DFW may have waived immunity regarding contract for credit-card fee analysis due to presence of “good faith” revision clause

Dallas/Fort Worth International Airport Board v. Vizant Technologies, LLC Formerly known as P.E. Systems, LLC (Tex. App— Dallas, December 15, 2017)

This is a contractual immunity case where the Dallas Court of Appeals affirmed-in-part and denied-in-part the Airport Board’s plea to the jurisdiction.

The Dallas/Fort Worth International Airport Board (“Board”) is a special purpose governmental entity separate from each of the cities making up its creation.  The Board delegated to its staff the ability to execute contracts on behalf of the Board up to $50,000 without Board approval. In 2012 staff retained Vizant Technologies, LLC, to analyze the Board’s credit-card processing costs. Its fees were based on the estimated reduction and savings achieved but was limited to $50,000. Vizant delivered the consulting services and by its calculations, it was due over $300,000. Pursuant to the “good faith effort” clause, Board staff submitted a request to the Board for a revised limit of $330,000, but the Board rejected the request. The Board paid Vizant’s $50,000 fee as specified in the agreement.  Vizant sued the Board for breach of contract, fraudulent inducement, fraud-in-the performance, promissory estoppel, and attorney’s fees. The Board filed a plea to the jurisdiction which was denied. The Board appealed.

First, the record shows the Board collects fees for processing credit-card payments in connection with its operation of an airport, something it is expressly authorized by statute to do.  The operation of an airport is expressly defined by statute as a governmental function.  As a result, the court rejected Vizant’s argument the contract was proprietary. However, secondarily, the contract was for services provided to that governmental entity and is expressly waived by Tex. Loc. Gov’t Code §§271.151-153. The Board asserts the contract was not properly executed on behalf of the Board since Vizant sought payment exceeding $50,000.  However, the “good faith” clause, under which Vizant focuses was breached, is not tied to a $50,000 limit by either the delegated authority or the contract. Construing the pleadings in Vizant’s favor, the court held the Legislature waived immunity for this contract. Next, the court agreed with the Board that it retains immunity for fraud, waiver-by-conduct and promissory-estoppel claims.

If you would like to read this opinion click here. Panel consists of Chief Justices Lang-Miers, Brown, and Boatright. Memorandum Opinion by Justice Boatright. To see the attorneys listed for the Appellants and Appellee click here.