County’s immunity waived for both delay and disruption damages in breach of contract suit says 5th Court of Appeals

County of Galveston, Texas v. Triple B Services, LLP 01-15-00565-CV (Tex. App.- Houston[1st Dist.], May 26th 2016)

This is a contractual immunity case involving a road construction project where the First District Court of Appeals affirmed-in-part and reversed-in-part the denial of a plea to the jurisdiction.

Triple B Services, LLP filed a lawsuit against Galveston County in a dispute over a road-expansion project. Under the contract, the County was responsible for moving certain utilities. Although Triple B’s plans for the construction project anticipated that the County would move the utilities by a particular date, the County did not move the utilities until almost a year later.  Triple B contends that it incurred additional costs to timely complete the project as a direct result of the County’s alleged delay in moving the utilities. After completing the expansion on time, Triple B sued the County for breach of contract. The County filed a plea to the jurisdiction which the trial court denied. The County appealed.

The Legislature has provided a limited waiver of immunity for breach-of-construction-contract lawsuits against a county. Tex. Loc. Gov’t Code §262.007 (West 2005). Although Triple B’s expert testified to costs that Triple B incurred “as a direct result of County-caused delays in completing utility adjustments,” he explicitly denied that the damages were “delay damages” as understood in construction law. He distinguished between “delay” damages and “disruption” damages. The County contends that the phrase “owner-caused delays” in §262.007(b)(1) of the Texas Local Government Code limits the statute’s application to “delay damages,” and, therefore, does not include “disruption damages.” And, because Triple B’s expert testified that Triple B was not seeking “delay damages,” the County asserts it remains immune. Further, the County asserts the damages Triple B alleges are consequential damages, for which immunity is not waived. However, the court disagreed and held §262.007 allows a claim for disruption damages against a county if the disruption damages directly result from the county’s delay in performing its contractual obligations. Based on the limited record, the court held the alleged damages could also be the “direct result” of the County’s failure to timely act. Further, the Texas Prompt Pay Act (“PPA”) applies solely to contracts between a vendor and a government entity. Based on the plain text of §262.007, a county may be sued for late payment and “interest as allowed by law.” The interest sought by Triple B is “interest allowed by law”—namely, allowed by the PPA—for which immunity is waived. Finally, while Chapter 262 waives immunity for attorney’s fees, Triple B failed to properly plead a basis for receiving such fees. The statute is a waiver of immunity and not a basis for a substantive claim for attorney’s fees. As such the plea should have been granted as to such fees.

To read the opinion click here. Panel consists of Justices Bland, Brown, and Lloyd. Opinion issued by Justice Brown. Attorneys for the County of Galveston are Robert Barron Boemer, Paul Ready and Barry C. Willey.  Attorneys for Triple B Services, LLP are William Jason Walker and William Bart Davis.