v. Cook Paint & Varnish Co., 418 F. Supp. 56, 58–59 (N.D. Tex. 1976) (citations omitted).

Several amici further warn that implying a reimbursement right would create a significant conflict for defense counsel during settlement discussions.[1] According to the amici, if an insured’s acknowledgment of a settlement offer’s reasonableness were to expose the insured to an extra-contractual reimbursement obligation, as the underwriters here contend it should, defense counsel’s traditional role in evaluating and recommending settlement could end up advancing the insurer’s interest over that of the insured, necessitating the insured’s retention of its own coverage counsel during what may be a critical point in the proceedings. Indeed, the amici argue, with defense counsel thus hindered from encouraging settlement, both the insured and the insurer will likely feel the need to hire their own “settlement counsel” to evaluate the case and formulate a strategy for the anticipated reimbursement litigation. Whether or not the concerns the amici voice are real or imagined, we believe they do portend significant distrust in the insurer/insured relationship during the settlement process should an equitable reimbursement right be implied.

Several amici also warn that recognizing a reimbursement right risks weakening the insurer’s incentive to negotiate a settlement most favorable to its insured. Knowing that the insured will likely bear the ultimate payment obligation could incentivize the insurer to curtail attorney’s fees and litigation expenses early in the proceedings by negotiating a quick settlement, with the added benefit of extinguishing any risk of Stowers liability. See Stowers, 155 S.W.2d at 547. The potentially protracted coverage/reimbursement litigation likely to follow would be at the insured’s expense, even though the insured purchased insurance for the very purpose of hedging the risk and expense of future litigation.

The Court in Matagorda County weighed the varying risks that arise in this context and decided that insurers, on balance, are better positioned to handle them “either by drafting policies to specifically provide for reimbursement or by accounting for the possibility that they may occasionally pay uncovered claims in their rate structure.” Matagorda County, 52 S.W.3d at 136. We decline to overrule that decision, and now turn to the underwriters’ argument that the circumstances presented here are distinguishable and support their asserted right to reimbursement in this case.

III. Excess Underwriters’ Reimbursement Theories

The excess underwriters contend that by soliciting the settlement demand and agreeing to be bound by it, Frank’s Casing impliedly consented to reimburse the excess underwriters. The underwriters further claim an equitable reimbursement right under the doctrines of quantum meruit and assumpsit. Although we declined to recognize an implied or equitable reimbursement right in Matagorda County, the underwriters contend our decision was limited to the facts presented in that case. They maintain that the rationale underlying our decision does not apply here because the excess underwriters had neither the duty to defend nor unilateral control over settlement, factors they contend were critical underpinnings of our Matagorda County analysis. The underwriters also emphasize that, unlike the insurer in Matagorda County, their policy prevented them from settling the case without Frank’s Casing’s consent.

Implied-in-Fact Agreement

The excess underwriters argue that Frank’s Casing impliedly agreed to reimbursement by taking an active role in procuring the settlement offer, and in demanding that the excess underwriters settle the claim. They also point to Frank’s Casing’s participation in the drafting and negotiation of the settlement agreement.

Undoubtedly, these actions demonstrate that Frank’s Casing believed the claims should be settled, but they say nothing about Frank’s Casing’s agreement to a reimbursement obligation that does not appear in its policy. To the contrary, Frank’s Casing’s letters to the excess underwriters expressed continuing disagreement with the insurers’ coverage position, indicated that Frank’s Casing was looking to the excess underwriters to fund the entire settlement, and made clear that Frank’s Casing would seek recourse against the underwriters if the case was not settled and a judgment in excess of policy limits resulted. In settling the ARCO suit, both Frank’s Casing and the excess carriers expressly sought to preserve their positions in the coverage dispute; in effect, they agreed to disagree on the reimbursement question and let the trial court decide the legal effect. This is a far cry from impliedly consenting to reimbursement. The excess underwriters benefitted from the settlement by eliminating potential Stowers liability in the event ARCO’s claims were later determined to be covered, just as Frank’s Casing benefitted by eliminating the possibility of a large verdict that might turn out not to be covered. Given the parties’ explicit efforts to preserve their positions, it makes no more sense to say that Frank’s Casing impliedly agreed to reimburse the carriers than it would to say that the carriers impliedly agreed to waive their coverage position. Just as an insured’s acceptance of a defense the insurer proffers with a reservation of rights implies the insured’s consent to the reservation, the excess underwriters’ agreement to accept the settlement in light of Frank’s Casing’s reimbursement contest implied the insurers’ consent to Frank’s Casing’s reservation of the reimbursement question. As we reaffirmed in Matagorda County, “a meeting of the minds is an essential element of an implied-in-fact contract.” Matagorda County, 52 S.W.3d at 133 (citing Haws & Garrett Gen. Contractors, Inc. v. Gorbett Bros. Welding Co., 480 S.W.2d 607, 609 (Tex. 1972)). Frank’s Casing’s agreement to reimburse the excess insurers cannot be implied in light of its consistent position that the insurers alone were responsible for the claims.

The excess insurers contend, however, that Frank’s Casing’s agreement may be implied here because, unlike in Matagorda County, Frank’s Casing’s policy did not allow the insurers to settle without Frank’s Casing’s consent. In support, the underwriters cite the following policy language:

Liability under this policy with respect to any occurrence shall not attach unless and until the Assured, or the Assured’s underlying insurers, shall have paid the amount of the underlying limits on account of such occurrence. The Assured shall make a definite claim for any loss for which the Underwriters may be liable under this policy within twelve (12) months after the Assured shall have paid an amount of ultimate net loss [2] in excess of the amount borne by the Assured or after the Assured’s liability shall have been fixed and rendered certain either by final judgment against the Assured after actual trial or by written agreement of the Assured, the claimant, and Underwriters. If any subsequent payments shall be made by the Assured on account of the same occurrence, additional claims shall be made similarly from time to time. Such losses shall be due and payable within thirty (30) days after they are respectively claimed and proven in conformity with this policy.[3]

As we read this language, however, it describes when payment is due to the insured under the policy. Specifically, the insurer must pay Frank’s Casing when the primary coverage layer is exhausted and Frank’s Casing timely presents a claim for any excess amount for which it has been found liable as the result of a trial or a written agreement to which the parties acquiesced. In other words, the policy requires Frank’s Casing to obtain the underwriters’ consent to a settlement to receive payment under the policy. The policy language says nothing about the underwriters’ reimbursement rights should they decide to negotiate a settlement of the claim.

Equitable Theories

The excess underwriters also claim a reimbursement right under the equitable theories of quantum meruit and assumpsit. Under the former theory, one who provides valuable services to another may establish that the service’s recipient has an implied-in-law obligation to pay when the recipient has reasonable notice that the service provider expects to be paid. See Heldenfels Bros., Inc. v. Corpus Christi, 832 S.W.2d 39, 41 (Tex. 1992). Under the latter, a cause of action arises when money is paid for the use and benefit of another. See King v. Tubb, 551 S.W.2d 436, 442 (Tex. Civ. App.—Corpus Christi 1977, no writ).

We held in Matagorda County that TAC could not recover on either quantum meruit or an unjustment enrichment theory, a quasi-contractual doctrine that closely resembles assumpsit. The excess underwriters argue that Matagorda County does not govern because Frank’s Casing sought a settlement demand from ARCO and demanded that the underwriters pay it. They also contend that their status as excess insurers with no duty to defend distinguishes this case from Matagorda County. Neither of those distinctions, however, allays the concerns underlying our analysis in Matagorda County.

The parties’ respective positions were no less firmly drawn in Matagorda County than in this case. There, it was clear that “the County was looking to [TAC] to settle . . . without a contribution from [the County].” Matagorda, 52 S.W.3d at 133 (internal quotations omitted). We fail to see how Frank’s Casing’s suggestion that ARCO submit a settlement demand within policy limits meaningfully distinguishes the decision. In Matagorda County, we concluded that “when coverage is disputed and the insurer is presented with a reasonable settlement demand within policy limits, the insurer may fund the settlement and seek reimbursement only if it obtains the insured’s clear and unequivocal consent to the settlement and the insurer’s right to seek reimbursement.” Id. at 135 (emphasis added). We did so because “[o]therwise, the insured is forced to choose between rejecting a settlement within policy limits or accepting a possible financial obligation to pay an amount that may be beyond its means, at a time when the insured is most vulnerable.” Id. That fundamental concern is unaffected by the fact that the excess underwriters had no duty to defend.

There is an additional reason that the excess underwriters are not entitled to a reimbursement right. That is, “[w]hen a valid agreement already addresses the matter, recovery under an equitable theory is generally inconsistent with the express agreement.” Fortune Prod. Co. v. Conoco, Inc., 52 S.W.3d 671, 684 (Tex. 2000). Here, the insurance policies spell out the parties’ respective obligations in great detail. As set out above, the excess underwriters were not liable under the policy until the primary coverage was exhausted, Frank’s Casing had provided timely notice, and Frank’s Casing had become liable for a judgment either as the result of a trial or a settlement to which the excess underwriters had agreed. To recognize an equitable right to reimbursement would require us to “rewrite the parties’ contract [or] add to its language,” Am. Mfrs. Mut. Ins. Co. v. Schaefer, 124 S.W.3d 154, 162 (Tex. 2003), which we decline to do.

Other States

The excess underwriters also urge us to overrule Matagorda County and follow the decisions of the California Supreme Court in Blue Ridge Insurance Co. v. Jacobsen, 22 P.3d 313 (Cal. 2001), and a Florida appellate court in Colony Insurance Co. v. G & E Tires & Service, Inc., 777 So. 2d 1034 (Fla. Dist. Ct. App. 2000). In Blue Ridge, the California Supreme Court implied a reimbursement obligation in favor of a liability insurer that funded a settlement of claims ultimately determined not to be covered. Blue Ridge, 22 P.3d at 314. The California court distinguished our decision in Matagorda County on the basis that California provides a much more limited opportunity to resolve coverage issues before the underlying lawsuit is resolved than does Texas. Id. at 322–23. Moreover, the legal background underlying Blue Ridge differs significantly from Texas law. An insurer in Texas cannot be held liable under Stowers for failing to settle a claim that is not covered. Am. Physicians Ins. Exch. v. Garcia, 876 S.W.2d 842, 849 (Tex. 1994). Under California law, however, an insurer may not consider whether claims are covered in evaluating settlement demands. Blue Ridge, 22 P.2d at 318.

In Colony Insurance, the Florida appeals court held that a liability insurer’s reservation of rights letter, coupled with the insured’s acceptance of a defense, entitled the insurer to reimbursement for defense costs it had paid. 777 So. 2d at 1039. We held in Matagorda County, however, that a unilateral reservation-of-rights letter could not create a reimbursement obligation not contained in the insurance contract. Matagorda County, 52 S.W.3d at 131. As we have noted, to follow Colony Insurance would require us to overrule Matagorda County, which we decline to do.

The Dissents

Justice Hecht would impose an equitable reimbursement obligation on Frank’s Casing that is not found in its policy, supplementing the terms these sophisticated parties negotiated based on an unjust-enrichment theory. Justice Wainwright, recognizing that the equities presented cut both ways, does not agree that a reimbursement right may be implied in law; instead, he would apply one in fact, as a matter of law, based on Frank’s Casing’s acquiescence in the settlement, even though both parties expressly reserved their respective positions on the coverage/reimbursement question. On indistinguishable facts, we rejected both of those theories in Matagorda County. 52 S.W.3d at 131–35. In “rewrit[ing] the parties’ contract . . . [because they] believe we should,” Utica Nat’l Ins. Co. of Tex. v. Am. Indem. Co., 141 S.W.3d 198, 208 (Tex. 2004) (Hecht, J., dissenting), and eschewing our own precedent, the dissenting justices would, in the words of one amicus curiae, “take[] a step back from predictability in the law related to business transactions in Texas and, therefore, a step back from the continuing effort to attain a fair, efficient, and predictable civil justice system,” Amicus Curiae Brief of Texas Civil Justice League in Support of Respondent’s Motion for Rehearing, at 2.

In Matagorda County, this Court drew a bright-line rule disallowing reimbursement on an equitable unjust-enrichment theory because insurers are in a superior position to evaluate the risks stemming from a coverage dispute and can expressly allocate that risk by delineating reimbursement rights in their policies. 52 S.W.3d at 135–36. Justice Hecht’s approach would undermine both the predictability that our decision in Matagorda County provided and the “strong public policy in favor of preserving the freedom of contract.” Fortis Benefits v. Cantu, 234 S.W.3d 642, 649 (Tex. 2007). Just a few months ago, we concluded that an insured could not rely on the equitable “made-whole” doctrine to supplant a contractual subrogation clause. Id. at 645. We warned that courts “should not by judicial fiat insert non-existent language . . . into parties’ agreed-to contracts . . . .” Id. at 649 n.41. The Court proclaimed itself “loathe to judicially rewrite the parties’ contract by engrafting extra-contractual standards,” id. at 649, and reaffirmed the reasoning that supported our holding in Matagorda County: “insurers are well equipped to evaluate and reduce risk by, for example, ‘drafting policies to specifically provide for reimbursement,’” id. (quoting Matagorda County, 52 S.W.3d at 136).

Justice Hecht attempts to limit our decision in Matagorda County to its facts, arguing the concerns that drove our decision there do not exist in this case and, even if they did, an equitable remedy could be fashioned to do equity in accordance with general restitution principles. While his dissent asserts that the remedy could be limited to avoid “unfairness,” it offers little guidance as to the remedy’s boundaries. He hints that the concerns underlying Matagorda County do not apply because Frank’s Casing is “a substantial business.” Under Justice Hecht’s construct, then, whether an insured faces a reimbursement obligation would have to be decided on a case-by-case basis: insureds with less economic heft than Frank’s Casing but more than Matagorda County might or might not be on the hook, depending upon how a court might view the “equities” presented. Justice Hecht’s approach would breed uncertainty and “promote litigation rather than settle it.” Gandy, 925 S.W.2d at 709.

Justice Wainwright’s approach is similarly untenable. Agreeing with the Court that the circumstances would not support a reimbursement right implied in law, he would imply one in fact — as a matter of law. As in Matagorda County, however, the record here affirmatively demonstrates just the opposite. Frank’s Casing’s repeated insistence on its coverage position and on the excess underwriters’ obligation to fund any settlement, and its express reservation of the question, belie any meeting of the minds — “an essential element of an implied-in-fact contract.” Matagorda County, 52 S.W.3d at 133. Just as in Matagorda County, Frank’s Casing “consistently contested [the excess underwriters’] coverage position and insisted that [they] pay under the policy.” Id. Undoubtedly, the parties agreed that the case should be settled. But the excess underwriters’ own letter to Frank’s Casing advising that it would contact ARCO and attempt to settle noted that the underwriters had “asked Frank’s to contribute to the settlement [and] Frank’s ha[d] refused.” Furthermore, though Justice Wainwright contends that Frank’s Casing’s agreement to the settlement constituted a manifestation of assent to the terms on which it was offered, there is uncontested evidence that the excess underwriters first mentioned reimbursement in a letter it sent to Frank’s Casing just hours before they contacted the plaintiffs and settled the case. Frank’s Casing’s assent cannot be inferred under these circumstances. See Restatement (Second) of Contracts § 69(1)(a) (1981) (noting that assent may only be inferred “[w]here an offeree takes the benefit of offered services with reasonable opportunity to reject them”). We held on nearly identical facts in Matagorda County that “there was no meeting of the minds” between the insurer and its insureds. Id. Given the parties’ explicit efforts to preserve their respective positions on the coverage/reimbursement question, it makes no more sense to conclude that Frank’s Casing impliedly agreed to reimburse the excess carriers than it would to say that the excess carriers impliedly agreed to waive their coverage position.

Choice of Law

The excess underwriters argue alternatively that Louisiana law recognizes a reimbursement right, and that state’s law should apply to this case because Frank’s Casing’s principal place of business is in Louisiana, the policy was issued through a Louisiana insurance agency, and the underlying incident arose from work Frank’s Casing performed in Louisiana. Frank’s Casing contends that the excess underwriters never requested that the trial court apply Louisiana law to the reimbursement issue, and also never established that it differs from Texas law. We agree with Frank’s Casing.

The excess underwriters never requested that the trial court apply Louisiana law to the reimbursement issue or clearly asserted that Louisiana law applies. Instead, a footnote in their motion for summary judgment simply alluded to Louisiana law “[t]o the extent [it] might apply to this case,” and then cited two Louisiana statutes, Louisiana Civil Code articles 2055 and 2298, and two cases, Edmonston v. A-Second Mortgage Co., 289 So. 2d 116 (La. 1974), and E.F. Minyard v. Curtis Products, Inc., 205 So.2d 422 (La. 1967), generally allowing recovery for unjust enrichment. Neither the statutes nor the cases cited specifically addressed an insurer’s right to reimbursement from its insured when it settles a claim that is ultimately determined not to be covered, absent an express agreement.[4] In addition, after this Court issued its decision in Matagorda County, the excess underwriters again briefly cited general Louisiana unjust-enrichment law in their response to Frank’s Casing’s motion for reconsideration of the trial court’s partial summary judgment on reimbursement. After arguing at length that Matagorda County did not govern reimbursement in this case, they added a final three-paragraph section entitled “Louisiana Law Governs Excess Underwriters’ Right to Reimbursement.” They still did not ask the trial court to apply Louisiana law, however, but instead merely argued that Louisiana law would allow reimbursement “[t]o the extent this Court finds Louisiana law controlling.” Even if the excess underwriters had clearly requested the court to apply Louisiana law, we cannot tell from the authorities they have cited how a Louisiana court would resolve the issue before us. As the party advocating the application of Louisiana law, the excess underwriters bore the burden of establishing that it differed from Texas law to overcome the presumption that it is the same as Texas’s. See Gevinson v. Manhattan Constr. Co. of Ok., 449 S.W.2d 458, 465 n.2 (Tex. 1969); see also Unocal Corp. v. Dickinson Res. Inc., 889 S.W.2d 604, 607 n.2 (Tex. App.—Houston [14th Dist.] 1994), writ denied per curiam, 907 S.W.2d 453 (Tex. 1995).[5] Because they have not, we presume that the outcome would be no different under the foreign state’s law.

Conclusion

We hold that the excess underwriters have not established a right to reimbursement under Texas law, nor have they established that the application of Louisiana law would produce a different result. Accordingly, we affirm the court of appeals’ judgment.

___________________________________

Harriet O’Neill

Justice

OPINION DELIVERED: February 1, 2008

^[1] We received amicus curiae briefs from United Policyholders; Pilco, Inc.; Shell Oil Co., Motiva Enterprises LLC, Burlington Resources Inc., Temple-Inland Inc., and Brad Fish, Inc.; the Texas Association of Defense Counsel; the Texas Civil Justice League; and Fred A. Simpson and Randall L. Smith, opposing a right to reimbursement under these circumstances. These amici argue generally that allowing reimbursement would distort the process of settling third-party liability claims and would allow insurers to extract contributions from their insureds that their policies do not support. The Complex Insurance Claims Litigation Association and the Property Casualty Insurers Association of America submitted briefs supporting the underwriters’ right to reimbursement.

^[2] The policy defines “ultimate net loss” as “the total sum which the Assured, or his Underlying Insurers as scheduled, or both, become obligated to pay . . . either through adjudication or compromise . . . . ”

^[3] The title of this clause is not clear on any portion of the record; Frank’s Casing refers to it as a “Loss Payable” clause, a characterization that the excess underwriters do not dispute.

^[4] In Edmonston, for example, the court held that a widow who had unwittingly conveyed a home worth more than $24,000 to a mortgage company to satisfy a $5,178.24 second mortgage could recover under Louisiana’s unjust- enrichment statutes. 289 So.2d at 122. In Minyard, the court considered when limitations had run on a subcontractor’s claim to recover from a product supplier amounts it had paid to compensate the contractor for defective caulking. 205 So. 2d at 638. The court merely equated the subcontractor’s claim seeking indemnity with an unjust-enrichment claim in determining the appropriate limitations period. Id. at 650, 653. In response to Frank’s Casing’s motion for reconsideration of the trial court’s partial summary judgment on reimbursement, the excess underwriters cited a suit in which a court held that an insurer was not liable for statutory bad-faith penalties because the insurer had sought reimbursement of settlement costs. Peavey Co. v. M/V ANPA, 971 F.2d 1168 (5th Cir. 1992). In reversing the penalties, the Fifth Circuit noted that the the insured had stipulated that it would be liable to reimburse the insurer if coverage was resolved in the insurer’s favor. Id. at 1177.

^[5] The excess underwriters contend that the presumption that another state’s law is the same as this state’s does not apply because Louisiana law is not based on the common law, citing 29 Am. Jur. 2d Evidence § 259 (2002). Neither we nor any other Texas court has recognized this distinction. In fact, we recently indicated that the presumption would normally apply in a case involving Louisiana law. Coca-Cola Co. v. Harmar Bottling Co., 218 S.W.3d 671, 685 (Tex. 2006).

Justice Hecht, joined by Justice Green, dissenting.

By refusing to apply to insurers the same law of unjust enrichment that applies to everyone else, the Court hands Frank’s Casing Crew & Rental Tools, Inc. $7 million for which it paid nothing and to which it has no contractual right. The court does not deny the injustice of this result but argues that such windfalls are necessary to avoid situations in which an insured might be prejudiced by having to pay its own liabilities. Never mind that Frank’s Casing claims no such prejudice in this case, or that no case can be found in which any insured ever claimed such prejudice, or that if any imagined prejudice ever actually did occur, it could easily be remedied. The Court’s holding is contrary to the only other cases it can find on the subject,[1] and it has been expressly rejected in the Restatement (Third) of Restitution and Unjust Enrichment.[2] Worst of all, the burden of the windfalls in this and many other cases will most likely fall on other policyholders who have never tried to get away with demanding more coverage than they bought, so that insureds who stick to their policies will have the privilege of paying extra to satisfy the claims of those who do not.

A blanket rule providing an insurer reimbursement for payment of non-covered claims might work unfairness. An insurer could try to take unfair advantage of its insured’s inexperience in assessing coverage issues and use a weak coverage dispute, coupled with the threat of a reimbursement claim if coverage is found lacking, to force the insured to contribute more toward the settlement of a liability claim than it should, thereby denying the insured the full protection of insurance to which it was entitled. But the Court’s rule denying reimbursement in every situation is more than potentially unfair. As this case demonstrates, it actually allows an insured to take unfair advantage of the extra-contractual liability an insurer faces for failing to resolve claims against the insured and leverage the threat of that liability to force its insurer to settle a claim and abandon a serious coverage issue, thereby effectively obtaining coverage it did not pay for and increasing the risk for which other policyholders must pay. The general law of restitution avoids the problems of both extremes by allowing reimbursement to prevent unjust enrichment but not otherwise.[3] This is reflected in section 35 of the Restatement (Third) of Restitution and Unjust Enrichment, recently adopted by the American Law Institute.[4] Section 35 provides a balanced, practical, and principled rule for resolving the issue presented by this case.

The Court encourages insurers, as it has in the past, to obtain prompt resolution of coverage disputes, but today’s decision leaves them no alternative. Now an insurer must litigate coverage before a liability claim is resolved, even if that means putting an insured in the undesirable position

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of having to fight liability and coverage at the same time, even if it means litigating the liability claim in a declaratory judgment action to determine coverage, and even if it means delaying resolution of the liability claim until coverage has been determined. Otherwise, an insurer will be denied the right to litigate coverage altogether, which the Court surely cannot intend. I suspect that this consequence of the today’s decision, forcing more coverage litigation, will cause far more problems than the hypothetical concerns expressed in the Court’s opinion.

For these reasons, which I now explain more fully, I respectfully dissent.

Respondent Frank’s Casing Crew & Rental Tools, Inc. has provided oil well and completion services and products throughout the United States since 1938. Headquartered in Louisiana, it has offices in Texas and transacts business here.

In 1995, an offshore drilling platform that Frank’s Casing had fabricated in Louisiana for ARCO Oil and Gas Co. and its successor, Vastar Resources, Inc., collapsed and sank in the Gulf of Mexico. In May 1996, ARCO filed suit in Texas against two defendants, and after they in turn sued Frank’s Casing as a third-party defendant, ARCO and Vastar (who had joined the suit as plaintiff, collectively “ARCO”) named Frank’s Casing as a defendant in January 1997. Alleging that Frank’s Casing had failed to weld the platform components properly, ARCO sued for breach of contract, negligence, strict products liability, and contractual indemnity, seeking damages for lost profits and production and for costs of investigation, salvage, and repair, as well as exemplary damages and attorney fees.

In addition to a $1 million surplus lines comprehensive general liability insurance policy, Frank’s Casing had a $10 million umbrella policy provided by petitioners, Certain Companies Subscribing Severally But Not Jointly To Policy No. 548/TA4011F01 and Excess Underwriters at Lloyd’s, London (“the Excess Underwriters”). Frank’s Casing notified both insurers of ARCO’s suit. The primary insurer assumed the defense of the lawsuit, as was its right and duty under its policy, and hired counsel to represent Frank’s Casing.

In March 1997, counsel for the Excess Underwriters wrote Frank’s Casing a reservation-of-rights letter, stating in part:

Underwriters have commenced an investigation into the claims being made against Frank’s in the [ARCO] Litigation. We are writing to advise you of our representation of Underwriters, to advise that we will be evaluating the coverage provided by the Umbrella Policy, to request your assistance and cooperation in our investigation into the claims being made against Frank’s and the facts relevant to the Litigation, to advise that Underwriters have not yet come to any conclusions as to coverage, to invite Frank’s to provide Underwriters any information that you believe might assist Underwriters in their evaluation of the coverage questions, to solicit your input into our evaluation, and to advise Frank’s as to Underwriters’ preliminary reservation of certain rights under the Umbrella Policy.

Specifically, the letter explained that coverage of ARCO’s claims “may be limited or negated” under the umbrella policy because:

claims alleging breach of contract and warranties “may not constitute an ‘occurrence’ as that term is defined by the policy” – “an accident or a happening. . . which unexpectedly and unintentionally results in personal injury or property damage or advertising liability” ;

the policy excluded property damage claims for the failure of Frank’s Casing’s product or work due to deficiencies in its designs, plans, or written instructions;

the policy also excluded the costs of removal, recovery, repair, or replacement of product or work that failed to perform its function, and the costs of raising, removal, or destruction of any of wreckage or debris or obstruction, however caused;

the policy expressly excluded coverage for punitive damages and would not cover any damages occurring after September 30, 1995, the end of the policy period; and

notice of the claim may not have been timely.

The letter also stated that the scope of the umbrella policy’s coverage was to follow the form of the primary policy (other than the monetary limits, of course), which counsel had not had an opportunity to review, and that the primary policy might therefore further restrict coverage of ARCO’s claims. In January 1998, the Excess Underwriters sent Frank’s Casing a second reservation-of-rights letter giving an additional reason for lack of coverage: that ARCO’s claims for lost profits and loss of use of the platform were not “property damage” covered by the policy. The record does not reflect whether Frank’s Casing responded to the letters but does indicate that Frank’s Casing took the position that all claims were covered.

Nearing the February 16, 1998 trial setting, the parties discussed settlement. ARCO’s claims totaled $16 million (Frank’s Casing stipulated that property damage was $5,630,360.28), far more than the policy limits of Frank’s Casing’s insurance, but after an unsuccessful mediation, ARCO’s counsel offered to settle for $9.9 million. Although Frank’s Casing had no express right under its primary policy to control settlement,[5] and may or may not have had one under the umbrella policy,[6] its corporate counsel unilaterally rejected the offer as too high, even though it was within policy limits, and did not even forward it to the Excess Underwriters. On January 30, counsel for the Excess Underwriters contacted ARCO directly, without Frank’s Casing’s knowledge, and attempted to settle only the claims they believed were covered, but no agreement was reached. When Frank’s Casing’s counsel learned of this, he objected to any settlement negotiations being conducted without his involvement. ARCO then offered to settle all of its claims against all of the defendants for $8.8 million. In a February 2 letter to corporate counsel for Frank’s Casing, counsel for the Excess Underwriters estimated that, after contributions offered by other defendants, Frank’s Casing would be required to contribute about $7.55 million. Assuming that $750,000 of primary coverage remained, the letter made two proposals: the Excess Underwriters would pay two-thirds of the amount required to meet ARCO’s demand and waive all coverage issues if Frank’s Casing would pay one-third; alternatively, they would contribute $5 million to any reasonable settlement Frank’s Casing reached with ARCO and arbitrate coverage issues later. Frank’s Casing refused both proposals.

Under their policy, the Excess Underwriters had no duty to provide Frank’s Casing a defense but did have the right to associate in the defense with Frank’s Casing’s cooperation when it appeared likely they would be involved,[7] and on February 2, they retained separate trial counsel. Trial commenced February 17, and it immediately became clear for the first time that Frank’s Casing was ARCO’s target defendant. The next day, Frank’s Casing’s corporate counsel requested ARCO’s trial counsel to make a settlement offer within the umbrella policy’s limits, suggesting $7 million. ARCO promptly responded with a $7.5 million offer, which Frank’s Casing’s counsel immediately passed along to the Excess Underwriters in a letter hand-delivered and faxed to their counsel, insisting that since trial was not going well, “Frank’s does now look to Underwriters to settle this claim.” The letter added that the Excess Underwriters’ coverage reservations had “little credence” and that it was “probable” Frank’s Casing would suffer a jury verdict in excess of policy limits. ARCO’s last offer, the letter continued, was “one that an insurer, acting as a reasonably prudent insured, would accept.” Counsel concluded:

Should Underwriters in this instance refuse to move forward and resolve this dispute based upon [ARCO’s] current demand, [Frank’s Casing] specifically reserves its rights pursuant to the Stowers doctrine[[8]] to proceed against the Underwriters for any liability Frank’s may incur over and above the limits of its insurance.

On February 20, counsel for the Excess Underwriters responded by faxed letter that ARCO’s offer should be accepted but stated that they continued to believe “a substantial portion” of the claims were not covered and that it would be “unreasonable for Umbrella Underwriters to assume total responsibility for [ARCO’s] current demand.” The Excess Underwriters again proposed to resolve both ARCO’s claims and the coverage issues by paying two-thirds of ARCO’s settlement demand with Frank’s Casing paying one-third (after contribution of the remainder of the primary policy’s limits, which turned out to be about $500,000). Alternatively, the Excess Underwriters proposed to pay ARCO’s demand, less the contribution from the primary insurer, with Frank’s Casing’s agreement to resolve coverage issues later. When counsel for Frank’s Casing faxed a reply again refusing to contribute to the settlement and reiterating its demand that the Excess Underwriters accept ARCO’s offer, the Excess Underwriters acceded. ARCO had indicated that its offer would remain open only until the trial court’s ruling on a particular issue, which was expected imminently. By letter faxed to Frank’s Casing’s counsel on the morning of February 23, counsel for the Excess Underwriters stated that they were acting “to ensure that the favorable settlement will not be lost to both Frank’s and Umbrella Underwriters.” But, he added, the Excess Underwriters would “continue to reserve all coverage issues” and would “hold Frank’s responsible for and . . . seek reimbursement of all sums paid in settlement of claims for which no coverage exists”.

A few hours later, counsel for the Excess Underwriters’ faxed ARCO’s trial counsel a letter agreeing to pay $7.5 million in settlement. Frank’s Casing contends that it had no opportunity to respond to the Excess Underwriters’ reimbursement claim before the case settled. But when the settlement was announced to the court the next day, counsel for Frank’s Casing and the Excess Underwriters both referred to the latter’s reimbursement claim:

[Counsel for Frank’s Casing]: Underwriters have attempted to reserve all rights against Frank’s as to coverage under the umbrella policy. It is Frank’s position that no proper preservation of reservations has been made and Frank’s denies that the Underwriters may preserve coverages. More specifically, Underwriters’ offer to resolve the issue with [ARCO], which [was] made pursuant to Frank’s demand by a Stowers letter dated February 19, 1998 and February 20th, 1998, forwarded by Michael Andrepont to Jay James Cooper, counsel for Underwriters.

Underwriters have accepted this offer in order to avoid the possibility of having to pay out funds in excess of policy limits. As a result, it is Frank’s position that Underwriters have either waived their right to reserve cover issues or alternatively [are estopped] from asserting any coverage issues since Underwriters have agreed to the settlement.

* * *

[Counsel for the Excess Underwriters]: This settlement is being funded by Frank’s Umbrella Underwriters subject to a full reservation of all rights against Frank’s under the umbrella policy No. 548TA4011FO1. And these Underwriters will hold Frank’s responsible for and will seek reimbursement of all sums paid the settlement of claims for which no coverage exists under the umbrella policy.

The parties later signed and filed a settlement agreement that made no reference to the Excess Underwriters’ reimbursement claim specifically but preserved “any claims that exist presently or may arise in the future between Defendant Frank’s and Frank’s Insurers arising from the claims asserted by Plaintiffs.”

Also on February 23, the Excess Underwriters filed this action against Frank’s Casing to resolve the coverage dispute and to obtain reimbursement for the settlement of any non-covered claims. They asserted seven provisions of the umbrella policy that limited or denied coverage of ARCO’s claims. The policy neither provided for nor prohibited a right of reimbursement; it was entirely silent on the subject. The Excess Underwriters asserted that the right was implied in law and in fact. In its answer, Frank’s Casing asserted in part that the Excess Underwriters had not stated a claim in contract or tort and had acted with unclean hands. Frank’s Casing also counterclaimed for negligence, bad faith, violations of the Texas Insurance Code, breach of contract, business disparagement, and a declaratory judgment that all of ARCO’s claims were covered by the umbrella policy.

The case was presented to the trial court in seven motions for partial summary judgment, five by the Excess Underwriters and two by Frank’s Casing, addressing separately the reimbursement issue, the various coverage issues, and damages. In September 1999, the trial court issued a series of orders granting the Excess Underwriters reimbursement for any non-covered claims and denying most of Frank’s Casing’s counterclaims. Then in March and April 2000, the trial court granted the Excess Underwriters’ motions on the coverage issues and denied Frank’s Casing’s remaining motion. Finally, on December 14, 2000, more than two years and nine months after the case was filed, the trial court granted the Excess Underwriters’ motion on damages, ordering that they were entitled to reimbursement of $7,013,612. But a week later, this Court issued its decision in Texas Association of Counties County Government Risk Management Pool v. Matagorda County, holding that an insurer that pays a claim later determined not to be covered by the policy is entitled to reimbursement “only if it obtains the insured’s clear and unequivocal consent to the settlement and the insurer’s right to seek reimbursement.”[9] The trial court directed Frank’s Casing to move for reconsideration on the issue of the right to reimbursement, and Frank’s Casing complied. After further hearing, the trial court granted the motion, withdrew its orders on that issue, granted summary judgment for Frank’s Casing on that issue, and signed a judgment that the Excess Underwriters take nothing. The trial court did not withdraw its orders resolving the coverage issue in favor of the Excess Underwriters.

Only the Excess Underwriters appealed. The court of appeals affirmed, although it noted:

We recognize this case carries Matagorda County to a logical conclusion that is somewhat disquieting — Frank’s was able to resolve the parties’ coverage dispute in its own favor simply by sending a Stowers demand to the Underwriters. Thereafter, the Underwriters had to pay if Arco’s claims were within the policy, but also had to pay if they [were] not within the policy because there was no right to reimbursement. But this is a matter that the Underwriters must take up with the superior court.[10]

The Court granted the Excess Underwriters petition for review [11] and issued an opinion reversing and remanding the case to the trial court for rendition of judgment in their favor.[12] Though two Justices did not join fully in the Court’s opinion,[13] none dissented from the judgment.[14] When respondent’s motion for rehearing was filed, only four of the Justices present at oral argument remained on the Court. To fully consider respondent’s motion, petitioner’s response, and a number of amicus briefs,[15] the Court granted the motion and ordered the case reargued.[16]

Frank’s Casing has not challenged, either in the court of appeals or in this Court, the trial court’s rulings on the coverage issues. Therefore, I assume that none of ARCO’s claims were covered by the umbrella policy. The only issue, then, is whether the Excess Underwriters are entitled to be reimbursed for the amount they paid in settlement.

The parties agree that the coverage issues were governed by Louisiana law, but they disagree whether the reimbursement issue is governed by Louisiana law or Texas law, and whether the two are different. Frank’s Casing contends that the Excess Underwriters never requested the application of Louisiana law in the trial court and that in any event, on the issue before us it is no different than Texas law. The Excess Underwriters alluded to Louisiana law twice in the trial court. A six-sentence footnote in their motion for summary judgment began, “[t]o the extent Louisiana law might apply to this case”, and then cited two Louisiana statutes [17] and two cases [18] generally allowing recovery for unjust enrichment. None of the authorities cited specifically addressed the issue in this case. In response to Frank’s Casing’s motion for reconsideration, after this Court’s decision in Matagorda County issued, the Excess Underwriters again briefly cited general Louisiana authority “[t]o the extent this Court finds Louisiana law controlling”. Neither instance amounted to an actual assertion that the reimbursement issue is controlled by Louisiana law. If Louisiana law were controlling, it is not clear from the authorities cited how it would resolve the issue before us. Without proof that Louisiana and Texas law are different, they should be presumed to be the same,[19] and which of the two states’ law controls need not be resolved.

Accordingly, I turn to the question whether Texas law affords an insurer the right to reimbursement from its insured for settling a non-covered liability claim.

III

When the parties to a contract disagree over what performance is required and that disagreement cannot be resolved before performance is due, the party who must perform is put to the choice of doing more than he thinks is called for or facing the other party’s claim of breach. The potential adverse consequences of the latter course may be severe enough that the party is all but forced to render the performance demanded and forego resolution of the dispute. The other party thus obtains more than he bargained for.

According to the Restatement (Third) of Restitution and Unjust Enrichment:

The commonsense solution to this dilemma — allowing performance with reservation of rights — promotes justice and efficiency. Because it offers recourse to a party who might otherwise be effectively compelled to render an extracontractual performance, it serves both to reinforce the parties’ agreement and to prevent the unjust enrichment that would otherwise result. Equally important, the mechanism of contingent or provisional performance (that is, performance subject to an eventual claim in restitution) will serve in many cases to reduce the overall cost of resolving the parties’ dispute. Disputes over contractual requirements commonly arise in the midst of the undertaking, rather than at its outset or conclusion. The cost of interruption is then at its highest; the risk of consequential harms (which must ultimately be borne by one party or the other) leverages the stakes beyond the amount initially in dispute. If the party on whom a questionable demand is made can protect its position only by refusing performance, the costs of resolution are magnified accordingly. Performance with reservation of rights can reduce these costs by deferring dispute resolution to a point at which the risk of consequential harm is lower.[20]

Provisional performance is the rule for transactions governed by the Uniform Commercial Code, which provides that “[a] party that with explicit reservation of rights performs or promises performance or assents to performance in a manner demanded or offered by the other party does not thereby prejudice the rights reserved.”[21] The UCC imposes no requirement that the other party consent to the reservation for it to be effective.

The point of reserving rights is, of course, is to see them vindicated, which cannot be accomplished without a remedy.[22] The remedy, according to the Restatement (Third) of Restitution and Unjust Enrichment, is restitution. The UCC provision, the Restatement explains, “presume[s] . . . that the ‘rights reserved’ by a performing party — ‘where one party is claiming as of right something which the other believes to be unwarranted’ — take the form of a claim in restitution for the value of any benefit conferred to which the recipient was not entitled.”[23] Texas law recognizes restitution as a remedy for unjust enrichment “[w]hen a person has obtained a benefit by taking undue advantage of another”.[24] The Restatement sets out the following rule, originally suggested by Professor Mark Gergen:[25]

35. Performance of Disputed Obligation

(1) If one party to a contract demands from the other a performance that is not in fact due by the terms of their agreement, the party on whom the demand is made may render such performance under protest or with reservation of rights, preserving a claim in restitution to recover the value of the benefit conferred in excess of the recipient’s contractual entitlement.

(2) The claim described in subsection (1) is available only to a party acting in good faith and in the reasonable protection of the claimant’s own interests. It is not available where there has been an accord and satisfaction between the parties, or where a performance with reservation of rights is inadequate to discharge the claimant’s obligation to the recipient.[26]

The rule restricts restitution to claimants who act in good faith and in the reasonable protection of their own interests. The provisional performance must also go far enough to discharge a claimant’s obligation. In such circumstances, restitution is not precluded by the voluntary-payment rule because, as comment b to section 35 explains, the claimant acts under a kind of coercion — the pressure to take action to avoid consequential harms before uncertainty as to contractual obligations can be resolved.[27]

Section 35 restates the principle of restitution inherent in the UCC provision and applicable to contracts generally. But insurance policies are not governed by the UCC, and as comment c to section 35 recognizes, “disputes between insurers and policyholders over the insurer’s duty to pay a claim, or to settle or defend a claim brought against the policyholder, present special difficulties for the law of restitution, because the insurer’s duty to indemnify and defend is subject to extensive regulation under local insurance law.”[28] Regulation is necessary because an insured is typically at a distinct disadvantage in dealing with an insurer, having little or nothing to say about the policy language, little or no experience in evaluating coverage issues, and neither the wherewithal nor the inclination to litigate disputes. The prospect that a third-party liability claim may not be covered by insurance poses a significant threat to most insureds. As the Restatement observes, “[p]ublic policy strongly favors the prompt discharge of an insurer’s obligations to its policyholder.”[29]

Nevertheless, Texas law permits a liability insurer to defend or settle a claim against its insured while reserving its rights to contest coverage,[30] as long as it acts timely and in good faith.[31] An insured may reject the reservation, demand an unconditional defense, and sue for contractual and extracontractual damages.[32] But if the insured does not reject the reservation, the insurer must be given a meaningful opportunity to resolve the coverage dispute if the reservation is to be anything but an empty formality. Without that opportunity, the Restatement explains:

the risk of enhanced liability in coverage disputes may compel a performance by the insurer that is outside the scope of the insurance contract. If the insurer, by denying coverage, risks a potential liability greater than the amount initially in controversy — and if the insurer is obliged to take action before the coverage issue can be adjudicated — the effect of the applicable legal rules may be to subject the insurer to an extracontractual liability. Such a result distorts the parties’ allocation of risks and creates the sort of unjust enrichment with which the present Section is concerned.[33]

The present case is a prime example of such distortion of risk and unjust enrichment when an insurer is denied restitution from its insured for settling non-covered claims. The Excess Underwriters’ Stowers obligation was to accept a reasonable settlement offer within policy limits or stand to the full recovery against Frank’s Casing, even beyond policy limits. Once ARCO made such an offer, Frank’s Casing had almost no incentive to confront the coverage issues. If ARCO’s claims were covered by the Excess Underwriters’ policy, Frank’s Casing had no exposure, and if the claims were not covered, so what? If the Excess Underwriters settled and won the coverage dispute, Frank’s Casing had nothing to lose without an obligation to reimburse the settlement of the non-covered claims. And if the Excess Underwriters did not settle and lost the coverage dispute, Frank’s Casing would have no obligation. Only if the Excess Underwriters refused to settle and later won the coverage dispute would Frank’s Casing risk any liability. But while Frank’s Casing’s risk of refusing to contribute to the settlement was slight, the Excess Underwriters’ risk of refusing to settle was enormous. Even if they won the coverage dispute, they could not recover without a right of reimbursement, and if they lost the coverage dispute, their Stowers liability would extend to ARCO’s full recovery, perhaps $16 million. Having estimated their ultimate exposure to be $5 million, as reflected in their settlement offer to Frank’s Casing, the Excess Underwriters barely hesitated in paying $2 million more to settle $16 million in claims, especially after trial had begun and Frank’s Casing itself viewed ARCO’s case claims as strong.

If the Excess Underwriters’ assessment of the coverage issues had been correct, they would have paid $2 million more than they owed. As it turned out, the Excess Underwriters were finally determined to have no obligation at all. None of ARCO’s claims were covered. Stowers liability combined with no right of reimbursement effectively forced the Excess Underwriters to extend Frank’s Casing $7 million in coverage for which it had not contracted and had paid nothing. Such disincentive for insurers to resolve coverage issues carries a cost that must be paid in higher premiums.

The purpose of the law of restitution is to prevent such unjust enrichment without permitting abuse. In Matagorda County, the Court noted that an insurer’s right of reimbursement could operate unfairly against an insured. Though the Court did not elaborate, such a situation can occur when the plaintiff’s claims exceed the defendant’s assets, but not its policy limits, coverage is uncertain, and the insurer can settle over the defendant’s objection.[34] But Matagorda County incorrectly asserted that a right of reimbursement might result in a defendant having to pay more than it is worth.[35] It is impossible for an insurer to exact more from an insured than he is worth; you can’t squeeze blood from a turnip. And an insurer has no more incentive or ability to sue for reimbursement that cannot

class=Section3>

be collected than a plaintiff has to demand a settlement that cannot be paid. Indeed, it almost always has less incentive. Not only will the insurer want to leverage the coverage dispute to extract a lower settlement demand from the plaintiff, but an insurer who pursues its insured into bankruptcy does so at a business cost paid in bad customer relations and lower premiums.

In any event, Frank’s Casing does not argue that an obligation to reimburse the Excess Underwriters would have put it in the predicament hypothesized in Matagorda County. Frank’s Casing is a substantial business, and there is nothing to indicate that it lacked the means to meet its liability to ARCO. When both the defendant’s assets and the plaintiff’s demand exceed the insurer’s policy limits, granting the defendant the unilateral power to accept or reject a settlement offer may unfairly prejudice the insurer.[36]

The possibility of prejudice to an insured, not actually present in either this case or in Matagorda County, is avoided under section 35, which would not allow reimbursement because the insurer’s settlement of the claim under a reservation of rights would result in a higher payment by the insured and therefore be “inadequate to discharge [the insurer’s] obligation to the [insured]”. The remedy for unjust enrichment does not come at a price of unfairness to the other party. Further, if the restrictions on restitution contained in section 35 were inadequate to prevent an unjust application of the rule, equity could intervene because restitution is an equitable remedy.[37] If an insured were unfairly prejudiced by affording an insurer a right of reimbursement, the answer is to limit the right in that situation to prevent the prejudice, not to deny it altogether in the many other cases in which it is necessary to prevent unjust enrichment.

The Court rejects section 35, not because it is in any way unfair to insureds, but because it “undermine[s] . . . the predictability that our decision in Matagorda County provided”.[38] Of course, it does. Never is extremely predictable. But section 35 would certainly create no serious unpredictability in this case or any one like it. It is not very hard to see that Frank’s Casing should not be given the benefit of coverage it did not buy.

Frank’s Casing and amici curiae have raised several other arguments against an insured’s right to be reimbursed by its insured for settling non-covered claims.

Such a right disincentivizes insurers to obtain a resolution of coverage issues before a liability claim must be settled. We have encouraged prompt resolution of coverage issues through declaratory judgment actions.[39] The argument that an insurer entitled to reimbursement might delay such resolution is easily answered; an insurer who intentionally delays resolution of coverage issues to prejudice the insured may, in a particular case, forfeit the right of reimbursement by failing to act in the good faith required by section 35.

Denying reimbursement altogether raises a different set of problems. Early resolution of coverage issues is often impossible or imprudent.[40] In many cases, there is simply not time. Here, for example, while Frank’s Casing faults the Excess Underwriters for doing nothing to resolve coverage issues in the eleven months that the liability case was pending against it, the fact that the coverage case took nearly three years and seven motions for summary judgment strongly suggests that it could not have been completed before the trial of ARCO’s claims. In other cases, litigating coverage while the liability claim is pending is prejudicial to the insured. The insured may be forced to take positions in support of coverage that undermine the defense of the liability claim. Pitting the insurer and insured against one another may create intolerable conflict at a time when their interests in defending against liability should be aligned. It may simply be distracting and difficult for the insured to fight the liability claimant on one front and his insurer on another. These problems may now be unavoidable, since the Court’s refusal to allow an insurer to recover payment of a non-covered claim means that unless an insured agrees to defer coverage issues, they must be determined before the liability claim is resolved or be forever lost. It may even be necessary to delay resolution of the liability claim. The Court certainly does not suggest that an insurer should be denied a fair opportunity to litigate coverage issues.

If there is to be such a right, it should be expressed in the policy. It is well settled that the law may imply contractual terms to prevent unjust enrichment. In Ferrous Products Co. v. Gulf States Trading Co., we said, quoting hornbook law:

A quasi contractual obligation is one that is created by the law for reasons of justice, without any expression of assent and sometimes even against a clear expression of dissent.

* * *

Contracts implied in law, or more properly quasi or constructive contracts, are a class of obligations which are imposed or created by law without regard to the assent of the party bound, on the ground that they are dictated by reason and justice, and which are allowed to be enforced by an action ex contractu. . . . Such contracts rest on the equitable principle that a person shall not be allowed to enrich himself unjustly at the expense of another, and on the principle that whatsoever it is certain that a man ought to do, that the law supposes him to have promised to do.[41]

This settled law is a part of every contract and governs the transaction.[42] The argument here is that the general law of restitution should not apply. But restitution is necessary if an insurer’s reservation of rights, long allowed by Texas law, is to have any viability in cases in which coverage issues cannot be resolved before the liability claim. To deny restitution in such cases, given an insurer’s Stowers duty to accept a reasonable settlement of a liability claim within policy limits, is effectively to create coverage where none exists. That is what happened in this case.

An express agreement — the policy — precludes an agreement implied in law. This both misstates the law and misapplies it to this case. It is true, as we said in Fortune Production Co. v. Conoco, Inc., that

[g]enerally speaking, when a valid, express contract covers the subject matter of the parties’ dispute, there can be no recovery under a quasi-contract theory. . . . That is because parties should be bound by their express agreements. When a valid agreement already addresses the matter, recovery under an equitable theory is generally inconsistent with the express agreement.[43]

But we also specifically noted that there were certain exceptions which would allow recovery of “overpayments under a contract . . . under a theory of restitution or unjust enrichment.”[44] Moreover, the Excess Underwriters’ policy does not cover the subject of restitution. It required that Frank’s Casing make a claim within a year after its liability became fixed [45] and then allowed the Excess Underwriters thirty days to decide whether to pay it. But this provision neither required nor entitled the Excess Underwriters to defer a decision on a claim until after Frank’s Casing had settled it and thus force a Stowers violation. The policy merely provided an outside time frame for making and paying claims. On the subject of reimbursement in the circumstances before us the policy was entirely silent, and that silence does not preclude restitution.

The risk of any uncertainty about coverage should be borne entirely by the insurer because of its control of the liability litigation and its superior knowledge and experience with coverage issues. There is no question that most insurers are better able to assess coverage issues than most insureds, since insurers are likely to have encountered the issues many times. But as this case illustrates, an insurer must be virtually certain that coverage does not exist before it can justify the risk of refusing to settle a claim within policy limits. Few cases are so clear. As the Restatement recognizes, restitution is an equitable accommodation of the insurer’s and insured’s interests in reserving and later resolving coverage issues. Also, while it may be possible for an insurer to exercise its right to control the defense and settlement of a liability claim in a way that unfairly prejudices an insured sued for restitution, the prejudice can be addressed in any case in which it occurs without denying restitution in all cases. Frank’s Casing makes no claim of such prejudice in this case.
Insurers will use meritless coverage issues and the threat of a suit for reimbursement to force insureds to contribute to settling claims when they should not have to. This is not what happened in the present case. Instead, Frank’s Casing repeatedly refused to contribute anything to the settlement of ARCO’s claims, either settling the coverage issues at the same time or reserving resolution for later, when the umbrella policy provided no coverage at all. The law does not punish insureds for such obduracy as it would insurers, as for example with Stowers liability. But an insured should not be rewarded for forcing coverage when none exists. An insurer who raises bogus coverage issues to extract a settlement contribution from an insured is subject to other sanctions as for any unfair practice.[46]
Defense counsel cannot advise an insured that a settlement offer is reasonable if in so doing he subjects the insured to a reimbursement obligation. The premise is incorrect. Counsel’s advice regarding the reasonableness of an offer does not trigger the insurer’s claim for restitution. That claim depends entirely on the effectiveness of the reservation of rights, the resolution of coverage issues, the reasonableness in fact of the acceptance of the settlement offer, and the insurer’s good faith and absence of inequitable conduct. Of course, if counsel’s advice is communicated beyond persons protected by the attorney-client privilege, it may be evidence of the reasonableness of the offer when the issue arises, but if kept confidential the advice would be privileged from disclosure. A right of restitution does not pose a conflict for defense counsel in advising the insured. In this case, there is no hint of such a conflict. We have no indication what Frank’s Casing’s defense counsel thought of ARCO’s settlement offer, and corporate counsel did not hesitate in pronouncing the offer reasonable and twice insisting that the Excess Underwriters accept it.
If an insurer’s settlement of a non-covered claim can be recovered from the insured, the insurer will settle early, even if unfavorably, to minimize defense expenses and avoid Stowers liability. It is difficult to imagine why an insurer would accept a settlement offer that is unreasonable and to which its insured objects, and then try to seek reimbursement from the insured. If for some reason it occurred, it would exhibit the the lack of good faith that section 35 requires.

These arguments do not support making an exception to the general law of restitution for the defense and settlement of liability insurance claims. The Court cites only one other court of last resort that has considered the issue: Blue Ridge Insurance Co. v. Jacobsen. There, the Supreme Court of California allowed a right of reimbursement in circumstances similar to this case.[47] I agree with the reasoning of that case, as does the Restatement.[48]

* * * * *

I would reverse the court of appeals’ judgment and remand the case to the trial court for rendition of judgment in favor of the Excess Underwriters. Accordingly, I respectfully dissent.

___________________

Nathan L. Hecht

Justice

Opinion delivered: February 1, 2008

^[1] Blue Ridge Ins. Co. v. Jacobsen, 22 P.3d 313, 318-319 (Cal. 2001); Colony Ins. Co. v. G & E Tires & Serv., Inc., 777 So.2d 1034, 1038-1039 (Fla. Dist. Ct. App. 2000).

^[2] Restatement (Third) of Restitution and Unjust Enrichment § 35 & reporter’s note to cmt. c, illus. 10 (Tentative Draft No. 3, 2004) (“it is the dissenting opinion in Texas Ass’n of Counties [County Gov’t Risk Mgmt. Pool v. Matagorda County, 52 S.W.3d 128, 136 (Tex. 2000) (Owen, J., joined by Hecht, J., dissenting)] that reflects the position of this Restatement”).

^[3] Mark P. Gergen, Restitution as a Bridge over Troubled Contractual Waters, 71 Fordham L. Rev. 709, 725-728 (2002).

^[4] Restatement (Third) of Restitution and Unjust Enrichment § 35 & reporter’s note to cmt. a (Tentative Draft No. 3, 2004). Tentative Draft No. 3 was approved by the membership of the American Law Institute during its annual meeting on May 18, 2004. American Law Institute, Proceedings at 81st Annual Meeting 259-260 (2004).

^[5] The policy provided that the insurer “shall have the right and duty to defend any suit against the Assured . . . and may make such investigation and settlement of any claim or suit as it deems expedient”.

^[6] The policy provided: “The Assured shall make a definite claim for any loss for which the Underwriters may be liable under this policy within twelve (12) months after the Assured shall have paid an amount of ultimate net loss in excess of the amount borne by the Assured or after the Assured’s liability shall have been fixed and rendered certain either by final judgment against the Assured after actual trial or by written agreement of the Assured, the claimant, and Underwriters.” (Emphasis added.) The Excess Underwriters argue that the last phrase gives Frank’s Casing the right to consent to any settlement, but Frank’s Casing argues that this stretches the phrase’s meaning.

^[7] The policy provided:

The Underwriters shall not be called upon to assume charge of the settlement or defense of any claim made or suit brought or proceeding instituted against the Assured but Underwriters shall have the right and shall be given the opportunity to associate with the Assured or the Assured’s underlying insurers or both in the defense and control of any claim, suit or proceeding relative to an occurrence where the claim or suit involves, or appears reasonably likely to involve Underwriters, in which event the Assured and Underwriters shall co-operate in all things in the defense of such claim, suit or proceeding.

^[8] See American Physicians Ins. Exch. v. Garcia, 876 S.W.2d 842, 843 n.2 (Tex. 1994) (“The duty of an insurer to exercise ordinary care in the settlement of claims to protect its insureds against judgments in excess of policy limits is generically referred to in Texas as the Stowers duty.”); Stowers Furniture Co. v. Am. Indem. Co., 15 S.W.2d 544 (Tex. Comm’n App. 1929, holding approved).

^[9] 52 S.W.3d 128, 135 (Tex. 2000) (“[W]e hold that, when coverage is disputed and the insurer is presented with a reasonable settlement demand within policy limits, the insurer may fund the settlement and seek reimbursement only if it obtains the insured’s clear and unequivocal consent to the settlement and the insurer’s right to seek reimbursement.”).

^[10] 93 S.W.3d 178, 180 (Tex. App.–Houston [14th Dist.] 2002).

^[11] 46 Tex. Sup. Ct. J. 546 (Apr. 3, 2003).

^[12] 48 Tex. Sup. Ct. J. 735 (May 27, 2005).

^[13] Id. at 744 (O’Neill, J., concurring); id. at 746 (Wainwright, J., concurring).

^[14] Justice Brister did not participate in the decision, having authored the opinion for the court of appeals while serving as Chief Justice of that court. Justice Johnson also did not participate, having recently been appointed to the Court.

^[15] Amicus briefs in support of respondent’s motion for rehearing have been submitted by United Policyholders; Brad Fish, Inc.; Pilco, Inc.; Shell Oil Co.; Motiva Enterprises LLC; Burlington Resources Inc.; Temple-Inland Inc.; Texas Civil Justice League; Texas Ass’n of Defense Counsel, Inc.; and Valero Energy Corp. Amicus briefs opposing the motion have been filed by Property Casualty Insurers Ass’n of America; American Insurance Ass’n; and Complex Insurance Claims Litigation Ass’n, on behalf of its members: AIG; Chubb & Son; Farmers Insurance Group; The Hartford Insurance Group; Liberty Mutual Group Inc.; St. Paul Fire and Marine Insurance Co.; Selective Insurance Co. of America; The Travelers Indemnity Co. and Travelers Indemnity and Surety Co.; and Zurich American Insurance Co.

^[16] 49 Tex. Sup. Ct. J. 240 (Jan. 6, 2006).

^[17] La. Civ. Code Ann. arts. 2055, 2298.

^[18] Edmonston v. A-Second Mortgage Co. of Slidell, 289 So.2d 116 (La. 1974); E.F. Minyard v. Curtis Prods., Inc., 205 So.2d 422 (La. 1968).

^[19] Coca-Cola Co. v. Harmar Bottling Co., 218 S.W.3d 671, 685 (Tex. 2006); Gevinson v. Manhattan Constr. Co. of Okla., 449 S.W.2d 458, 465 n. 2 (Tex. 1969); Milner v. Schaefer, 211 S.W.2d 600, 603 (Tex. Civ. App.—San Antonio 1948, writ ref’d); Tempel v. Dodge, 33 S.W. 222, 222 (Tex. 1895).

^[20] Restatement (Third) of Restitution and Unjust Enrichment § 35 cmt. a (Tentative Draft No. 3, 2004).

^[21] Tex. Bus. & Com. Code §§ 1.102 (“Scope of Chapter” in Uniform Commercial Code); 1.308(a) (“Performance or Acceptance Under Reservation of Rights”).

^[22] See Miers v. Brouse, 271 S.W.2d 419, 421 (Tex. 1954) (“The first maxim of equity is that it will not suffer a right to be without a remedy. As Lord Holt early said: ‘If the plaintiff has a right, he must of necessity have a means to vindicate and maintain it . . . . It is a vain thing to imagine a right without a remedy.’” (citation omitted)); Ashby v. White, 92 Eng. Rep. 126, 136 (K. B. 1703) (Lord Holt, C.J., dissenting), reprinted in 1 Smith’s Leading Cases 464, 483 (9th ed. 1889). On writ of error from the King’s Bench, the House of Lords reversed the judgment and ruled in favor of the plaintiff for the reasoning stated in Lord Chief Justice Holt’s dissent. 1 Eng. Rep. 417 (H.L. 1703); see 90 Eng. Rep. 1188 (H.L. 1703); John William Smith et al., A Selection of Leading Cases on Various Branches of the Law: With Notes 509 (9th ed., Charles H. Edson & Co. 1888).

^[23] Restatement (Third) of Restitution and Unjust Enrichment § 35 cmt. a (Tentative Draft No. 3, 2004).

^[24] Heldenfels Bros., Inc. v. City of Corpus Christi, 832 S.W.2d 39, 41 (Tex. 1992) (“A party may recover under the unjust enrichment theory when one person has obtained a benefit from another by fraud, duress, or the taking of an undue advantage.”).

^[25] See Gergen, supra note 3, at 728.

^[26] Restatement (Third) of Restitution and Unjust Enrichment § 35 (Tentative Draft No. 3, 2004); id. cmt. a (“The rule of this Section is implicit in the negative statement of U.C.C. § 1-308(a) . . . .”).

^[27] Restatement (Third) of Restitution and Unjust Enrichment § 35 cmt. b (Tentative Draft No. 3, 2004) (“When the cost of resistance includes a risk of further loss or liability, beyond the amount already in controversy, the party on whom the demand is made may have no practical alternative but to submit. Performance in such cases is not ‘voluntary,’ and restitution is uniformly available to rectify the overperformance that the claimant has effectively been compelled to render.”); see Dallas County Cmty. Coll. Dist. v. Bolton, 185 S.W.3d 868, 886 (Tex. 2005); BMG Direct Mktg. v. Peake, 178 S.W.3d 763, 776-778 (Tex. 2005).

^[28] Id. cmt. c.

^[29] Id.

^[30] See American Physicians Ins. Exch., 876 S.W.2d at 861 (Hightower, J., dissenting).

^[31] See American Eagle Ins. Co. v. Nettleton, 932 S.W.2d 169, 174 (Tex. App.—El Paso 1996, writ denied) (“[A]n insurer may undertake the insured’s defense and later deny coverage if it ‘reserves its rights’ by advising the insured that it may interpose a policy defense following adjudication of the claimant’s suit against the insured. This is a proper course of action only when the insurer has a good faith belief that the complaint alleges conduct which may not be covered by the policy. In such a situation, the reservation of rights will not breach the duty to defend if timely notice of intent to reserve rights is sufficient to inform the insured of the insurer’s position.” (citations omitted)).

^[32] Texas Ass’n of Counties County Gov’t Risk Mgmt. Pool v. Matagorda County, 52 S.W.3d 128, 141 (Tex. 2000) (Owen, J., joined by Hecht, J., dissenting) (“Under Texas law, if an insurance company tenders a defense with a reservation of rights, the insured may either accept that defense with the reservation of rights, or it may refuse the tendered defense and defend the suit itself. If the insured decides to defend itself, it must bear the cost of that defense if the claims against it are not covered by insurance.” (citation omitted)).

^[33] Restatement (Third) of Restitution and Unjust Enrichment § 35 cmt. c (Tentative Draft No. 3, 2004).

^[34] Suppose the following: at trial, P has a 50% probability of recovering 10 and a 50% probability of recovering 0; coverage is 50/50; policy limits are 10; and D has 2 in assets.

P expects, on average, to recover 3. Half the time P loses at trial and takes nothing. A fourth of the time he wins at trial and there is coverage, so he recovers 10 from I. But another fourth of the time he wins at trial but there is no coverage, so he is limited to D’s assets, 2. With one chance at 10, one at 2, and two at 0, he should expect 3.

With no right of reimbursement, I expects at trial to pay only 2.5 on average, since there is only one chance in 4 that it will owe 10, and D expects to pay only 0.5 on average, since there is only one chance in 4 that it will owe 2. If there is a right of reimbursement, I can pay P 3 to settle and still lower its expected cost to 2 on average, since half the time it will recover nothing from D in the coverage suit and the other half it will recover D’s 2. But D’s expected cost then increases, on average, to 1, since it will lose the coverage fight half the time. In this situation, if I can insist on settling for 3, it benefits itself and harms D.

^[35] 52 S.W.3d at 135 (stating that a right of reimbursement might force an insured to “choose between rejecting a settlement within policy limits or accepting a possible financial obligation to pay an amount that may be beyond its means, at a time when the insured is most vulnerable.”).

^[36] Now suppose: at trial, P has a 50% probability of recovering 20 and a 50% probability of recovering 0; coverage is 50/50; policy limits are 10; and D has 50 in assets.

At trial, P expects, on average, to recover 10. D expects, on average, to pay 7.5. I expects, on average, to pay 2.5. If D has the unilateral power to accept or reject settlements, even assuming I has a right of reimbursement, I’s average expected cost is increased to 5, and D’s falls to 5. But if D can use the threat of Stowers liability to force I to pay 10, and I has no right of reimbursement, I’s average expected cost is increased to 10, and D’s falls to 0.

^[37] BMG Direct Mktg. v. Peake, 178 S.W.3d 763, 771, 775(Tex. 2005) (noting, however, that “an adequate legal remedy may render equitable claims of unjust enrichment and equitable defenses of voluntary-payment unavailable” and citing Matagorda County, 52 S.W.3d 128, 133-135 (Tex.2000)); Dallas County Cmty. Coll. Dist. v. Bolton, 185 S.W.3d 868, 886 (Tex. 2005) (Brister, J., joined by Jefferson, C.J, and O’Neill, J., dissenting to opinion holding that allegedly illegal student activity fees were voluntarily paid as a matter of law). See Restatement (Third) of Restitution and Unjust Enrichment § 1, cmt b (“This equitable conception of the law of restitution is crystallized by Lord Mansfield’s famous statement in Moses v. Macferlan (1761): ‘In one word, the gist of this kind of action is, that the defendant, upon the circumstances of the case, is obliged by the ties of natural justice and equity to refund the money.’ Explaining restitution as the embodiment of natural justice and equity gives the subject an undoubted versatility, an adaptability to new situations, and — in the eyes of many observers — a particular moral attractiveness. Restitution in this view is the one aspect of our legal system that makes a direct appeal to standards of equitable and conscientious behavior as a source of obligations that society will enforce with a legal sanction.”).

^[38] Ante at ___.

^[39] See, e.g., Farmers Tex. County Mut. Ins. Co. v. Griffin, 955 S.W.2d 81, 84 (Tex. 1997) (per curiam); State Farm Fire & Cas. Co. v. Gandy, 925 S.W.2d 696, 714 (Tex. 1996).

^[40] Griffin, 955 S.W.2d at 84.

^[41] 332 S.W.2d 310, 312 (Tex. 1960) (citations omitted).

^[42] See, e.g., Wessely Energy Corp. v. Jennings, 736 S.W.2d 624, 626 (Tex. 1987) (“The laws existing at the time a contract is made becomes a part of the contract and governs the transaction. Langever v. Miller, 124 Tex. 80, 76 S.W.2d 1025, 1026-27 (1934).”).

^[43] 52 S.W.3d 671, 684 (Tex. 2000) (citations omitted).

^[44] Id. (citing Southwestern Elec. Power Co. v. Burlington N. R.R. Co., 966 S.W.2d 467, 469 (Tex. 1998) (“[I]n some circumstances, overpayments under a valid contract may give rise to a claim for restitution or unjust enrichment.”)).

^[45] See supra note 6.

^[46] See Tex. Ins. Code § 541.060 (prohibiting certain unfair settlement practices).

^[47] 22 P.3d 313, 318-319 (Cal. 2001).

^[48] Restatement (Third) of Restitution and Unjust Enrichment § 35, illus. 10 & reporter’s note (Tentative Draft No. 3, 2004).

Justice Wainwright, dissenting.

In the heat of trial, an insured and its excess insurer reached an agreement to address a situation not covered by the insurance policy. The insured accepted a $7.5 million payment from the insurers (including $500,000 from the primary insurance carrier) to settle the case against it, but later objected to enforcement of an express condition in the agreement to settle the case on its behalf. A deal is a deal, whether the insurer or the insured likes it after the fact. Because the Court’s holding contradicts this principle, I respectfully dissent.

At trial it quickly became clear that defendant Frank’s Casing was the focus of plaintiff ARCO’s attention. Frank’s Casing and its insurers feared a large verdict that might eclipse the limits of its excess coverage. On two prior occasions Frank’s Casing refused offers by the excess underwriters to fund a settlement of the claims brought against it by ARCO, subject to the condition that the excess underwriters could seek a reimbursement if the settled claims were not covered. The third offer to settle the dispute with ARCO for $7.5 million in insurance funds was also expressly conditioned on the right of the excess underwriters to seek reimbursement of the settlement payment if a later declaratory judgment action determined that ARCO’s claims were not covered by the excess policy. Frank’s Casing did not respond verbally or in writing to the third offer, but Frank’s Casing accepted the $7.5 million check and announced on the record in the trial court that it accepted the insurance payment to fund the settlement of the dispute and that the settlement with plaintiffs was consummated “by letter dated February 23, 1998.” The February 23rd letter contained the reimbursement term. The trial court rendered judgment on the settlement. In the subsequent declaratory action brought by the excess underwriters, Frank’s Casing lost its argument that ARCO’s claims were covered by the excess policy on summary judgment and did not appeal the final judgment. Having secured millions of dollars from the excess underwriters by virtue of their offer to settle the dispute, Frank’s Casing now claims that it is not bound by the express condition in the offer to reimburse the payment by the excess underwriters. By its actions and its statements in the trial court confirming the settlement, Frank’s Casing accepted the February 23rd offer. And Frank’s Casing lost on the issue the parties reserved to finally determine whether a right of reimbursement arose—the trial court determined there was no insurance coverage for ARCO’s claims.

Frank’s Casing admits that the excess underwriters paid $7 million to settle the claims on its behalf. Frank’s Casing does not dispute that the third settlement offer conditioned the right to reimbursement on whether coverage was found to exist and did not reject the offer or object to the reimbursement condition. Frank’s Casing lost on the coverage issue. Notwithstanding these facts, the Court surprisingly bifurcates the settlement offer to allow Frank’s Casing to accept the benefits of a contract and reject its obligations. The Court holds that Frank’s Casing consented to the settlement payment but not to the express condition. Frank’s Casing, the Court holds, can keep the $7.5 million benefit from the agreement but is not bound by the obligation to reimburse the excess underwriters when it lost its claim that there was coverage of the settled claims. The Court essentially decides that the insurer is bound by the deal but that the insured can rewrite the deal if it does not like the result.

The Court relies on Texas Association of Counties County Government Risk Management Pool v. Matagorda County. 52 S.W.3d 128 (Tex. 2000). In Matagorda County, the Court restricted an insurer’s right to reimbursement of settlement payments later found not to be covered by an insurance policy to circumstances where the insurer “obtains the insured’s clear and unequivocal consent to the settlement and the insurer’s right to seek reimbursement.” Id. at 135. Matagorda County erected this uncommon standard for contract formation even though the standard eschewed traditional common law contract principles on the tenets necessary to establish a right to recover.

Once upon a time, the relationship between insurer and insured was fully one of contract and was governed by the terms and conditions of the policy. See Progressive County Mut. Ins. Co. v. Sink, 107 S.W.3d 547, 551 (Tex. 2003) (insurance policy is a contract to be interpreted according to contract principles); Barnett v. Aetna Life Ins. Co., 723 S.W.2d 663, 665 (Tex. 1987) (“It is a fundamental rule of law that insurance policies are contracts and as such are controlled by rules of construction which are applicable to contracts generally.”). Even after common law modifications and legislative regulation of the parties’ consensual relationship, see, e.g., Tex. Bus. & Com. Code §§ 17.41–.63; Tex. Ins. Code §§ 541.001–.454; Arnold v. Nat’l County Mut. Fire Ins. Co., 725 S.W.2d 165, 167 (Tex. 1987) (holding that insurers owe a duty of good faith and fair dealing toward insureds); G. A. Stowers Furniture Co. v. Am. Indemn. Co., 15 S.W.2d 544, 547 (Tex. Comm’n App. 1929, holding approved) (creating a duty to accept reasonable settlement demands within policy limits), the relationship between insurer and insured is still fundamentally based on the agreement of the parties. See Provident Life & Accident Ins. Co. v. Knott, 128 S.W.3d 211, 216 (Tex. 2003) (insurance policies are interpreted under rules of contract construction); Barnett, 723 S.W.2d at 665. In an insurance arrangement like the one at issue, the insured and insurer enter an agreement for the insurer to cover prescribed risks. Generally, the insured pays premiums to protect it against certain unrealized fortuitous costs or damages, up to an agreed limit, that it may suffer or be obligated to pay. See Eric Mills Holmes, et al., Holmes’ Appleman on Insurance, § 1.4, at 22–23 (2d ed. 1996). A contract of insurance obligates the insurer to cover only the risks prescribed in the policy. Id. at 29.

The standard of proof for an agreement is straightforward. A contract is established when proven by a preponderance of the evidence that an offer is accepted, accompanied by consideration. See Fed. Sign v. Tex. S. Univ., 951 S.W.2d 401, 408 (Tex. 1997) (“A contract must be based upon a valid consideration, in other words, mutuality of obligation.”); Haws & Garrett Gen. Contractors, Inc. v. Gorbett Bros. Welding Co., 480 S.W.2d 607, 609 (Tex. 1972) (“[T]here must be shown the element of mutual agreement which, in the case of an implied contract, is inferred from the circumstances.”). Unusual to Texas’s common law of contracts, Matagorda County made the existence of a contractual agreement in this context subject to “clear and unequivocal” proof of acceptance.[1] Matagorda County, 52 S.W.3d at 135. Matagorda County provides no reasoning to support its creation of that particular standard, but that remains the law in Texas. Because the parties reached an agreement on reimbursement, we should decide this case by simply enforcing their agreement.

II.

Frank’s Casing agreed to pay premiums for the provision of excess insurance coverage by the excess underwriters in the amount of $10 million. ARCO sued Frank’s Casing and others after an offshore drilling platform partially fabricated by Frank’s Casing for ARCO collapsed in the Gulf of Mexico. The excess underwriters issued a reservation of rights letter contesting coverage under its excess insurance policy with Frank’s Casing. When settlement discussions were unfruitful, the case was tried to a jury. During the heat of trial, with a large verdict appearing increasingly likely, Frank’s Casing entered another round of settlement discussions directly with ARCO and procured a settlement demand of $7.5 million, which Frank’s Casing presented to the excess underwriters. The excess underwriters agreed to pay $7 million (plus $500,000 from the primary insurer) to settle the case, conditioned on their right to seek reimbursement if they were ultimately not required to extend coverage for the claims at issue.

At the time the parties were considering the settlement, both believed they were in difficult positions. The record indicates that both parties believed a substantial verdict, possibly beyond the excess layer of insurance coverage, was likely. Both also knew that their original contract of insurance did not address the issue of the insurer’s ability to obtain reimbursement of a settlement payment for uninsured claims. Under these circumstances, the following decision trees grew.

During the trial, the excess underwriters had to decide whether to fund a settlement for an amount less than their policy limits, which included claims potentially not covered by their policy, to avoid the risk of a larger judgment. By agreeing to pay a settlement amount that was less than the excess underwriters’ policy limits, the excess underwriters would avoid a verdict that could exhaust their policy limits and potential extra-contractual claims. Thus, the excess underwriters would benefit from the proposed settlement.

Frank’s Casing likewise believed that it was faced with the specter of a large jury verdict against it. By settling within the excess underwriters’ policy limits, Frank’s Casing avoided a verdict beyond policy limits, a portion of which Frank’s Casing would be personally liable to pay. The settlement would end the trial and vanquish the risk of a large verdict and Frank’s Casing’s potential exposure for amounts above the excess limits or for the entire verdict if there were no coverage. In other words, the settlement would also benefit Frank’s Casing.

The excess underwriters decided to pay their portion of the settlement but conditioned their payment on their right to seek reimbursement if the claims were proven not to be a risk the parties had agreed to cover under the excess policy. The excess underwriters sent a letter on February 23, 1998, making this offer to Frank’s Casing. The letter further stated that the excess underwriters “w[ould] contact Arco/Vastar’s attorney th[at] morning” to settle the claims against Frank’s Casing. Frank’s Casing concurred that the settlement was reasonable and not only approved but demanded that the excess underwriters consummate the $7.5 million settlement. The excess underwriters sent a second letter on February 23rd to confirm the settlement with ARCO, copied Frank’s Casing on the letter, and then filed a declaratory judgment action contesting coverage that same day. The next day at the hearing before the trial court, which had recessed trial to give the parties the opportunity to resolve the dispute, the parties dictated their settlement into the record. At the hearing, Frank’s Casing did not object to any portion of the settlement, but asserted that by agreeing to the settlement the excess underwriters waived their right to contest “coverage,” making no mention of reimbursement.

Hence, we come to the dispute before this Court. Did Frank’s Casing obtain a windfall—i.e., payment by its insurer of millions of dollars to settle claims against it for which there was no coverage? Or did the excess underwriters voluntarily pay a settlement to obtain the benefits of saving potentially millions of dollars from the expected verdict? Two sophisticated entities carefully exercised their rights and obligations in light of their potential exposure. Both made reasoned decisions they believed to be in their best interests under the circumstances. But for the reimbursement condition included in the excess underwriters’ offer accepted by Frank’s Casing, I would conclude that there is no right to reimbursement. Absent the parties entering into a legally enforceable agreement, I do not believe that the equities of the parties’ respective circumstances alone support allowing a right to recoup the settlement payment.

If Frank’s Casing’s only conduct toward the excess underwriters upon obtaining the $7.5 million settlement offer from ARCO was to acquiesce to a settlement that did not include the reimbursement condition, the excess underwriters would have no right to reimbursement. However, I conclude that Frank’s Casing, by its acceptance of the $7.5 million payment and acquiescence in the settlement, bound itself under principles of contract law to the condition that the excess underwriters would be able to seek reimbursement. Frank’s Casing was not simply a beneficiary of its insurer’s settlement, but demanded in a prior letter dated February 19, 1998, that the excess underwriters act in a “reasonably prudent” manner, accept the settlement offer from ARCO, and do so “BEFORE a ruling by the court on the contract issues . . . [which] could occur at any time, but will occur, at the latest, by beginning of court Tuesday of next week.” Including the weekend, the following Tuesday, February 24, 1998, was five days away. The excess underwriters agreed to pay the settlement conditionally. The second February 23rd letter, which Frank’s Casing told the trial court was the basis of settlement, provided:

[The excess underwriters] continue to reserve all rights against Frank’s [Casing] as to coverage under the Umbrella Policy, and will hold Frank’s [Casing] responsible for and will seek reimbursement of all sums paid in settlement of claims for which no coverage exists under the Umbrella Policy.

(emphasis added). The excess underwriters then settled the case against Frank’s Casing the same day and faxed written confirmation to ARCO with a copy to Frank’s Casing. Frank’s Casing never asserts that it rejected the settlement offer or made a counteroffer. Instead, Frank’s Casing acknowledges that it accepted the settlement offer from the excess underwriters but argues that the excess underwriters did not obtain “Frank’s [Casing’s] agreement nor its clear and unequivocal consent to seek reimbursement.”[2]

The second letter sent on February 23rd to the plaintiffs confirmed the verbal settlement but stated that the excess underwriters would continue to reserve all rights “against Frank’s [Casing] as to coverage” and, for a second time that day, affirmed that they would “hold Frank’s [Casing] responsible for and will seek reimbursement of all sums paid in settlement of claims for which no coverage exists under the Umbrella policy.” Frank’s Casing again did not reject but accepted the settlement. After entering the settlement, the excess underwriters filed a declaratory judgment action contesting coverage that afternoon.

The next morning the trial court recessed the trial to enable the parties to dictate their settlement into the record. Frank’s Casing stated that “by letter dated February 23, 1998” (which conditioned settlement on reimbursement) from the excess underwriters to the plaintiffs, it had agreed to pay $7.5 million to settle the case with the plaintiffs. Frank’s Casing then asserted that the excess “underwriters have either waived their right to reserve cover [sic] issues or alternatively [are estopped] from asserting any coverage issues since underwriters have agreed to the settlement.” Counsel for the excess underwriters reconfirmed on the trial court record:

This settlement is being funded by Frank’s [Casing’s] umbrella underwriters subject to a full reservation of all rights against Frank’s [Casing] under the umbrella policy. . . . And these [excess] underwriters will hold Frank’s [Casing] responsible for and will seek reimbursements of all sums paid [for] the settlement of claims for which no coverage exists under the umbrella policy.

The trial court rendered judgment on the agreement dictated into the record. The Settlement Agreement and Release, signed later by Frank’s Casing and the excess underwriters, confirmed that the excess underwriters’ right to seek reimbursement was not released. The covenants not to sue and the releases between the parties did not apply “to any claims that exist presently . . . between Defendant Frank’s [Casing] and Frank’s [Casing’s] Insurers arising from the claims asserted by Plaintiffs.”

Frank’s Casing has never disputed that the excess underwriters’ settlement offer was conditioned on a right to seek reimbursement. Frank’s Casing argues that by its actions it accepted the part of the settlement offer providing for the excess underwriters to make a $7 million settlement payment but did not accept the condition on that promise. The facts do not support Frank’s Casing’s position.

III.

A contracting party cannot accept the benefits of a contract and disclaim its obligations. W. H. Putegnat Co. v. Fid. & Deposit Co. of Md., 29 S.W.2d 1004, 1006 (Tex. 1930) (“Where one accepts the benefits of a contract[,] he must assume its burdens.”); United Concrete Pipe Corp. v. Spin-Line Co., 430 S.W.2d 360, 364 (Tex. 1968) (noting that a party may have the right to withdraw his consent before a contract’s performance but not after the promise is accepted or performed); Robert H. Jerry, II, The Insurer’s Right to Reimbursement of Defense Costs, 42 Ariz. L. Rev. 13, 72 (2000) (“[A]cquiescence in and acceptance of the benefits of [the party’s] performance constitute a manifestation of acceptance of the terms on which [the party’s] performance was tendered.”). To effectively decline an offer, some terms of which an offeree disapproves, the offeree must reject the offer or make a counteroffer. See Ashford Dev., Inc. v. USLife Real Estate Servs. Corp., 661 S.W.2d 933, 934–35 (Tex. 1983) (determining that an additional term in a loan commitment was a counteroffer); Komet v. Graves, 40 S.W.3d 596, 601 (Tex. App.—San Antonio 2001, no pet.) (holding an attempt to change an offer before acceptance operates as a rejection and counteroffer). Neither occurred here before the settlement was consummated.

Frank’s Casing accepted the settlement proposed by the excess underwriters, thereby acquiescing in the terms of the offer, and bound itself to the settlement under the law of contracts. See Blue Ridge Ins. Co. v. Jacobsen, 22 P.3d 313, 317 (Cal. 2001) (holding an insurer may seek reimbursement for settlement of uncovered claims where the insured is aware of the reservation but acquiesces). In practice in an insurance context, insureds often communicate acceptance of an offer by conduct, as in the case of an insured accepting a defense from an insurer that reserves its right to deny coverage. In such cases, the insured’s acceptance of the defense is an implied consent to the insurer’s reservation of the coverage issues, “even in the absence of an express consent or acceptance of the offer.” W. Cas. & Sur. Co. v. Newell Mfg. Co., 566 S.W.2d 74, 76 (Tex. Civ. App.—San Antonio 1978, writ ref’d n.r.e.); see also In re Halliburton Co., 80 S.W.3d 566, 568 (Tex. 2002) (“[W]hen an employer notifies an employee of changes to the at-will employment contract and the employee ‘continues working with knowledge of the changes, he has accepted the changes as a matter of law.’”) (quoting Hathaway v. Gen. Mills, Inc., 711 S.W.2d 227, 229 (Tex. 1986)).

Although the excess policy does not address reimbursement, during the trial the parties extended their contractual arrangement to address the risk of a large verdict by settlement and also agreed on a method to allocate the cost. The settlement vanquished the risk of a jury verdict against them. The allocation of the cost of settlement would be based on the outcome of the coverage suit. If the settled claims were found to be covered by the excess policy, the excess underwriters’ payment of the settlement would end the matter. The contractual relationship would function as intended as the excess underwriters were paid premiums to protect Frank’s Casing from covered risks within policy limits. If the settled claims were found not to be covered under the excess policy, the excess underwriters would have a contractual right to seek reimbursement of the settlement payment. The Court agrees that the parties reserved the coverage question but steadfastly ignores both the fact that Frank’s Casing lost on the issue reserved (on which the parties hinged the excess underwriters’ right to seek reimbursement) and the implications of that determination. By the terms of the parties’ arrangement during trial, there arose a right to reimbursement.

The Court concludes that no such agreement was reached or can be implied in fact but nevertheless decides that Frank’s Casing may keep the benefit of the offer to pay $7.5 million to settle the case but reject the reimbursement condition on the offer. As cited, infra, contract law does not allow the Court’s approach of “having my cake and eating it, too.” A deal is a deal, and in Texas we enforce deals. If Frank’s Casing wanted to reject the condition on reimbursement, it should have rejected the $7.5 million payment on its behalf and proceeded with trial, made a counteroffer that excluded the condition on reimbursement, or objected to the condition on reimbursement before the settlement was entered. The Court posits that “the excess underwriters’ agreement to accept the settlement in light of Frank’s Casing’s reimbursement contest implied the insurers’ consent to Frank’s Casing’s reservation of the reimbursement question.” __ S.W.3d __, __. The Court misstates some facts and ignores others. First, the excess underwriters did not accept the offer, Frank’s Casing did; the excess underwriters made the offer. Second, as explained, it is true the parties hinged reimbursement on the answer to the coverage question. However, again, ignoring the facts, the Court refuses to acknowledge that Frank’s Casing lost its claim of coverage, which gave rise to the excess underwriters’ contractual right to reimbursement.

The Court asserts “it makes no more sense to say that Frank’s Casing impliedly agreed to reimburse the carriers than it would to say that the carriers impliedly agreed to waive their coverage position.” Id. at __. The Court’s logic falters as it again ignores material facts. The excess underwriters’ reservation of the right to reimbursement is an express condition in the second February 23rd letter (pursuant to which the parties consummated the settlement) and acknowledged in the language of the subsequent settlement releases. It defies logic in this context to argue that the carriers impliedly waived positions they explicitly reserved in writing when the settlement was consummated, explicitly reserved during the hearing in the trial court, and then provided for in the settlement documents. The facts of Frank’s Casing’s agreement to the settlement are, however, very different. Frank’s affirmed on the trial court record that it settled under the terms of the second February 23rd letter, affirmatively accepted the $7.5 million check, and raised no objection when counsel for the excess underwriters stated, in the same trial court hearing on the record, that under the terms of the settlement they retained the right to seek reimbursement if the settled claims were later held not to be covered.

Frank’s Casing also argues that recognizing the excess underwriters’ contractual right to reimbursement is unfair. I do not agree. A trial court decided that the claims against Frank’s Casing, which the excess underwriters agreed to pay to settle, were not covered claims under the excess policy. Frank’s Casing did not appeal that determination, and it is therefore settled. Frank’s Casing is not entitled to insurance coverage for risks for which it paid no premiums, and the excess underwriters are not obligated to pay for risks they did not agree to cover and for which they received no consideration. Should the parties have desired to cover such risks, they could have consented to such an arrangement by defining the scope of coverage to include the claims at issue and agreeing on premiums to be paid for such coverage. But they did not.

And neither would I create an equitable right to reimbursement in this case. Matagorda County left open a very small window for insurers to seek reimbursement of settlement payments for claims later determined to be outside policy coverage. The parties should sink or swim on the agreements they enter, unless the facts are such that they effect a change in the parties’ agreement under traditional principles of contract law, are changed by the Legislature, or involve fraud, extortion, mutual mistake of fact, or another basis for altering a contract. Deciding this case based on a balancing of equitable rights to reimbursement would significantly widen this window but would invite insurers and insureds to unnecessarily introduce the uncertainty and unpredictability of restitutionary theories into these situations when the relationship is one based on contract.

IV.

In conclusion, I would hold that absent an agreement that the insured reimburse the insurer for paying to settle a claim that is later held not to be covered, there is no right to reimbursement of the settlement payment. Such an agreement may be included in the insurance policy or by subsequent explicit consent or by conduct.

The parties’ contractual relationship should govern an insurer’s right to reimbursement. If our analysis of this reimbursement issue were based on the common law of contract, determined by the agreements between the parties, rather than undefined standards that are foreign to contract law, the law in this area would be less perplexing and more certain. Insureds and insurers alike benefit from predictability and certainty in the law.

________________________________________

Dale Wainwright

Justice

OPINION DELIVERED: February 1, 2008

^[1] The Court has not defined the Matagorda County “clear and unequivocal” standard for entering an agreement for reimbursement. It seems to require more than a simple preponderance of the evidence; beyond that, we do not know what this standard requires. Even evidence supporting a clear and convincing standard may be equivocal, but Matagorda County requires more than that.

^[2] Frank’s Casing also complains that it had only a few hours to study the proposed settlement from the excess underwriters. This complaint rings hollow as it was Frank’s Casing’s February 19th letter that imposed the February 23rd deadline on the excess underwriters to settle the case, and Frank’s Casing threatened to pursue extra-contractual claims if the deadline was not met.

Jul 22nd, 2015 Insurance Defense Litigation

Required FMLA Posters for Texas Employers–Texas Employment Law

Required FMLA Posters for Texas Employers

Comprehensive information and links to required posters (all free of charge) are found at http://www.twc.state.tx.us/ui/lablaw/posters.html.
Posters should be displayed in such a way that each employee can readily see them (generally, the requirements have language such as “conspicuously placed” and “readily accessible” to employees). That would mean that employees who do not normally get to certain offices would not be served by posters displayed at those offices. The offices, or sub-offices, where those employees normally congregate would need to have the posters displayed for the benefit of the employees who are served by each such location.
Posters and other kinds of required notices do not have to be placed in individual locations that are only temporary worksites. Example: construction workers building homes in a subdivision would not need to have posters in each house, but rather only in a company jobsite trailer for the project.
In case of a co-employment situation, such as temporary employees assigned to client companies, the employees working at client sites are co-employed by the staffing firms and their clients under various state and federal employment laws. The notice statutes merely require the posters to be in the workplace. The enforcing agencies do not care who actually places the notices where the employees work, as long as the posters are up and visible to the employees. Thus, as long as the client companies have the applicable notices properly posted, their compliance with the notice requirements inures to the staffing firm’s benefit. By the same token, if the clients do not have the notices posted, the staffing firm would be co-liable with them for non-compliance with the laws. Bottom line: the staffing firm needs to determine whether the appropriate notices are posted in the clients’ locations, and if they are not posted, cooperate with its clients to get the posters displayed.
In a virtual office situation, where the company does not maintain a physical location where employees normally congregate, assemble, or show up for work-related purposes, post copies of the posters on the company’s web site section restricted to staff and send an e-mail, “read receipt requested”, to all affected employees listing and identifying the posters, complete with links to the posters on the web site, and reminding the employees that the posters are there for their benefit and that they should keep the e-mail archived so that they can easily find the links to the posters if needed.

Jul 21st, 2015 Employment Law Defense