Corpus Christi Independent School District v. Tl Mechanical

• Court: Court of Appeals of Texas
• Decided: March 29, 2012
• Docket: 13-11-00624-CV
• Status: Published

Opinion

NUMBER 13-11-00624-CV

COURT OF APPEALS

THIRTEENTH DISTRICT OF TEXAS

CORPUS CHRISTI - EDINBURG

CORPUS CHRISTI INDEPENDENT SCHOOL DISTRICT, Appellant,

v.

TL MECHANICAL, Appellee.

On appeal from the County Court at Law No. 4 of Nueces County, Texas.

MEMORANDUM OPINION Before Chief Justice Valdez and Justices Garza and Vela Memorandum Opinion by Justice Vela This is an interlocutory appeal from a trial court order denying appellant, Corpus

Christi Independent School District's ("CCISD"), plea to the jurisdiction. CCISD raises a

single issue on appeal contesting the trial court's ruling. We affirm. I. BACKGROUND

Appellee TL Mechanical and CCISD entered into a contract with respect to air

conditioning system renovations at Mary Carroll High School in Corpus Christi. After TL

Mechanical's bid had been accepted and the contract had been entered into, an issue

arose with respect to alleged deficiencies of the Carrier Corporation's equipment that was

being utilized, because Carrier was unable to provide factory installed ventilation controls

on the system. The evidence also reflected that Carrier was listed in the project

specifications as one of four acceptable equipment suppliers. The CCISD engineer in

charge of the project refused to accept the Carrier controls and required TL Mechanical to

use equipment provided by McQuay. As a result, TL Mechanical incurred an additional

$175,000 for purchase of the equipment. TL Mechanical filed suit against CCISD,

alleging that the school district breached its contract by not issuing a formal change order

or construction change directive, and sought, as damages, the additional costs

associated with utilizing the McQuay equipment. CCISD filed a plea to the jurisdiction,

which the trial court denied after a hearing. CCISD then filed this interlocutory appeal.

II. STANDARD OF REVIEW

A plea to the jurisdiction based on governmental immunity challenges a trial court's

subject matter jurisdiction. State v. Holland, 221 S.W.3d 639, 642 (Tex. 2007). We

consider a trial court's ruling on a plea to the jurisdiction under a de novo standard. Id.

Generally, a plaintiff bears the burden to plead facts affirmatively demonstrating

subject matter jurisdiction. Id. A plea to the jurisdiction can challenge either the

sufficiency of the plaintiff's pleadings or the existence of jurisdictional facts. Tex. Dept. of

2 Parks & Wildlife v. Miranda, 133 S.W.3d 217, 226–27 (Tex. 2004). When a plea attacks

the pleadings, the issue turns on whether the pleader has alleged sufficient facts to

demonstrate subject matter jurisdiction. Id. In such cases, we construe the pleadings

liberally in the plaintiff's favor and look for the pleader's intent. City of Carrollton v.

Singer, 232 S.W. 3d 790, 795 (Tex. App.—Fort Worth 2007, pet. denied). When the

pleadings neither allege sufficient facts nor demonstrate incurable defects, the plaintiff

should usually be afforded an opportunity to amend. County of Cameron v. Brown, 80

S.W.3d 549, 555 (Tex. 2002). However, if the pleadings affirmatively negate jurisdiction,

then the plea to the jurisdiction may be granted without leave to amend. Id. When a

plea to the jurisdiction challenges the existence of jurisdictional facts, a court may

consider evidence in addressing the jurisdictional issues. Miranda, 133 S.W.3d at 227.

If the evidence reveals a question of fact on the jurisdictional issue, the trial court cannot

grant the plea, and the issue must be resolved by a fact finder. Id. at 227–28.

Governmental immunity encompasses two components: immunity from liability

and immunity from suit. Tooke v. City of Mexia, 197 S.W.3d 325, 332 (Tex. 2006).

When a governmental entity enters into a contract, it waives immunity from liability under

the terms of the contract; however, entering into a contract does not also act as a waiver

of immunity from suit. Id. A waiver of immunity from suit may occur, even in the breach

of contract context, only if the legislature has waived such immunity by clear and

unambiguous language. Id. at 332–33.

3 III. ANALYSIS

CCISD's primary arguments are that TL Mechanical did not have an obligation to

issue a formal change order or construction change directive, thus there was no breach of

contract and the damages that TL Mechanical seeks are not recoverable.

Section 271.152 of the local government code provides a limited waiver of

immunity for local governmental entities that enter into certain contracts. Sharyland

Water Supply Corp. v. Alton, 354 S.W.3d 407, 411 (Tex. 2011); see TEX. LOC. GOV'T CODE

ANN. § 271.152 (West 2005). The statute provides:

A local governmental entity that is authorized by statute or the constitution to enter into a contract and that enters into a contract subject to this subchapter waives sovereign immunity to suit for the purpose of adjudicating a claim for breach of the contract, subject to the terms and conditions of this subchapter.

TEX. LOC. GOV'T CODE ANN. § 271.152. According to its plain language, the statute

unambiguously waives a governmental entity's immunity from suit for breach of certain

written contracts. Ben Bolt–Palito Blanco Consol. Indep. Sch. Dist. v. Tex. Political

Subdivs. Prop./Cas. Joint Self–Ins. Fund, 212 S.W.3d 320, 327 (Tex. 2006). The

Legislature enacted section 271.152 "to loosen 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." Id.

For section 271.152's waiver of immunity to apply, however, three elements must

be established: (1) the party against whom the waiver is asserted must be a "local

governmental entity" as defined by section 271.151(3); (2) the entity must be authorized

by statute or the Constitution to enter into contracts; and (3) the entity must in fact have

4 entered into a contract that is "subject to this subchapter," as defined by section

271.151(2). TEX. LOC. GOV'T CODE ANN. §§ 271.151–.152. A contract "subject to this

subchapter" is defined as "a written contract stating the essential terms of the agreement

for providing goods or services to the local governmental entity that is properly executed

on behalf of the local governmental entity." Id. § 271.151(2).

Here, all three elements are present. First, waiver of immunity in section 271.152

applies to "local governmental entities," which include municipalities, public school and

junior college districts, and various special-purpose districts and authorities. Id. §

271.151(3). There is no dispute that CCISD is a public school district expressly included

in the definition of a local government entity. Second, CCISD has statutory authority to

enter into contracts pursuant to section 11.1511(c)(4) of the Texas Education Code,

which authorizes an independent school district's board of trustees to "enter into contracts

as authorized under this code or other law and delegate contractual authority to the

superintendent as appropriate." TEX. EDUC. CODE ANN. § 11.1511(c) (4) (West Supp.

2011).

The third element requires the parties to enter into a "contract subject to this

subchapter." Id. § 271.151(2). In order for a contract to be subject to section 271.152's

waiver of immunity, it must: (1) be in writing, (2) state the essential terms of the

agreement, (3) provide for goods or services, (4) to the local governmental entity, and (5)

be executed on behalf of the local governmental entity. Id. The construction contract

between TL Mechanical and CCISD, signed by both the president and secretary of the

school board, its attorney and its superintendent, was attached to TL Mechanical's

5 pleadings. It is a contract for goods and services to be provided to CCISD. This

jurisdictional evidence, therefore, reflects "a written contract stating the essential terms of

the agreement for providing goods or services to the local government entity" that was

"properly executed on behalf of the local governmental entity." Id. § 271.151.

Section 271.153 of the statute limits the damages that can be awarded. See id. §

271.153. The purpose of section 271.153 is to limit the amount due by a governmental

agency on a contract once liability has been established, not to foreclose the

determination of whether liability exists. Kirby Lake Dev. Ltd. v. Clear Lake City Water

Auth., 320 S.W.3d 829, 838 (Tex. 2010). In City of Houston v. Southern Electrical

Services, Inc., the court stated that, in a case involving a plea to the jurisdiction, the court

does not adjudicate the substance of the case. 273 S.W.3d 739, 744 (Tex.

App.—Houston [1st Dist.] 2008, pet. denied). Rather, we determine if a court has the

power to adjudicate a case. Id. "Section 271.153 does not retract the privilege granted

in section 271.152 to adjudicate the claim for breach, if a plaintiff alleges facts to support

such a claim and seeks recovery only of damages to the extent allowed." Id. The

jurisdictional plea should be decided without delving into the merits of the case. Bland

Indep. Sch. Dist. v. Blue, 34 S.W.3d 547, 554 (Tex. 2000).

While CCISD urges that TL Mechanical has not alleged a breach of contract, the

jurisdictional evidence reflected that Carrier was listed in the project specifications as one

of four acceptable equipment suppliers. TL Mechanical urged in its pleadings that

CCISD never issued a formal change order or construction change directive to

accommodate the deviation from the original bid. TL Mechanical asserted that the

6 failure to issue the formal change order cost TL Mechanical the price difference of the

upgraded material. Thus, the pleadings reflect that TL Mechanical is filing suit for breach

of contract. CCISD's argument, in fact, goes to the merits of the case rather than the

jurisdictional issue. Whether CCISD can be held responsible for any alleged breach of

the parties' contract, however, is not within the scope of the governmental immunity

question presented here. See e.g., City of Houston v. Clear Channel Outdoor, Inc., 233

S.W.3d 441, 446 (Tex. App.—Houston [14th Dist.] 2007, no pet.) (determining that

whether the City's offer to purchase the plaintiff's billboard was binding under the City

charter implicated the merits of the case and did not defeat waiver of immunity.); see also

LaMarque Ind. School Dist. v. Healthy Resources Enter., Inc., No. 14-10-01269-CV, 2011

WL 5926179, at *4 (Tex. App.—Houston [14th Dist.] Nov. 29, 2011, no pet.) (mem. op.)

(holding that whether the school district could be held liable for breach of agreement for

failure to comply with specific terms applicable to amendment or work orders was not

within the scope of the question of governmental immunity).

CCISD also argues that the damages sought are not recoverable because TL

Mechanical is seeking lost profits. However, TL Mechanical pleaded that the "amount of

damages sought does not include any amount for 'lost profits.'" The damages it seeks

are based on the price difference between the Carrier equipment and the McQuay

equipment. These are direct damages stemming from the alleged breach.

Thus, we hold that TL Mechanical alleged facts sufficient to invoke the

government's waiver of immunity for the purpose of adjudicating a breach of contract

claim under local government code section 271.152. CCISD's issue is overruled.

7 IV. CONCLUSION

Having overruled CCISD's sole issue, we affirm the trial court's order denying the

plea to the jurisdiction.

ROSE VELA Justice

Delivered and filed the 29th day of March, 2012.