City of Galveston, Dorothy Palumbo, City Attorney and Sterling W. Patrick, Director of Grants and Housing v. CDM Smith, Inc.

470 S.W.3d 558, 2015 Tex. App. LEXIS 3249, 2015 WL 1544938
Court of Appeals of Texas·Decided April 2, 2015·No. NO. 14-14-00294-CV·Published·Cited by 20 cases

Opinion

OPINION

Martha Hill Jamison, Justice

When the legislature enacted chapter 271 of the Local Government Code, it loosened the immunity bar so “that all local governmental entities that have been given or are given the statutory authority to enter into contracts shall not be immune from suits arising from those contracts.” 1 In five issues, appellants City of Galveston, Dorothy Palumbo, and Sterling W. Patrick challenge the trial court’s denial of their plea to the jurisdiction, contending that they are immune from suit in conjunction with claims arising from the City’s contract with appellee CDM Smith, Inc. 2 Concluding the City’s immunity has been waived as to CDM’s.breach of contract claim, we affirm the trial court’s denial of the plea to the jurisdiction as to that claim. As to CDM’s other claims, we reverse the trial court’s order denying the City’s plea to the jurisdiction and render judgment granting the plea and dismissing those claims for lack of jurisdiction.

Background

Congress enacted the Consolidated Security, Disaster Assistance, and Continuing Appropriations Act of 2009 to appropriate funds through the Community Block Grant Program (Program) for aid in disaster relief. Congress designated the United States Department of Housing and Urban Development-(HUD) as the administering agency for Program funds. HUD allocated to the State of Texas over $1.3 billion to assist with the recovery from damages caused by Hurricane Ike. Approximately $160 million was allocated to the City to address housing damage. The City entered into a contract with CDM to act as the “Program Administrator.”

The City and CDM have divergent views regarding the nature of their agreement. The City argues it is a “platform for further activities”; that throúgh it, the City could-authorize the Program Administrator to perform services for the City; and without such further authorizations, the parties had no obligations to provide or pay for services. CDM asserts that the agreement is a services contract requiring CDM to provide professional management *563 and operational services to the City regarding the Program.

When CDM completed services for the City, CDM would submit invoices to the City, and the City would review the invoices for compliance with HUD and State requirements and then forward them to the responsible state agency for payment. 3 The agency would then release Program funds to pay for CDM’s services.

The City fell behind on payments, and the parties executed a task order modification that was made part of the contract and required the City to process and submit invoices for payment within 15 days of receiving an invoice from CDM. CDM sued the City and Palumbo and Patrick, in their official capacities, after the City purportedly stopped submitting invoices for payment. CDM asserted claims for breach of contract, violation of the .Texas Prompt Pay Act, and ultra vires actions of City employees, and sought a writ of mandamus for violation of the Texas Public Information Act, seeking documents relevant to CDM’s claims.

Discussion

The City argues it is entitled to immunity from suit because none of the potential theories of waiver of immunity asserted by CDM apply to the facts of this case. CDM asserts immunity has been waived under the following theories: (1) Local Government Code section 271.152, which waives governmental immunity from suit for a governmental entity that enters into a contract for services; (2) the City’s execution of the contract was a proprietary, not governmental, function; (3) the Texas Prompt Pay Act, which CDM contends waives immunity for interest payments; and (4) governmental officials could be sued in their official capacities for actions outside of their authority and failures to perform ministerial acts, including missing deadlines under the contract and failing to submit invoices as required under the contract. CDM also contends it was entitled to sue the City for violations of the Public Information Act.

The City is a local governmental entity.' See Lubbock Cnty. Water Control & Imp. Dist. v. Church & Akin, L.L.C., 442 S.W.3d 297, 300 & n. 4 (Tex.2014); Tex. Loc. Gov’t Code § 271.151(3)(A). Local governmental entities enjoy governmental immunity from suit, unless immunity is expressly waived. 4 Church & Akin, 442 S.W.3d at 300. Governmental immunity includes both immunity from liability, which bars enforcement of a judgment against a governmental entity^ and immu- ■ nity from suit, which bars suit against the entity altogether. Id. A governmental entity that enters into a contract necessarily waives immunity from liability, voluntarily binding itself like any other party to the terms of agreement, but it does not waive immunity from suit. Id. Unlike immunity from liability, immunity from suit deprives the courts of jurisdiction and thus completely bars the plaintiffs claim. Id.

A suit asserting that a government officer “acted without legal authority” and seeking to compel the official “to comply *564 with statutory or constitutional provisions” is an ultra vires suit. City of El Paso v. Heinrich, 284 S.W.3d 366, 372 (Tex.2009). Those suits are not barred by governmental immunity because they “do not attempt to exert control over the state.” Id.

We review a plea challenging the trial court’s jurisdiction de novo. 5 State v. Holland, 221 S.W.3d 639, 642 (Tex.2007). We first look to the pleadings to determine if the pleader has alleged facts that affirmatively demonstrate the court’s jurisdiction to hear the cause. Tex. Dep’t of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 226 (Tex.2004). We construe the pleadings liberally in favor of the plaintiff, look to the pleader’s intent, and accept as true the factual allegations in the pleadings. Id. If the issue is one of pleading sufficiency, the plaintiffs should be afforded the opportunity to amend unless the pleadings affirmatively negate jurisdiction. Id. at 227.

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City of Galveston, Dorothy Palumbo, City Attorney and Sterling W. Patrick, Director of Grants and Housing v. CDM Smith, Inc., 470 S.W.3d 558, 2015 Tex. App. LEXIS 3249, 2015 WL 1544938 (Tex. Ct. App. 2015).

470 S.W.3d 558 (City of Galveston, Dorothy Palumbo, City Attorney and Sterling W. Patrick, Director of Grants and Housing v. CDM Smith, Inc.) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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