City of San Antonio v. Casey Industrial, Inc. ( 2014 )


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  •                                 Fourth Court of Appeals
    San Antonio, Texas
    MEMORANDUM OPINION
    No. 04-14-00429-CV
    CITY OF SAN ANTONIO
    acting through City Public Service Board of San Antonio a/k/a CPS Energy,
    Appellant
    v.
    CASEY INDUSTRIAL, INC.,
    Appellee
    From the 408th Judicial District Court, Bexar County, Texas
    Trial Court No. 2008-CI-06252
    Honorable Michael E. Mery, Judge Presiding
    Opinion by:       Patricia O. Alvarez, Justice
    Sitting:          Catherine Stone, Chief Justice
    Sandee Bryan Marion, Justice
    Patricia O. Alvarez, Justice
    Delivered and Filed: December 31, 2014
    AFFIRMED
    Appellant CPS Energy 1 was sued by Appellee Casey Industrial, Inc. for various causes of
    action including breach of contract. In its defense, CPS Energy argued its governmental immunity
    is not waived for Casey’s claims, and it moved to dismiss Casey’s suit. The trial court denied CPS
    Energy’s plea to the jurisdiction, and it sought this interlocutory appeal. Because Casey met its
    burden to show CPS Energy’s immunity is waived by the Local Government Code, and CPS
    1
    Appellant identifies itself as the City of San Antonio acting through the City Public Service Board of San Antonio
    (CPS Energy).
    04-14-00429-CV
    Energy failed to meet its burden to conclusively disprove any essential element of subject matter
    jurisdiction, we affirm the trial court’s order.
    BACKGROUND
    In August 2004, CPS Energy contracted with Casey and Wheelabrator Air Pollution
    Control, Inc., to add pollution control systems to one of CPS Energy’s coal-fired power stations.
    City of San Antonio ex rel. City Pub. Serv. Bd. of San Antonio v. Casey Indus., Inc., 
    381 S.W.3d 589
    , 591 (Tex. App.—San Antonio 2012, pet. denied). After some disputes between the parties,
    Casey sued CPS Energy for, inter alia, breach of contract and quantum meruit. 
    Id. Casey moved
    for partial summary judgment on the ground that the three-party contract was void and its quantum
    meruit claim should be tried. 
    Id. The trial
    court granted Casey’s motion, 
    id., but this
    court reversed the judgment, 
    id. at 596–
    97. We concluded the contract was not void, dismissed Casey’s quantum meruit claim for want
    of jurisdiction, and remanded the cause to the trial court. 
    Id. After remand,
    CPS Energy moved to dismiss Casey’s breach of contract claim. CPS
    Energy asserted Casey’s claims are outside the contract, its immunity from suit is not waived for
    an “extra-contractual” claim, and Casey’s claims must be dismissed. The trial court denied CPS
    Energy’s plea to the jurisdiction, and CPS Energy appeals.
    GOVERNMENTAL IMMUNITY
    The common-law doctrine of governmental immunity shields political subdivisions of the
    State from suits for money damages. Ben Bolt-Palito Blanco Consol. Indep. Sch. Dist. v. Tex.
    Political Subdivisions Prop./Cas. Joint Self-Ins. Fund, 
    212 S.W.3d 320
    , 324 (Tex. 2006); Reata
    Const. Corp. v. City of Dall., 
    197 S.W.3d 371
    , 374 (Tex. 2006). However, the legislature has
    waived a local governmental entity’s immunity from suit in certain breach of contract claims.
    Zachry Const. Corp. v. Port of Hous. Auth. of Harris Cnty., No. 12-0772, 
    2014 WL 4472616
    , at
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    04-14-00429-CV
    *4 (Tex. Aug. 29, 2014) (citing TEX. LOC. GOV’T CODE ANN. §§ 271.152, .153 (West 2005)). For
    a breach of contract claim to withstand a plea to the jurisdiction, “the claimant must plead facts
    with some evidentiary support that constitute a claim for which immunity is waived.” Zachry
    Const., 
    2014 WL 4472616
    , at *7.
    PLEA TO THE JURISDICTION
    If a plaintiff sues a governmental entity, the plaintiff bears the burden to plead facts that
    show the trial court’s subject matter jurisdiction over the governmental entity defendant. Tex.
    Dep’t of Parks & Wildlife v. Miranda, 
    133 S.W.3d 217
    , 226–28 (Tex. 2004); accord Tex. Dep’t of
    Transp. v. Jones, 
    8 S.W.3d 636
    , 638 (Tex. 1999) (per curiam). In response, the governmental
    entity may assert its immunity from suit in a plea to the jurisdiction. 
    Miranda, 133 S.W.3d at 225
    –
    26 (“Sovereign immunity from suit defeats a trial court’s subject matter jurisdiction and thus is
    properly asserted in a plea to the jurisdiction.”); accord Lubbock Cnty. Water Control & Imp. Dist.
    v. Church & Akin, L.L.C., 
    442 S.W.3d 297
    , 305 (Tex. 2014); 
    Jones, 8 S.W.3d at 638
    . In its plea,
    the defendant bears the burden “to establish that it is a governmental entity entitled to
    governmental immunity.” Church & 
    Akin, 442 S.W.3d at 305
    ; accord 
    Miranda, 133 S.W.3d at 228
    (requiring “the state to meet the summary judgment standard of proof”). If the governmental
    entity meets its burden, the burden shifts back to the plaintiff “to establish, or at least raise a fact
    issue on, a waiver of immunity.” Church & 
    Akin, 442 S.W.3d at 305
    ; accord 
    Miranda, 133 S.W.3d at 228
    . If the trial court denies the plea, the governmental entity may appeal. TEX. CIV. PRAC. &
    REM. CODE ANN. § 51.014(a)(8) (West Supp. 2014); Ben Bolt-Palito 
    Blanco, 212 S.W.3d at 324
    ;
    
    Miranda, 133 S.W.3d at 225
    –26.
    STANDARD OF REVIEW
    In appellate review of a trial court’s decision on a plea to the jurisdiction, the question of
    “whether [the trial] court has subject matter jurisdiction is a question of law” which we review de
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    04-14-00429-CV
    novo. Miranda, 
    133 S.W.3d 226
    (citing Tex. Natural Res. Conservation Comm’n v. IT-Davy, 
    74 S.W.3d 849
    , 855 (Tex. 2002)).
    The parties’ burdens for a plea to the jurisdiction “generally mirror[] that of a [traditional]
    summary judgment.” 
    Miranda, 133 S.W.3d at 228
    (referencing TEX. R. CIV. P. 166a(c)). After
    the plaintiff “allege[s] facts that affirmatively demonstrate a trial court’s subject matter
    jurisdiction,” 
    id. at 226,
    the governmental entity must “assert[] and support[] with evidence [the
    proposition] that the trial court lacks subject matter jurisdiction” 
    Id. at 228.
    If the governmental
    entity fails to conclusively disprove any essential element required to show waiver, it is not entitled
    to have its plea granted. See 
    id. (applying summary
    judgment burdens to a plea to the jurisdiction);
    Elliott-Williams Co., Inc. v. Diaz, 
    9 S.W.3d 801
    , 803 (Tex. 1999) (“The defendant as movant must
    disprove at least one of the essential elements of the plaintiff’s causes of action to prevail on
    summary judgment.”); cf. Mission Consol. Indep. Sch. Dist. v. Garcia, 
    372 S.W.3d 629
    , 642 (Tex.
    2012) (granting a plea to the jurisdiction on a claim because the governmental entity negated an
    essential element of plaintiff’s claim and plaintiff failed to raise a fact question on the negated
    element).
    The court must “take as true all evidence favorable to the nonmovant [and] indulge every
    reasonable inference and resolve any doubts in the nonmovant’s favor.” 
    Miranda, 133 S.W.3d at 228
    .
    ANALYSIS
    In its sole issue on appeal, CPS Energy asserts it is immune from Casey’s suit on two bases:
    first, because Casey’s claims “fall outside the contract and outside Section 271.152[’s]” waiver of
    immunity; and second, because Casey’s damages “are not recoverable under section 271.153.”
    Before we address CPS Energy’s arguments, we briefly review the statutory requirements
    pertaining to Casey’s claims and CPS Energy’s governmental immunity defense.
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    04-14-00429-CV
    A.     CPS Energy has Governmental Immunity
    In this matter, the City of San Antonio is acting through CPS Energy, and the City is a local
    governmental entity. See TEX. LOC. GOV’T CODE ANN. § 271.151(3)(A) (West 2005); Tooke v.
    City of Mexia, 
    197 S.W.3d 325
    , 345 (Tex. 2006) (“A local government entity is defined to include
    a municipality.”). As a local governmental entity, the City has immunity from suit unless its
    immunity is waived. See TEX. LOC. GOV’T CODE ANN. § 271.152; 
    Tooke, 197 S.W.3d at 332
    .
    B.     Applicable Immunity Waiver Law for Casey’s Suit
    Casey’s breach of contract claims arise under the contract CPS Energy and Casey entered
    into in August 2004. CPS Energy’s immunity was not waived by statute for such a claim before
    September 1, 2005.      See Zachry Const., 
    2014 WL 4472616
    , at *14 (Boyd, J., dissenting)
    (reviewing the history of local governmental entity immunity against contract actions). Therefore,
    sections 271.152 and 271.153 apply in this case. See Act of May 20, 2005, 79th Leg., R.S., ch.
    604, § 2, sec. 271.152, .153, 2005 Tex. Gen. Laws 1548, 1549 (West) (codified at TEX. LOC. GOV’T
    CODE ANN. §§ 271.152–.153) (applying sections 271.152 and 271.153 “to a claim that arises under
    a contract executed before the effective date of this Act only if sovereign immunity has not been
    waived with respect to the claim before the effective date of this Act”).
    C.     Section 271.152, “Waiver of Immunity to Suit for Certain Claims”
    1.      CPS Energy’s Argument
    As its first basis to show its immunity was not waived, CPS Energy asserts that Casey’s
    own pleadings affirmatively negate jurisdiction. CPS Energy insists that Casey’s pleadings admit,
    as a matter of law, the additional work Casey did for which it seeks damages was “outside the
    contract.” CPS Energy argues that the essential terms for the extra work Casey performed were
    not defined because it did not issue a change order authorizing the work; thus, there was no contract
    governing the work, and its immunity from suit is not waived by section 271.152.
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    04-14-00429-CV
    2.      Section 271.152’s Plain Language
    Section 271.152 states the conditions on which a local governmental entity’s immunity
    from suit is waived.
    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 (West 2005).
    3.      Requirements to Invoke Section 271.152’s Waiver
    We review the evidence pertaining to each of the statutory requirements necessary to
    invoke section 271.152’s waiver of immunity.
    •       The City of San Antonio is a local governmental entity. See TEX. LOC. GOV’T CODE
    ANN. § 271.152 (“local governmental entity” (emphasis added)).
    •       Acting through CPS Energy, it was authorized by statute to enter into a contract
    with Casey for the J.T. Deely power station modifications. See 
    id. (“authorized by
    statute . . . to enter into a contract” (emphasis added)); City of San Antonio ex
    rel. City Pub. Serv. Bd. of San Antonio v. Casey Indus., Inc., 
    381 S.W.3d 589
    , 596
    (Tex. App.—San Antonio 2012, pet. denied) (citing TEX. LOC. GOV’T CODE ANN.
    § 271.119 (“Design-Build Contracts for Facilities”)).
    •       It did so in August 2004. See TEX. LOC. GOV’T CODE ANN. § 271.152 (“enters into
    a contract” (emphasis added)); Casey 
    Indus., 381 S.W.3d at 596
    –97.
    •       In its pleadings, Casey (1) alleged that CPS Energy breached the August 2004
    contract and (2) provided evidence of the executed contract and affidavits
    supporting its allegations of breach. Casey also provided evidence that contract
    provisions under paragraph 14.1.2 include procedures for CPS Energy or Casey to
    modify the scope of work, change the performance schedule, and seek an increase
    or decrease in the D/B contractor’s compensation. It argued and pled evidence
    showing that it complied with the procedures to raise, discuss, and resolve a claim.
    See TEX. LOC. GOV’T CODE ANN. § 271.152 (“claim for breach of contract”
    (emphasis added)).
    Specifically, Casey argued contract section 14.1.2 authorized Casey to seek additional
    compensation. Article 14 addresses “Default and Termination”; section 14.1 is titled “Default by
    [Casey] or Wheelabrator”; the concluding sentence of section 14.1.2 reads as follows:
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    04-14-00429-CV
    Provided [Casey] is not in Default itself, a Default by Wheelabrator under Section
    14.1.1, which results in an impairment or frustration of [Casey’s] Work through no
    fault of [Casey], shall be considered a “Force Majeure” event and will entitle
    [Casey] to request an extension of time and/or additional compensation by Notice
    to [CPS Energy] as required in Section 9:1.3.
    Casey pointed the trial court to CPS Energy’s January 3, 2006 letter declaring Wheelabrator was
    in default under the contract. Casey pled evidence, including an affidavit from one of its officers,
    to show it complied with the contract’s requirements to request additional compensation.
    Having reviewed the evidence in the light most favorable to Casey, we conclude Casey
    met its burden to show CPS Energy’s immunity was waived. See Zachry Const., 
    2014 WL 4472616
    , at *7; 
    Miranda, 133 S.W.3d at 228
    .
    4.      CPS Energy’s Evidence to Rebut Waiver of Immunity
    Because Casey met its initial burden, the burden shifted to CPS Energy to conclusively
    disprove a waiver of its immunity from suit. See 
    Miranda, 133 S.W.3d at 226
    –28; Elliott-Williams
    Co., Inc. v. Diaz, 
    9 S.W.3d 801
    , 803 (Tex. 1999) (“The defendant as movant must disprove at least
    one of the essential elements of the plaintiff’s causes of action to prevail on summary judgment.”).
    To overcome Casey’s evidence that CPS Energy’s immunity was waived, CPS Energy argued and
    pled evidence that Casey did not comply with what it asserts are the applicable contract procedures,
    e.g., 9.1 Change Orders. It contended that the only contractual procedure to modify Casey’s scope
    of work was the change order provision, Casey never requested a change order, it never issued
    one, and any additional work Casey did was not covered by a contract. Thus, CPS Energy argues,
    without a valid contract for the additional work, section 271.152 does not apply and its immunity
    was not waived.
    Viewing the parties’ evidence in the light most favorable to Casey, 
    Miranda, 133 S.W.3d at 228
    , we conclude CPS Energy failed to meet its burden to disprove as a matter of law any
    essential element of section 271.152, see Elliott-Williams 
    Co., 9 S.W.3d at 803
    ; cf. Mission Consol.
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    04-14-00429-CV
    Indep. Sch. Dist. v. Garcia, 
    372 S.W.3d 629
    , 642 (Tex. 2012) (granting a plea to the jurisdiction
    on a claim because the governmental entity negated an essential element of plaintiff’s claim and
    plaintiff failed to raise a fact question on the negated element).
    Because “Section 271.152 uses Section 271.153 to further define to what extent immunity
    has been waived,” we next consider whether Casey’s claimed damages are of the type recoverable
    under section 271.153. See 
    id. D. Section
    271.153, “Limitations on Adjudication Awards”
    As its second basis to show it is immune from suit, CPS Energy argues Casey’s damages
    are not recoverable under section 271.153. Section 271.153 2 reads in its entirety as follows:
    (a) The total amount of money awarded in an adjudication brought against a local
    governmental entity for breach of a 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; and
    (3) interest as allowed by law.
    (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.
    2
    Section 271.153 was amended in 2009, 2011, and 2013, but the changes apply “only to a claim that arises under a
    contract executed on or after the effective date of [the respective] Act.” See, e.g., Act of May 21, 2009, 81st Leg.,
    R.S., ch. 1266, § 17, 2009 Tex. Gen. Laws 4006, 4008 (West) (amending, inter alia, TEX. LOC. GOV’T CODE ANN.
    § 271.153). Each revising act applied the former law to contracts executed before its effective date. See, e.g., 
    id. -8- 04-14-00429-CV
    Act of May 20, 2005, 79th Leg., R.S., ch. 604, § 1, sec. 271.153, 2005 Tex. Gen. Laws 1548, 1549
    (amended 2009, 2011, 2013) (current version at TEX. LOC. GOV’T CODE ANN. § 271.153 (West
    Supp. 2014)).
    CPS Energy argues that even if its governmental immunity were waived by section
    271.152, its immunity from suit was not waived because Casey’s claimed damages are not those
    allowed by section 271.153. Citing section 271.153, CPS Energy argues there was no balance due
    or owed because Casey had been paid in full, CPS Energy did not sign any change orders, and the
    evidence conclusively proves it was not responsible for any delays.
    In response, Casey pled evidence showing Wheelabrator, acting as CPS Energy’s
    contractor, caused project delays, Casey cites the contract provisions that allow it to seek additional
    compensation, e.g., 14.1.2, and it provides evidence that it complied with those provisions. Casey
    pled evidence to show there is a balance due and owed to it by CPS Energy for the retainage—
    which CPS Energy admits it has not paid. See TEX. LOC. GOV’T CODE ANN. § 271.153(a)(1)
    (allowing damages for “balance due and owed” from “owner-caused delays”). Casey also argues
    CPS Energy owes it damages for the additional work CPS Energy required it to perform on the
    power station. See 
    id. § 271.153(a)(2)
    (allowing damages for “additional work the contractor is
    directed to perform”). Casey contends the additional work it did was work defined in the contract
    but not within Casey’s original scope of work. Casey also asserts the contract terms required it to
    do the work or pay liquidated damages in the amount of approximately $150,000 per day.
    Viewing the parties’ evidence in the light most favorable to Casey, 
    Miranda, 133 S.W.3d at 228
    , we conclude it shows Casey is suing CPS Energy on a breach of contract claim arising
    from a contract with CPS Energy for damages it claims CPS Energy owes it for additional work
    CPS Energy required it to do. See TEX. LOC. GOV’T CODE ANN. § 271.153(a). Thus, we conclude
    Casey met its burden to show its claimed damages are recoverable under section 271.153. See id.;
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    04-14-00429-CV
    Zachry Const., 
    2014 WL 4472616
    , at *7 (requiring the claimant to “plead facts with some
    evidentiary support that constitute a claim for which immunity is waived”); 
    Miranda, 133 S.W.3d at 228
    .
    On the other hand, we conclude CPS Energy failed to meet its burden to prove as a matter
    of law that Casey’s damages are not recoverable under section 271.153. See Mission Consol.
    Indep. Sch. 
    Dist., 372 S.W.3d at 642
    (requiring, for its plea to the jurisdiction to be granted, the
    governmental entity defendant to conclusively negate at least one essential element of the
    claimant’s claim).
    CONCLUSION
    Having reviewed all the evidence in the light most favorable to Casey, 
    Miranda, 133 S.W.3d at 228
    , we conclude Casey met its burden to “plead facts with some evidentiary support
    that constitute a claim for which immunity is waived.” See Zachry Const., 
    2014 WL 4472616
    , at
    *7. To the contrary, CPS Energy failed to meet its burden to conclusively negate any essential
    element of subject matter jurisdiction. See 
    Miranda, 133 S.W.3d at 228
    ; Elliott-Williams 
    Co., 9 S.W.3d at 803
    .
    Therefore, we overrule CPS Energy’s issue and affirm the trial court’s order.
    Patricia O. Alvarez, Justice
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