ACCEPTED NO. 15-25-00115-CV 15-25-00115-CV FIFTEENTH COURT OF APPEALS AUSTIN, TEXAS
In the 8/18/2025 1:00 PM CHRISTOPHER A. PRINE
Fifteenth Court of Appeals FILED IN CLERK
Austin, Texas 15th COURT OF APPEALS AUSTIN, TEXAS 8/18/2025 2:04:46 PM ______________________________________________ CHRISTOPHER A. PRINE Clerk T EXAS A SSOCIATION OF S CHOOL B OARDS R ISK M ANAGEMENT F UND , Appellant, v. SOUTHWEST TEXAS JUNIOR COLLEGE, Appellee . ______________________________________________
Appeal from the 83rd Judicial District Court Val Verde County, Texas, No. 2023-0279-CIV The Honorable Robert E. Cadena, Presiding Judge __________________________________________________________________
REPLY BRIEF OF APPELLANT __________________________________________________________________
Jack W. Higdon Texas Bar No. 24007360 jack.higdon@blankrome.com Barry Abrams Texas Bar No. 00822700 barry.abrams@blankrome.com Joshua A. Huber Texas Bar No. 24065457 josh.huber@blankrome.com BLANK ROME LLP 717 Texas Avenue, Suite 1400 Houston, Texas 77002-2727 (713) 228-6601 (713) 228-6605 - Fax
ORAL ARGUMENT REQUESTED TABLE OF CONTENTS
Page
I. INTRODUCTION............................................................................. 1
II. ARGUMENT .................................................................................... 3
A. THE COLLEGE MISSTATES THE STANDARD OF REVIEW APPLICABLE TO THE FUND’S JURISDICTIONAL CHALLENGE. ....... 3
B. THE COLLEGE CANNOT OVERCOME THE FUND’S IMMUNITY THROUGH ARTFUL PLEADING .................................................... 5
C. THE TEXAS SUPREME COURT DISAPPROVED CITY OF MESQUITE AND THE NOTION THAT COURTS NEED NOT “PARSE THE PLEADINGS” TO DETERMINE THE SCOPE OF THE IMMUNITY WAIVER UNDER THE ACT .......................................................... 7
D. THE ACT DOES NOT WAIVE THE FUND’S IMMUNITY FROM SUIT AND LIABILITY BASED UPON THE COLLEGE’S EQUITABLE THEORIES, WHICH IT ASSERTS OFFENSIVELY IN AN ATTEMPT TO CREATE COVERAGE WHERE NONE EXISTS ............................ 9
1. The Express Terms of the Coverage Documents Do Not Provide RCV Coverage for Unrepaired and Unreplaced Losses ......................................................... 9
2. Unlike in Colorado and Greenville, the College Asserts Waiver and Estoppel Offensively, Purportedly to Create RCV Coverage Where None Exists .................. 12
3. Section 271.155 Does Not Grant an Immunity Waiver for the College’s Equitable Theories ............................ 15
4. The College Did Not Meet its Evidentiary Burden. .... 19
E. THE ACT DOES NOT WAIVE THE FUND’S IMMUNITY FROM THE COLLEGE’S CONSEQUENTIAL DAMAGES CLAIM ................. 21
III. PRAYER ......................................................................................... 25
i TABLE OF AUTHORITIES
Page(s)
Cases
City of Corpus Christi v. Graham Construction Services, Inc., No. 13-19-00367-CV, 2020 Tex. App. LEXIS 4734 (Tex. App.— Corpus Christi June 25, 2020, pet. denied).................................. 24, 25
City of Mesquite v. PKG Contracting, Inc., 263 S.W.3d 444 (Tex. App.—Dallas 2008, pet. denied).................... 7, 8
City of San Antonio v. Wheelabrator Air Pollution Control, Inc., 381 S.W.3d 597 (Tex. App.—San Antonio 2012, pet. denied) .............. 1
Cty. of Galveston v. Triple B Servs., LLP, 498 S.W.3d 176 (Tex. App.—Houston [1st Dist.] 2016, pet. denied) ................................................................................................. 22
David J. Sacks, P.C. v. Haden, 266 S.W.3d 447 (Tex. 2008) ................................................................ 10
Ewing Constr. Co. v. Amerisure Ins. Co., 420 S.W.3d 30 (Tex. 2014) .................................................................. 15
Farmers Tex. Cnty. Mut. Ins. Co. v. Wilkinson, 601 S.W.2d 520 (Tex. App.—Austin 1980, writ ref’d n.r.e.)............... 19
In re FirstMerit Bank, N.A., 52 S.W.3d 749 (Tex. 2001) .................................................................. 21
Fitzhugh 25 Partners, L.P. v. KILN Syndicate KLN 501, 261 S.W.3d 861 (Tex. App.—Dallas 2008, pet. denied)................ 11, 14
Green Acres Baptist Church, Inc. v. Bhd. Mut. Ins. Co., No. 6:23-cv-566-JDK, 2025 U.S. Dist. LEXIS 126690 (E.D. Tex. 2025) .................................................................................................... 11
Green Intern., Inc. v. Solis, 951 S.W.2d 384 (Tex. 1997) ................................................................ 22
ii Hidalgo Cnty. v. Dyer, 358 S.W.3d 698 (Tex. App.—Corpus Christi—Edinburg 2011, no pet.)............................................................................................... 5, 6
Kan. City S. v. Port of Corpus Christi Auth., 305 S.W.3d 296 (Tex. App.—Corpus Christi 2009, pet. denied) ........ 12
LeBlanc v. Lange, 365 S.W.3d 70 (Tex. App.—Houston [1st Dist.] 2011, no pet.) .......... 21
Matzen v. McLane, 659 S.W.3d 381 (Tex. 2021) .......................................................... 20, 21
McLennan Cnty. Water Control & Improvement Dist. #2 v. Geer, No. 10-17-00399-CV, 2020 Tex. App. LEXIS 5663, 2020 WL 4218085 (Tex. App.—Waco July 22, 2020, no pet.) .............................. 5
Methodist Hosp. v. Addison, 574 S.W.3d 490 (Tex. App.—Houston [14th Dist.] 2019, no pet.)........ 6
Mission Consol. Indep. Sch. Dist. v. Garcia, 253 S.W.3d 653 (Tex. 2008) .................................................................. 9
Nat’l Fire Ins. Co. v. State & Cty. Mut. Fire Ins. Co., No. 01-11-00176-CV, 2012 Tex. App. LEXIS 7729 (Tex. App.— Houston [1st Dist.] Aug. 30, 2012, no pet.) ........................................ 18
Nettles v. GTECH Corp., 606 S.W.3d 726 (Tex. 2020) .................................................................. 5
Port Freeport v. RLB Contracting Inc., 369 S.W.3d 581 (Tex. App.—Houston [1st Dist.] 2012, pet. denied) ... 7
Prairie View A&M Univ. v. Chatha, 381 S.W.3d 500 (Tex. 2012) ................................................................ 17
Prime Time Family Entertainment Center, Inc. v. Axis Insurance Co., 630 S.W.3d 226 (Tex. App.—Eastland 2020, no pet.) .................... 7, 18
iii Roma ISD v. Ewing Const. Co., No. 04-12-00035-CV, 2012 Tex. App. LEXIS 5968 (Tex. App.— San Antonio July 25, 2012, pet. denied)............................................... 7
Rotating Servs. Indus. v. Harris, 245 S.W.3d 476 (Tex. App.—Houston [1st Dist.] 2007, pet. denied) . 18
Seureau v. ExxonMobil Corp., 274 S.W.3d 206 (Tex. App.—Houston [14th Dist.] 2008, no pet.)...... 17
Sharyland Water Supply Corp. v. City of Alton, 354 S.W.3d 407 (Tex. 2011) ................................................................ 12
Shields Ltd. P'ship v. Bradberry, 526 S.W.3d 471 (Tex. 2017) .......................................................... 20, 21
Tex. Ass’n of Sch. Bds. Risk Mgmt. Fund v. Colo. Indep. Sch. Dist., 660 S.W.3d 767 (Tex. App.—Eastland 2023, no pet.) .................. 13, 14
Tex. Ass'n of Sch. Bds. Risk Mgmt. Fund v. Greenville Indep. Sch. Dist., No. 05-21-01012-CV, 2022 Tex. App. LEXIS 4952 (Tex. App.— Dallas July 19, 2022, pet. denied) .............................................. passim
Tex. Dep’t of Parks & Wildlife v. Miranda, 133 S.W.3d 217 (Tex. 2004) .................................................. 4, 9, 20, 21
Texas Farmers Ins. Co. v. McGuire, 744 S.W.2d 601 (Tex.1988) ............................................................. 7, 18
Tooke v. City of Mexia, 197 S.W.3d 325 (Tex. 2006) ............................................................ 1, 17
Ulico Cas. Co. v. Allied Pilots Ass’n, 262 S.W.3d 773 (Tex. 2008) ...................................................... 7, 18, 19
Univ. of Tex. M.D. Anderson Cancer Ctr. v. McKenzie, 578 S.W.3d 506 (Tex. 2019) .............................................................. 5, 6
Washington National Insurance Co. v. Craddock, 109 S.W.2d 165 (Tex. 1937) ............................................................ 7, 18
iv Worsdale v. City of Killeen, 578 S.W.3d 57 (Tex. 2019) .................................................................. 16
Zachry Constr. Corp. v. Port of Hous. Auth. of Harris Cty., 449 S.W.3d 98 (Tex. 2014) .............................................................. 8, 16
Statutes
Tex. Gov’t Code § 311.034 ................................................................... 1, 17
Tex. Loc. Gov't Code § 271.151(2)(A) ...................................................................................... 1 § 271.152 ..................................................................................... passim § 271.153 ....................................................................................... 12, 15 § 271.153(a)(1)............................................................................. passim § 271.153(b)(1)..................................................................................... 22 § 271.153(c) ........................................................................................... 1 § 271.155 ........................................................................... 15, 16, 17, 19 § 271.157 ............................................................................................. 17
Other Authorities
House Research Org., Bill Analysis, Tex. H.B. 2039, 79th Leg., R.S. (2005) ............................................... 23
Senate Research Ctr., Bill Analysis, Tex. H.B. 2039, 79th Leg., R.S. (2005) ............................................... 23
v I. INTRODUCTION 1/
Immunity waivers must be clear, unambiguous, and narrowly
construed in favor of retaining immunity. See TEX. GOV’T CODE § 311.034;
Tooke v. City of Mexia, 197 S.W.3d 325, 328-29 (Tex. 2006). Section
271.152 of the Act waives immunity for the limited and defined purpose
of adjudicating a claim for breach of written contracts that are executed
by local governmental entities and contain the essential terms of the
parties’ agreement. See TEX. LOC. GOV’T CODE §§ 271.151(2)(A), 271.152.
The waiver is further restricted to defined types of damages and a narrow
category of equitable relief for a specific type of contract that is not at
issue here. Id. § 271.153(c).
The Texas Legislature struck a policy balance in the Act. City of
San Antonio v. Wheelabrator Air Pollution Control, Inc., 381 S.W.3d 597,
602 (Tex. App.—San Antonio 2012, pet. denied). Immunity was waived
to allow a contracting party to hold a local governmental entity
accountable for its express contractual obligations, while still promoting
fiscal predictability by limiting a local governmental entity’s financial
1/ All capitalized terms in this Reply are given the same meaning as defined in the Fund’s opening brief.
1 exposure to the “amounts due and owed” under the written terms of their
properly executed contracts. TEX. LOC. GOV’T CODE § 271.153(a)(1).
The College advocates for a far more expansive view of the Act that
would permit a breach of contract plaintiff to import immunity-barred
equitable theories like waiver and estoppel – or possibly even intentional
tort theories like fraud and bad faith – into a breach of contract claim
under the guise of what it characterizes as contract “defenses,” which
would expose local government entities to unbounded liability far beyond
that provided under the express, bargained-for terms in their properly
executed contracts.
This case well-illustrates the inherent flaw in such an expansive
interpretation. It would allow the College to create new and different self-
insurance coverage than what it (and other Fund members) expressly
agreed to provide one another. The College attempts to extend the
incorrect interpretation of the Act in the materially distinguishable
Colorado and Greenville cases (which misconstrued the Act to allow
equitable waiver and estoppel theories to be asserted against the Fund
in a purely defensive context), to allow the College to invoke equitable
theories offensively, thereby creating new and different RCV coverage,
2 and exposing the Fund and its other members to a financial risk that
they did not agree to share.
The College therefore does not merely seek to avoid its obligation to
comply with conditions precedent to recovery. It is attempting to avoid
its own performance obligations under the Coverage Documents to create
coverage where none exists. Today the College invokes equitable theories
to attempt to create coverage where none exists; tomorrow it and others
may resurrect intentional tort theories for the same purpose. Adopting
the College’s sweeping interpretation of the limited immunity waiver in
the Act would greatly expand its scope and eviscerate the Fund’s inherent
immunity from suit and immunity from unlimited liability.
For the reasons discussed in the Fund’s Brief and in this Reply, the
Court should reverse the trial court’s order denying the Fund’s
Jurisdictional Plea.
II. ARGUMENT
A. THE COLLEGE MISSTATES THE STANDARD OF REVIEW APPLICABLE TO THE FUND’S JURISDICTIONAL CHALLENGE.
The College repeatedly asserts that its pleading allegations alone
determine whether the Fund’s immunity has been waived. College Brief,
3 at 7, 12, 16, 17. But the College’s assertion is based upon a false premise:
the incorrect claim that the Fund “did not raise an evidentiary challenge
to the existence of jurisdictional facts . . . but instead challenge[s] the face
of the College’s Petition.” Id. at 16-17. That is incorrect. The Fund did
contest the sufficiency of the College’s jurisdictional allegations and the
Fund did submit a substantial evidentiary record that conclusively
negated them. 2/
When an immune government defendant contests a plaintiff’s
jurisdictional allegations and offers evidence to defeat them – as the
Fund did here – to avoid dismissal the plaintiff bears the burden to
adduce its own evidence creating a genuine fact issue with respect to the
challenged allegations. Tex. Dep’t of Parks & Wildlife v. Miranda, 133
S.W.3d 217, 227 (Tex. 2004). The Court’s appellate review therefore is
not confined to the face of the pleadings. Id. The Court must also consider
the evidentiary record and “review the evidence under a standard
2/ CR 39 (“The Fund contests the sufficiency of the College’s jurisdictional allegations and has submitted evidence that under Texas law disproves conclusively the possibility of allegations upon which jurisdiction might be based.”), 60-110, 166-167 (“The Fund contests the sufficiency of the College’s jurisdictional allegations. The Fund has submitted evidence that under Texas law conclusively negates jurisdiction for the College’s extracontractual claims and defenses.”), 187-435.
4 mirroring that of summary judgment,” to determine whether the College
met its burden to create a genuine fact issue concerning its jurisdictional
allegations. Nettles v. GTECH Corp., 606 S.W.3d 726, 734 (Tex. 2020).
B. THE COLLEGE CANNOT OVERCOME THE FUND’S IMMUNITY THROUGH ARTFUL PLEADING.
A plaintiff may not expand a limited “[immunity] waiver
through artful pleading.” Univ. of Tex. M.D. Anderson Cancer Ctr. v.
McKenzie, 578 S.W.3d 506, 513 (Tex. 2019). To combat artful pleading,
Texas courts look to the substance of the plaintiff’s claims, not the labels
attached to the causes of action, to determine whether a plaintiff’s claims
are barred by immunity. Hidalgo Cnty. v. Dyer, 358 S.W.3d 698, 704
(Tex. App.—Corpus Christi—Edinburg 2011, no pet.); see also McLennan
Cnty. Water Control & Improvement Dist. #2 v. Geer, No. 10-17-00399-
CV, 2020 Tex. App. LEXIS 5663, 2020 WL 4218085, at *4 (Tex. App.—
Waco July 22, 2020, no pet.) (mem. op.) (concluding trial court erred in
denying defendant's plea to the jurisdiction because plaintiffs’
factual allegations encompass matters falling outside the limited waiver
of immunity in the Texas Tort Claims Act).
The College contends that it has not asserted a cause of action
against the Fund for waiver (or previously, for unconscionability, fraud,
5 and bad faith), but has instead merely asserted “factual allegations or
theories . . . to support its breach of contract claim.” See College Brief, at
21. 3/ But the “factual allegations or theories” in the College’s live
pleadings are what determine the extent to which its claims fall within
limited statutory immunity waiver, not the College’s recharacterization
its various equitable theories as component parts of a breach of contract
claim. McKenzie, 578 S.W.3d at 513; Dyer, 358 S.W.3d at 704.
The College cannot, through artful pleading, import immunity-
barred equitable theories such as waiver and estoppel (or immunity-
barred tort theories such as fraud and bad faith) 4/ into its breach of
3/ Here, the College takes liberty with the factual record when it states that the College “has never sought ‘exemplary, and treble damages’” from the Fund. See College Brief, at 21 (emphasis added). The College cites to its First Amended Petition filed after the Fund filed its initial Jurisdictional Plea, but ignores its Original Petition – the live pleading when the Fund filed its Jurisdictional Plea – which expressly prayed for “treble/exemplary damages from and against Defendants.” CR 25 (emphasis added). 4/ The College’s equitable theories remain a moving target. The College initially asserted only waiver and unconscionability in its pleadings, see CR 12, 115, but it has since dismissed with prejudice any unconscionability arguments (as well as its various intentional tort theories) and does not address unconscionability in its Brief, reflecting that it now has been abandoned. See Methodist Hosp. v. Addison, 574 S.W.3d 490, 509 (Tex. App.—Houston [14th Dist.] 2019, no pet.). See App. F. The College did not plead estoppel in either its original or amended petition. See CR 7-26, 111-123 (no mention of the words “estoppel” or “estopped”). Yet, the College’s Brief discusses estoppel as if it did. See, e.g., College Brief, at 11, 14, 26 (“An example would be the College’s defense that [the Fund] is estopped from asserting or has waived . . .”)(emphasis added). This reply will focus on the pleaded waiver theory that the College has not dismissed with prejudice, but the Fund’s
6 contract claim to expand the limited scope of the immunity waiver in
Section 271.152 of the Act to create additional RCV coverage where none
exists under the express written terms of the parties’ agreement.5/
C. THE TEXAS SUPREME COURT DISAPPROVED CITY OF MESQUITE AND THE NOTION THAT COURTS NEED NOT “PARSE THE PLEADINGS” TO DETERMINE THE SCOPE OF THE IMMUNITY WAIVER UNDER THE ACT.
As discussed on pages 30-32 of the Fund’s Brief, the Texas Supreme
Court has expressly disapproved of City of Mesquite, and other cases that
adopted its rationale, 6/ which held that a court need not “parse further
the pleadings or contract to determine whether the legislature has
waived immunity,” as long as the contract being sued on “falls within the
provisions of section 271.152.” City of Mesquite v. PKG Contracting, Inc.,
arguments concerning the waiver doctrine apply equally to any purported estoppel theory. 5/ As discussed infra at Section II.D.3, the Texas Supreme Court has long held that the equitable doctrines of waiver and estoppel are not available to “create insurance coverage when none exists by the terms of the policy.” Ulico Cas. Co. v. Allied Pilots Ass’n, 262 S.W.3d 773, 780 (Tex. 2008); Texas Farmers Ins. Co. v. McGuire, 744 S.W.2d 601, 602–03 (Tex.1988); Washington National Insurance Co. v. Craddock, 109 S.W.2d 165, 166 (Tex. 1937); see also Prime Time Family Entertainment Center, Inc. v. Axis Insurance Co., 630 S.W.3d 226, 232 (Tex. App.—Eastland 2020, no pet.) (“the contractual coverage of an insurance policy cannot be expanded by waiver or estoppel on the part of the insurer . . . The manner in which [the insurer] adjusted the claim cannot create coverage by either waiver or estoppel.”). 6/ See, e.g., Roma ISD v. Ewing Const. Co., No. 04-12-00035-CV, 2012 Tex. App. LEXIS 5968, at *9 (Tex. App.—San Antonio July 25, 2012, pet. denied); Port Freeport v. RLB Contracting Inc., 369 S.W.3d 581, 591 (Tex. App.—Houston [1st Dist.] 2012, pet. denied); City of Mesquite, 263 S.W.3d at 448.
7 263 S.W.3d 444, 447 (Tex. App.—Dallas 2008, pet. denied); Zachry
Constr. Corp. v. Port of Hous. Auth. of Harris Cty., 449 S.W.3d 98, 110
n.54 (Tex. 2014).
Zachry disapproved City of Mesquite expressly. The Zachry court
did not end its inquiry after concluding that the government contract at
issue in that case was a contract subject to immunity waiver in the Act.
Zachry, 449 S.W.3d at 106 (“The contract between the Port and Zachry
qualifies.”). The Zachry court proceeded to do what the City of Mesquite
line of cases had incorrectly held was not required – it “parse[d] further”
the pleadings and contract to determine whether the damages and
remedies sought fell within the scope of those permitted under the other
limiting provisions in the Act. Id. at 108-110 (“The Act waives immunity
for contract claims that meet certain conditions: the existence of a specific
type of contract, a demand for certain kinds of damages, a state forum,
etc.”) (emphasis added).
The multi-level analysis the Texas Supreme Court endorsed in
Zachry is illustrated by the funnel graphic on page 20 of the Fund’s Brief.
The scope of the immunity waiver under the Act is limited to only certain
claims, certain damages and relief, but not others. See Zachry, 449
8 S.W.3d at 108-110.
The Act does not function as depicted by the College’s “umbrella”
graphic and “broadly waive governmental immunity” for all claims that
in any way relate to a government contract, such as waiver and estoppel.7/
See Miranda, 133 S.W.3d at 226–227; Mission Consol. Indep. Sch. Dist.
v. Garcia, 253 S.W.3d 653, 655 (Tex. 2008) (“We interpret statutory
waivers of immunity narrowly, as the Legislature's intent to waive
immunity must be clear and unambiguous.”)(emphasis added).
Accordingly, the Court must analyze the individual damage and
liability theories asserted by the College to determine whether they fall
within the scope of the statutory terms which define and limit narrow
immunity waiver in Section 271.152.
D. THE ACT DOES NOT WAIVE THE FUND’S IMMUNITY FROM SUIT AND LIABILITY BASED UPON THE COLLEGE’S EQUITABLE THEORIES, WHICH IT ASSERTS OFFENSIVELY IN AN ATTEMPT TO CREATE COVERAGE WHERE NONE EXISTS.
1. The Express Terms of the Coverage Documents Do Not Provide RCV Coverage for Unrepaired and Unreplaced Losses.
Relying exclusively on the allegations in its pleadings, the College
7/ CR 445.
9 asserts that “there is no reasonable dispute” that the RCV damages it
seeks are “expressly made due and owed/owing under the [Coverage
Documents].” See College Brief, at 44-45. Not so. The Fund disputed the
College’s jurisdictional damages allegations below and offered evidence
that conclusively disproved them.
The proper analysis of the College’s RCV damages theory starts
with an examination of the plain and unambiguous language of the RCV
coverage terms in the Coverage Documents. See David J. Sacks, P.C. v.
Haden, 266 S.W.3d 447, 450 (Tex. 2008) (“An unambiguous contract will
be enforced as written.”). The Property Coverage Agreement expressly
limits RCV coverage to the lesser of three amounts – one of which is the
out-of-pocket expenses a member paid to actually and necessarily repair
or replace damaged property. 8/ Thus, unless the College incurred
unreimbursed, out of pocket expenses to actually and necessarily repair
or replace the College’s allegedly damaged property, no RCV coverage
exists under the express terms of the Coverage Documents.
“[C]ourts across the country that have considered the meaning of
the same or similar [RCV] language in a property insurance policy have
8/ CR 941, 1020.
10 universally held that such language requires repair or replacement of the
destroyed property before the insured is entitled to recover replacement
cost damages.” Fitzhugh 25 Partners, L.P. v. KILN Syndicate KLN 501,
261 S.W.3d 861, 863 (Tex. App.—Dallas 2008, pet. denied) (collecting
cases). “[T]he replacement of damaged property is an event that triggers
coverage . . . [and] [t]o allow an insured to recover replacement costs in
the absence of actual replacement would permit the insured to recover
for a loss he has not suffered.” Id. at 863-864 (emphasis added).
The College seeks to recover only RCV damages. See College Brief,
at 26 (“the College has sought to recover [RCV] benefits under the policy
as its measure of damages.”). However, the undisputed record establishes
that the College has neither repaired nor replaced any of the allegedly
damaged properties for which it now claims it is entitled to RCV
coverage. 9/ Accordingly, no RCV coverage is “due and owed/owing” under
9/ CR 189, 280. The College did not allege and it adduced no contrary evidence of any timely repair or replacement of its allegedly damaged property that was not paid by the Fund. The College’s repair estimates prepared by its retained expert, Jose Alfredo Villalobos, are no evidence of actual out of pocket repair or replacement losses that would trigger RCV coverage. See, e.g., Green Acres Baptist Church, Inc. v. Bhd. Mut. Ins. Co., No. 6:23-cv-566-JDK, 2025 U.S. Dist. LEXIS 126690, at *21-22 (E.D. Tex. 2025) (“Estimates for work to repair or replace property that [plaintiff] has not yet repaired or replaced . . . are not competent evidence of the replacement cost value allegedly owed to [plaintiff] under the policy.”).
11 the express terms of the Coverage Document. See, e.g., Sharyland Water
Supply Corp. v. City of Alton, 354 S.W.3d 407, 413 (Tex. 2011) (a request
for damages not recoverable under the contract is not an amount “due
and owing” for purposes of Section 271.153); Kan. City S. v. Port of
Corpus Christi Auth., 305 S.W.3d 296, 307 (Tex. App.—Corpus Christi
2009, pet. denied) (same).
2. Unlike in Colorado and Greenville, the College Asserts Waiver and Estoppel Offensively, Purportedly to Create RCV Coverage Where None Exists.
For the reasons just discussed, the College’s breach of contract
claim does not seek to enforce the express terms of the Coverage
Documents against the Fund – i.e., the only claim for which the
Legislature has narrowly waived the Fund’s immunity – because the
express terms of the Coverage Documents do not provide RCV coverage
for hypothetical repairs to, or the replacement of damaged property, that
have not actually and necessarily been made. 10/
The College instead attempts to utilize the equitable doctrines of
waiver and/or estoppel to create new and different RCV coverage for itself
that does not require the College to first suffer a “loss” by making (and
10/ CR 941, 1020.
12 paying for) actual repairs or replacement of damaged property. See
College Brief, at 26-27. It is that “equitably-created RCV coverage” that
the College sues to have the Fund pay.
In support of the College’s argument that the Act waived the Fund’s
immunity based upon “equitably-created coverage” theories, the College,
as it did below, relies primarily on two sister court opinions in Colorado
and Greenville. See College Brief, at 22-27. But Colorado and Greenville
are materially distinguishable from this case. Unlike in Colorado and
Greenville, the College asserts its equitable theories offensively in an
attempt to create coverage where none otherwise exists, not simply as
defenses to the satisfaction of a condition precedent asserted by the Fund.
The Colorado court emphasized that its decision turned on
“constru[ing] the context in which these [equitable] theories have been
asserted.” Tex. Ass’n of Sch. Bds. Risk Mgmt. Fund v. Colo. Indep. Sch.
Dist., 660 S.W.3d 767, 769 (Tex. App.—Eastland 2023, no pet.). And,
because the school district in that case invoked the equitable doctrines of
waiver and estoppel in its amended pleadings solely “in response to the
defense of an unfulfilled condition precedent raised by the Fund,” the
court held that they were “raised in a defensive context [and] fall within
13 the Act’s waiver of immunity.” Id. (emphasis in original); see also Tex.
Ass'n of Sch. Bds. Risk Mgmt. Fund v. Greenville Indep. Sch. Dist., No.
05-21-01012-CV, 2022 Tex. App. LEXIS 4952, at *8 (Tex. App.—Dallas
July 19, 2022, pet. denied) (“Greenville’s defensive theories benefit from
the same waiver of immunity.”) (emphasis added).
Here, the College first raised its waiver theory in its Original
Petition, not in response to any defense that the College had failed to
satisfy a condition precedent.11/ In addition, contrary to its
mischaracterization throughout the College’s Brief, the RCV coverage
terms are not “conditions precedent” to recovery under the Coverage
Documents. See College Brief, at 23, 27. Repair and replacement are
coverage terms that define the scope of RCV coverage provided to the
College and the Fund’s other governmental members. See Fitzhugh 25
Partners, L.P., 261 S.W.3d at 863 (“It is the act of replacing the property
that causes the insured to suffer an additional loss for which he
purchased additional [RCV] coverage.”). As a breach of contract plaintiff,
the College has the threshold burden to prove that it has suffered a loss
for which RCV coverage exists under the Coverage Documents – i.e.,
11/ CR 12.
14 unreimbursed, out-of-pocket expenses to actually repair or replace
damaged property. Ewing Constr. Co. v. Amerisure Ins. Co., 420 S.W.3d
30, 33 (Tex. 2014).
The context in which this case arises therefore is materially
different from the circumstances in Colorado/Greenville, and the College
has not addressed those material distinctions
Accordingly, even if Section 271.155 were construed to expand
Section 271.152’s immunity waiver to include other subordinate
equitable defenses that the Texas Legislature chose not to include in
Section 271.153 of the Act – which for the reasons discussed in the Fund’s
Brief and the following subsection, it should not – the College has not
asserted its equitable theories in a purely defensive manner as did the
plaintiffs in Colorado and Greenville, and the Fund remains immune
from the College’s attempt to assert those theories offensively, to create
RCV coverage that does not exist under the contract.
3. Section 271.155 Does Not Grant an Immunity Waiver for the College’s Equitable Theories.
As discussed in the Fund’s Brief, the purpose of Section 271.155 is
to ensure that the Act only waives a defendant governmental entity’s
immunity and not any of its other defenses or damage limitations.
15 Zachry, 449 S.W.3d at 107 (“Section 271.155 preserves defenses other
than immunity.”). The title of Section 271.155 is “No Waiver of Other
Defenses” (emphasis added), indicating that it refers to other defenses of
the party whose immunity is being waived by the Act. That section
therefore only applies in circumstances where a party that has sued a
local government contends that the Act has also waived the defendant
local government’s contractual defenses or damage limitations—its other
defenses—in addition to its immunity. For example, it would be
nonsensical to interpret Section 271.155 as preserving a plaintiff’s right
to enforce a “limitation on damages.” Worsdale v. City of Killeen, 578
S.W.3d 57, 73 (Tex. 2019) (observing that statutes should be construed to
avoid “glaringly absurd” results).
That is the only reasonable interpretation of Section 271.155 and it
is consistent with Zachry’s holding that Section 271.155 is a “limitation .
. . on the waiver of immunity” in Section 271.152. Zachry, 449 S.W.3d at
108 (emphasis added). The Colorado and Greenville courts’
interpretation of Section 271.155, which the College advocates for here,
results in a significant and unlimited expansion of the immunity waiver
in Section 271.152. Under that reading of the statute, the Act would no
16 longer provide only a limited waiver of immunity to adjudicate contract
disputes based upon the express terms of a written government contract.
Instead, local governments would be exposed to open-ended liability
based upon non-existent contract terms and liability based upon
otherwise immunity-barred equitable and/or intentional tort theories,12/
as long as a plaintiff characterized them as contract “defenses.” Such a
construction does not comport with the plain meaning of the statute or
the legal requirement to narrowly construe waivers of immunity. See
TEX. GOV’T CODE § 311.034; Tooke, 197 S.W.3d at 328–29.
The College’s claim that Section 271.155 waives the Fund’s
immunity based upon equitable theories also is wrong for another reason.
By its terms, Section 271.155 preserves only “a defense or limitation on
damages available to a party to a contract . . .” (emphasis added). As a
matter of law, neither waiver nor estoppel (to the extent it was pled) are
12/ See Prairie View A&M Univ. v. Chatha, 381 S.W.3d 500, 515 (Tex. 2012)(applying equitable defenses to governmental entities “invades the domain of the Legislature and cuts against the very nature of sovereign immunity.”); Seureau v. ExxonMobil Corp., 274 S.W.3d 206, 219 (Tex. App.—Houston [14th Dist.] 2008, no pet.) (“[T]he Legislature has not waived immunity with respect to the intentional tort of fraud”); TEX. LOC. GOV’T CODE § 271.157 (“This subchapter does not waive sovereign immunity to suit for a cause of action for a negligent or intentional tort.”).
17 “available” to the College to create RCV coverage where it does not exist.
More than 85 years ago, the Texas Supreme Court held in
Washington National Insurance Co. v. Craddock that an insured cannot
use the waiver doctrine to create coverage in an insurance contract. 109
S.W.2d at 166. The rule has since expanded to include the estoppel
doctrine, and has repeatedly been reaffirmed by the Texas Supreme
Court and various intermediate appellate courts. See, e.g., Ulico Cas. Co.,
262 S.W.3d at 780 (“[W]aiver and estoppel cannot create a new and
different contract with respect to risks covered by the policy.”) (emphasis
omitted); McGuire, 744 S.W.2d at 602–03 (“The doctrine of estoppel
cannot be used to create insurance coverage when none exists by the
terms of the policy”); Nat’l Fire Ins. Co. v. State & Cty. Mut. Fire Ins. Co.,
No. 01-11-00176-CV, 2012 Tex. App. LEXIS 7729, at *15 (Tex. App.—
Houston [1st Dist.] Aug. 30, 2012, no pet.) (same); Prime Time Family
Entertainment Center, Inc., 630 S.W.3d at 232 (“[T]he contractual
coverage of an insurance policy cannot be expanded by waiver or estoppel
on the part of the insurer . . . The manner in which [the insurer] adjusted
the claim cannot create coverage by either waiver or estoppel.”); Rotating
Servs. Indus. v. Harris, 245 S.W.3d 476, 487-488 (Tex. App.—Houston
18 [1st Dist.] 2007, pet. denied)(“Settled Texas law precludes a party from
invoking estoppel to create insurance coverage where none exists under
the terms of the policy.”); Farmers Tex. Cnty. Mut. Ins. Co. v. Wilkinson,
601 S.W.2d 520 (Tex. App.—Austin 1980, writ ref’d n.r.e.), abrogated by
Ulico Cas. Co., 262 S.W.3d 773 (“It is well established that, whereas the
doctrines of waiver and estoppel may operate to avoid conditions that
would cause a forfeiture of an insurance policy, they will not operate to
change, re-write or enlarge the risks covered by the policy.”).
Accordingly, even if the College had asserted its equitable theories
in a purely defensive context as did the school district plaintiffs in
Colorado and Greenville, which it did not do, waiver and estoppel are not
“available to [the College]” to create RCV coverage that does not exist
under the express terms of the Coverage Documents – such as coverage
for hypothetical repairs that have not been made. Section 271.155
therefore does not expand Section 271.152’s limited waiver of immunity
to include liability based upon the College’s equitable theories.
4. The College Did Not Meet its Evidentiary Burden.
A plaintiff must affirmatively demonstrate that a claim is viable in
order to establish that immunity does not apply or has been waived. See,
19 e.g., Matzen v. McLane, 659 S.W.3d 381, 389 (Tex. 2021). Conclusory
pleading allegations are insufficient where, as here, the Fund has
contested the jurisdictional allegations and offered evidence to defeat
them. Miranda, 133 S.W.3d at 227.
The College did not adduce any jurisdictional evidence regarding
its waiver or now-dismissed unconscionability theory, and it does not
direct the Court to any jurisdictional evidence in its Brief. The College
instead concedes that it supported its arguments against the Fund’s
jurisdictional challenge “by simply citing to the College’s First Amended
Petition.” See College Brief, at 48. The College’s pleadings are not
evidence, and they do not create a genuine fact issue regarding:
• The effect of the enforceable “no waiver” provision in the underlying contract, which permits waiver of a contractual right or obligation “only when expressly waived in writing by the waiving party,” and forecloses any implied waiver based upon mere “act or omission.” 13/ See Shields Ltd. P'ship v. Bradberry, 526 S.W.3d 471, 481 (Tex. 2017) (“[A]s a general proposition, nonwaiver provisions are binding and enforceable.”);
• The absence of any written waiver by the Fund of its rights under the Coverage Documents;
• The fact that the Fund’s conduct was entirely consistent with the contract’s waiver restrictions and the RCV coverage terms, including its approval of four written extensions of 13/ CR 176, 195.
20 RCV coverage repair deadline. 14/ Id. at 474 (waiver of a non- waiver clause requires, at a minimum, conduct that is inconsistent with its terms);
• The lack of any “shocking” circumstances surrounding the negotiation of the underlying contract between the Fund and the various governmental entity members who created the Fund. LeBlanc v. Lange, 365 S.W.3d 70, 88 (Tex. App.— Houston [1st Dist.] 2011, no pet.) (“[T]he circumstances surrounding the negotiations must be shocking” to warrant a finding of procedural unconscionability.); 15/ and
• The absence of any contract terms that are “so one-sided that it is unconscionable under the circumstances existing when the parties made the contract.” In re FirstMerit Bank, N.A., 52 S.W.3d 749, 757 (Tex. 2001).
Accordingly, even if the College was permitted to assert its
equitable theories against the Fund, which it cannot do, the College did
not satisfy its evidentiary burden to create a genuine fact issue about
whether it has viable equitable theories that could effect a waiver of the
Fund’s immunity. Matzen, 659 S.W.3d at 389; Miranda, 133 S.W.3d at
227.
E. THE ACT DOES NOT WAIVE THE FUND’S IMMUNITY FROM THE COLLEGE’S CONSEQUENTIAL DAMAGES CLAIM.
The only consequential damages for which a waiver of immunity
14/ CR 189, 941. 15/ The College has dismissed with prejudice any argument that the circumstances surrounding the parties contract were unconscionable, or involved fraud, bad faith, misrepresentations, or other intentionally tortious conduct. See App. F.
21 exists under the Act is for “any amount owed as compensation for the
increased cost to perform the work as a direct result of owner-caused
delays or acceleration.” TEX. LOC. GOV’T CODE §§ 271.153(a)(1), (b)(1)
(emphasis added).
According to the College, because the term “owner-caused delays”
is not defined in the Act, that term does not necessarily mean the owner
of property, and the Fund therefore could be held liable for delay damages
as “the owner of TASB’s risk management programs, including property
coverage.” See College Brief, at 39. But the plain and ordinary meaning
of the statutory text does not support the College’s position, as the term
“owner-caused delays” plainly refers to “delay damages” in the
construction context.
“‘Delay damages’ is a term of art in the construction industry . . . .”
Green Intern., Inc. v. Solis, 951 S.W.2d 384, 393 (Tex. 1997) (Gonzalez,
J., dissenting). It refers to construction damages “‘arising out of delayed
completion, suspension, acceleration or disrupted performance’; these
damages compensate the contracting party that is injured when a project
takes longer than the construction contract specified.” Cty. of Galveston
v. Triple B Servs., LLP, 498 S.W.3d 176, 181 (Tex. App.—Houston [1st
22 Dist.] 2016, pet. denied) (citing Phillip J. Bruner & Patrick J. O'Connor,
5 Construction Law § 15:29 (2002)). When the Legislature authorized a
recovery of damages for the “increased cost to perform the work as a
direct result of owner-caused delays or acceleration,” it did so in the
context of a contractor plaintiff who had been hired to perform work on
property owned by a local governmental entity.
That construction of the statute is consistent with the Act’s
legislative history, which emphasizes the Act’s importance to
construction contractors. See also House Research Org., Bill Analysis,
Tex. H.B. 2039, 79th Leg., R.S. (2005) (explaining that proponents of
Section 271.152 had argued that it would “bring fairness to business
relationships between contractors and local government entities,” avoid
“a fundamentally unfair situation that denie[d] redress . . . to a contractor
who completed a project for a city that refused to pay,” and address the
concerns of contractors who “do not bid for local government contracts.”);
Senate Research Ctr., Bill Analysis, Tex. H.B. 2039, 79th Leg., R.S.
(2005).
By its plain terms, Section 271.153(a)(1), does not apply here
because the College – not the Fund – is the “owner” of the relevant
23 properties and it did not allege or adduce any jurisdictional evidence that
it had incurred increased costs to perform work as a direct result of its
own “owner-caused delays or acceleration.”
The College’s characterization of City of Corpus Christi v. Graham
Construction Services, Inc. as having “rejected a similar argument” is
wrong. See College Brief, at 39. In Graham Construction Services, Inc.,
the City of Corpus Christi (the “City”) was sued for delay damages
under Section 271.153(a)(1) by a construction contractor who had been
hired to build a waste treatment plant for the City. See No. 13-19-00367-
CV, 2020 Tex. App. LEXIS 4734, at *2-4 (Tex. App.—Corpus Christi June
25, 2020, pet. denied). The City argued that its immunity was not waived
under Section 271.153(a)(1) because the alleged construction delays were
caused by the City’s independent contractor, Carollo, and not the City-
owner itself. Id. at *7. The Graham Construction court found a
jurisdictional fact issue existed that allowed the claim to go forward
because the construction contract identified Carollo as the “Owner’s
Representative.” Id. Thus, whether caused directly by the City-owner, or
by its City’s designated owner-representative, the alleged delays were
caused by the owner of the property being constructed.
24 Graham Construction does not stand for the proposition that a
waiver of immunity exists for delay damages under Section 271.153(a)(1)
in the non-construction context, simply because the plaintiff asserts that
the government defendant “owns” something.
III. PRAYER
The Fund respectfully requests that this Court reverse the trial
court’s orders denying the Jurisdictional Plea and granting the College’s
MSJ on jurisdictional grounds, and grant the Fund such other and
further relief, whether legal or equitable, to which it may show itself to
be justly and equitably entitled.
Respectfully submitted,
By: /s/ Jack W. Higdon Jack W. Higdon jack.higdon@blankrome.com State Bar No. 24007360 Barry Abrams barry.abrams@blankrome.com State Bar No. 00822700 Joshua A. Huber josh.huber@blankrome.com State Bar No. 24065457 BLANK ROME LLP 717 Texas Avenue, Suite 1400 Houston, Texas 77002-2727 (713) 228-6601
25 (713) 228-6605 (Fax) ATTORNEYS FOR APPELLANT, TEXAS ASSOCIATION OF SCHOOL BOARDS RISK MANAGEMENT FUND
CERTIFICATE OF COMPLIANCE
Pursuant to TEX. R. APP. P. 9.4(i)(3), I certify that this reply brief complies with the type-volume restrictions of TEX. R. APP. P. 9.4(e), (i)(2)(C). Exclusive of the portions exempted by Rule 9.4(i)(1), this reply brief contains 4,575 words. I further certify that based on a word count run in Microsoft Word, the aggregate of all briefs filed by Appellant does not exceed 27,000 words and is 12,510 words (excluding items exempted under TEX. R. APP. P. 9.4(i)(1)).
/s/ Jack W. Higdon Jack W. Higdon
26 CERTIFICATE OF SERVICE
I certify pursuant to TEX. R. APP. P. 9.5(b)(1) that a true and correct copy of the foregoing and/or attached instrument was electronically served on counsel for all parties on August 18, 2025, through the Fourth District Court of Appeals’ electronic filing manager, as indicated below:
Via Electronic Service: Preston J. Dugas III pdugas@dcclawfirm.com Vincent P. Circelli vcircelli@dcclawfirm.com Andrew D. Spadoni aspadoni@dcclawfirm.com Sarah Arroyo sarroyo@dcclawfirm.com DUGAS & CIRCELLI, PLLC 4800 Bryant Irvin Ct., Fort Worth, Texas 76107
Jack W. Higdon Jack W. Higdon
27 Automated Certificate of eService This automated certificate of service was created by the efiling system. The filer served this document via email generated by the efiling system on the date and to the persons listed below. The rules governing certificates of service have not changed. Filers must still provide a certificate of service that complies with all applicable rules.
Penny Johnson on behalf of Jack Higdon Bar No. 24007360 pljohnson@blankrome.com Envelope ID: 104505283 Filing Code Description: Brief Requesting Oral Argument Filing Description: Reply Brief of Appellant Status as of 8/18/2025 2:17 PM CST
Case Contacts
Name BarNumber Email TimestampSubmitted Status
Gregory Moore 24055999 greg.moore@blankrome.com 8/18/2025 2:04:46 PM SENT
Jack Higdon 24007360 JHigdon@BlankRome.com 8/18/2025 2:04:46 PM SENT
Preston Dugas III pdugas@dcclawfirm.com 8/18/2025 2:04:46 PM SENT
Christopher Caudill 24104717 christopher.caudill@blankrome.com 8/18/2025 2:04:46 PM SENT
Jennifer Saenz jsaenz@dcclawfirm.com 8/18/2025 2:04:46 PM SENT
Amy Easley aeasley@dcclawfirm.com 8/18/2025 2:04:46 PM SENT
Andrew Spadoni aspadoni@dcclawfirm.com 8/18/2025 2:04:46 PM SENT
Vincent PCircelli vcircelli@dcclawfirm.com 8/18/2025 2:04:46 PM SENT
Sarah Arroyo sarroyo@dcclawfirm.com 8/18/2025 2:04:46 PM SENT
Associated Case Party: Texas Association of School Boards Risk Management Fund
Joshua Huber 24065457 jhuber@blankrome.com 8/18/2025 2:04:46 PM SENT
Barry Abrams 822700 barry.abrams@blankrome.com 8/18/2025 2:04:46 PM SENT
Jack Higdon jack.higdon@blankrome.com 8/18/2025 2:04:46 PM SENT
Yvette Manzano yvette.manzano@blankrome.com 8/18/2025 2:04:46 PM SENT
Joshua Huber josh.huber@blankrome.com 8/18/2025 2:04:46 PM SENT
Penny Johnson penny.johnson@blankrome.com 8/18/2025 2:04:46 PM SENT
Liniuse Umunna Liniuse.Umunna@blankrome.com 8/18/2025 2:04:46 PM SENT
Christopher W.Caudill Christopher.Caudill@BlankRome.com 8/18/2025 2:04:46 PM SENT
Gregory J.Moore Greg.Moore@BlankRome.com 8/18/2025 2:04:46 PM SENT
Noorhan Chahal noorhan.chahal@blankrome.com 8/18/2025 2:04:46 PM SENT