1 The style of this appeal erroneously suggests that STV Incorporated is a separate defendant.

In fact, S TV Inco rpo rated, along with Lockwood, Andrews & Newman, is involved only as a

member of the joint venture that is LAN/STV. United States Court of Appeals

Fifth Circuit



## FILED

June 24, 2005

Charles R. Fulbruge III

Clerk UNITED STATES COURT OF APPEALS

FIFTH CIRCUIT

____________

No. 04-10914

____________

GLF CONSTRUCTION CORPORATION,

Plaintiff-Appellant,

versus

LAN/STV, A Joint Venture of Lockwood, Andrews & Newman, Inc.;

STV INCORPORATED,

Defendants-Appellees.

Appeal from the United States District Court

For the Northern District of Texas

Before REAVLEY, JONES, and GARZA, Circuit Judges.

EMILIO M. GARZA, Circuit Judge:

GLF Construction Corporati on (“GLF”) appeals the district court’s order granting summary

judgment on GLF’s tort claims against LAN/STV, a joint ven ture of Lockwood, Andrews &

Newman, Inc. and STV Incorporated. 1 Our focus on appeal is whether that dismissal was premised-2-

on a correct interpretation of T EX

. R EV

. C IV

. S TAT

. A NN . art. 6550d (Vernon Supp. 2004-2005), a

provision defining the scope of derivative sovereign immunit y for i ndependent contractors performing

the functions of government entities.

I

LAN/STV entered into a contract (the “En gineering Contract”) with Dallas Area Rapid

Transit (“DART”). The contract called for LAN/STV to prepare plans, drawings, and specifications

for the construction of an extension to the light rail syst em in Dallas, Texas (the “Project”). The

Engineering Contract also required LAN/STV to provide administrative and supervisory services for

the Project. DART provided LAN/STV’s plans to general contractors, who would then submit bids

to DART for the contract to construct the Project. DART awarded the contract for construction of

the ext ension (t he “Construction Contract”) to GLF. The Construction Contract bound GLF to

complete the Project in accordance with the plans, drawings, and specifications prepared by

LAN/STV, and und er t he supervision of LAN/STV. By virtue of these contracts, DART was in

privity with both LAN/STV and GLF, but LAN/STV and GLF were not in privity with each other.

GLF filed suit against LAN/STV. Lacking contractual privity with LAN/STV, GLF asserted

tort claims of professional negligence and misrepresentation. GLF’s complaint alleged that the plans,

drawings, and specifications LAN/STV prepared and provided: (1) w ere insufficiently detailed to

accomplish their purpose; (2) contained an exorbitant number of errors; (3) were inconsistent as to

how and when the work was to be performed ; and (4) did not accurately reflect existing site

conditions. GLF further alleged that these deficiencies were exacerbated by LAN/STV’s improper

contract administration and supervision.

LAN/STV filed a motion for summary judgment on t he ground of derivative sovereign2 LAN/STV argues that, in light of the prior decision addressing very similar claims between

the same parties, the district court’s judgment in this case should be affirmed under the doctrine of

claim preclusion. Claim preclusion applies where the parties to both actions are identical or in privity,

the first judgment was rendered by a court of competent jurisdiction and concluded with a judgment

on the merits, the same claim or cause of action is involved in both suits, and all claims or defenses

arise from a common nucleus of operative facts. S ee Agrilectric Power Partners, Ltd. v. Gen. Elec.

Co.

, 20 F.3d 663, 664-65 (5th Cir. 1994). LAN/STV did not raise claim preclusion as an affirmative

defense as required by F ED

. R. C IV

. P. 8(c). While we may apply the doctrine of claim preclusion

even when not properly pled before the district court, Jackson v. North Bank Towing Corp.

, 213 F.3d

885, 890 (5th Cir. 2000), we decline to do so in this case. We are not satisfied that all of the relevant

facts are before us, and are therefore unable to determine whether the elements of claim preclusion

are satisfied, particularly with respect to the requirement of a common nu cleus of operative facts.

See Energy Dev. Corp. v. St. Martin

, 296 F.3d 356, 363 (5th Cir. 200 2) (“Our cases al l owi ng

consideration of res judicata or collateral estoppel on appeal do so only if ‘all of the relevant facts

are contained in the record and are uncontroverted.’”); see also Matter of Braniff Airways

, 783 F.2d

1283, 1289 (5th Cir. 1986) (stating that “[t]he party seeking to assert t hat an issue was already

adjudicated upon bears the burden of proving that contention” and that “if reasonable doubt exists

as to what was decided in the first action, the doctrine of res judicata should not be applied”).

LAN/STV has not argued issue preclusion, and we decline to raise it sua sponte

. S ee United Home

Rentals, Inc. v. Texas Real Estate Comm’n

, 716 F .2d 324, 331 (5th Cir. 1983) (declining to raise

collateral estoppel sua sponte ).

-3- immunit y. It argued that, as an independent contractor performing DART’s functions, it enjoyed the

same immunit

y from GLF’s tort claims as DART would enjoy. In support of its motion, LAN/STV

presented an order from the same cour t dismissing, on derivative sovereign immunity grounds, a

concurrent act io n by GLF against LAN/STV. Like this action, that suit was based on a DART

expansion project for which LAN/STV pre pared the plans and GLF performed the construction.

Finding the reasoning of that order persuasive, the district court in thi s case granted LAN/STV’s

motion for summary judgment. 2 GLF filed this appeal.

II

We review de novo a grant of summ ary judgm ent. Baton Rouge Oil & Chem. Workers v.

ExxonMobil Corp.

, 289 F.3d 373, 376 (5th Cir. 2002). We affirm the judgment only if there is no

genuine issue of material fact and the movant is entitled to judgment as a matter of law. F E D

. R. C IV

.3 Under the doctrine of sovereign immunity, the State and its governmental units are immune

from tort liabilit

y unless immunit

y has been waived by the Texas Torts Claim Act. S ee Univ. of Texas

Med. Branch v. Y

ork , 871 S.W.2d 175, 177 (Tex. 1994). The Texas Tort Claims Act waives

sovereign immunit

y only in a limit

ed ran ge o f cases, and GLF concedes that none of these

circumstances apply to this case. S ee T EX C IV

. P RAC

. & R EM

. C ODE A NN

. § 101.021 (Vernon 2005).

-4- P. 56(c). We review the district court’s interpretation of state law de novo

. T ranscon. Gas Pipe Line

Corp. v. Transp. Ins. Co.

, 953 F.2d 985, 987-88 (5th Cir. 1992). When there is no ruling by t he

state’s highest court addressing the legal issue presented, we must determine, as best we can, what

the state’s highest court would decide. Id . at 988.

“DART is a regional transportati on autho rity created under Chapter 452 of the Texas

Transportati on Code.” M artin K. Eby Constr. Co. v. Dallas Area Rapid Transit

, 369 F.3d 464, 465

(5th Cir. 2004). Under Texas law, where “an independent contractor of [a transportation] entity is

performing a function of the en t it y or of a regional transportation authority . . . , the contractor is

liable fo r damages o nly to the extent that the entity or authority would be liable if the entity or

authority itself were performing the function.” T E X

. R EV

. C IV

. S TAT

. A NN

. art. 6550d (Vernon Supp.

2004-20 05). GLF does not dispute that the engineering and supervisory services provided by

LAN/STV fall within the ambit of DART’s functions as a regional transportati on authority. S ee T EX

.

T RANSP

. C ODE A NN

. § 452.056 (Vernon 1999) (providing that a regional transportation authority

may “acquire, construct, develop, plan, own, operate, and maintain a public transportati on system in

the terri tory of the authority”). Because LAN/STV was performing a function of DART, it is liable

for damages to GLF “only to the extent” th at DART would be liable if it had prepared the plans,

drawings, and specifications and supervised the Project.

The doctrine of sovereign immunit y would bar tort claims of the sort alleged by GLF’s, if

asserted against DART. 3 GLF could, however, assert claims against DART for breach of contract.Thus, sovereign immunit y would insulate DART from liabilit y in tort for the actions that fo rm the

basis of GLF’s complaint against LAN/STV.

GLF has not argued that its claims would be construed other than as tort claims if DART itself

had performed the functions at issue. C ompare Martin K. Eby

, 369 F.3d at 472 (holding that “it is

cle ar t hat Eby’s misrepresentation claim, as it is presented here, is a contractual one”); C ass v.

Stephens

, 156 S.W.3d 38, 68 (Tex.App. )) El Paso 2004, pet. filed) (“The law of ‘contorts’ is a

muddy area, devoid of b right line rules or easy answers as to what conduct constitutes a tort, and

what a breach of c ontract. The acts of a party m ay breach duti

es i n tort or contract al one, or

simultaneously in both.”).

-5- See Beard Family P’ship v. Commerical Indem. Ins. Co.

, 116 S.W.3d 839, 847 (Tex.App. )) Austin,

2003, no pet.) (“An owner breaches its construction c o ntract with its contractor when the

inadequacies of the owner’s plans, obtained through the owner’s retained engineer, cause delay in the

completion of the work.”) (citing United States v. Spearin

, 248 U.S. 132, 136 (1918)). GLF argues

that, because it would have a cause of action against DART for breach of contract, Article 6550d

does not prohibit it from suing LAN/STV i n tort. That i s, GLF contends that, as l ong as the

government entity could have been subjected to liabilit y under some cause of action, the independent

contractor performing a function that entity can be sued under any cause of action.

We disagree. Texas law carves out certain exceptions to the general rule that DART, as a

government entity, is immune from suit and liabilit y. Through the Texas Tort Claims Act, it permits

liabilit y for certain tort claims. See T EX C IV

. P RAC

. & R EM

. C ODE A NN

. § 101.021 (Vernon 2005).

It permits liabilit

y for b reach of contract through administrative remedies and, where the plaintiffs

have exhausted those remedies, through suits fo r breach of contract. M artin K. Eby

, 369 F.3d at

469-71. It also limits the maximum amount of liability for certain areas in which it has waived

immunit y from liabilit

y and suit. S ee T EX C IV

. P RAC

. & R EM

. C ODE A NN

. § 101.023 (Vernon 2005)

(setting maxim

um monetary awards under the Texas Torts Claim Act). Texas law thus limits

DART’s liabilit

y both in terms of the causes of action for which DART may be held liable and, for4 Our analysis is not altered by GLF’s citation to City of Alton v. Sharyland Water Supply

Corp.

, 145 S.W.3d 673 (Tex.App. )) Corpus Christi 2004, no pet.). In that case, the court rejected

the defendants’ contention that, as contractors of a government entity, they were immune from suit.

Id

. at 681-82. The court noted, however, that the defendants cited no authority for their claim of

derivative immunity, and the opinion nowhere addresses Article 6550d. See Id.

-6- some claims, the maximum amount of recovery. Article 6550(d) effectively places LAN/STV, as an

independent c o nt ractor performing DART’s functions, in DART’s shoes for purposes of liability.

That is, as the language of the statute plainly states, LAN/STV is liable “only to the extent” that the

DART itself would be liable had it performed the sa me function. T E X

. R EV

. C IV

. S TAT

. A NN

. art.

6550d (Vernon Supp. 2004-2005). Texas law would not permit DART to be held liable in tort on

these facts. Accordingly, neither does Article 6550d permit LAN/STV, performing DART’s

functions, to be held liable in tort. 4

GLF argues that this reading of Article 6550d is inconsistent with the language of the statute.

Texas law, GLF notes, draws a distinction between immunit y from liabilit

y and immunit

y from suit.

See Martin K. Eby

, 369 F.3d at 468 (recognizing that, under Texas law, governmental immunity

embraces two principles: immunit y from liabilit

y and immunit

y from suit). Because Article 6550d is

framed in terms of whether the transportati on entity would be “liable,” GLF reasons, the district court

necessarily erred by focusing on whether DART could be sued for the same cause of action.

Again, we disagree. Governmental immunity under Texas law does incorporate two

distinguishable principles, immunity from liability and immunity from suit. It does not follo w,

ho wever, that by using the word “liable” in Article 6550d, the legislature intended to permit

independent contractors to be held liable under any cause of action so long as the government entity5 In Martin K. Eby

, the distinction between immunity from liability and immunity from suit

was relevant only because the issue in that case was whether the plaintiff had to exhaust his

administrative remedies before filing suit against DART, notwithstanding DART’s waiver of

immunity from liability. 369 F.3d at 468-71.

-7- for whom the contractor was acting could be liable for breach of contract. 5 The distinction between

immunit y from liabilit

y and immunit

y from suit is simply inapposi t e to the interpretation of Article

6550d.

GLF also objects that the district court’s interpretation of Article 6550d creates immunit y for

independent contractors regardless of whether the government would be liable, merely because of the

fortuity that a different cause of action applies. GLF intimates that the district court’s interpretation

of Article 6550d gives LAN/STV a windfall. We find t his argument unpersuasive. As GLF

acknowledges, it can pursue its c laims directly against DART through DART’s administrative

procedures and, after exhausting that remedy, can file suit against DART for breach of contract. See

Martin K. Eby

, 369 F.3d at 471; Beard Family P’ship

, 116 S.W.3d at 847. Further, there is nothing

to indicate that DART would be prevented from pursuing claims against LAN/STV for the alleged

deficiencies in the company’s performance. Thus, our reading of Article 6550d neither denies GLF

a remedy nor immunizes LAN/STV from liability.

For the reasons stated above, we AFFIRM the judgment of the district court.