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holding that a college district's governmental immunity was not waived on a claim for breach of a security services contract that was terminated prematurely where plaintiff sought damages for work it "should have performed"
Summary of this case from La Joya Indep. Sch. Dist. v. TrevinoOpinion
NUMBER 13-16-00473-CV
03-01-2018
TEXAS SOUTHMOST COLLEGE DISTRICT, Appellant, v. FLORES INVESTMENTS, INC., D/B/A AMERICAN INVESTIGATIONS & SECURITY INTERNATIONAL, Appellee.
On appeal from the County Court at Law No. 2 of Cameron County, Texas.
MEMORANDUM OPINION
Before Justices Contreras, Benavides, and Longoria
Memorandum Opinion by Justice Benavides
This is an interlocutory appeal from an order denying a plea to the jurisdiction filed by appellant Texas Southmost College (TSC), a/k/a Texas Southmost College District. By its sole issue, TSC asserts the trial court erred in denying the plea. We reverse and remand.
I. BACKGROUND
In the fall of 2013, TSC contacted appellee Flores Investments, Inc., a/k/a American Investigations and Security International (Flores) about an immediate need for security officers. TSC and Flores entered into a contract on November 1, 2013 for a term of 303 days, ending on August 31, 2014. The contract contained a provision stating that the contract would automatically renew until it was terminated by written notice thirty days before the end of the term.
The contract between TSC and Flores renewed on August 31, 2014, and again on June 30, 2015, with a specific ending date of April 28, 2016, for a term of 303 days. According to Flores's petition, it received information that TSC had put out a notice for bids in June of 2015 and another security contract was awarded to American Surveillance Company.
American Surveillance Company intervened in the suit at the trial court, but is not a party to this appeal.
Flores contends that TSC continued to utilize its security services until October 2015, when Flores received notice that TSC would cease using its services within thirty days. Despite this alleged notice, TSC requested security services from Flores through written requests, although in a lesser capacity, up until December 11, 2015, when Flores received an e-mail from Randy Paredes, the security representative of TSC, stating that December 11, 2015 was the last working day for Flores. Flores's security services were not utilized after December 11, 2015.
Based on the pleadings, Flores contends it received this notice from an unknown party.
TSC continued to pay the invoices submitted by Flores for security services performed until December 11, 2015.
TSC sent Flores a letter terminating the contract prior to the renewal of the next term. Flores filed suit against TSC alleging a breach of the contract terms and requesting $316,076.47 in damages. Flores claimed there was a "balance due and owed" for money it "would have received" under the contract from December 2015 through April 2016 had TSC not breached the contract. TSC responded by denying Flores's allegations and filed a plea to the jurisdiction alleging it had sovereign immunity because Flores did not plead a cause of action that would waive immunity. The trial court denied TSC's plea to the jurisdiction. This interlocutory appeal followed.
II. PLEA TO THE JURISDICTION
By one issue, TSC alleges the trial court improperly denied its plea to the jurisdiction. TSC claims that Flores did not allege a cause of action that falls under a waiver of sovereign immunity.
A. Standard of Review
A plea to the jurisdiction is a dilatory plea; its purpose is "to defeat a cause of action without regard to whether the claims asserted have merit." Bland Indep. Sch. Dist. v. Blue, 34 S.W.3d 547, 554 (Tex. 2000). The plea challenges the trial court's subject matter jurisdiction over a pleaded cause of action. Tex. Dep't of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 226 (Tex. 2004); Cameron County, Tex. v. Ortega, 291 S.W.3d 495, 497 (Tex. App.—Corpus Christi 2009, no pet.).
Subject matter jurisdiction is a question of law; therefore, we review the trial court's ruling on a plea to the jurisdiction de novo. See Miranda, 133 S.W.3d at 228. Whether undisputed evidence of jurisdictional facts establishes a trial court's jurisdiction is also a question of law. Miranda, 133 S.W.3d at 226. However, disputed evidence of jurisdictional facts that also implicate the merits of the case may require resolution by the finder of fact. Id. When a plea to the jurisdiction challenges the pleadings, we determine if the pleader has alleged facts that affirmatively demonstrate the court's jurisdiction to hear the case. Id.
A plaintiff bears the burden of alleging facts that affirmatively demonstrate the trial court's jurisdiction. Tex. Dep't of Transp. v. Ramirez, 74 S.W.3d 864, 867 (Tex. 2002); State of Tex. Parks & Wildlife Dep't. v. Morris, 129 S.W.3d 804, 807 (Tex. App.—Corpus Christi 2004, no pet.). In deciding a plea to the jurisdiction, a court may not weigh the merits of the causes of action, but must consider only the plaintiff's pleadings and any evidence in the record pertinent to the jurisdictional inquiry. County of Cameron v. Brown, 80 S.W.3d 549, 555 (Tex. 2002); City of Laredo v. Nuno, 94 S.W.3d 786, 788 (Tex. App.—San Antonio 2002, no pet.). The appellate court must examine the pleader's intent and construe the pleading in the plaintiff's favor. Brown, 80 S.W.3d at 555; Ramirez, 74 S.W.3d at 867. However, a plea to the jurisdiction may be granted without allowing the plaintiff to amend the pleading if the pleading affirmatively negates the existence of jurisdiction. Brown, 80 S.W.3d at 555; Ramirez, 74 S.W.3d at 867.
B. Applicable Law and Discussion
1. Immunity and Waiver Under Local Government Code Section 271.152
Under the common-law doctrine of sovereign immunity, the state cannot be sued without its consent. City of Houston v. Williams, 353 S.W.3d 128, 134 (Tex. 2011) (citing Tooke v. City of Mexia, 197 S.W.3d 325, 331 (Tex. 2006)). Governmental immunity operates like sovereign immunity to afford similar protection to subdivisions of the state, including counties, cities, and school districts. LTTS Charter Sch., Inc. v. Palasota, 362 S.W.3d 202, 208 (Tex. App.—Dallas 2012, no pet.). Like sovereign immunity, governmental immunity has two components: (1) immunity from liability, which bars enforcement of a judgment against a governmental entity, and (2) immunity from suit, which bars suit against the entity altogether. Id. Governmental immunity from suit deprives a trial court of subject matter jurisdiction and is properly asserted in a plea to the jurisdiction. Id.
Like sovereign immunity, governmental immunity can be waived by statute. City of Houston, 353 S.W.3d at 134. The Legislature has made clear that a statute shall not be construed as a waiver of immunity unless it is effected by "clear and unambiguous language." TEX. GOV'T CODE ANN. § 311.034 (West, Westlaw through 2017 1st C.S.).
Section 271.152 of the local government code waives immunity to suit for qualifying local governmental entities for purposes of adjudicating a claim for breach of contract entered into by the local governmental entity. TEX. LOC. GOV'T CODE ANN. § 271.152 (West, Westlaw through 2017 1st C.S.); see City of Houston, 353 S.W.3d at 134. For the waiver of immunity to apply under section 271.152, three elements must be established: (1) the party against whom the waiver is asserted must be a "local governmental entity" as defined by the local government code, (2) the entity must be authorized by statute or the Constitution to enter into contracts, and (3) the entity must in fact have entered into a contract that is defined by local government code section 271.151(2). See City of Houston, 353 S.W.3d at 134-35. Relevant to the issue of waiver of immunity, a contract is defined as "a written contract stating the essential terms of the agreement for providing goods or services to the local governmental entity that is properly executed on behalf of the local governmental entity." See id. at 135 (citing TEX. LOC. GOV'T CODE ANN. § 271.151(2) (West, Westlaw through 2017 1st C.S.) (defining a "contract" for purposes of waiving immunity under this subchapter)).
Here, TSC is a local governmental entity and therefore, a contract for goods or services is required under law to waive immunity. See TEX. LOC. GOV'T CODE ANN. § 271.151(3)(B), (2)(B). TSC argues that Flores is not entitled to recover damages based on the limitations on adjudication awards contained in section 271.153 of the Local Government Code, and therefore, its immunity is not waived. See id. § 271.153 (West, Westlaw through 2017 1st C.S.). Section 271.153 states that:
(a) Except as provided in Subsection (c), the total amount of money awarded in an adjudication brought against a local governmental entity for breach of contract subject to this subchapter is limited to the following:
(1) the balance due and owed by the local governmental entity under the contract as it may have been amended, including any amount owed as compensation for the increased cost to perform the work as a direct result of owner-caused delays or acceleration;
(2) the amount owed for change orders or additional work the contractor is directed to perform by a local governmental entity in connection with the contract;
(3) reasonable and necessary attorney's fees that are equitable and just; and
(4) interest as allowed by law, including interest as calculated under Chapter 2251, Government Code.
(b) Damages awarded in an adjudication brought against a local governmental entity arising under a contract subject to this subchapter may not include:
(1) consequential damages, except as expressly allowed under Subsection (a)(1);
(2) exemplary damages; or
(3) damages for unabsorbed home office overhead.
Id.
(c) Actual damages, specific performance, or injunctive relief may be granted in an adjudication brought against a local governmental entity for breach of a contract described by Section 271.151(2)(B).
2. Were Damages "Due and Owed"?
Section 271.152 of the Local Government Contract Claims Act (the Act) states:
A local governmental entity that is authorized by statute or the constitution to enter into a contract and that enters into a contract subject to this subchapter waives sovereign immunity to suit for the purpose of adjudicating a claim for breach of the contract, subject to the terms and conditions of this subchapter.TEX. LOC. GOV'T CODE ANN. § 271.152 (emphasis added); See Zachry Const. Corp. v. Port of Houston Auth. of Harris Cty., 449 S.W.3d 106 (Tex. 2014). The "terms and conditions of this subchapter" referred to above are found within the Act's other nine sections, which include section 271.153 regarding limits on adjudication.
In order to determine if Flores's claims triggered a waiver of immunity, we must first determine if the Agreement between the parties was a contract "subject to the Act." West Travis Cty. Pub. Util. Agency v. Travis Cty. Mun. Util. Dist. No. 12, No. 03-16-00880-CV, ___ S.W.3d ___, 2017 WL 3902625, *3 (Tex. App.—Austin 2017, no pet. h.). We determine as defined in section 271.151(2) of the local government code, there was a contract between TSC and Flores. See TEX. LOC. GOV'T CODE ANN. § 271.151(2).
Even so, "we must determine whether the remedies that [Flores] seeks are recoverable under the Act." West Travis Cty., ___S.W.3d ___, 2017 WL 3902625, at 3. A negative answer to either question signifies that the Legislature has not waived TSC's sovereign immunity and that the trial court improperly denied TSC's plea to the jurisdiction. See id. It is "axiomatic that a 'wavier of immunity must be clear and unambiguous.'" Id. At *4 (quoting Tooke, 197 S.W.3d at 333). "[A]ny ambiguity must be resolved in favor of retaining immunity." Id. (citing Wichita Falls State Hosp. v. Taylor, 106 S.W.3d 692, 697 (Tex. 2003)).
"At common law, actual damages are either 'direct' or 'consequential.'" Baylor Univ. v. Sonnichsen, 221 S.W.3d 632, 636 (Tex. 2007) (quoting Arthur Anderson & Co. v. Perry Equip. Corp., 945 S.W.2d 812, 816 (Tex. 1997)). "Consequential damages are defined as 'those damages which result naturally, but not necessarily' from the defendant's wrongful acts." Kansas City S. v. Port of Corpus Christi Auth. of Nueces Cty., 305 S.W.3d 296, 307 (Tex. App.—Corpus Christi 2009, no pet.) (quoting Sonnichsen, 221 S.W.3d at 636). "Direct damages, on the other hand, compensate for the loss that is the necessary and usual result of the act." Id.
Attached to its pleading, Flores submitted a copy of the Agreement between TSC and Flores, as well as invoices claiming that a balance was "due and owed" to Flores. "A 'balance due and owed. . .under the contract' is simply the amount of damages for breach of contract payable and unpaid." Zachry Const, 449 S.W.3d at 111. TSC argues that Flores cannot defeat the immunity provision because the damages Flores claimed are for services never requested or performed, no balance was "due and owed," and therefore, no damages are recoverable under the Act. See TEX. LOC. GOV'T CODE ANN. § 271.151-.160 (West, Westlaw through 2017 1st C.S.)
Based on the contract attached to the pleadings, TSC was required to submit work requests in writing to Flores. Contained in the contract was a fee schedule (Article 10) that laid out the amounts each type of employee was to be paid. Nothing in the Agreement made Flores TSC's exclusive security services provider nor did it guarantee a minimum number of hours to Flores. Article 5 of the contract stated "This constitutes the entire Agreement. All statements, promises, warranties, and representations not contained in this Agreement are excluded. This Agreement may only be amended in writing by authorized representatives. Neither party shall assign its rights or delegate its obligations without the prior written consent of the other." Therefore, we assume the contract contained all provisions the parties had agreed on.
In a similar case, Tooke v. City of Mexia, the Tookes sued the City of Mexia for breach of contract and sought recovery for "lost profits they would have made had the contract continued—consequential damages excluded from recovery under [Section 271.153]." Zachry Const, 449 S.W.3d at 108 (citing Tooke, 197 S.W.3d at 346). "Even though the Tookes' contract claim fell within Section 271.152, [the Texas Supreme Court] concluded—because they did not 'claim damages within [Section 271.153's] limitations'—that the City's immunity from suit on the Tookes' claim has not been waived.'" Id. (quoting Tooke, 197 S.W.3d at 346). "This was true even though the Tookes might have proved that the City breached the contract." Id.
In reviewing the multiple pages of invoices attached to the live pleadings, we observe that Flores repeatedly billed TSC for work hours "cut." TSC argues that the request for work, as per the contract, was to be submitted in writing to Flores, and without a written submission, work was not to be performed. Flores states that it billed for work that "should have been performed"; therefore, it is entitled to the wages being considered "due and owed."
Wavier of immunity language is clear and applies only to the balance due and owed by the local governmental entity under the contract as it may have been amended, including any amount owed as compensation for the increased cost to perform the work as a direct result of owner-caused delays or acceleration. See TEX. LOC. GOV'T CODE ANN. § 271.151 (emphasis added). Here, because TSC did not request the work Flores is attempting to bill for, the damages are not "direct damages" or "lost profits" and, therefore, are not a balance that is "due and owed." See id. When the only damages claimed are precluded by Section 271.153, immunity is not waived. See Zachry Const., 449 S.W.3d at 110. Flores does not show a waiver of sovereign immunity based on its pleading because the damages requested are not "due and owed." Therefore, the trial court erred in denying TSC's plea to the jurisdiction. We affirm TSC's sole issue.
III. CONCLUSION
We reverse the trial court's denial of TSC's plea to the jurisdiction and render an order granting the plea to the jurisdiction.
GINA M. BENAVIDES,
Justice Delivered and filed the 1st day of March, 2018.