Immunity waived in contract dispute even without change order says 4th Court of Appeals

City of San Antonio by/through CPS Energy v. Casey Industrial, Inc., 04-14-00429-CV (Tex. App. – San Antonio, December 31, 2014)

This is one of several cases involving contracts between CPS Energy (“CPS”), Casey Industrial Inc. (“Casey”) and Wheelabrator Air Pollution Control Inc., (“Wheelabrator”) involving a set of breach of contract claims. In this case the San Antonio Court of Appeals affirmed the denial of CPS’ plea to the jurisdiction holding Casey met its burden to hold immunity was waived.

In August 2004, CPS Energy contracted with Casey and Wheelabrator to add pollution control systems to one of CPS Energy’s coal-fired power stations. After a contract dispute Casey sued CPS Energy for breach and quantum meruit which already went through one appeal.  That case resulted in a declaration the contract was not void and no quantum meruit claim could go forward. CPS Energy moved to dismiss Casey’s breach of contract claim asserting it was an “extra-contractual” claim for which CPS maintained immunity. The trial court denied the motion and CPS appealed.

It was essentially accepted that the contract falls within the waiver of immunity found in Tex. Loc. Gov’t Code §§ 271.152 and 271.153 but only as to the contract’s terms and payments. CPS argued Casey did extra work not envisioned by the contract and CPS did not issue a change order to authorize it. Casey argued paragraph 14.1.2 allowed it to change the scope of work if Wheelabrator fell into default and could request additional compensation for the adjustments. Casey presented evidence via a CPS letter declaring Wheelabrator in default. The court agreed immunity was waved. As far as damages go, Casey’s original scope of work did not include the additional work, but such work was defined in the contract which Casey was attempting to compensate for due to Wheelabrator’s default. Casey further argued Wheelabrator, as the CPS general contractor, ordered it to do that additional work. Without much in the way of explanation, the court simply stated Casey established a waiver of immunity under the contract for this type of damages and CPS failed to conclusively establish otherwise. As a result the trial court properly denied the plea.

If you would like to read this opinion click here. Panel: Chief Justice Stone, Justice Marion and Justice Alvarez. Memorandum Opinion by Justice Alvarez. The attorneys listed for the City and CPS are Annalyn Garrett Smith and Judith Reed Blakeway.  The attorney listed for Casey Industrial Inc. is John Claiborne Howell