City of San Antonio v. Valemas, Inc. ( 2012 )

MEMORANDUM OPINION
No. 04-11-00768-CV
CITY OF SAN ANTONIO,
Appellant
v.
VALEMAS, INC.,
Appellee
From the 166th Judicial District Court, Bexar County, Texas
Trial Court No. 2007-CI-15772
Honorable David A. Berchelmann, Jr., Judge Presiding
Opinion by: Marialyn Barnard, Justice
Sitting: Karen Angelini, Justice
Phylis J. Speedlin, Justice
Marialyn Barnard, Justice
Delivered and Filed: June 13, 2012
AFFIRMED
This is an interlocutory appeal from the trial court’s order denying a plea to the
jurisdiction filed by appellant City of San Antonio (“the City”). On appeal, the City raises two
issues challenging the trial court’s denial. We affirm.
BACKGROUND
In 2005, the City entered into a contract with Valemas, Inc. (“Valemas”). Pursuant to the
contract, Valemas was to provide extensive landscaping renovation in Brackenridge Park.
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Valemas was to provide all machinery, labor, materials, and supervision for the project.
Valemas entered into subcontracts with numerous subcontractors and suppliers to perform work
on the Brackenridge Park project. The subcontractors included L. Payne Constructors (“Payne”).
Valemas began work on the project on January 27, 2005. According to Valemas, during
the course of the project, the City, among other things, delayed in obtaining necessary approvals
and permits, was slow in obtaining necessary amended drawings, mandated the use of specific
suppliers, and altered the scope of the project and increased the amount of work to be done.
Valemas claimed that as a result of the City’s acts and omissions, the contract price increased to
$2,552,200.17 and the contractual completion date of 250 days was impossible. The project
concluded on December 30, 2006. According to Valemas, the City’s actions resulted in
increased costs not only to Valemas, but to its subcontractors, including Payne. Valemas
claimed it and the subcontractors incurred damages for extra work, delay, downtime, additional
equipment charges, etc.
Valemas claimed the City refused to pay not only for the additional balance due because
of the delays and changes, but also refused to pay the balance on the original contract price. As a
result, Valemas was unable to pay Payne. In 2007, Valemas filed suit against the City alleging
breach of contract. In May 2010, Payne filed a plea in intervention and a cross-action, seeking
damages for breach of contract, or in the alternative quantum meruit or promissory estoppel.
The cross-action was originally against Valemas, but Payne then amended its intervention and
cross-action to include the City as a cross-defendant. The amendment of the cross-action came
after Valemas and Payne entered into a pass through agreement, which allows a contracting party
to assert a claim against the party with whom it contracted on behalf of another party who was
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not a party to the contract. However, in January 2011, Payne filed a notice of nonsuit as to the
City.
The matter then proceeded between Valemas and the City. After answering and asserting
numerous affirmative defenses, the City filed a plea to the jurisdiction. In its plea to the
jurisdiction, the City asserted Valemas’s suit had to be dismissed for lack of jurisdiction because
it was asserting a claim not on its own behalf, but on behalf of Payne under a “pass through
agreement,” 1 and there is no statutory waiver of immunity for such a claim.
The trial court held a hearing on the City’s plea. At that hearing, the City conceded that
under section 271.152 of the Texas Local Government Code, the City “waives sovereign
immunity to suit for adjudicating a claim for breach of contract subject to the terms and
conditions of Chapter 271.” The City asserted, however, that waiver was not applicable here
because even though Valemas brought the breach of contract suit, it was not, in actuality, seeking
to recover under its contract with the City, but was pursuing claims on behalf of Payne, who was
not a party to the contract, through a pass through agreement. Because Payne has no written
contract with the City, the City argued immunity was not waived under section 271.152 and the
trial court was without jurisdiction. Alternatively, the City argued the anti-assignment clause in
the contract precluded Valemas from asserting Payne’s breach of contract claim.
At the conclusion of the hearing, the trial court took the matter under advisement. On
October 24, 2011, the trial court signed an order denying the City’s plea to the jurisdiction. The
City then perfected this appeal.
1
Under a “pass through agreement,” a party agrees to pursue another party’s claim or claims against a third party.
See Interstate Contracting Corp. v. City of Dallas, 135 S.W.3d 605, 610 (Tex. 2004). Such claims are referred to as
pass through claims, which are claims (1) by a party who has suffered damages, (2) against a responsible party with
whom it has no contract, and presented through an intervening party who has a contractual relationship with both.
Id. Typically, the contractor remains liable to the subcontractor, but only to the extent the contractor receives
payment from the owner. Id.
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ANALYSIS
On appeal, the City raises two issues challenging the trial court’s order. The City first
contends the trial court erred in denying its plea to the jurisdiction because there is no express
waiver of immunity in section 271.152 of the Local Government Code for a subcontractor’s pass
through claim. Alternatively, the City argues that dismissal was required because of the anti-
assignment clause in the contract between Valemas and the City. We consider each issue in turn.
Waiver of Sovereign Immunity & Pass through Claims
The City first contends the trial court erred in refusing to dismiss Valemas’s suit for lack
of jurisdiction because Valemas was asserting a claim not on its own behalf, but on behalf of
Payne under a “pass through agreement,” and there is no statutory waiver of immunity for such a
claim. As noted above, under a “pass through agreement,” a party agrees to pursue another
party’s claim or claims against a third party. See Interstate Contracting Corp., 135 S.W.3d at
610. These “pass through claims” are claims by a party (here, a subcontractor) who has suffered
damages against a responsible party (here, the City) with whom it has no contract, presented
through an intervening party (here, a contractor) who has a contractual relationship with both.
Id.
Although the City concedes that under section 271.152 of the Texas Local Government
Code, sovereign immunity is waived for suits adjudicating a claim for breach of contract
between the City and parties it contracts with, waiver is not applicable here. The City asserts
that even though Valemas brought the breach of contract suit, it was pursuing claims on behalf of
Payne, who was not a party to the contract, by way of a pass through agreement between
Valemas and Payne. Thus, the question is whether section 271.152 of the Local Government
Code waives the City’s immunity for a breach of contract suit brought by a contracting party
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when the contracting party is seeking recovery based on a pass through agreement with a party
that did not contract with the City.
Standard of Review
A plea to the jurisdiction based on governmental immunity2 challenges a trial court’s
subject matter jurisdiction. State v. Holland, 221 S.W.3d 639, 642 (Tex. 2007). Because the
existence or absence of subject matter jurisdiction is a question of law, we must review a trial
court’s ruling on a plea to the jurisdiction under a de novo standard of review. Tex. Dep’t of
Parks & Wildlife v. Miranda, 133 S.W.3d 217, 224-26 (Tex. 2004); Univ. of Tex. Health Sci. Ctr.
at San Antonio v. Stevens, 330 S.W.3d 335, 337 (Tex. App.—San Antonio 2010, no pet.). In
conducting our de novo review, we look to the plaintiff’s petition to determine whether the facts
as pled affirmatively demonstrate that jurisdiction exists. Holland, 221 S.W.3d at 642-43. We
must accept the allegations in the petition as true, construe them in favor of the pleading party,
and examine the pleader’s intent. Stevens, 330 S.W.3d at 337. We also consider any evidence
relevant to jurisdiction without considering the merits of the claim beyond the extent necessary
to determine jurisdiction. Miranda, 133 S.W.3d at 226-27. However, if the relevant evidence is
undisputed or fails to raise a fact question on the jurisdiction issue, the trial court rules on the
plea as a matter of law. Id. at 228. Here, we find the evidence presented is not probative of the
existence of any disputed jurisdictional facts, and therefore, we must decide the existence of
jurisdiction as a matter of law.
2
Although the phrases “sovereign immunity” and “governmental immunity” are often used interchangeably, the
phrase “sovereign immunity” technically applies to various divisions of state government, e.g., agencies, boards,
hospitals, and universities. Wight Realty Interests, Ltd. v. City of Friendswood, 333 S.W.3d 792, 796 (Tex. App.—
Houston [1st Dist.] 2010, no pet.). The phrase “governmental immunity,” on the other hand, protects political
subdivisions of the state, e.g., counties, cities, and school districts. Id. As the City is the relevant party in this
appeal, the phrase governmental immunity is proper. See id.
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Application
We begin our analysis by noting that Texas recognizes the validity of pass through claims. See
Interstate Contracting Corp., 135 S.W.3d at 619; Alamo Cmty. Coll. Dist. v. Browning Constr.
Co., 131 S.W.3d 145, 159-60 (Tex. App.—San Antonio 2004, pet. denied). In Interstate
Contracting, the supreme court was presented with a certified question from the Fifth Circuit,
asking whether Texas recognized pass through claims, that is, whether a contractor could assert a
claim against an owner on a subcontractor’s behalf when there is no privity of contract between
the subcontractor and the owner. Id. at 607. The supreme court concluded Texas would allow
pass through claims, but it did not answer the question that is now posed to this court for review,
i.e., whether governmental immunity is waived under section 271.152 for suit based on such
claims. Id. at 620. The supreme court explained why it specifically chose not to address the
issue of sovereign immunity in Interstate Contracting, stating:
Although the questions certified do not limit our answers, we decline to extend
our answers in this case to the issue of sovereign immunity, which is well beyond
the scope of the questions certified. Doing so would require us to venture into the
facts of this particular case and analyze the merits of the parties’ claims at issue
before the Fifth Circuit Court of Appeals, rather than provide answers solely as to
the status of the Texas law on the questions asked. How our answer is to be
applied to the facts of this case is the province of the certifying court. See
Amberboy v. Societe de Banque Privee, 831 S.W.2d 793, 798 (Tex.1992).
Id. 3 The supreme court did not want to venture into the facts of the case and analyze the merits
of the issue before the federal appellate court. Id. However, the applicability of sovereign
immunity to pass through claims is now squarely before this court.
Here, it is undisputed that immunity is waived for any contract claims brought by
Valemas on its own behalf, assuming the damages sought are within the statutory limitations.
3
Although the Fifth Circuit applied the Texas Supreme Court’s answer to the certified question in Interstate
Contracting, allowing a contractor to sue the City of Dallas on behalf of a subcontractor based on a pass through
agreement, the issue of sovereign immunity was not raised. See Interstate Contracting Corp. v. City of Dallas,
Texas, 407 F.3d 708 (5th Cir. 2005).
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See id. § 271.153. It is also undisputed that Payne does not have a written contract with the City,
and therefore could not assert a breach of contract action against the City on its own due to lack
of privity. See Sanders v. Total Heat & Air, Inc., 248 S.W.3d 907, 912 (Tex. App.—Dallas
2008, no pet.) (holding privity between injured party and party to be held liable is generally
essential element for recovery in breach of contract action). Given that Texas recognizes the
validity of pass through claims, the question is whether Valemas, as a party who has a contract
with the City, can assert a pass through claim on Payne’s behalf against the City based on section
271.152, or whether the City has immunity from such a claim.
Sovereign and governmental immunity protect the State and its political subdivisions
from suits for money damages. See Reata Constr. Corp. v. City of Dallas, 197 S.W.3d 371, 374
(Tex. 2006). The Texas Legislature has mandated that statutes should not be construed to waive
immunity unless the waiver is stated in clear and unambiguous language. City of Galveston v.
State, 217 S.W.3d 466, 469; see TEX. GOV’T CODE ANN. § 311.034 (West Supp. 2011) (stating
statute shall not be construed as waiver of sovereign immunity unless waiver is effected in clear
and unambiguous language). Generally, any ambiguity as to the existence of waiver is resolved
in favor of immunity. Harris Cnty. Hosp. Dist. v. Tomball Reg’l Hosp., 283 S.W.3d 838, 844
(Tex. 2009); City of San Antonio v. Caruso, 350 S.W.3d 247, 250 (Tex. App.—San Antonio
2011, pet. denied).
In 2005, the Texas Legislature passed HB 2039, enacting sections 271.151-.160 of the
Texas Local Government Code. Act of May 23, 2005, 79th Leg., R.S., ch. 604, § 1, 2005 Tex.
Gen. Laws 1548 (codified at TEX. LOC. GOV’T CODE ANN. § 271.151-.160 (West 2005); Tooke v.
City of Mexia, 197 S.W.3d 325, 342 (Tex. 2006). These provisions were enacted to waive local
governmental entities’ immunity from suit for breach of contract under certain circumstances.
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See id. Valemas contends its suit, which is based on the pass through agreement with Payne,
falls within these provisions. The City counters that it does not fall within the statute because
waiver based on a pass through agreement was not stated in clear and unambiguous language.
The resolution of this issue requires this court to interpret section 271.152 and the companion
provisions thereto.
It is well-settled that statutory construction is a question of law. City of Rockwall v.
Hughes, 246 S.W.3d 621, 625 (Tex. 2008); Caruso, 350 S.W.3d at 250. Our objective in
interpreting any statute is to determine the Legislature’s intent. Hughes, 246 S.W.3d at 625;
Mid-Century Ins. Co. v. Ademaj, 243 S.W.3d 618, 621 (Tex. 2007). We look to the plain
meaning of the statute, construing it as a whole to give effect to every part, unless such a
construction would lead to absurd or nonsensical results. Hughes, 246 S.W.3d at 625-26;
Ademaj, 243 S.W.3d at 621. We may consider the object of the statute, legislative history, and
the consequences of a proposed construction. TEX. GOV’T CODE ANN. § 311.023(1), (3), (5)
(West 2005); see Caruso, 350 S.W.3d at 250; First-Citizens Bank & Trust Co. v. Great Austin
Area Telecomm. Network, 318 S.W.3d 560, 567 (Tex. App.—Austin 2010, no pet.). We may
consider these things whether or not the statute is ambiguous. TEX. GOV’T CODE ANN.
§ 311.023. With these principles in mind, we turn to section 271.152 to determine whether the
Legislature waived immunity for breach of contract actions brought as a pass through claim.
The relevant statute in this appeal, section 271.152, sets forth under what circumstances
local governmental entities waive immunity in breach of contract actions:
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 contract, subject to the terms and conditions of this subchapter.
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TEX. LOC. GOV’T CODE ANN. § 271.152. Although we have found no cases directly addressing
this provision’s applicability to pass through claims, the Austin Court of Appeals has considered
the statute with regard to assignments, and we find its analysis of the statute compelling, despite
the City’s protestations to the contrary, and adopt it here. First-Citizens Bank & Trust Co. v.
Great Austin Area Telecomm. Network, 318 S.W.3d at 567-69; see also Galveston Indep. Sch.
Dist. v. Clear Lake Rehab. Hosp., L.L.C., 324 S.W.3d 802, 810 (Tex. App.—Houston [14th
Dist.] 2010, no pet.) (citing First-Citizens Bank & Trust Co. to support holding that when
governmental entity and contracting party enter into contract under subchapter I and denominate
third-party beneficiary to contract, third-party beneficiary’s claim falls within waiver of
immunity authorized by section 271.152).
We begin with the plain language of section 271.152. Reviewing this language, we hold
the waiver set forth in section 271.152 is not limited to suits brought by contract signatories for
claims belonging solely to the signatories. Rather, “section 271.152 waives immunity for a class
of suits–suits for the purpose of adjudicating a claim for breach of a contract subject to
subchapter I.” See First-Citizens Bank & Trust Co., 318 S.W.3d at 567. In other words, section
271.152 waives immunity when a breach of contract action is brought against a governmental
entity based on a contract subject to subchapter I. Id. Therefore, we must review the entirety of
subchapter I to determine if the waiver stated in section 271.152 was intended to apply to pass
through claims. Id. at 567-68.
As noted above, subchapter I includes sections 271.151 through 271.160, which:
• define the terms used in the subchapter, see TEX. LOC. GOV’T CODE ANN.
§ 271.151;
• provide for waiver, see id. § 271.152;
• limit damages that may be awarded, see id § 271.153;
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• provide that adjudication procedures, e.g., notice requirements or alternate
dispute resolution requirements, stated or incorporated in a contract are
enforceable, see id § 271.154;
• provide that other available contract defenses are not waived, see id
§ 271.155;
• provide there is no waiver of immunity to suit in federal court, see id
§ 271.156;
• provide there is no waiver of immunity to suits for a negligent or intentional
tort, see id § 271.157;
• note the subchapter is not a grant of immunity to suit to a local governmental
entity, see id § 271.158;
• prohibit recovery of attorney’s fees absent a contractual provision allowing
recovery of such fees to the prevailing party, see id § 271.159; and
• note that a contract entered into by a local government entity is not a joint
enterprise for purposes of liability, see id § 271.160.
We find nothing in any of these sections to show the Legislature intended to exclude pass
through claims from the waiver provision in section 271.152. See id. §§ 271.152-.160.
Moreover, when we review the legislative history, it strongly suggests the Texas
Legislature intended to enact a broad waiver for local governmental entities in the contractual
setting. The Texas Supreme Court agrees. Quoting the bill analysis of the House Committee on
Civil Practices, the supreme court stated, “by enacting section 271.152, the Legislature intended
to loosen the immunity bar so ‘that all local government 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.’” Ben Bolt-Palito Blanco Consol. Indep. Sch. Dist. v. Tex. Political
Subdivisions Prop./Cas. Joint Self-Ins. Fund, 212 S.W.3d 320, 327 (Tex. 2006) (quoting House
Comm. on Civil Practices, Bill Analysis, Tex. H.B. 2039, 79th Leg., R.S. (2005)). Thus, the
Legislature clearly intended the waiver to apply not only to signatories, not only to claims based
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on the contracts themselves, but to claims “arising from” those contracts. Payne’s pass through
claim, as asserted by Valemas, clearly “arises from” the contract between the City and Valemas.
Further, the bill analysis suggests the enactment of section 271.152 was based on the
Legislature’s recognition of the inherent unfairness in allowing governmental entities to enter
into contracts, but then avoid its obligations under such contracts by claiming immunity. See
First-Citizens Bank & Trust Co., 318 S.W.3d at 568; see House Comm. on Civil Practices, Bill
Analysis, Tex. H.B. 2039, 79th Leg., R.S. (2005). As noted by supporters of the bill, because of
the threat of immunity, many qualified contractors declined to bid on local government projects,
considering it too risky. House Comm. on Civil Practices, Bill Analysis, Tex. H.B. 2039, 79th
Leg., R.S. (2005). This was especially true for small businesses which generally did not bid at
all. Id. The bill was enacted to “encourage a broader, more qualified, and more diverse range of
bidders for local government contracts.” First-Citizens Bank & Trust Co., 318 S.W.3d at 568
(citing House Comm. on Civil Practices, Bill Analysis, Tex. H.B. 2039, 79th Leg., R.S. (2005).
In the context of this case, the “inherent unfairness” is obvious should the statute be
interpreted as to permit immunity for pass through claims. It is common knowledge that when a
local governmental entity enters into a contract for extensive renovations or construction, the
general contractor with whom it contracts will subcontract with others. If a local governmental
entity is immune from pass through claims, requiring subcontractors to sue the general contractor
to recover rather than rely on the general contractor to pursue such claims, smaller
subcontractors will be less likely to risk entering such agreements–knowing that in the event the
contractor is unable to pay because of non-payment by the governmental entity they will be
forced to engage in expensive litigation, the cost of which they may not be able to bear, or
simply write the matter off as a loss. This puts subcontractors into the same position as
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contractors, and as recognized by the supporters of the bill that proposed section 271.152 in the
context of general contractors, will make many highly qualified subcontractors, especially small
businesses, hesitant to enter into such contracts. This will discourage and disadvantage a diverse
range of bidding subcontractors and limit the choices of general contractors in direct opposition
to what the bill was intended to do.
Accordingly, we hold that just as it is inconsistent with the purpose of section 271.152 to
construe it to deny waiver to assignees of those who enter into contracts subject to subchapter I,
so is it inconsistent to deny waiver to pass through claims brought by a contractor against a
local governmental entity on a subcontractor’s behalf. To hold otherwise would subject
subcontractors to the same risk of non-redressable breach the statue sought to eliminate, resulting
in subcontractors suffering the same problems once suffered by general contractors prior to the
enactment of section 271.152.
Our interpretation does not, as the City suggests, extend liability beyond what the statute
contemplates. Section 271.153 defines the limits of liability and specifically provides that
recovery under subchapter I is limited to the balance due and owed under the contract, any
amount owed for change orders or additional work the contractor is directed to perform by the
local governmental entity, and interest as allowed by law. TEX. LOC. GOV’T CODE ANN.
§ 271.153. Thus, Valemas can only recover what is owed on the contract–the fact that any
recovery may be payable to Payne does not extend the City’s liability. This is borne out by a
close review of Valemas’s pleadings in which it seeks recovery based on its contract with the
City.
Based on the foregoing, we hold the trial court did not err in denying the City’s plea to
the jurisdiction based on an absence of immunity. The doctrine of governmental immunity does
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not preclude Valemas from asserting a pass through claim on Payne’s behalf. We therefore
overrule the City’s first issue.
Sovereign Immunity & Anti-Assignment Clauses
In the alternative, the City contends that even if this court determines there is waiver of
immunity for the pass through claims, the anti-assignment clause in the City’s contract precludes
Valemas from asserting Payne’s claims. Although the City did not mention the concept of
standing, we find that given this issue was raised in the plea to the jurisdiction, it appears the
City is arguing Valemas lacks standing to assert Payne’s claims based on the anti-assignment
clause. Assuming without deciding that Valemas’s suit even involves an assignment, we
disagree with the City’s argument.
Standard of Review
Standing is a prerequisite to subject matter jurisdiction, and subject matter jurisdiction is
essential to a court’s power to decide a case. Bland Indep. Sch. Dist. v. Blue, 34 S.W.3d 547,
553-54 (Tex. 2000). A plaintiff may not maintain a cause of action unless he has standing to
litigate the matters that are the basis of the lawsuit. RDG P’ship v. Long, 350 S.W.3d 262, 271
(Tex. App.—San Antonio 2011, no pet.). A claim that a party lacks standing may be raised by a
plea to the jurisdiction. Bland Indep. Sch. Dist., 34 S.W.3d at 553-54. A party’s standing to see
relief is a question of law we review de novo. Tex. Dep’t of Transp. v. City of Sunset Valley, 146
S.W.3d 637, 646 (Tex. 2004); Long, 350 S.W.3d at 271.
Application
In their contract, the City and Valemas agreed that:
[Valemas] shall not assign, transfer, convey, sub-let or otherwise dispose of this
contract, or any portion thereof, or any right, title, or interest in, to or under the
same, without previous consent in writing of the City.
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The City contends this anti-assignment clause precluded Valemas from asserting a breach of
contract claim on behalf of Payne, i.e., that by suing the City to recover for Payne, Valemas had
assigned Payne rights under the contract. However, Texas law distinguishes between a
contracting party’s ability to assign rights under a contract containing an anti-assignment clause
and that same party’s ability to assign causes of action arising from the breach of that contract.
E.g., Dearborn Stove Co. v. Caples, 149 Tex. 563, 236 S.W.2d 486-490 (1951) (holding fact that
lease was not assignable did not prevent valid assignment of overcharge claim arising from
lease); City of Brownsville ex. rel. Pub. Utils. Bd. v. AEP Tex. Cent. Co., 348 S.W.3d 348, 358
(Tex. App.—Dallas 2011, no pet.) (holding anti-assignment clause that precluded assignment of
rights and duties under contract did not preclude assignment of cause of action for breach of the
contract); Pagosa Oil & Gas, L.L.C. v. Marrs and Smith P’ship, 323 S.W.3d 203, 211–12 (Tex.
App.—El Paso 2010, pet. denied) (holding mineral lessee was not precluded from assigning
cause of action for breach of lease to another despite language in assignment clause requiring
consent to assignment); Lindsay ex rel. Lindsay v. S. San Antonio Indep. Sch. Dist., 983 S.W.2d
778, 779-80 (Tex. App.—San Antonio 1998, no pet.) (recognizing assignability of decedent’s
cause of action for alleged breach of employment contract despite estate’s inability to assign
contract itself). Absent specific circumstances not present in this case, causes of action in Texas
are freely assignable. See State Farm Fire & Cas. Co., v. Gandy, 925 S.W.2d 696, 705-07 (Tex.
1996).
In the agreement between the City and Valemas, Valemas agreed not to “assign, transfer,
convey, sub-let or otherwise dispose of this contract, or any portion thereof, or any right, title, or
interest in, to or under the same” without the City’s consent. We look to the plain wording of the
anti-assignment clause to determine whether it prohibited Valemas from assigning its breach of
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contract action to Payne. See AEP Tex. Cent. Co., 348 S.W.3d at 358; Pagosa Oil & Gas, 323
S.W.3d at 212. We hold it does not. The clause merely states Valemas’s rights and interests
under the agreement were not assignable without written consent of the City. The provision does
not indicate an intent to limit Valemas’s ability to assign causes of action arising from an alleged
breach of the contract. Because Valemas maintained its common law rights to assign its causes
of action arising from the contract, it would have standing to assert Payne’s claims by virtue of
the assignment. See id.
This anti-assignment clause in this case is similar to the one reviewed in AEP Tex. Centr.
Co. In that case, AEP Texas Central Company (“AEP”), the appellee, raised a cross-point
contending the City of Brownsville lacked standing to assert the causes of action at issue in the
case based on an anti-assignment clause in the purchase and sale agreement between AEP and
OMPA. AEP Tex. Cent. Co., 348 S.W.3d at 358. The anti-assignment clause stated: “The rights
under this Agreement shall not be assignable or transferable nor the duties delegable by either
Party without the prior written consent of the other Party, which consent may be granted or
withheld in such other Party’s sole discretion.” Id. The Dallas Court of Appeals held this clause
did not preclude OMPA from assigning its breach of contract action against AEP to the City. Id.
Rather, the clause merely precluded the assignment of rights and duties under the contract. Id.
As noted above, the same is true with regard to the anti-assignment clause in the contract
between the City and Valemas. The contract merely precludes Valemas from assigning its rights
and interests under the contract to another without the City’s consent. A breach of contract claim
is not a right or interest identified in the contract. Accordingly, we resolve this issue against the
City.
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CONCLUSION
Based on our analysis of the issues and our interpretation of the law, the trial court did
not err in denying the City’s plea to the jurisdiction. The City is not entitled to immunity from
Valemas’s breach of contract action and Valemas is not precluded from asserting the breach of
contract claim by the anti-assignment clause in the contract. We therefore affirm the trial court’s
judgment.
Marialyn Barnard, Justice
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