13th Court of Appeals holds City entitled to damages for breach of contract claims against water treatment and distribution facility

Kempner Water Supply Corp. v. City of Lampasas, Texas, 13-17-00047-CV (Tex. App. Corpus Christi, January 31, 2019)

This is a breach of contract case for water treatment where the Corpus Christi Court of Appeals held as a matter of law the City was entitled to damages in its breach of contract claim, but remanded the case for a determination on a damage amount.

City of Lampasas (City) sued appellant Kempner Water Supply Corporation (Kempner) for a breach of contract claim. The City assigned its raw water reservation right to a third-party named Central Texas in order for Central Texas to treat the water and deliver it to Kempner for final delivery.  Kempner and the City have differing interpretations of the contract, which focused on the City’s payments for water treatment performed by Central Texas and whether the contract intended to cover payment for water treatments performed directly by Kempner. When the parties entered into the contract, Kempner did not have its own water treatment facility, but later built one. Kempner charged the City for water it treated as well as treatments performed by Central Texas on water that Kempner distributed. The trial court granted the City’s motion for summary judgment and denied Kempner’s.  Kempner appealed.

After a lengthy contract construction analysis, the court held the contract states the City agreed to pay Kempner for costs Kempner incurred for water treated by Central Texas.  It did not obligate the City to pay Kempner for water that Kempner treated. The City conclusively established Kempner breached the contract by charging it for Kempner-treated water.  However, when analyzing damages, the court noted the record did not separate out the allowable damages. As a result, the case was remanded back to the trial court for a hearing on damages.

If you would like to read this opinion, click here. Panel consists of Chief Justice Valdez, Justice Benavides and Justice Hinojosa. Memorandum Opinion by Justice Benavides. The docket page with attorney information is found here.