Austin Court of Appeals holds Utility Agency was immune from contract dispute regarding water service agreement


West Travis County Public Utility Agency v. Travis County Municipal Utility District No. 12,03-16-00880-CV (Tex.App— Austin, August 29,2017)

This is an interlocutory appeal from the denial of a plea to the jurisdiction in a case involving immunity from a contract.

The Lower Colorado River Authority (“LCRA”) and MUD 12 entered into a water sale contract in which the LCRA agreed to provide MUD 12 with raw water from the Colorado River in exchange for specified payments. As part of the contract the MUD had to install a specific meter to measure the water flow for payments. Later, LCRA assigned the contract to West Travis County Public Utility Agency (“Agency”).  Evidence admitted at the hearing demonstrates that MUD 12 spent over $100,000 to install the Master Meter in two concrete tanks.  A dispute arose regarding the fees charged by the Agency and the MUD sued for breach of contract. The Agency filed a plea to the jurisdiction which the trial court denied. The Agency appealed.

The Agency is a governmental entity entitled to sovereign immunity. To be a proper waiver of immunity goods or services must be provided by a contractor to the governmental entity. The MUD asserts immunity is waived under Tex. Loc. Gov’t Code §271.152 because it provided goods and services to the Agency by way of the Master Meter. However, the court noted it cannot read the meaning of “services” so broadly that the requirement is read completely out of the statute. Not every “benefit” received by a governmental entity operating within a contractual relationship with another party qualifies as a “service.” The governmental entity must have a right under the contract to receive services—even under a broad interpretation of that term—because otherwise the benefits incidentally accruing to it would be too “indirect.”   The Agency had no contractual right to receive any services from MUD. Had MUD 12 not installed the Master Meter—for whatever reason—there would be no contract upon which to sue. Additionally, an “essential term” to the contract is the amount the governmental entity has agreed to pay the claimant for the “service.” No such payment terms were present.  As a result, the contract does not fall under the waiver of immunity. The plea should have been granted.

Justice Pemberton concurred and dissented. He believed immunity was waived under the contract, but only for direct damages and attorney’s fees. The specific performance claims were barred.

If you would like to read this opinion click here.  The panel consists of Justice Puryear, Pemberton, and Goodwin. Justice Puryear delivered the opinion of the court. Justice Pemberton delivered the concurring and dissenting opinion. If you would like to see this opinion click here. Attorney’s listed for West Travis County Public Utility Agency are Mr. James F. Parker III, Mr. David Klein and Mr. Jose E. De La Fuente. Attorneys for Travis County Municipal Utility District No, 12 are Ms. Mary Byars, Ms. Jane M.N. Webre.

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