Beaumont Court of Appeals holds assignee to contract proceeds established waiver of immunity, even though contractor was paid

The City of Beaumont, Texas v. Interflow Factors Corporation 09-17-00284-CV Tex. App — Beaumont, Texas December 21, 2017)

This is an interlocutory appeal from the denial of a plea to the jurisdiction in a contract dispute claim.  The Beaumont Court of Appeals affirmed the denial.

Interflow sued the City and a contractor named Barnett alleging the City waived immunity by contracting with Barnett to perform landscaping services. Barnett hired  Interflow to deal with her invoices and assigned the right to the collected payments on the present and future accounts.  The City was provided notice of the assignment. The City allegedly began submitting payments to Interflow for the work performed by Barnett. However, Interflow alleged that, at Barnett’s request, the City directly paid Barnett for four invoices that totaled $11,847.00. According to Interflow,  because the City had received notice of the assignment, the City’s payments to Barnett did not discharge the City’s liability to Interflow pursuant to the invoices.  The City filed a plea to the jurisdiction, which the trial court denied. The City appealed.

The first issued addressed by the court was the City did not have a contract with Interflow, only Barnett. Therefore, the waiver of immunity under Tex. Loc. Gov’t Code § 271.152 came into question as it relates to assignments. The court performed a mild analysis of the language, and citing to First-Citizens Bank & Trust Co 318 S.W.3d 560 (Tex. App.—Austin 2010, no pet.), held the statute does not limit who can collect under the contract. An assignee steps into the shoes of the assignor. Therefore, as long as the contractor would have a right to seek payment, so does the assignee. The Court held immunity was therefore waived. [Comment: the Court analyzed the issue of Barnett no longer having the right to seek payment since he was already paid, as that was, apparently, considered a merits-based argument which was not necessary to analyze for jurisdictional purposes.]

If you would like to read this opinion click here. Panel consists of Chief Justice McKeithenJustice Kreger and Justice Johnson. Memorandum Opinion by Chief Justice McKeithen.  The docket page with attorney information can be found here.