Garland Independent School District v. Reeder General Contractors, Inc.

Court of Appeals of Texas·Decided March 21, 2024·No. 05-22-00855-CV·Published

Opinion

Affirm and Opinion Filed March 21, 2024

In The

Court of Appeals

Fifth District of Texas at Dallas No. 05-22-00855-CV

GARLAND INDEPENDENT SCHOOL DISTRICT, Appellant V.

REEDER GENERAL CONTRACTORS, INC., Appellee

On Appeal from the 162nd Judicial District Court Dallas County, Texas

Trial Court Cause No. DC-21-15806

MEMORANDUM OPINION ON REHEARING Before Justices Molberg, Pedersen, III, and Miskel Opinion by Justice Molberg We deny appellant Garland Independent School District’s motion for

rehearing and, on our own motion, withdraw our January 26, 2024 memorandum opinion and vacate the judgment of that date. This is now the opinion of the Court.

In three issues, Garland Independent School District (the District) appeals the trial court’s order denying its plea to the jurisdiction. The District argues the Texas Local Government Contract Claims Act1 does not waive immunity for appellee Reeder General Contractors, Inc.’s claims for various reasons; the Legislature has

1 TEX. LOC. GOV’T CODE §§ 271.151–.160.

not waived governmental immunity for equitable damages claims; and Texas Government Code § 2251 does not waive a school district’s governmental immunity for attorney’s fees claims. We affirm in this memorandum opinion.

Background

On October 26, 2021, Reeder sued the District for breach of contract, alleging the two parties executed a contract for Reeder to perform construction work at several district campuses, including Jackson Middle School and Lyles Middle School. The parties executed the contract and related plan documents on February 7, 2018. On May 18, 2018, Reeder had to stop work on the Jackson project when it “discovered a previously undisclosed electrical feeder line running within the project’s building foundation footprint[,]” making it “impossible for the piers to be constructed as called for in the plans.” Reeder alleged the District and the District’s architect did not complete their redesign for the project until October 16, 2018. Reeder alleged it incurred significant additional costs resulting from the six-month delay. It alleged, in accordance with contractual requirements, it submitted a change order (Proposed Change Order 38) on January 3, 2019, requesting $265,700 for “additional jobsite costs and general conditions it incurred due to the delay.” Reeder substantially completed some of the work on December 5, 2019, and submitted a revised change order, and the parties, eighteen months later, eventually reached an agreement with the District’s project manager for a $154,504 payment for the work. Reeder alleged the District presented the change order to the District’s Board of

Trustees for approval in March 2021. The Board “agreed that Reeder was not at fault and was entitled to the change order,” but Reeder alleged the District has nevertheless failed and refused to execute the change order. Reeder further alleged the District prevented Reeder from submitting a final payment request for retainage withheld on the project, despite the contract’s requirement that retainage be paid within thirty days after completion of work. Reeder alleged $1,138,995.88 was due and payable for these breaches. Reeder also alleged a Prompt Payment Act violation and sought attorney’s fees under “the terms of the contract and Texas law,” including Chapter 2251 of the Texas Government Code.

On June 3, 2022, the District filed a plea to the jurisdiction. The District argued the trial court lacked subject matter jurisdiction because governmental immunity precluded Reeder’s claims. Despite Texas Local Government Code § 271.152 (local government entity waives sovereign immunity to suit for breach of a contract entered into subject to Chapter 271, Subchapter I, of local government code), the District argued Reeder’s claims did not fall within the Act’s waiver because Reeder (1) could not establish the element of breach, (2) sought damages not allowed by § 271.153, and (3) failed to comply with the contract’s “claims” process for resolving disputes. The District also argued the suit was “extracontractual in nature and thus sounds in equity despite its mischaracterization as a breach of contract case,” and that Reeder’s Prompt Payment Act claim did not fall within any waiver of governmental immunity.

The District also filed a brief in support of its plea to the jurisdiction with which it included an affidavit from Javier Fernandez, the District’s Director of Facilities, Planning, and Construction Services. Fernandez stated Reeder failed to comply with the contract in several ways, including failing to file a “claim” with the District, to comply with the claims process, to file a written appeal of a decision of the architect, to file a written appeal of the program manager’s decision, and to provide written notice of any interference by the District, architect, or program manager. Fernandez also stated the District had paid all compensation due under the contract.

On August 5, 2022, Reeder filed its first amended petition. Reeder alleged the construction contract involved work at five different campuses, but the work at issue in its suit related to Jackson Middle School and Lyles Middle School, where it was to build new band halls and renovate other facilities. Prior to submitting its bid, Reeder was provided a project manual, a set of general conditions for construction, and plans, which were all incorporated as part of the contract documents governing the parties’ relationship. According to the contract, the intent of these documents was to “include all items necessary for the proper execution and completion of the work by [Reeder].” Reeder alleged it was obligated under the contract to study and compare the plans to actual observable site conditions prior to beginning its work “for the purpose of facilitating coordination and construction by [Reeder] and not the purpose of discovering errors, omissions, or inconsistencies.” Reeder alleged

the contract stated Reeder had no responsibility for “damages resulting from errors, inconsistencies, or omissions in the contract documents or for differences between field measurements or conditions and the contract documents” unless Reeder should have recognized such inconsistencies in its comparison of plans and observable site conditions and then failed to report to the District’s architect. The contract further stated Reeder was not “responsible for the adequacy of the . . . design required by” the plans.

Reeder alleged the District’s plans, prepared by the District’s architect, VLK Architects, Inc., were “riddled with inconsistencies, omissions, and errors that were not discoverable by [Reeder] in the exercise of its pre-work ‘study and compare’ obligations.” These defects, in addition to rainfall and other weather conditions, significantly slowed Reeder’s progress on the Lyles and Jackson projects.

Reeder discovered defects in the plans that prevented it from going forward on both projects. Reeder alleged it stopped work and submitted requests for information and then waited for the District, VLK, and the project manager, Jacobs, to inform it how to proceed with a redesign or workaround. Under the contract, responses to such requests were to be made “reasonably promptly,” but Reeder alleged the District, VLK, and Jacobs took 60 days on the Lyles project and 151 days on the Jackson project to decide on a new course of action.

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