Lack of pricing in contract version approved by City Council held to mean contract was not formally adopted so no waiver of immunity exists

Western Oilfields Supply Company D/B/A Rain for Rent v. City of Anahuac, 01-14-00468-CV (Tex. App. – Houston [1st Dist.] March 10, 2015).

This is a breach of contract case where the Houston Court of Appeals affirmed the dismissal of the Plaintiff’s claims based on governmental immunity.

In September 2008, Hurricane Ike damaged Anahuac’s municipal water treatment plant, and the plant became inoperable.  The City entered into a rental agreement as Rain for Rent asserted it could provide pumping equipment for a water filtration system on a temporary basis until the municipal plant became operational. After several months of operation the City became past due on the account giving rise to Rain for Rent’s breach of contract claim. The trial court granted the City’s plea to the jurisdiction and Rain for Rent appealed.

The key issue whether the City properly adopted and agreed to the terms of the contract via council vote. The document presented to the City Council contained many essential terms but did not contain any pricing. The motion was made to “go with” Rain for Rent but the pricing terms were not discussed or incorporated. The portion of the contract which contained pricing was prepared after the City Council meeting authorizing the use of Rain for Rent and then signed by the City administrator. In other words, the pricing was never expressly approved by the City Council, but was added to the contract later. And since the “ultimate pricing provision” is an essential term of a written agreement, the entire agreement was never formally approved by the City Council. The signature of the City administrator afterwards does not save the contract, since such authorization was never given to the City administrator. Acceptance of equipment and partial payment also does not save the contract as such a holding would equate to waiver-by-conduct which is not permitted in this case. The lack of City Council approval of the price quote during its meeting was an undisputed fact.  Since a properly executed and authorized contract is essential to trigger the waiver of immunity, the trial court properly granted the plea.

If you would like to read this opinion click here. Panel: Chief Justice Radack, Justice Bland, and Justice Huddle.  Memorandum Opinion by Justice Bland.  The attorney listed for the City is Richard Guy Baker.  The attorney listed for Rain for Rent is Julia Anderson Cook.