OPINION ON REHEARING
FELIPE REYNA, Justice.
Hoppenstein Properties, Inc. sued the McLennan County Appraisal District (“MCAD”) for breach of a commercial lease after MCAD abandoned the leased premises. The trial court granted MCAD’s partial plea to the jurisdiction on Hoppenstein’s claim for future damages. On original submission, this Court affirmed the judgment, holding that the commercial lease is not a contract for goods or services under section 271.152 of the Local Government Code, which waives a local governmental entity’s immunity from suits arising under such contracts. Hoppenstein has filed a motion for rehearing asking that the Court reconsider this holding in light of the Supreme Court’s recent decision in
Kirby Lake Development, Ltd. v. Clear Lake City Water Authority,
320 S.W.3d 829 (2010). We will grant rehearing, withdraw the prior opinion and judgment, and reverse the trial court’s order.
Background
The parties signed a 60-month lease in November 2007. A construction addendum to the lease required Hoppenstein to complete certain renovations, including among other things: (1) removing interior walls and constructing new ones according to an attached floor plan; (2) installing new carpet and tile; and (3) reconfiguring the HVAC system to accommodate the reconfigured space. Construction was to be “performed by trained and qualified
persons in a good and workman-like manner” and in compliance with applicable codes, ordinances, regulations, and statutes. MCAD retained the right to inspect and object to any deficiencies.
The lease term would commence after Hoppenstein completed renovation of the unoccupied portion of the premises,
and the parties were to sign a commencement letter at that time acknowledging the commencement date.
Hoppenstein alleges that the renovations were completed by May 1, 2008 and that MCAD occupied the renovated premises thereafter and the lease term commenced. Hoppenstein claims that MCAD breached the lease by: (1) interfering with renovations to other portions of the premises; (2) failing to pay rent after May 31, 2008; (3) failing to pay for “renovation extras” performed by Hoppenstein and authorized by MCAD; and (4) abandoning the premises on June 1, 2009.
Hoppenstein seeks past damages for the first three components of the breach-of-contract claim. It seeks future damages for anticipatory breach
in the form of lost rents owed after May 31, 2009 and other costs incurred as a result of MCAD’s abandonment of the premises.
See Dixon v. Modelist,
157 S.W.3d 454, 456 (Tex.App.Houston [14th Dist.] 2004, no pet.) (“plaintiffs in anticipatory breach cases usually seek future damages as opposed to past damages”).
MCAD answered with a general denial, a series of special denials, and several affirmative defenses, including governmental immunity. In essence, MCAD claims that the lease never commenced because Hoppenstein never completed the renovations required to trigger commencement of the lease term. By its partial plea to the jurisdiction, MCAD contended that its immunity from suit has not been waived with regard to “any claims seeking rents and related obligations that purportedly have been or will be incurred after [MCAD] abandoned the premises.” In other words, MCAD claimed immunity from suit on Hoppenstein’s claim for future damages.
Hoppenstein contends in two issues that: (1) MCAD’s immunity from suit has been waived by section 271.152 of the Local Government Code because the lease constitutes a contract for the provision of services to MCAD; and (2) the waiver of immunity provided by section 271.152 applies on a “contract-by-contract basis” rather than a “promise-by-promise basis.”
Contract for Services
Section 271.152 of the Local Government Code waives the immunity from suit of certain local governmental entities
for breach-of-contract claims arising from written contracts that state “the essential terms of the agreement for providing goods or services to the local governmental entity.”
See
Tex. Loo. Gov’t Code Ann. §§ 271.151(2), 271.152 (Vernon 2005). “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.’ ”
Kirby Lake Dev.,
320 S.W.3d at 838 (quoting
Ben Bolt-Palito Blanco Consol. Indep. Sch. Dist. v. Tex. Political Subdivisions Prop./Cas. Joint Self-Ins. Fund,
212 S.W.3d 320, 327 (Tex.2006)).
The relevant inquiry is whether the lease entails “the provision of ‘goods or services’ ” to MCAD.
See id.
at 839 (quoting Tex. Loo. Gov’t Code Ann. § 271.151(2)). The term “services” is “broad enough to encompass a wide variety of activities.”
Id.
“The services provided ... need not be the primary purpose of the agreement,” but they must be provided directly to the local governmental entity.
Id.
The construction addendum requires Hoppenstein to renovate the pi"emises according to a floor plan agreed to by MCAD. The renovations had to be completed in a manner satisfactory to MCAD. The construction addendum was incorporated into the lease by reference in paragraph 33 of the lease.
Thus, the addendum is part of the lease.
See In re Bank One, N.A.,
216 S.W.3d 825, 826 (Tex.2007) (orig. proceeding) (per curiam) (“Documents incorporated by reference in [a contract] are part of the contract.”).
Under the lease, Hoppenstein contracted to renovate the premises for MCAD. Thus, the lease entails the provision of services to MCAD within the meaning of the statute.
See Kirby Lake Dev.,
320 5.W.3d at 839 (agreement to construct, develop and lease facilities was a contract for services under the statute). Accordingly, we sustain Hoppenstein’s first issue.
Scope of Waiver
Hoppenstein contends in its second issue that the waiver of immunity provided by section 271.152 applies on a “contract-by-contract basis” rather than a “promise-by-promise basis.” Thus, Hoppenstein argues that MCAD’s immunity is waived not only for damages flowing from any breach of the “sendees provisions” of the lease but also from any breach of the remainder of the lease terms.
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OPINION ON REHEARING
FELIPE REYNA, Justice.
Hoppenstein Properties, Inc. sued the McLennan County Appraisal District (“MCAD”) for breach of a commercial lease after MCAD abandoned the leased premises. The trial court granted MCAD’s partial plea to the jurisdiction on Hoppenstein’s claim for future damages. On original submission, this Court affirmed the judgment, holding that the commercial lease is not a contract for goods or services under section 271.152 of the Local Government Code, which waives a local governmental entity’s immunity from suits arising under such contracts. Hoppenstein has filed a motion for rehearing asking that the Court reconsider this holding in light of the Supreme Court’s recent decision in
Kirby Lake Development, Ltd. v. Clear Lake City Water Authority,
320 S.W.3d 829 (2010). We will grant rehearing, withdraw the prior opinion and judgment, and reverse the trial court’s order.
Background
The parties signed a 60-month lease in November 2007. A construction addendum to the lease required Hoppenstein to complete certain renovations, including among other things: (1) removing interior walls and constructing new ones according to an attached floor plan; (2) installing new carpet and tile; and (3) reconfiguring the HVAC system to accommodate the reconfigured space. Construction was to be “performed by trained and qualified
persons in a good and workman-like manner” and in compliance with applicable codes, ordinances, regulations, and statutes. MCAD retained the right to inspect and object to any deficiencies.
The lease term would commence after Hoppenstein completed renovation of the unoccupied portion of the premises,
and the parties were to sign a commencement letter at that time acknowledging the commencement date.
Hoppenstein alleges that the renovations were completed by May 1, 2008 and that MCAD occupied the renovated premises thereafter and the lease term commenced. Hoppenstein claims that MCAD breached the lease by: (1) interfering with renovations to other portions of the premises; (2) failing to pay rent after May 31, 2008; (3) failing to pay for “renovation extras” performed by Hoppenstein and authorized by MCAD; and (4) abandoning the premises on June 1, 2009.
Hoppenstein seeks past damages for the first three components of the breach-of-contract claim. It seeks future damages for anticipatory breach
in the form of lost rents owed after May 31, 2009 and other costs incurred as a result of MCAD’s abandonment of the premises.
See Dixon v. Modelist,
157 S.W.3d 454, 456 (Tex.App.Houston [14th Dist.] 2004, no pet.) (“plaintiffs in anticipatory breach cases usually seek future damages as opposed to past damages”).
MCAD answered with a general denial, a series of special denials, and several affirmative defenses, including governmental immunity. In essence, MCAD claims that the lease never commenced because Hoppenstein never completed the renovations required to trigger commencement of the lease term. By its partial plea to the jurisdiction, MCAD contended that its immunity from suit has not been waived with regard to “any claims seeking rents and related obligations that purportedly have been or will be incurred after [MCAD] abandoned the premises.” In other words, MCAD claimed immunity from suit on Hoppenstein’s claim for future damages.
Hoppenstein contends in two issues that: (1) MCAD’s immunity from suit has been waived by section 271.152 of the Local Government Code because the lease constitutes a contract for the provision of services to MCAD; and (2) the waiver of immunity provided by section 271.152 applies on a “contract-by-contract basis” rather than a “promise-by-promise basis.”
Contract for Services
Section 271.152 of the Local Government Code waives the immunity from suit of certain local governmental entities
for breach-of-contract claims arising from written contracts that state “the essential terms of the agreement for providing goods or services to the local governmental entity.”
See
Tex. Loo. Gov’t Code Ann. §§ 271.151(2), 271.152 (Vernon 2005). “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.’ ”
Kirby Lake Dev.,
320 S.W.3d at 838 (quoting
Ben Bolt-Palito Blanco Consol. Indep. Sch. Dist. v. Tex. Political Subdivisions Prop./Cas. Joint Self-Ins. Fund,
212 S.W.3d 320, 327 (Tex.2006)).
The relevant inquiry is whether the lease entails “the provision of ‘goods or services’ ” to MCAD.
See id.
at 839 (quoting Tex. Loo. Gov’t Code Ann. § 271.151(2)). The term “services” is “broad enough to encompass a wide variety of activities.”
Id.
“The services provided ... need not be the primary purpose of the agreement,” but they must be provided directly to the local governmental entity.
Id.
The construction addendum requires Hoppenstein to renovate the pi"emises according to a floor plan agreed to by MCAD. The renovations had to be completed in a manner satisfactory to MCAD. The construction addendum was incorporated into the lease by reference in paragraph 33 of the lease.
Thus, the addendum is part of the lease.
See In re Bank One, N.A.,
216 S.W.3d 825, 826 (Tex.2007) (orig. proceeding) (per curiam) (“Documents incorporated by reference in [a contract] are part of the contract.”).
Under the lease, Hoppenstein contracted to renovate the premises for MCAD. Thus, the lease entails the provision of services to MCAD within the meaning of the statute.
See Kirby Lake Dev.,
320 5.W.3d at 839 (agreement to construct, develop and lease facilities was a contract for services under the statute). Accordingly, we sustain Hoppenstein’s first issue.
Scope of Waiver
Hoppenstein contends in its second issue that the waiver of immunity provided by section 271.152 applies on a “contract-by-contract basis” rather than a “promise-by-promise basis.” Thus, Hoppenstein argues that MCAD’s immunity is waived not only for damages flowing from any breach of the “sendees provisions” of the lease but also from any breach of the remainder of the lease terms.
Hoppenstein seeks damages in the form of lost rents owed after May 31, 2009 and other costs incurred because of MCAD’s anticipatory breach. In a suit for anticipatory breach, a landlord may recover the present value of future rentals, reduced by the reasonable cash market value of the property for the remainder of the
lease terra or by the amount of rent collected from a new tenant if the property is relet.
See Austin Hill Country Realty, Inc. v. Palisades Plaza, Inc.,
948 S.W.2d 293, 300 (Tex.1997);
Randall’s Food & Drugs, L.P. v. Patton,
No. 01-06-00821-CV, 2008 WL 3876149, at *4 (Tex.App.Houston [1st Dist.] Aug. 21, 2008, no pet.) (mem. op.). MCAD argues that such damages are analogous to lost profits and characterizes them as consequential damages, which a plaintiff generally cannot recover from a local governmental entity.
See
Tex. Loo. Gov’t Code Ann. § 271.153 (Vernon 2005). We disagree.
“ ‘At common law, actual damages are either “direct” or “consequential.” ’ ‘Special damages,’ or consequential damages, are ‘those damages which result naturally, but not necessarily,’ from the defendant’s wrongful acts. Direct damages compensate for the loss that is the necessary and usual result of the act.”
Baylor Univ. v. Sonnichsen,
221 S.W.3d 632, 636 (Tex.2007) (per curiam) (quoting
Arthur Andersen & Co. v. Perry Equip. Corp.,
945 S.W.2d 812, 816 (Tex.1997);
Henry S. Miller Co. v. Bynum,
836 S.W.2d 160, 163 (Tex.1992) (Phillips, C.J., concurring) (other citations omitted)).
Consequential damages may include some but not all claims for lost profits.
Cherokee County Cogeneration Partners, L.P. v. Dynegy Mktg. & Trade,
305 S.W.3d 309, 314 (Tex.App.-Houston [14th Dist.] 2009, no pet.). “Lost profits are damages for the loss of net income to a business measured by reasonable certainty.”
Miga v. Jensen,
96 S.W.3d 207, 213 (Tex.2002);
accord Cherokee County Cogeneration Partners,
305 S.W.3d at 314;
Mood v. Kronos Prods., Inc.,
245 S.W.3d 8, 12 (Tex.App.-Dallas 2007, pet. denied). “Lost profits may be in the form of direct damages, that is, profits lost on the contract itself, or in the form of consequential damages, such as profits lost on other contracts or relationships resulting from the breach.”
Mood,
245 S.W.3d at 12;
accord Cherokee County Cogeneration Partners,
305 S.W.3d at 314.
Here, the lost rentals Hoppenstein seeks to recover are those rentals which it would have received under the lease with MCAD, not from some other contract. These are direct damages.
See id.
Accordingly, we sustain Hoppenstein’s second issue.
Hoppenstein’s motion for rehearing is granted. The opinion and judgment of this Court dated August 18, 2010 are withdrawn, and the opinion and judgment we issue today are substituted therefor. We reverse the trial court’s order granting MCAD’s partial plea to the jurisdiction and render judgment denying the partial plea. We remand this cause to the trial court for further proceedings.
Chief Justice GRAY dissenting with note.