Big Blue Properties WF, LLC v. Workforce Resource, Inc., D/B/A Workforce Solutions North Texas A/K/A Texas Workforce Solutions ( 2022 )

In the
Court of Appeals
Second Appellate District of Texas
at Fort Worth
___________________________
No. 02-21-00135-CV
___________________________
BIG BLUE PROPERTIES WF, LLC, Appellant
V.
WORKFORCE RESOURCE, INC., D/B/A WORKFORCE SOLUTIONS NORTH
TEXAS A/K/A TEXAS WORKFORCE SOLUTIONS, Appellee
On Appeal from the 78th District Court
Wichita County, Texas
Trial Court No. DC78-CV2020-0243
Before Sudderth, C.J.; Kerr and Wallach, JJ.
Memorandum Opinion by Justice Kerr
MEMORANDUM OPINION
Appellant Big Blue Properties, LLC sued appellee Workforce Resource, Inc.,
d/b/a Workforce Solutions North Texas a/k/a Texas Workforce Solutions to collect
unpaid rent due under three commercial leases. Workforce Resource filed a plea to
the jurisdiction claiming that, as a local governmental entity, it is immune from suit
and that Section 271.152 of the Texas Local Government Code did not waive its
immunity. See Tex. Loc. Gov’t Code Ann. § 271.152. The trial court agreed, granted
the plea, and dismissed Big Blue’s breach-of-contract claim. Big Blue has appealed,
arguing in four issues that the trial court erred by granting Workforce Resource’s
jurisdictional plea because Section 271.152 waived Workforce Resource’s
governmental immunity. But because the leases at issue are not contracts for the
provision of services to Workforce Resource, Section 271.152 does not apply and
thus does not waive Workforce Resource’s immunity. See id. §§ 271.151(2)(A), .152.
Accordingly, we will affirm the trial court’s judgment.
I. Background
In November 2017, Workforce Resource—a local-workforce-development
organization—solicited proposals to consolidate its operations in one place.1 The
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Workforce Resource serves some eleven North Texas counties and “is led by a
local board consisting of 27 volunteer members, a majority of which come from
private industry. It is part of a statewide system of local boards which set policy and
oversee expenditures of funds in their individual areas. These boards are non-profit
and receive funding from the U.S. Department of Labor through the Texas
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solicitation provided that “[t]he [Workforce Resource] Board reserves the right to
negotiate the final terms of any and all contracts or agreements that may be initiated”
and stated that it was “not to be construed as a purchase agreement or contract or as a
commitment of any kind.” In response to this solicitation, Big Blue offered to lease
portions of its building in Wichita Falls, Texas.
On June 28, 2018, Workforce Resource’s board unanimously voted to proceed
to lease negotiations with Big Blue. Later that day, Workforce Resource’s executive
director, Ramona Statser,2 contacted Big Blue to inform it that Workforce Resource
would “begin negotiations” with Big Blue. Soon thereafter, on July 20, 2018, Statser
signed the first of three lease agreements with Big Blue on Workforce Resource’s
behalf. Statser went on to sign two more leases with Big Blue for two other spaces in
its building—again on Workforce Resource’s behalf—on October 31, 2018, and
January 25, 2019.
All three leases differed from the original proposal Big Blue had presented to
Workforce Resource’s board. Some of those differences included: (1) the leased
space’s square footage; (2) the leased space’s floor plans; (3) the lease term; (4) the
security-deposit requirements; (5) the lease-termination options; (6) the rental rates;
Workforce Commission.” Workforce Solutions North Texas,
https://ntxworksolutions.org/about-us/ (last visited May 24, 2022).
As the executive director, Statser was a staff member who reported to the
2
board.
3
(7) guarantees regarding the leased space’s condition; and (8) the leased space’s
parking availability. None of the finalized leases containing these changes was
presented to Workforce Resource’s board for final approval. But despite the board’s
lack of affirmative assent, Workforce Resource began moving its board and executive
staff into one of the three leased spaces in fall 2018.
None of the three written leases required either Big Blue or Workforce
Resource to provide any goods or services to the other; they provided for the
payment of rent in exchange for a leasehold interest in the property, which Big Blue
was to maintain. 3 The lease agreements signed by Big Blue and Statser provided that
“[Workforce Resource] has inspected the leased premises and accepts it in its present
(as-is) condition.” The lease agreements further stated that “[the leases] contain[ ] the
entire agreement between Landlord and Tenant and may not be changed except by
written agreement.” Although Statser and Big Blue orally negotiated for Big Blue to
conduct property renovations and construction, and although Big Blue performed
some of that work, those side agreements were never incorporated into the written
lease agreements or otherwise reduced to writing.
Workforce Resource moved into one of the leased spaces and fulfilled its rent
obligations for that space from September 2018 through summer 2019. But after
Workforce Resource’s management changed, it stopped paying rent and sought
Big Blue does not argue that maintenance was a service.
3
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release from all three lease agreements. Ultimately, at the end of 2019, Workforce
Resource vacated the one leased space it had moved into.
Big Blue sued Workforce Resource for breach of contract to collect the rent
due under all three leases, pleading that Workforce Resource was a local governmental
entity for which immunity had been waived under Local Government Code Section
271.152. Workforce Resource filed a plea to the jurisdiction challenging the
jurisdictional facts and arguing that Section 271.152 did not waive its immunity.
It is undisputed that Workforce Resource and Big Blue entered into three
written contracts that contained each party’s basic obligations. But the parties disagree
on four issues: (1) whether Workforce Resource was authorized to enter into the lease
agreements; (2) whether the lease agreements contained the “essential terms of the
agreement”; (3) whether the lease agreements were contracts for the provision of
services to Workforce Resource; and (4) whether Statser’s negotiation and signature,
without board approval, constituted “proper execution of the lease agreements.”
The trial court granted Workforce Resource’s plea to the jurisdiction and
dismissed Big Blue’s breach-of-contract claim, its only cause of action. 4 This appeal
followed.
4
Big Blue’s pleading also alleged a suit on a sworn account, which is not an
independent cause of action but a procedural device for proving certain contract
disputes. See Beach St. Foods, Inc. v. Grandy’s, LLC, No. 02-20-00135-CV,
2022 WL 187988, at *3 (Tex. App.—Fort Worth Jan. 20, 2022, no pet.) (mem. op.).
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II. Governmental Immunity and Standard of Review
“Sovereign immunity and its counterpart, governmental immunity, exist to
protect the State and its political subdivisions from lawsuits and liability for money
damages.” Mission Consol. ISD v. Garcia, 253 S.W.3d 653, 655 (Tex. 2008). Sovereign
immunity protects the State from lawsuits to which it has not consented while
governmental immunity provides similar protection to the State’s political
subdivisions. City of Cleburne v. RT Gen., LLC, No. 10-20-00037-CV,
2020 WL 7394519, at *2 (Tex. App.—Waco Dec. 16, 2020, no pet.) (mem. op.).
Workforce Resource is a local governmental entity and is entitled to governmental
immunity. See Arbor E&T, LLC v. Lower Rio Grande Valley Workforce Dev. Bd., Inc.,
476 S.W.3d 25, 35–38 (Tex. App.—Corpus Christi–Edinburg 2013, no pet.); see also
Dall./Fort Worth Int’l Airport Bd. v. Vizant Techs., LLC, 576 S.W.3d 362, 366 (Tex.
2019) (“Governmental immunity generally protects local governmental entities against
both lawsuits and legal liabilities.”).
Governmental immunity comprises two components: immunity from suit and
immunity from liability. See Tex. Dep’t of Parks & Wildlife v. Miranda, 133 S.W.3d 217,
224 (Tex. 2004) (op. on reh’g). Immunity from suit deprives the trial court of subject-
matter jurisdiction. Id.A party filing a plea to the jurisdiction seeks to defeat a claim by challenging the
trial court’s subject-matter jurisdiction. See Bland ISD v. Blue, 34 S.W.3d 547, 554 (Tex.
2000). The plaintiff bears the burden of establishing the trial court’s jurisdiction, a
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burden that includes demonstrating the government’s waiver of immunity once it has
been raised. See Town of Shady Shores v. Swanson, 590 S.W.3d 544, 550 (Tex. 2019).
A governmental entity asserting governmental immunity may challenge the
plaintiff’s pleadings or, as here, the existence of jurisdictional facts. See City of El Paso
v. Heinrich, 284 S.W.3d 366, 378 (Tex. 2009). When the governmental entity challenges
subject-matter jurisdiction based on disputed facts, the dispute may require resolution
by the factfinder. Miranda, 133 S.W.3d at 226. But whether undisputed evidence—as
presented here—establishes a trial court’s subject-matter jurisdiction is a legal
question that we review de novo. See id.
III. Analysis
In four issues, Big Blue argues that Texas Local Government Code Section
271.152 waives Workforce Resource’s immunity and that the trial court thus erred by
granting Workforce Resource’s plea to the jurisdiction because (1) Workforce
Resource was authorized to enter into the leases; (2) Workforce Resource “properly
executed” the leases; (3) the leases are contracts for the provision of services; and
(4) there is no legal impediment to enforcing the leases. Because we conclude that the
leases are not contracts for the provision of services to Workforce Resource, issue
three is dispositive, and we need not address Big Blue’s remaining issues. See Tex. R.
App. P. 47.1; Lance v. Robinson, 543 S.W.3d 723, 740 (Tex. 2018).
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A. Waiver of Immunity and the Local Government Code
Governmental immunity may be waived only with the legislature’s express
consent. Garcia, 253 S.W.3d at 655. The legislature waives governmental immunity
through statutes, which courts narrowly construe to ensure “clear and unambiguous”
waivers. Id.; see Tex. Gov’t Code Ann. § 311.034. Chapter 271 of the Texas Local
Government Code waives governmental immunity for certain contract claims against
local governmental entities. See Tex. Loc. Gov’t Code Ann. § 271.152. For waiver to
apply, a claim must arise from a “contract subject to this subchapter.” Id. A “contract
subject to this subchapter” means a contract that (1) is in writing; (2) states the
“essential terms of the agreement”; (3) is an agreement for the provision of “goods or
services” to the governmental entity;5 and (4) is “properly executed” on the
governmental entity’s behalf. Id. § 271.151(2)(A) (defining “contract subject to this
subchapter”); Dall./Fort Worth Int’l Airport Bd., 576 S.W.3d at 368.
Chapter 271 was meant to “loosen the [governmental] 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.”
Kirby Lake Dev., Ltd. v. Clear Lake City Water Auth., 320 S.W.3d 829, 838 (Tex. 2010)
(quoting Ben Bolt–Palito Blanco Consol. ISD v. Tex. Pol. Subdivisions Prop./Cas. Joint Self-
Big Blue does not argue that any goods were involved, so we focus on the
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“services” aspect of Section 271.151(2)(A)’s “goods or services” language. See Tex.
Loc. Gov’t Code Ann. § 271.151(2)(A).
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Ins. Fund, 212 S.W.3d 320, 327 (Tex. 2006)). But the legislature did not intend to
sweep all governmental contracts within Chapter 271’s immunity waiver. See Water
Expl. Co. v. Bexar Metro. Water Dist., 345 S.W.3d 492, 500–01 (Tex. App.—San
Antonio 2011, no pet.). Applying the requisite “narrow” reading of the waiver, courts
have consistently interpreted “goods or services” to require some affirmative act
beyond conveying leasehold property interests. 6 See, e.g., Triple BB, LLC v. Vill. of
Briarcliff, 566 S.W.3d 385, 395 (Tex. App.—Austin 2018, pet. denied) (op. on reh’g);
Hoppenstein Props., Inc. v. McLennan Cnty. Appraisal Dist., 341 S.W.3d 16, 19–20 (Tex.
App.—Waco 2010, pet. denied) (op. on reh’g); City of San Antonio v. Reed S. Lehman
Grain, Ltd., No. 04-04-00930-CV, 2007 WL 752197, at *2 n.2 (Tex. App.—San
Antonio Mar. 14, 2007, pet. denied) (mem. op. on reh’g). The affirmative act must be
required by the written contract, and it must result in a direct benefit to the
governmental entity by conferring “goods or services” upon it. See Lubbock Cnty. Water
Control & Improvement Dist. v. Church & Akin, L.L.C., 442 S.W.3d 297, 302–03 (Tex.
2014). Thus, where a written contract does not require the provision of goods or
services to the governmental entity’s direct benefit, Chapter 271 does not waive the
entity’s immunity. See id.6
The Texas Supreme Court has recognized that leasehold interests themselves
usually do not constitute contracts for the provision of “goods or services” under
Chapter 271. See Wasson Ints., Ltd. v. City of Jacksonville, 489 S.W.3d 427, 437 (Tex.
2016) (“[G]enerally, contracts for land leases . . . are not covered by Chapter 271.”).
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B. Application
Big Blue principally relies on Houston Community College System v. HV BTW, LP,
589 S.W.3d 204 (Tex. App.—Houston [14th Dist.] 2019, no pet.). There, the Houston
Community College System granted HV BTW, LP an easement on the system’s
property. Id. at 208. As consideration for the easement, HV agreed to construct
parking facilities on the property at its sole cost and expense. Id. After signing the
contract, HV spent over $500,000 in various costs directly associated with its
contractual development obligations. Id. To obtain approval for the construction, HV
needed the system’s signature, but when the system refused to sign, HV sued it for
breach of contract. Id. The trial court implicitly denied the system’s plea to the
jurisdiction and granted HV’s summary-judgment motion. Id.
The court of appeals affirmed the trial court’s denial of the system’s plea to the
jurisdiction, holding that the system had waived its governmental immunity by
entering into “an agreement for services within the purview of [C]hapter 271.” Id. at
212. Critical to the court’s decision was the fact that HV’s “construction of parking
facilities as consideration” for the easement constituted a “service” to the system’s
direct benefit. Id.
Here, in contrast, Big Blue was not contractually obligated to perform any
services. Big Blue, however, argues that the leases required it to perform services in
the form of “construction services to make the leased premises ready for [Workforce
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Resource],” pointing to each lease’s delay-in-occupancy provision, which provides
that
If Tenant is unable to occupy the leased premises on the
Commencement Date because of construction on the leased premises to be
completed by the Landlord that is not substantially complete . . . . the
Commencement Date will automatically be extended to the date Tenant
is able to occupy the Property . . . . If Tenant is unable to occupy the
leased premises after the 90th day after the Commencement Date
because of construction on the leased premises to be completed by Landlord that is
not substantially complete . . . Tenant may terminate this lease by giving
written notice to Landlord before the leased premises become[s]
available to be occupied by Tenant and Landlord will refund to Tenant
any amounts paid to Landlord by Tenant. [Emphases added.]
But a private company is not contractually obligated to provide services to a
local governmental entity when the company can choose not to provide the services
without breaching the contract. See Church & Akin, 442 S.W.3d at 303 (holding that a
private marina was not obligated to provide services to a local governmental entity
when the marina “could have elected not to use the premises for any purpose”). The
leases did not require Big Blue to provide construction services, and the leases could
have been fulfilled without any such construction. Thus, while Workforce Resource
might have benefitted from Big Blue’s construction services, it had no right to them
under the leases. And “[w]hen a party has no right under a contract to receive
services, the mere fact that it may receive services as a result of the contract is
insufficient to invoke [C]hapter 271’s waiver of immunity.” Id.
Additionally, there was no “meeting of the minds” about what construction Big
Blue would complete. Rather, Big Blue’s owner testified that, after the contracts were
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signed, the parties “would have the back and forth over what Big Blue would do
under the lease as far as the build out.” And, even if Big Blue had assumed specific
construction obligations through oral negotiation, Big Blue never reduced those
obligations to writing or incorporated them into the leases with written addenda that
our sister courts have held can satisfy Chapter 271.
For example, in the distinguishable circumstances of Hoppenstein Properties, the
McLennan County Appraisal District (MCAD) contracted to lease property from
Hoppenstein, a private entity. 341 S.W.3d at 18. The parties supplemented their
written contract with a written “construction addendum” that required Hoppenstein
to complete specific renovations on the leased property.7 Id. After the renovations
were completed, MCAD occupied the leased premises. Id. at 19. But after a dispute
arose, Hoppenstein sued for breach of contract. See id. MCAD asserted governmental
immunity in a plea to the jurisdiction, which the trial court granted. Id. at 18–19.
The court of appeals initially affirmed but ultimately reversed on rehearing in
light of the Texas Supreme Court’s then-recent decision in Kirby Lake Development. Id.
at 18, 20 (citing Kirby Lake Dev., 320 S.W.3d at 839). In reversing, the court of appeals
held that MCAD had waived its governmental immunity by entering into a contract
for services. Id. at 20. Critical to that holding was the fact that the written contract—
7
The “construction addendum” in Hoppenstein Properties required the company to
(1) remove interior walls and construct new ones according to an attached floor plan,
(2) install new carpet and tile, and (3) modify the building’s HVAC system.
341 S.W.3d at 18.
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as supplemented in writing—required Hoppenstein “to renovate the premises for
MCAD,” a “service” that directly benefitted the appraisal district. Id. As with Houston
Community College, Hoppenstein Properties is distinguishable. In both cases, written
contracts obligated private companies to perform specific “services”—in the form of
construction and development—to a governmental entity’s direct benefit. Here,
however, Big Blue had no obligation under the contracts to perform any construction,
renovation, or other property development. And even if Big Blue later agreed, during
oral negotiations, to complete certain construction or renovation work for Workforce
Resource, those agreements were never reduced to writing.
Instead, this case is similar to Triple BB. There, the Village of Briarcliff—
through a written contract—obtained an easement to construct a water line on a
marina’s land in exchange for granting the marina a license to display a billboard on a
lot owned by the Village and for agreeing to repair the marina’s parking lot at the
Village’s expense. Triple BB, 566 S.W.3d at 391. A few years later, the marina’s owners,
the Clendenins, sold the marina and their interest in the contract to Triple BB, after
which the Village conveyed the lot to another couple, the Flowerses. Id. The
Flowerses later sold their interest to Malcolm Phillips, who demanded that Triple BB
remove the billboard. Id. In response, Triple BB sued Phillips and the Village. Id. The
trial court granted Phillips’s summary-judgment motion and the Village’s plea to the
jurisdiction. Id.
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The court of appeals rejected Triple BB’s argument that the Clendenins’
easement conveyance alone constituted a “service” to a governmental entity under
Chapter 271. Id. at 394–95. Instead, the court of appeals held that “[b]y conveying an
easement, the Clendenins granted the Village a legal right to use their land in a certain
way. They made no promise to perform an act, and thus the contract for easement is
not a contract for service.” Id. at 395 (citations omitted). Accordingly, Chapter 271 did
not waive the Village’s immunity. Id.
Here, the lease agreements between Big Blue and Workforce Resource do not
constitute contracts for services. The written leases gave Workforce Resource nothing
more than leasehold property interests. Such conveyances alone are insufficient to
constitute the provision of services.
The lease agreements here also explicitly disclaimed any construction or
renovation obligation on Big Blue’s part: “[Workforce Resource] has inspected the
leased premises and accepts it in its present (as-is) condition.” The leases’ “as-is” provisions
distinguish this case from the written parking-facilities obligation in Houston Community
College. See 589 S.W.3d at 212. Further, the lease agreements here state, “[the leases]
contain[ ] the entire agreement between Landlord and Tenant and may not be
changed except by written agreement.” No written amendment was ever incorporated
into the agreements; Big Blue and Statser orally negotiated for certain work.
Because the leases merely conveyed leasehold property interests to Workforce
Resource—without requiring that Big Blue perform some “service” for Workforce
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Resource’s benefit—and because no written addendum for services was executed, we
hold that the leases are not contracts for the provision of services to Workforce
Resource and that Section 271.152 thus does not waive Workforce Resource’s
immunity. See Tex. Loc. Gov’t Code Ann. §§ 271.151(2)(A), .152. Accordingly, the
trial court did not err by granting Workforce Resource’s plea to the jurisdiction, and
we overrule Big Blue’s third issue.
IV. Conclusion
Having concluded that the trial court did not err by granting Workforce
Resource’s plea to the jurisdiction, we affirm the trial court’s judgment.
/s/ Elizabeth Kerr
Elizabeth Kerr
Justice
Delivered: June 2, 2022
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