Corpus Christi Independent School District v. Tl Mechanical ( 2012 )

NUMBER 13-11-00624-CV
COURT OF APPEALS
THIRTEENTH DISTRICT OF TEXAS
CORPUS CHRISTI - EDINBURG
CORPUS CHRISTI INDEPENDENT SCHOOL DISTRICT, Appellant,
v.
TL MECHANICAL, Appellee.
On appeal from the County Court at Law No. 4
of Nueces County, Texas.
MEMORANDUM OPINION
Before Chief Justice Valdez and Justices Garza and Vela
Memorandum Opinion by Justice Vela
This is an interlocutory appeal from a trial court order denying appellant, Corpus
Christi Independent School District's ("CCISD"), plea to the jurisdiction. CCISD raises a
single issue on appeal contesting the trial court's ruling. We affirm.
I. BACKGROUND
Appellee TL Mechanical and CCISD entered into a contract with respect to air
conditioning system renovations at Mary Carroll High School in Corpus Christi. After TL
Mechanical's bid had been accepted and the contract had been entered into, an issue
arose with respect to alleged deficiencies of the Carrier Corporation's equipment that was
being utilized, because Carrier was unable to provide factory installed ventilation controls
on the system. The evidence also reflected that Carrier was listed in the project
specifications as one of four acceptable equipment suppliers. The CCISD engineer in
charge of the project refused to accept the Carrier controls and required TL Mechanical to
use equipment provided by McQuay. As a result, TL Mechanical incurred an additional
$175,000 for purchase of the equipment. TL Mechanical filed suit against CCISD,
alleging that the school district breached its contract by not issuing a formal change order
or construction change directive, and sought, as damages, the additional costs
associated with utilizing the McQuay equipment. CCISD filed a plea to the jurisdiction,
which the trial court denied after a hearing. CCISD then filed this interlocutory appeal.
II. STANDARD OF REVIEW
A plea to the jurisdiction based on governmental immunity challenges a trial court's
subject matter jurisdiction. State v. Holland, 221 S.W.3d 639, 642 (Tex. 2007). We
consider a trial court's ruling on a plea to the jurisdiction under a de novo standard. Id.
Generally, a plaintiff bears the burden to plead facts affirmatively demonstrating
subject matter jurisdiction. Id. A plea to the jurisdiction can challenge either the
sufficiency of the plaintiff's pleadings or the existence of jurisdictional facts. Tex. Dept. of
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Parks & Wildlife v. Miranda, 133 S.W.3d 217, 226–27 (Tex. 2004). When a plea attacks
the pleadings, the issue turns on whether the pleader has alleged sufficient facts to
demonstrate subject matter jurisdiction. Id. In such cases, we construe the pleadings
liberally in the plaintiff's favor and look for the pleader's intent. City of Carrollton v.
Singer, 232 S.W.3d 790, 795 (Tex. App.—Fort Worth 2007, pet. denied). When the
pleadings neither allege sufficient facts nor demonstrate incurable defects, the plaintiff
should usually be afforded an opportunity to amend. County of Cameron v. Brown, 80
S.W.3d 549, 555 (Tex. 2002). However, if the pleadings affirmatively negate jurisdiction,
then the plea to the jurisdiction may be granted without leave to amend. Id. When a
plea to the jurisdiction challenges the existence of jurisdictional facts, a court may
consider evidence in addressing the jurisdictional issues. Miranda, 133 S.W.3d at 227.
If the evidence reveals a question of fact on the jurisdictional issue, the trial court cannot
grant the plea, and the issue must be resolved by a fact finder. Id. at 227–28.
Governmental immunity encompasses two components: immunity from liability
and immunity from suit. Tooke v. City of Mexia, 197 S.W.3d 325, 332 (Tex. 2006).
When a governmental entity enters into a contract, it waives immunity from liability under
the terms of the contract; however, entering into a contract does not also act as a waiver
of immunity from suit. Id. A waiver of immunity from suit may occur, even in the breach
of contract context, only if the legislature has waived such immunity by clear and
unambiguous language. Id. at 332–33.
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III. ANALYSIS
CCISD's primary arguments are that TL Mechanical did not have an obligation to
issue a formal change order or construction change directive, thus there was no breach of
contract and the damages that TL Mechanical seeks are not recoverable.
Section 271.152 of the local government code provides a limited waiver of
immunity for local governmental entities that enter into certain contracts. Sharyland
Water Supply Corp. v. Alton, 354 S.W.3d 407, 411 (Tex. 2011); see TEX. LOC. GOV'T CODE
ANN. § 271.152 (West 2005). The statute provides:
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. According to its plain language, the statute
unambiguously waives a governmental entity's immunity from suit for breach of certain
written contracts. Ben Bolt–Palito Blanco Consol. Indep. Sch. Dist. v. Tex. Political
Subdivs. Prop./Cas. Joint Self–Ins. Fund, 212 S.W.3d 320, 327 (Tex. 2006). The
Legislature enacted section 271.152 "to loosen the immunity bar so that all local
governmental entities that have been given or are given the statutory authority to enter
into contracts shall not be immune from suits arising from those contracts." Id.
For section 271.152's waiver of immunity to apply, however, three elements must
be established: (1) the party against whom the waiver is asserted must be a "local
governmental entity" as defined by section 271.151(3); (2) the entity must be authorized
by statute or the Constitution to enter into contracts; and (3) the entity must in fact have
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entered into a contract that is "subject to this subchapter," as defined by section
271.151(2). TEX. LOC. GOV'T CODE ANN. §§ 271.151–.152. A contract "subject to this
subchapter" 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." Id. § 271.151(2).
Here, all three elements are present. First, waiver of immunity in section 271.152
applies to "local governmental entities," which include municipalities, public school and
junior college districts, and various special-purpose districts and authorities. Id. §
271.151(3). There is no dispute that CCISD is a public school district expressly included
in the definition of a local government entity. Second, CCISD has statutory authority to
enter into contracts pursuant to section 11.1511(c)(4) of the Texas Education Code,
which authorizes an independent school district's board of trustees to "enter into contracts
as authorized under this code or other law and delegate contractual authority to the
superintendent as appropriate." TEX. EDUC. CODE ANN. § 11.1511(c) (4) (West Supp.
2011).
The third element requires the parties to enter into a "contract subject to this
subchapter." Id. § 271.151(2). In order for a contract to be subject to section 271.152's
waiver of immunity, it must: (1) be in writing, (2) state the essential terms of the
agreement, (3) provide for goods or services, (4) to the local governmental entity, and (5)
be executed on behalf of the local governmental entity. Id. The construction contract
between TL Mechanical and CCISD, signed by both the president and secretary of the
school board, its attorney and its superintendent, was attached to TL Mechanical's
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pleadings. It is a contract for goods and services to be provided to CCISD. This
jurisdictional evidence, therefore, reflects "a written contract stating the essential terms of
the agreement for providing goods or services to the local government entity" that was
"properly executed on behalf of the local governmental entity." Id. § 271.151.
Section 271.153 of the statute limits the damages that can be awarded. See id. §
271.153. The purpose of section 271.153 is to limit the amount due by a governmental
agency on a contract once liability has been established, not to foreclose the
determination of whether liability exists. Kirby Lake Dev. Ltd. v. Clear Lake City Water
Auth., 320 S.W.3d 829, 838 (Tex. 2010). In City of Houston v. Southern Electrical
Services, Inc., the court stated that, in a case involving a plea to the jurisdiction, the court
does not adjudicate the substance of the case. 273 S.W.3d 739, 744 (Tex.
App.—Houston [1st Dist.] 2008, pet. denied). Rather, we determine if a court has the
power to adjudicate a case. Id. "Section 271.153 does not retract the privilege granted
in section 271.152 to adjudicate the claim for breach, if a plaintiff alleges facts to support
such a claim and seeks recovery only of damages to the extent allowed." Id. The
jurisdictional plea should be decided without delving into the merits of the case. Bland
Indep. Sch. Dist. v. Blue, 34 S.W.3d 547, 554 (Tex. 2000).
While CCISD urges that TL Mechanical has not alleged a breach of contract, the
jurisdictional evidence reflected that Carrier was listed in the project specifications as one
of four acceptable equipment suppliers. TL Mechanical urged in its pleadings that
CCISD never issued a formal change order or construction change directive to
accommodate the deviation from the original bid. TL Mechanical asserted that the
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failure to issue the formal change order cost TL Mechanical the price difference of the
upgraded material. Thus, the pleadings reflect that TL Mechanical is filing suit for breach
of contract. CCISD's argument, in fact, goes to the merits of the case rather than the
jurisdictional issue. Whether CCISD can be held responsible for any alleged breach of
the parties' contract, however, is not within the scope of the governmental immunity
question presented here. See e.g., City of Houston v. Clear Channel Outdoor, Inc., 233
S.W.3d 441, 446 (Tex. App.—Houston [14th Dist.] 2007, no pet.) (determining that
whether the City's offer to purchase the plaintiff's billboard was binding under the City
charter implicated the merits of the case and did not defeat waiver of immunity.); see also
LaMarque Ind. School Dist. v. Healthy Resources Enter., Inc., No. 14-10-01269-CV, 2011
WL 5926179, at *4 (Tex. App.—Houston [14th Dist.] Nov. 29, 2011, no pet.) (mem. op.)
(holding that whether the school district could be held liable for breach of agreement for
failure to comply with specific terms applicable to amendment or work orders was not
within the scope of the question of governmental immunity).
CCISD also argues that the damages sought are not recoverable because TL
Mechanical is seeking lost profits. However, TL Mechanical pleaded that the "amount of
damages sought does not include any amount for 'lost profits.'" The damages it seeks
are based on the price difference between the Carrier equipment and the McQuay
equipment. These are direct damages stemming from the alleged breach.
Thus, we hold that TL Mechanical alleged facts sufficient to invoke the
government's waiver of immunity for the purpose of adjudicating a breach of contract
claim under local government code section 271.152. CCISD's issue is overruled.
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IV. CONCLUSION
Having overruled CCISD's sole issue, we affirm the trial court's order denying the
plea to the jurisdiction.
ROSE VELA
Justice
Delivered and filed the
29th day of March, 2012.
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