Javier Solis and Maria Solis D/B/A J. Solis Maintenance and Welding Service v. City of Laredo ( 2011 )

OPINION
No. 04-10-00751-CV
Javier SOLIS and Maria Solis d/b/a J. Solis Maintenance and Welding Service,
Appellants
v.
CITY OF LAREDO,
Appellee
From the 49th Judicial District Court, Webb County, Texas
Trial Court No. 2009CVF001270-D1
Honorable Jose A. López, Judge Presiding
Opinion by: Catherine Stone, Chief Justice
Sitting: Catherine Stone, Chief Justice
Phylis J. Speedlin, Justice
Marialyn Barnard, Justice
Delivered and Filed: September 21, 2011
AFFIRMED
This appeal of an order granting a plea to the jurisdiction arises from a lawsuit alleging
breach of contract and intentional tort claims against the City of Laredo. Javier Solis and Maria
Solis d/b/a J. Solis Maintenance and Welding Service appeal the trial court’s order granting the
City of Laredo’s plea to the jurisdiction, contending the trial court erred in concluding that the
City retained its sovereign immunity because: (1) the City sued Solis for payment under a bid
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bond; and (2) the parties had entered into a contract thereby waiving the City’s immunity from
suit. We affirm the trial court’s order.
BACKGROUND 1
Solis submitted a bid to the City for a public works project. In his submission of the bid,
Solis included a bid bond in the amount of 5% of Solis’s bid. The bid bond listed Solis as
principal and Acstar Insurance Company as surety. The bid bond was designed to ensure that
Solis would promptly enter into a contract for the performance of the work if the City accepted
Solis’s bid.
In April of 2006, the City accepted Solis’s bid in the amount of $1,644,759.00, but by
letter dated May 1, 2006, Solis forfeited the project and declined to enter into the contract due to
difficulty in obtaining the necessary bonds. On May 15, 2006, the City rescinded the award of
the contract to Solis for failure to enter into the contract. Shortly thereafter, the City sent formal
demand for payment on the bid bond in the amount of $80,396.95. In December of 2006, the
City sued Solis and Acstar in cause number 2006CVF002054-D4 seeking payment on the bond.
Although Solis initially filed counter-claims against the City for fraud, negligent
misrepresentation, breach of good faith and fair dealing, and breach of contract, Solis later
dropped his counter-claims against the City.
In July of 2009, Solis filed a separate lawsuit against the City in the underlying cause
(number 2009CVF001270-D1), asserting claims for breach of contract, common law fraud, fraud
by nondisclosure, and breach of fiduciary duty. After a hearing, the trial court granted the City’s
plea to the jurisdiction. Solis appeals.
1
The factual recitations included in this section are based, in part, on the trial court’s findings of fact.
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STANDARD OF REVIEW
A trial court’s ruling on a plea to the jurisdiction is reviewed de novo. City of Waco v.
Lopez, 259 S.W.3d 147, 150 (Tex. 2008). In reviewing the ruling, an appellate court must
determine whether facts have been alleged that affirmatively demonstrate jurisdiction in the trial
court. Id. The court must also consider evidence tending to negate the existence of jurisdictional
facts when necessary to resolve the jurisdictional issues raised. Id. The court construes the
pleadings liberally in favor of the plaintiff, and a fact question regarding jurisdiction precludes a
trial court from granting a plea to the jurisdiction. Id.
WAIVER OF IMMUNITY UNDER REATA
In his first issue, Solis asserts that the City is not immune from his intentional tort claims
because the City waived its immunity by asserting an affirmative claim for relief against Solis in
the prior lawsuit. In support of his assertion, Solis cites Reata Const. Corp. v. City of Dallas,
197 S.W.3d 371 (Tex. 2006). The City responds that the waiver found in Reata is inapplicable
because the City did not seek any affirmative relief in the underlying cause. The City argues that
its prior lawsuit involving the bid bond was a separate lawsuit, and the affirmative claims filed in
the prior lawsuit have no effect on the City’s immunity in the underlying cause.
In Reata, the City of Dallas issued a temporary license for the installation of fiber optic
cable to Dynamic Cable Construction Corporation. 197 S.W.3d at 373. Dynamic subcontracted
with Reata Construction Corporation to perform the drilling for the project. Id. Reata
inadvertently drilled into a water main, flooding a nearby building. Id. The building owner sued
Dynamic and Reata for negligence. Id. Reata filed a third-party claim against the City, alleging
that the City negligently misidentified the water main’s location. Id. The City intervened in the
case, ultimately asserting negligence claims against Dynamic and Reata. Id. The City also filed
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a plea to the jurisdiction asserting governmental immunity from suit. Id. The trial court denied
the City’s plea, and the court of appeals reversed, holding that the City’s intervention did not
result in a waiver of immunity. Id. at 374.
The Texas Supreme Court noted that courts generally defer to the Legislature to waive
immunity. Id. at 375. This deference is based on the position that the absence of immunity may
“hamper governmental functions requiring tax resources to be used for defending lawsuits and
paying judgments rather than using those resources for their intended purposes.” Id. The court
also noted, however, that if a governmental entity “interjects itself into or chooses to engage in
litigation to assert affirmative claims for monetary damages, the entity will presumably have
made a decision to expend resources to pay litigation costs.” Id. “If the opposing party’s claims
can operate only as an offset to reduce the government’s recovery, no tax resources will be called
upon to pay a judgment, and the fiscal planning of the governmental entity should not be
disrupted.” Id. Accordingly, the court held once a governmental entity asserts affirmative
claims for monetary recovery, the entity must participate in the litigation process as an ordinary
litigant; provided, however, that: (1) the claims against the governmental entity must be germane
to, connected with, and properly defensive to those asserted by the governmental entity; and (2)
the governmental entity continues to have immunity from affirmative damage claims against it
for monetary relief exceeding amounts necessary to offset the governmental entity’s claims. Id.
at 377. Under those circumstances, the trial court does not acquire jurisdiction over a claim for
damages against the governmental entity in excess of the damages recovered by the
governmental entity, if any. Id.
One of the key requirements to a waiver under the holding in Reata is that the damages
sought against the governmental entity are limited to an offset against the entity’s recovery.
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Because the damages must be offset, it necessarily follows that both the claims by the
governmental entity and the claims against it must be filed in the same cause. Requiring both
claims to be asserted in the same cause allows the governmental entity to continue to evaluate
whether pursuing the affirmative claims in a particular case is worthwhile given the distraction
and expense of litigation. See id. at 382-83 (Brister, J., concurring) (noting “when the
government brings its own affirmative claims, it has obviously concluded that the distraction and
expense of litigation is worthwhile in that particular case.”) Thus, the waiver of immunity is
limited to “that particular case” in which the governmental entity decides to assert affirmative
claims. See id.
In this case, the City never had any pending affirmative claims; therefore, Solis’s claim
for damages could not be in the nature of an offset, which is the only type of claim for which
immunity is waived under Reata. Although the City asserted affirmative claims in the prior case,
its waiver of immunity was limited to “that particular case” in which it asserted affirmative
claims. See Reata, 197 S.W.3d at 382-83 (Brister, J., concurring). Accordingly, the City’s
immunity was not waived based on Reata. 2
WAIVER UNDER 271.152
If a local governmental entity enters into an authorized contract, it waives sovereign
immunity from suit for the purpose of adjudicating a claim for breach of contract. TEX. LOC.
GOV’T CODE ANN. § 271.152 (West 2005). The term “contract” as used in section 271.152 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
2
We note that Solis relied on the holding in Reata as his only basis for arguing immunity was waived with regard to
his intentional tort claims. We further note that the Texas Tort Claims Act does not waive sovereign immunity for
intentional torts. City of San Antonio v. Polanco & Co., L.L.C., No. 04-07-00258-CV, 2007 WL 3171360 (Tex.
App.—San Antonio Oct. 31, 2007, pet. denied) (mem. op.).
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governmental entity.” Id. at § 271.151(2). Solis asserts the trial court erred in finding the parties
did not enter into a contract, asserting the Notice of Award, which was signed by both parties,
was a valid written contract. The City counters that although it accepted Solis’s bid in the Notice
of Award, Solis forfeited the project before a contract was executed.
In order for immunity to be waived under section 271.152, “the entity must in fact have
entered into a contract.” City of Houston v. Williams, No. 09-0770, 2011 WL 923980, at *4
(Tex. Mar. 18, 2011). “Section 271.151(2) effectively states five elements a contract must meet
in order for it to be a contract subject to section 271.152’s waiver of immunity: (1) the contract
must 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. “‘[A] court may determine, as a matter of law, that multiple
documents comprise a written contract.’” Id. at *6 (quoting Fort Worth Indep. Sch. Dist. v. City
of Fort Worth, 22 S.W.3d 831, 840 (Tex. 2000)). Stated differently, a written contract may be
embodied in multiple documents. Id. at *8.
In this case, the parties disagree as to whether the Notice of Award sent to Solis by the
City constitutes a contract when coupled with Solis’s bid proposal. The fact that parties to an
informal agreement contemplate a formal writing does not necessarily prevent the formation of a
binding contract. See Scott v. Ingle Bros. Pac., Inc., 489 S.W.2d 554, 556 (Tex. 1972); WTG
Gas Processing, L.P. v. ConocoPhillips Co., 309 S.W.3d 635, 645 (Tex. App.—Houston [14th
Dist.] 2010, pet. denied). Whether the parties intended to make a binding agreement is the
determinative issue. Foreca, S.A. v. GRD Dev Co., 758 S.W.2d 744, 746 (Tex. 1988); Medistar
Corp. v. Schmidt, 267 S.W.3d 150, 157-58 (Tex. App.—San Antonio 2008, pet. denied).
Although the parties’ intent to be bound is often a question of fact, the court may decide, as a
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matter of law, that there existed no immediate intent to be bound. Foreca, S.A., 758 S.W.2d at
746; WTG Gas Processing, L.P., 309 S.W.3d at 643; Medistar Corp., 267 S.W.3d at 158.
In this case, the bid proposal form contemplated a formal signed agreement. The bid
proposal form stated, “The undersigned BIDDER proposes and agrees, if this BID is accepted, to
enter into an agreement with OWNER in the form included in the Contract Documents.”
Moreover the Notice of Award notifies Solis that his bid “[h]as been favorable [sic] considered
for the project by the City Council.” However, the Notice of Award requires Solis to sign the
proposed Contract and return it with the required proof of insurance and bonds within ten days
“for the approval and signature of the City Manager.” Moreover, the Notice of Award states that
for purposes of an effective date for the bonds and insurance, “the date of April 3, 2006 may be
considered the date of the Contract, if the Documents are approved by the City Manager.”
Finally, the Notice of Award states, “If you fail to submit the proposed Contract and the
Performance and Payment Bonds and the Certificates of Insurance within ten (10) days from
your receipt of this Notice, your bid will be considered withdrawn and your bid bond will be
forfeited.” Solis subsequently sent written notice forfeiting his right to proceed with the project
without ever signing and returning the Contract. Accordingly, the language within the Notice of
Award conclusively establishes that the City had no intent to be bound until the Contract was
executed. Because the Contract was never executed by the City, the City’s immunity was never
waived under section 271.152.
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CONCLUSION
The City asserted no claims for affirmative relief in the underlying lawsuit, and the
record established that no contract was entered into by the City and Solis. Accordingly, the City
retained its immunity. The trial court’s order is affirmed.
Catherine Stone, Chief Justice
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