Because defendant had to bring compulsory counter-claims to City’s lawsuit, such claims were “germane” to original claims and immunity is waived

Archer Group, LLC and John Christian Archer II v. City of Anahuac, 01-14-00664-CV (Tex. App. – Houston [1st Dist.], August 4, 2015)

Archer appealed the granting of a plea to the jurisdiction in favor of the City of Anahuac (“the City”), the Anahuac Municipal Development District (“AMDD”), and the Chambers-Liberty Counties Navigation District 2 (“CLCND”) (collectively, “Anahuac Entities”) in which the First District Court of Appeals reversed and remanded.

After Hurricane Ike, the City engaged in recovery efforts, including the marina and needed funding assistance.  The Anahuac Entities contracted with Archer, a consulting firm, to obtain federal grants to assist in recovery. The Anahuac Entities entered into an interlocal agreement to share the cost of Archer’s services and listed Archer as a service provider, but required an addendum be signed by Archer. Archer never signed the addendum, even though he accepted initial payments from each entity. The Anahuac Entities sued Archer for the return of the initial payments.  Archer filed counterclaims asserting that even though the City Council never approved the funds, the Council approved the services initially (albeit with addendums) and once Archer was paid, Archer paid its grant writer to begin the process.  In other words, Archer already spent the money starting the project. Archer’s counter-claims asserted monetary damages. The Anahuac Entities filed pleas to the jurisdiction which the trial court granted. Archer appealed.

The crux of this case is whether Archer’s counter-claims are “germane to, connected to, and properly defensive to” the Anahuac Entities initial claims, thereby waiving governmental/sovereign immunity. The First Court of Appeals has held the meaning of the term “germane” in this context is “not narrower in scope than the test for a compulsory counterclaim” which is germane to the original suit by its very nature. The Anahuac Entities sought the return of $15,000 plus exemplary damages for the grant writing services. Archer alleges he spent the money and incurred costs associated with the contract for services. Archer’s claims are based on the same occurrences and legal question as the Anahuac Entities’ suit which makes it germane to the initial claims. In fact, they are compulsory counter-claims, so Archer was required to bring them in response to the Anahuac Entities’ suit. The Anahuac Entities argued the Interlocal Agreement was never ratified so no waiver exists; however, that is a merit-based argument inappropriate for analyzing a plea to the jurisdiction. As a result, the court reversed and remanded.

If you would like to read this opinion click here.  Panel: Justice Keyes, Justice Higley and Justice Brown. Opinion by Justice Keyes. The attorney listed for the City is Richard Guy Baker.  The attorney listed for John Archer is Monique Giselle Pfullmann.  The attorney listed for the Archer Group, LLC is Marvin L. Morales.