County properly supported summary judgment affidavits to establish breach of contract claim against garbage franchise holder

Quote

Hernandez v County of Zapata, 04-19-00507-CV  (Tex. App. – San Antonino, July 8, 2020).

This is a breach of contract/garbage collection case where the San Antonio Court of Appeals upheld an order granting the County’s summary judgment against Hernandez.

The County of Zapata and Hernandez entered into a one-year written contract, granting Hernandez an exclusive franchise to provide garbage collection services to Zapata County residents. Hernandez agreed to pay Zapata a percentage of the sums he collected from Zapata County residents for his garbage collection services. When a dispute arose, the County of Zapata sued Hernandez for breach of contract.  The County filed a traditional motion for summary judgment, which was granted. Hernandez appealed. [Comment: this opinion is helpful mainly to litigators who deal with standards for admission of evidence].

A party opposing a motion for summary judgment may file a response “not later than seven days prior to the day of” the summary judgment hearing.  Hernandez failed to timely file a response and failed to establish the trial court abused its discretion in denying his motion to file a late response. Hernandez’s motion was unsupported by any probative evidence establishing good cause for the failure. The lack of factual support and explanation regarding counsel’s alleged mistakes, “leav[es] the trial court without any means of determining whether an excusable accident or mistake had in fact occurred.”

In comparison, the County’s affidavits in support of its summary judgment were properly supported and included the underlying facts to justify the conclusions asserted in the affidavits. For example, the affidavit of the County auditor provided support by stating 1) His primary duties are to oversee financial record-keeping for the county and to assure that all expenditures comply with the county budget, 2)  He has continuous access to all county books and financial records and conducts a detailed review of all county financial operations, 3) He has general oversight of all books and records of all county officials and is charged with strictly enforcing laws governing county finance, 4)  After reviewing bank statements from Hernandez’s business and comparing with county records and the cross-checking corresponding franchise fee percentage owed by Hernandez pursuant to the contract, that the amount Hernandez owed Zapata was $361,439.07. The trial court did not abuse its discretion in denying Hernandez’s objections to the County’s affidavits.

The trial court also did not abuse its discretion in overruling the objection to bank statements based on hearsay.  Under the Texas Rules of Evidence, a statement by an opposing party is not hearsay if the statement is offered against the opposing party and “is one the party manifested that it adopted or believed to be true.” Hernandez admitted that he produced the bank statements in discovery. By producing the bank statements and by adopting the bank statements as his own, Hernandez manifested an adoption or belief in their truth.  The evidence is sufficient to conclusively establish the existence of a valid contract,  that Zapata performed under the contract, and that Hernandez breached the agreement.  Aside from the first-year payment, it is undisputed Hernandez did not pay Zapata the contracted percentages of the total gross receipts for the years 2011 to 2016. As a result, the trial court was within its discretion to grant the summary judgment.  Finally, the record supports an award of attorney’s fees.

If you would like to read this opinion click here. The panel consists of Justices Martinez, Rios and Watkins.  Opinion by Justice Martinez.

Corpus Christi Court of Appeals holds recovery in breach of contract case under Chapter 271 waiver of immunity dependent on contract definition of “owner” – attorney’s fees are recoverable for any contract covered by Chapter 271 waiver.

Quote

Special guest author Laura Mueller, City Attorney of Dripping Springs

City of Corpus Christi v. Graham Constr. Servs., Inc., 2020 WL 3478661, No. 13-19-00367-CV (Tex. App.—Corpus Christi June 25, 2020) (mem. op.).

This is a breach of contract claim under Chapter 271 of the Local Government Code involving a wastewater plant replacement project where the Court of Appeals affirmed the trial court’s denial of the city’s plea to the jurisdiction.

The City of Corpus Christi (City) entered into a contract with Graham Construction Services (Graham) for the replacement of a wastewater plant.  In the agreement, the City hired Carollo to provide engineering and contract administration services and Carollo was considered the owner’s representative.  The agreement had strict deadlines for the completion of the project in two different phases.  The agreement also had strict notice of claim requirements (i.e. less than 90 days after claim event).  Graham submitted over a dozen delay claims, arguing that it faced delays due to “unclear or conflicting specifications in the contract, unnecessarily burdensome testing requirements, and an uncooperative and obstructionist attitude on the part of Carollo”, but not within the time frames required by the agreement.  At some point, the City replaced Carollo with Freese & Nichols (Freese), but Carollo was still involved in the project.  Graham also submitted reports requesting an increase in price and extensions of the schedule.  The City reviewed the reports and met with Graham regarding these reports. The City refused to issue a certificate of substantial completion, and Graham left the job site.   Graham sued the City for breach of contract.  The City filed a counterclaim which included a third-party petition against Carollo.  Three years after the suit filing, the City filed a plea to the jurisdiction.  The trial court denied the plea as to the breach of contract and attorney fee claims and the City appealed.

Under Chapter 271 of the Texas Local Government Code’s waiver of immunity for goods/services contracts contract damages are limited to: (a) balance due including increased costs from owner caused delays; (b) change orders; (c) attorney’s fees; and (d) interest.  Id. § 271.153.  The chapter does not waive a contractor’s defense, but does require a contractor to comply with the adjudication methods found in the contract. Id. §§ 271.154; .155.  The City argued that it was not responsible for owner-caused delays because the delays were allegedly caused by Carollo, an independent contractor.  The Court held a fact issue exists because Carollo was listed as an Owner Representative in the agreement.  The Court also held (a) the City’s thirty and sixty-day notice of claim requirements are prohibited by § 16.071 of the Texas Civil Practice and Remedies Code; and (2) the City did not tell Graham it missed the notice of claim deadline but instead worked through the claim dispute.  These are permissible under § 271.155.  The Court compared this case to a recent contract case where the City did notify a contractor of the lateness of their claims.   See Mission Consol. Indep. Sch. Dist. v. ERO Int’l, LLP, 579 S.W.3d 123, 129 (Tex. App.—Corpus Christi–Edinburg 2019, no pet.).  Finally, the Court held that the contractor’s request for attorney’s fees was allowed because § 271.153 states that fair and equitable attorney’s fees are recoverable. The plea was properly denied.

If you would like to read this opinion click here.

 

 

Texas Supreme Court holds immunity waived for arbitration clauses, but only a court can decide the immunity question

Quote

San Antonio River Authority v Austin Bridge & Road, L.P., 17-0905 (Tex. May 1, 2020)

In this construction contract dispute, the Texas Supreme Court held Chapter 271 of the Texas Local Government Code waives immunity for arbitration clauses.

The San Antonio River Authority (“Authority”) hired Austin Bridge and Road L.P. (“ABR”) to perform repairs of the Medina Lake Dam.  Disagreements about scope of work and payment arose. ABR triggered the arbitration provision in the contract. When the arbitrator denied the Authority’s assertion it was immune, it sued ABR in district court seeking a declaration the Authority lacked the ability to waive immunity for arbitration. The trial court denied the Authority’s summary judgment. The court of appeals reversed in part, holding that while the arbitration provision was enforceable, only a court could determine immunity was waived. The Authority appealed.

Until the waiver in Chapter 271 existed, governmental immunity shielded a local government from enforcement of its contract obligations. Currently, § 271.154 expressly provides that arbitration agreements are enforceable. The term “Adjudication” in Chapter 271 means “the bringing of a civil suit and prosecution to final judgment . . . and includes the bringing of an authorized arbitration proceeding…”  Further, an arbitration is an “adjudication procedure” under the plain meaning of the statute. However, immunity is waived only to the extent authorized by Chapter 271. As a result, the Authority was authorized to agree to arbitrate disputes arising from its contract with Austin Bridge, within Chapter 271’s expressed limits.  However, the Court agreed with the court of appeals and held only the judiciary has a non-delegable duty to determine whether immunity has been waived. Because immunity bears on the trial court’s jurisdiction to stay or compel arbitration, and to enforce an arbitration award in a judgment against a local government, a court must decide whether governmental immunity is waived. An agreement to arbitrate is unenforceable against a local government to the extent it purports to submit immunity questions to an arbitrator. The Court then analyzed the contract and determined that while the contract was for the benefit of the River District, it also provided a benefit to the Authority, and the Authority is the entity that entered into the contract. As a result, in this situation, the Authority’s immunity is waived.  The Court held the decision of whether ABR is seeking actual damage or consequential damages is not factually developed; however, ABR at last pled some possibility the damages sought are actual damages.

If you would like to read this opinion, click here. Justice Bland delivered the opinion of the Court. Dissent filed by Justice Boyd, joined by Chief Justice Hecht and Justices Guzman and Devine.

Contractor properly complied with administrative dispute resolutions in contract, so properly exhausted administrative remedies holds Dallas Court of Appeals

Quote

 

Dallas Area Rapid Transit Authority v. GLF Construction Company, 05-19-003930-CV, (Tex. App – Dallas, April 3, 2020)

This is an interlocutory appeal in a contractual immunity case where the Dallas Court of Appeals affirmed the denial of DART’s plea to the jurisdiction.

GLF and DART entered into a contract for GLF to built part of a DART light rail extension. In the contract, the parties agreed to an administrative dispute resolution process. According to GLF, DART’s inadequate project administration drove GLF’s costs up far beyond the contract price.  GLF submitted a paragraph 50 request for equitable adjustment. GLF administratively appealed the contracting officer’s decision to an administrative judge, but the judge’s decision, while finding liability, did not list which party owed any money. In January 2019, GLF sued DART for breach of contract and to hold the resolution process unconstitutional. DART filed a plea to the jurisdiction, which was denied.

DART asserts GLF failed to exhaust its remedies under the resolution process. However, the court interpreted DART’s position as essentially stating that because GLF did not sue to challenge the judge’s decision and formally list the suit as an appeal, that this lawsuit does not qualify as an appeal of that decision, and therefore GLF did not exhaust its remedies. The court noted in this lawsuit, GLF requested a trial de novo from the administrative law judge’s decision and sought damages. As a result, the petition challenges the administrative judge’s decision within the plain meaning of the regulations and contract. The plea was properly denied.

If you would like to read this opinion click here. Panel consists of Justices Myers, Whitehill, and Reichek. Affirmed. Memorandum Opinion by Justice Whitehill. Docket page with attorney information can be found here.

Texas Supreme Court holds plaintiff lacked standing to challenge PIP payments since he suffered no out-of-pocket expenses

 

Farmers Texas County Mutual Insurance Co. v Beasley, 18-0469 (Tex. March 27, 2020)

While not a governmental entity case, this case involves standing to sue under a personal injury protection policy (PIP) and the distinction made with incurred rates vs. list rates of the medical providers. This can affect not only litigation but also those entities which are self-insured.

Beasley was injured in a car accident and his treatment displayed in the medical provider’s invoices totaled $2,662.54. Beasly had health coverage with BlueCross Blue Shield (BCBS) which negotiated a provider rate of $1,068.90.  The medical providers did not attempt to recover or hold him liable for the difference. Beasley also had a PIP policy through Farmers Texas County Mutual Insurance Company (Farmers).  The policy stated it would pay benefits because of bodily injury, including reasonable medical expenses. Beasley made a claim but sought the list/invoiced rates. Farmers paid Beasley $1,068.90.  He sued for the difference alleging breach of contract and asserting the policy covers reasonable medical costs, regardless of any reductions the providers agreed to accept later. Farmers asserted the policy was for medical expenses incurred. The trial court granted Farmers’ plea to the jurisdiction but the court of appeals reversed holding the breach of contract claim was sufficient to confer jurisdiction. Farmers appealed.

Standing is a requirement of jurisdiction and Beasley must establish an injury. Beasley was not harmed as the medical providers did not attempt to charge him for the difference.  He was not able to claim any unreimbursed, out-of-pocket medical expenses. Nor does Beasley assert that any of his medical providers withheld treatment as a result of the adjusted bills. The fact Beasley felt personally aggrieved by the lack of payment does not mean he suffered an injury. [Comment: yes, he actually made that argument.] Beasley also asserts Farmers impermissibly considered a collateral source in determining how much to reimburse: BCBS’s payments to Beasley’s medical providers. But a health insurer’s negotiated discounts do not constitute a collateral source of benefits to the insured in this context.  Adjustments in the amount of charges to arrive at the amount owed is a benefit to the insurer, one it obtains from the provider for itself, not for the insured. As a result, the collateral source rule is inapplicable in Beasley’s case. Beasley, therefore, was not able to establish standing to bring suit.

If you would like to read this opinion click here. Opinion by Justice Green. The court docket page with attorney information is found here.

 

Public entities which issue bonds can utilize Expedited Declaratory Judgment Act for validation of contract execution, but not compliance says Texas Supreme Court

Quote

City of Controe, et al, v San Jacinto River Authority, et al, 18-0989, (Tex. March 27, 2020)

This is a case brought under the Expedited Declaratory Judgment Act (EDJA) involving proper compliance by the local government with bond requirements. The EDJA provides an “issuer” of “public securities” an expedited declaratory procedure to establish the “legality and validity” of public securities and “public security authorizations.” Tex. Gov’t Code § 1205.021.

The Lone Star Groundwater Conservation District was created to address concerns about inhabitance of an area and their reliance on groundwater drawn from the Gulf Coast Aquifer. In 2008, the Conservation District required all large-volume groundwater users—including the Cities—to develop and implement plans for reducing their usage substantially. Mandatory groundwater usage cutbacks took effect in January 2016. Respondent San Jacinto River Authority (SJRA) is a legislatively created conservation and reclamation district developed a Groundwater Reduction Plan (GRP) to draw surface water from Lake Conroe, treat the water, and sell it to large-volume users. SJRA issued seven series of bonds between 2009 and 2016 that had an outstanding principal balance of approximately $520 million. SJRA entered into bilateral GRP contracts with about 80 water-system operators. Although SJRA  can set, the GRP rates are governed entirely by contract. Several cities sued the Conservation District, which suit expanded to include SJRA. Several cities asserted they would not pay. SJRA filed suit   under the EDJA seeking a declaration regarding the contracts and rates. The cities opted into the suit, but then filed pleas to the jurisdiction alleging SJRA did not seek a declaration as to “the legality and validity” of a “public security authorization,” but instead seek to litigate what are substantively suits on contracts that properly lie outside the statute.  The trial court denied the pleas and the cities appealed. The intermediary court of appeals held primarily for SJRA and the cities appealed to the Texas Supreme Court.

The EDJA was enacted to “stop ‘the age old practice allowing one disgruntled taxpayer to stop the entire bond issue simply by filing suit.’”  The Court went through an analysis of the EDJA and its purpose in considering jurisdiction and definitions. SJRA and the Attorney General contend the GRP contracts, rate order, and rates themselves are public security authorizations because they are all connected to the bonds SJRA issued to finance the GRP Project.  The Court first held the Authority Declaration concerns the legality and validity of SJRA’s contracts with GRP Participants, as GRP rate orders and rates are creatures of the contracts.  As a result, the EDJA permits the trial court to exercise jurisdiction over this declaration.  However, the Court held the rate orders and rates lacked a proper connection with the bonds. Even though the rate order and rates may affect the amount SJRA is paid under the contracts, neither has an authorizing connection with the public securities. The EDJA treats execution of a contract to be connected but does not treat compliance with a contract as a public security authorization. As a result, SJRA can seek a declaration the contract was validly executed, but not whether it complied with the contract. As a result, the EDJA confers jurisdiction to declare whether the GRP contracts (as public security authorizations) are legal and valid, but it does not extend to declaring whether a specific rate amount set in a particular rate order is valid as it is controlled by the contract.  SJRA may not obtain EDJA declarations concerning the Cities’ in personam rights and liabilities. The EDJA permits only in rem declarations concerning property rights.

If you would like to read this opinion click here. Opinion by Justice Busby. The court docket page with attorney information is found here.

School district failed to establish unauthorized contract, even with TEA report declaring contract was executed in violation of procurement laws

Quote

Harlandale Independent School District v. Jasmine Engineering, Inc, 04-19-00638-CV, (Tex. App – San Antonio, March 11, 2020)

This is a breach of contract/immunity case where the San Antonio Court of Appeals affirmed the denial of the school district’s plea to the jurisdiction.

Harlandale Independent School District (the “District”) and  Jasmine Engineering, Inc. (“Jasmine”) entered into a Professional Services Agreement (“PSA”)which was amended six times. When the District terminated the contract, Jasmine sued for breach of contract.  The District filed one plea to the jurisdiction challenging only the pleadings, which the 4th Court already considered and held Jasmine properly pled a waiver of immunity. On remand, the District filed another plea to the jurisdiction challenging jurisdictional facts. The plea was denied, and the District appealed.

Texas Education Agency (“TEA”) performed an investigation and issued a determination that the District violated state law procurement requirements by entering into the PSA and amending it. The District therefore asserts no valid contract was created. Section 271.152 of the Texas Local Government Code waives immunity for contracts for goods or services. Under chapter 271 a valid contract is one stating the essential terms for providing goods or services to the local governmental entity and that is properly executed on behalf of the local governmental entity. Jasmine Engineering asserts that the TEA cannot determine the validity of the PSA and, if the matter were properly before the trial court, Jasmine Engineering would argue waiver and other legal theories. While the District relies on the TEA report, the District did not advance that it also determined the PSA was not authorized. While it is true that the TEA has the statutory authority to initiate investigations into contracting matters, make findings, and impose sanctions pursuant to its findings, these powers do not imply that the TEA’s findings bind the trial court or are a jurisdictional bar. Tex. Educ. Code §39.057.  And while the TEA report is attached to the plea, none of the supporting documentation was included. As a result, the evidence did not negate the pleadings and the trial court properly denied the plea.

If you would like to read this opinion click here. Panel consists of Justices Martinez, Chapa, and Rios. Memorandum Opinion by Justice Martinez. Docket page with attorney information can be found here.

Texas Supreme Court holds 1949 utility easements with “reconstruction” language means easements are general with no fixed width

Quote

Southwestern Electric Power Company v. Kenneth Lynch, Tommy Batchelor, and Twant Wilson, Texas, 18-0768, (Tex. – Feb. 28, 2020)

This is a property/easement dispute where the Texas Supreme Court held a set of utility easements were general, with no fixed width, regardless of the historic use.

In 1949, Southwestern Gas & Electric Company (Southwestern) acquired a number of easements over a stretch of land in northeast Texas to construct a transmission line. Southwestern constructed wooden poles at the time. Southwestern Electric Power Company (SWEPCO) later acquired these easements. The easements authorize SWEPCO “to erect towers, poles and anchors along” a set course on a right-of-way that traverses several privately owned properties and SWEPCO historically used only 30 feet of easement area. In 2014 and 2015, SWEPCO undertook a modernization project to replace the transmission lines.  SWEPCO offer to set a width of 100 feet to individual property owners. Some owners accepted, but the Landowners in this case did not. After the project was completed, the Landowners filed suit seeking a declaratory judgment fixing SWEPCO’s easements to a thirty-foot width, fifteen feet on each side of the transmission line. They asserted the offer of 100 feet meant SWEPCO intended to exceed the 30 feet in the future.  SWEPCO filed two pleas to the jurisdiction, which were denied, and counterclaims for trespass and breach of contract. The trial court held a bench trial and held for the Landowners. The judgment was affirmed by the court of appeals.

The Court first determined SWEPCO’s pleas were properly denied as a ripe controversy existed regarding the scope of the easement, regardless of whether SWEPCO ever utilized more than 30 feet. While acknowledging many of the Landowner’s assertions were hypotheticals, it noted their claims are inextricably tethered to a disagreement of present scope. Regarding that scope, the easements do not state a specific maximum width of the right-of-way, nor do the easements specify how much of the land SWEPCO is entitled to access. Instead of construing the easements as general easements that intentionally omitted a defined width, the courts below incorrectly held the easements became “fixed and certain” once the transmission lines were constructed. The plain language of the easements stated they allowed for reconstruction and alteration, which contemplates future construction and installation of new poles and additional lines. The Court has recognized the existence of general easements that do not require a fixed width.  As a result, they are general easements with no fixed widths. However, the  Court noted a holder of a general easement must utilize the land in a reasonable manner and only to an extent that is reasonably necessary.  If at some point in the future SWEPCO utilizes the easements in a way that the Landowners believe is unreasonable and not reasonably necessary, or in a way that violates the express terms of the easements, the Landowners could at that point bring suit to enjoin SWEPCO’s use of the easements.

If you would like to read this opinion click here. Opinion by Justice Green. Justice Bland did not participate. Docket page with attorney information can be found here.

City allowed to appeal civil service order since hearing examiner performed her own Internet search on medication side-effects

Quote

City of Fort Worth v. Shea O’Neill, 02-18-00131-CV (Tex. App. – Fort Worth, Jan. 23, 2020).

The Fort Worth Court of Appeals reversed-in-part and affirmed-in-part a trial court order regarding whether the court had jurisdiction over an appeal from a hearing examiner’s decision under the Civil Service Act.

Shea O’Neill was indefinitely suspended as a firefighter with the City.  O’Neill, while on work-related leave, struck a 70-year-old fellow parent at a football scrimmage. The parent alleged he sustained facial injuries, several cracked and broken teeth, and a bloody nose.   The fire chief found that O’Neill had violated several fire-department rules and regulations and imposed the suspension.  O’Neill appealed and a hearing examiner reversed the suspension. The City appealed to the district court, which granted O’Neill’s plea to the jurisdiction holding it had no jurisdiction over the hearing examiner’s decision. The City appealed.

The City asserts the district court had jurisdiction to consider the appeal for two reasons: (1) the hearing examiner’s decision was procured by unlawful means because she considered evidence not admitted at the hearing and (2) the hearing examiner exceeded her jurisdiction because she concluded that the fire department’s due-process violations compelled her to reinstate O’Neill.  The Civil Service Act mandates that a decision be made on evidence submitted at the hearing. A hearing examiner’s decision is “final and binding on all parties.” An appeal is permitted only if the hearing examiner was without jurisdiction or exceeded his/her jurisdiction or that the order was procured by fraud, collusion, or other unlawful means. It is undisputed the hearing examiner conducted her own independent Internet research on the side effects of certain drugs. O’Neill counters the search results were not “procured” through unlawful means. In ordinary usage, “procure” means to “to cause to happen or be done” and to “bring about.”  The hearing examiner found the “slap” was defensive in nature and unlikely to have caused the broken teeth or bones and dismissed the nosebleed as being caused by the slap. The court held a fact issue exists regarding the side-effects evidence and whether it led the hearing examiner to decide that the evidence overall did not support the fire chief’s findings and conclusions.  Such was improper and was procured through an unlawful means as the medication issue was not submitted during the hearing as evidence.  As a result, the “procured through unlawful means” ground entitled the City to reversal of the order granting the plea and a remand for further proceedings. However, the hearing examiner also determined that the department did not fully investigate the facts and allegations and did not give O’Neill an adequate opportunity to respond to the allegations. Such is within her discretion. Nothing in the Civil Service Act prohibits hearing examiners from reinstating a firefighter based on a finding that the department did not give due process during the disciplinary process. That ground was overruled by the court, even though it still remanded the case.

If you would like to read this opinion click here. Panel consists of Justice Gabriel, Justice Kerr, Visiting Justice Massengale.  Memorandum opinion from Justice Kerr. The docket page with attorney information can be found here.

No waiver of immunity when non-profit sues to invalidate transfer of real property to city

Quote

City of Houston and Keith W. Wade v. Hope for Families, Inc, 01-18-00795-CV, (Tex. App – Houston [1st Dist.], Jan. 9, 2020)

This is a governmental immunity case where the First  Court of Appeals held the contracting non-profit did not establish a waiver of immunity.

Hope for Families, Inc. (HFF) acquired the property for a community development project financed by the City which fell through.  HFF negotiated a transfer of the property to the City in exchange for debt forgiveness. HFF later sued to invalidate the transfer alleging the City’s negotiator, Wade, committed fraud when negotiating. The City filed a plea to the jurisdiction which was denied and the City appealed.

HFF asserts “A corporation may convey real property of the corporation when authorized by appropriate resolution of the board of directors or members.” Tex. Bus. Org. Code § 22.255, which it did not do. However, that provision does not grant HFF the right to sue to invalidate a transfer and does not waive immunity. HFF also sued Wade as an individual. While Wade is immune individually (as fraud is an intentional tort), the court held HFF should have the opportunity to replead an ultra vires claim.

If you would like to read this opinion click here. Panel consists of Justices Keys, Kelly, and Goodman.  Memorandum Opinion by Justice Goodman. Docket page with attorney information found here.

No waiver of immunity for city contract to install sewer lines on property says 4th Court of Appeals

Quote

Twanda Brown v. City of Ingram04-1900508-CV (Tex. App. —  San Antonio, Nov. 20, 2019).  

In this suit, the San Antonio Court of Appeals affirmed the granting of the City’s plea to the jurisdiction related to counterclaims regarding utility services.  

The City of Ingram (“the City”) sued Brown and eight other defendants, seekingdeclaratory judgment that its ordinances regarding penalties and permits for utilities and wastewater are “valid and reasonable exercises of the City’s police powers.” Brown answered the City’s suit and asserted a counterclaim for breach of contract, alleging the City “breached its Contract for Wastewater Services by knowingly permitting an unqualified, unlicensed subcontractor” to connect her property to the City’s sewer system. Brown alleged the subcontractor’s negligence “sever[ed] a gas line and caus[ed] damages to Brown and her property.” The City filed a plea to the jurisdiction which was granted.  Brown appealed.  

The Texas Tort Claims Act makes sanitation, water, and sewer services governmental functions, thereby entitling the City to immunity absent a waiver. The City’s actions of connecting residents to the city’s sewer system is a governmental functionImmunity is waived for breach of contract claims for goods or services provided to the entityBrown’s pleadings allege the purported contract was an agreement to provide goods or services to Brown (i.e. construction and installation of service lines), not the other way around. Because any purported contract does not involve the provision of goods or services to the City, it is not a “contract subject to” the waiver in Texas Local Government Code chapter 271 subchapter I.  

Several days after the trial court granted the plea to the jurisdiction, the City filed a motion to strike an affidavit submitted by the City on the basis that counsel for the City learned the affiant made a mistake as to the location of a photograph.  Brown filed an objection but also sought in the alternative, the trial court re-open the hearing. The court noted the record does not reflect whether the trial court ruled on either. However, the court held the issue is irrelevant to the ability to rule on the appeal as it does not change the analysis of the type of contract involved.  Finally, the court denied the City’s request for sanctions as they do not believe the claims “lacked any reasonable basis in law.”   

If you would like to read this opinion click hereThe panel consists of Chief Justice Marion, and Justices Alvarez and Chapa. Opinion by Chief Justice Marion. The attorney for Brown is listed as Roger Gordon.  The attorneys listed for the City are Charles E. ZechScott Micheal Tschirhart  and Llse D. Bailey 

Beaumont Court of Appeals holds firefighter’s last-chance agreement in collective bargaining city deprived trial court of jurisdiction to hear appeal of indefinite suspension

Quote

 

Michael Scott Nix v. City of Beaumont, 09-18-00407-CV (Tex. App. -Beaumont – Oct. 3, 2019)\

This is an interlocutory appeal in a firefighter suspension case where the Beaumont Court of Appeals affirmed the granting of the City’s plea to the jurisdiction.

Nix filed a petition seeking declaratory and equitable relief against the City based on his indefinite suspension from his position as a firefighter. He asserted the Collective Bargaining Agreement (“CBA”) was invalid because the City allegedly failed to comply with the Texas Open Meeting Act (“TOMA”) requirements when the CBA was negotiated.  He also asserts the “last chance” agreement he entered into with the Fire Chief was invalid. Nix’s last-chance agreement probated part of the suspension, but noted he could be terminated if he violated any terms of the agreement.  Nix’s suspension in 2015 resulted in the last-chance agreement and the Chief determined he violated the sick leave policy in 2017 resulting in an indefinite suspension. Nix asserts in the absence of a valid contract, the suspensions were invalid, depriving him of due process of law and a protected property interest. The City filed a plea to the jurisdiction, which was granted.  Nix appealed.

TOMA has a limited waiver of immunity. An action taken in violation of TOMA is voidable, not void. When a department head suspends a firefighter for violating a civil service rule, the suspension may be for a reasonable period not to exceed fifteen calendar days or for an indefinite period. Tex. Loc. Gov’t Code Ann. § 143.052(b). The firefighter may accept the suspension or appeal to the Civil Service Commission. If the firefighter disagrees with the Commission, the employee may file suit in district court. The question of whether the City posted the CBA 2012-2015 negotiations in accordance with TOMA is not relevant because it is the CBA 2015-2020 CBA applicable to his underlying challenge to his indefinite suspension in 2017.  The City provided evidence showing proper postings for the negotiation of the 2015-2020 CBA.  When Nix accepted the last-chance agreement in 2015, he had the opportunity to refuse the Chief’s offer and appeal his suspension to the Commission; however, Nix agreed to waive his right to appeal, including the right to appeal the Chief’s 2017 decision determining that Nix had violated the Agreement. Nix waived all rights he may have to file suit against the City as to any issue directly or indirectly related to the last-chance agreement or to his indefinite suspension.  As a result, the trial court properly granted the plea.

If you would like to read this opinion click here. Panel consists of Chief Justice McKeithen, Justice Horton and Justice Johnson.  Opinion delivered by Chief Justice McKeithen. The attorneys listed for Nix are Melissa Azadeh and Laurence Watts.  The attorneys listed for the City are Sharae Reed and Tyrone Cooper.

City immune for claims of “general engineering work” since the contract was expressly for a specific project with no generalized work included

Quote

Naismith Engineering, Inc. v. The City of Aransas Pass, 13-18-00402-CV (Tex. App. – Corpus Christi, September 19, 2019)

This is a governmental immunity/contract case where the Corpus Christi court out of Edinburg affirmed the granting of the City’s plea to the jurisdiction.

The City Manager, with council approval, entered into a contract with Naismith Engineering, Inc (NEI) to design improvements to the boat-ramp area of the City’s Conn Brown Harbor (CBH project). The City sued NEI and its surety alleging there were deficiencies related to the CBH project. NEI subsequently counterclaimed to recover outstanding fees for work “general work” performed . NEI alleged that “[NEI] performed work ranging from general project services to general harbor engineering and planning and services for waterline extension….”  The City filed a plea to the jurisdiction as to the counter-claim which was granted.   NEI appealed.

The court declined to “apply the common law of contracts to a governmental immunity question” and held no contract existed for “general services” between the City and NEI. Therefore, no waiver of immunity exists. While NEI attempted to argue its counter-claim included unpaid fees for the CBH project, however, the evidence and statements of counsel made it clear the counter-claim was for other work which was simply near and around the boat ramp. A governmental entity retains immunity from suit as to those claims for monetary damages that are not germane to, connected with, and properly defensive to the entity’s claim. The counterclaim does not arise from the same transaction or occurrence that is the subject matter of the City’s claim and therefore no immunity is waived. The plea was properly granted.

If you would like to read this opinion click here. Panel consists of Chief Justice  Contreras and Justices Longoria and Perkes.  Memorandum Opinion by Justice Longoria. The attorneys listed for the City of Aransas Pass are Matthew B. Cano, James F. McKibben Jr. and Ken Fields.  The attorneys listed for Naismith Engineering are Paul Dodson and John Swallow.

13th Court of Appeals holds no contract necessary for medical providers to sue self-insured school district

Quote

South Coast Spine & Rehabilitation PA v. Brownsville Independent School District,  13-18-00006-CV (Tex. App. – Corpus Christi, September 12, 2019)

This is a governmental immunity/contract case where the Corpus Christi court out of Edinburg reversed the granting of a directed verdict for the school district and remanded the case.

Brownsville Independent School District (BISD) is  a self-insured school district which had a third-party administrator (American Administrative Group [AAG]) handle health benefit claims. South Coast Spine & Rehabilitation, PA, (South Coast) sued seeking payment for out-of-network medical services provided to twenty-seven BISD employees. Each patient executed an “Assignment of Proceeds, Lien, and Authorization,” assigning to South Coast the patient’s benefits under the Plan. South Coast submitted claims for these twenty-seven patients and AAG refused payment. South Coast also named the twenty-seven patients as defendants. BISD subsequently filed a plea to the jurisdiction which was denied, then appealed, and remanded when the appellate court held a written contract between BISD and South Coast was not required in order to establish a waiver of immunity under Tex. Loc. Gov’t Code chapter 271.  On remand and trial, the trial court granted a directed verdict based on an absence of a written contract between South Coast and BISD. South Coast appealed.

The court held that it’s prior interlocutory opinion held  that South Coast could sue BISD as an assignee under the Plan—a contract between BISD and its employees. South Coast Spine & Rehab. PA v. Brownsville Indep. Sch. Dist., No. 13-11-00270-CV, 2014 WL 1789546, at *3–5 (Tex. App.—Corpus Christi–Edinburg Apr. 30, 2014, no pet.). An assignee steps into the shoes of the claim holder—in this case, the patients—and is considered under the law to have suffered the same injury and have the same legal rights as the claim holder. BISD employees are free to choose their own medical providers, and BISD is obligated to pay those medical providers the employee’s assigned benefits to the extent the services are covered by the Plan. The dispositive question, then, was whether and to what extent the Plan covered the out-of-network services provided by South Coast.  Based on the language in the Plan, it specifically covers out-of-network providers to a certain extent.  South Coast only sought from BISD the amount generally paid to out-of-network providers for covered services—60%. The court therefore reversed the directed verdict and remanded.

If you would like to read this opinion click here. Panel consists of Justices Benavides, Hinojosa, and Perkes. Memorandum opinion by Justice Perkes. The attorney listed for South Coast  is Keith Gilbert. The attorney listed for BISD is Baltazar Salazar.

Subcontractor did not contract directly with DFW Airport, so no waiver of immunity exists for breach of contract, says Dallas COA

Quote

Ruth Torres v. Dallas/Ft Worth International Airport et. al, 05-18-00675-CV (Tex. App. —  Dallas, August, 29, 2019).

This is a breach of contract case where the Dallas Court of Appeals held the trial court was without jurisdiction to hear the claims.

Torres was to provide human resources consulting services to Pursuit of Excellence (POE), a corporation that contracted with DFW to provide airport operations services. POE filed suit against Torres for breach of contract.  Torres answered, counterclaimed, and attempted to bring in the Dallas/Ft.Worth International Airport (DFW).  DFW filed a plea to the jurisdiction, which was granted. Torres appealed.

DFW is a special-purpose governmental entity which possesses immunity as a matter of law.  As a result, Torres must establish a waiver of immunity to proceed. The Texas Tort Claims Act expressly lists the operating and regulation of an airport to be a governmental function, so no proprietary aspects are involved. Although TEX. LOC. GOV’T CODE § 271.152 provides for a waiver of immunity in certain cases, that waiver is not absolute.  Unfortunately for Torres, she did not contract with DFW, but with an independent contractor of DFW.  The waiver under §271.152 applies only to contracts entered into directly with DFW.  The remaining arguments asserted by Torres (UDJA, TOMA, PIA, etc.) were not raised at the trial court so cannot be raised for the first time on appeal. The plea was properly granted.

If you would like to read this opinion, click here. Panel consists of Justices Myers, Osborne, and Nowell.  Opinion by Justice Myers.