City of Merkel v Copeland, 11-16-00323-CV (Tex. App. — Eastland, October 18, 2018).
This is a governmental immunity/breach of contract claim where the Eastland Court of Appeals reversed the denial of the City’s plea to the jurisdiction.
The City entered into a contract with Tin Cup Country Club where the City would sell the waste (i.e. effluent) from the City’s waste water treatment plant with a minimum each year and a set amount per gallon. Tin Cup used the waste to water and fertilize the golf course. Copeland and Cully purchased Tin Cup and the contract. The City later stopped providing water as the quality did not meet state requirements. Plaintiffs sued for breach of contract. The City filed a plea to the jurisdiction which was denied. The City appealed.
The court first determined the City was performing a governmental function, not proprietary. While sale of waste is not a listed function, it is a required sub-component of the governmental function of water and sewer services. The City must get rid of the waste somehow under TCEQ regulations, so selling it is a reasonable means of fulfilling its overall function. The only waiver of immunity would be found in Chapter 271 of the Texas Local Government Code relating to goods or services provided to the entity. Since the City was not purchasing anything (but selling) the issue becomes whether Tin Cup was providing a service. Under section 271.151(B), a contract for the sale of certain acre-feet of reclaimed water is subject to waiver, but that section did not exist when the contract was executed. As a result, only subsection (A) applies. The contract was not a “service” and was not intended to be a service. As a result no waiver of immunity exists. The plea should have been granted.
If you would like to read this opinion click here. Panel consists of Justices Bailey, Chief Justice Grey (by assignment from Waco) and Wright (retired).