## IN THE SUPREME COURT O F TEX AS

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O N P E T I T I O N F O R R E V I E W F R O M T H E C O U R T O F A P P E A L S F O R T H E S E V E N T H D I S T R I C T O F T E X A S

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J U S T I C E W I L L E T T , dissenting. For deca des the L ubbock Water District opera ted a marina at Buf falo Springs L ake. I n 2007, the Dis trict lease d the m arina proper ty to Church & Akin. The lease agr eeme nt speci fi ed that the proper ty could only be used as a marina, and the lease require d that “the m ar i n a” i s s u e tickets to visitors for admission to the lake. When Church & Akin declined the District’s reque st to incre ase the marina’ s hours of oper ation, the District terminated the lease befor e the end of the fix ed term. Church & Akin sued for brea ch of contra ct. The Court holds the District en j o y s go v ernme ntal im m u n ity beca

use the lease ag ree ment does not contain a contra ct for service s to the District. I respe ctfully dissent beca

use I believe the lease ag ree ment obliga tes Church & Aki n to opera te a marina a s a ser

vice to the District.I. Waiver of Gove rnm ental Im m uni ty

The L eg islature has waived local g overnme nts’ immunit y for brea ch o f co n t rac t claims arising from “a written contra ct stating the essential terms of [an] ag ree ment for providing g oods or service s to [a] local g overnme ntal entity .” A contra ct contains its “esse ntial terms” when it outlines 1
t h e m at er i al terms nece ssary to make a contra ct enfor cea ble. And “ser

vices” is a term “broa d 2 enoug h to encompass a

wide ar ray of ac tiviti es.” 3 “[W ]e construe contra cts from a utilit aria n standpoint bear ing in mind the particula r business activity soug ht to be serve d.” Eac h portion of a contra ct must be rea d in light of its other opera tive 4 parts. “We consider the entire writing to harmonize and eff ectua te all provisions such that none are rende red meaning less.” Whil e contra ct interpre tation does involve close scrutiny of its individual 5 components, “w e must evalua te t he overall ag ree ment to deter mine what purposes the par ties had in mind at t h e t i m e they signe d the [agr eeme nt] .” When seeking to deter mine the intent of the 6 parties, we also look to the text “as unde rstood in light of the fac ts a nd circ umstances surrounding

T E X . L O C A L G O V ’ T C O D E § 2 7 1

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i e d t h e “ e s s e n t i a l t e r m s ” r e q u i r e m e n t b e c a u s e i t “ c l e a r l y o u t l i n e d ” “ [ t ] h e n a m e s o f t h e p a r t i e s , p r o p e r t y a t i s s u e , a n d b a s i c o b l i g a t i o n s ” )

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. 6 2the contra ct’s execution.” We must interpre t contra cts as entire instruments, with an ey e toward the 7 prac tical intent of the parties and the surrounding circ umstances, and we must g ive meaning and harmony to the contra ct’s various parts. I believe the Court has deviated from this well-wor n course in its analy sis of the District’s lea se ag ree ment. II. Interpret ation of

the Lease A gree m ent Apply ing the above principles, I would hold that t h e Di s trict has waived its immunit y by
contra cting for the oblig atory opera tion of a marina

as a se rvice to the District. A. The lea se ag ree ment require s Church & Akin to opera te a mar ina. The Court conclude s that any benef it that ac crues to the District from Church & Akin’s opera tion of a marina is too indirect to constitute a contra ct for se rvice s to the District beca use the lease ag ree ment did not require opera tion of a marina. I ag ree that conting ent terms in a contra ct can be too attenuate d to trig g er waiver of g overnme ntal immunit y . But I believe the lease ag ree ment did not simpl y comme nd marina ope ration—it commande d it. The lease ag ree ment contains the following l ang uag e under the “USE” provision of the
contra ct: The premises are lease d t o b e used only as a L ake marina, restaura nt, g asoline and sundry sales and as a rec rea tional fac ility

. L essee ag ree s to restric t their use to such purposes, and not to use, or to permit the use of, the premises for any other purpose without first obtaining the consent in writing of L essor or L essor’s authorized ag ent. L essor a g ree s not to unreasona bly withhold consent.

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. 7 3The Court say s that this “mar ina only ” provision does not require Church & Akin to do

any thing—it is only a restric tion on use. Thus, Church & Akin would not be violating the provision if it did nothing

with the proper

ty
. But another clause in the “USE” section indicates that Church & Akin cannot just abandon any use of the pr emises. The ticke ting c lause in the “ USE” sec tion of the lease say s: The marina will issue cate ring tickets that will be rede emed at the g ate for admittance to the lake. These tickets will be rede emed by the marina at the price of $1.00 eac h. They will only be ava ilable to persons c oming into the mar ina. The ti cketing clause require s Church & Akin to use the pre mises. I n mandatory lang uag e, the clause demands that Church & Akin will issue the tickets. I n other words, C h u rc h & Akin cannot, a s the Court claims, do nothing with the proper

ty g iven t he ti cketing clause ’s re quirement that Church & Akin issue cate ring tickets. And if it uses the proper ty at all, Church & Akin trig g ers the “marina onl y ” clause, t hus requiring opera tion o f a marina, a restaura nt, a retail and gas store, and a rec rea tiona l facility

. Thus, the ticketing clause and the “mar ina only ” clause lead to this inexorable sy llogism: I f Church & Akin decide s to actually use the pre mises, it mus t opera te a mar ina. Church & Akin must use the premises to issue tickets for admission to the lake. There fore , Church & Akin must operate a marina. Har moniz ing these two clause s, as we must, I would hold that they invariably lead to the conclusion that Church & Akin was oblig ated to oper ate a marina. Also, the ticketing clause seems to take for g rante d that Church & Akin will opera te a marina beca use it s t ates that “the marina” will issue and rede em the tickets. The Court disreg ards this
4nece ssary implication by deciding that the ticketing clause is a benef it to Church & Akin rathe r than

a service that Church & Akin provides to the Water District. This rea ding of the contra ct flouts the wording of the contra ct, which states the marina will provide the ticketing service

. I n this c ontext , “will,” althoug h it has m any possible meaning s depending on context, here indicates a mandatory require ment. The Court points out that “will” can also indicate a statement of intent. But the phrase

8 “will issue cate ring tickets” is situated in a contra ct in which parties lay out their respe ctive duties and rig hts. I n that context, “will issue cate ring tickets” establishes a duty , not a statement of intent. To rea d this as a statement of mere intent or pl an makes the phrase at wor st gr atuitous and at best

a very roundabout and awkwa rd way of stating that Church & Akin is allowed to issue and rede em cate ring tickets. Neither is the most natura l rea ding of the contra ct. I f t h e co n t ract was not establishing a duty but simply rec og nizi ng that the cate ring tickets are allowed and intended, lang uag e like “may ” or “will be allowed to” issue cate ri n g t i ck et s s hould be expected. And we should avoid reading s that turn contra ct l ang uag e int o g ratuitous surpl u s age . I b eli eve the phrase “will issue cate ring tickets” rea ds most na turally as an obliga tory act. I t strains lang uag e and logic
to construe a binding obliga tion (“the marina will issue cate ring tickets”) as nothing more than a possible benef

it to the bound party

. More o v er , the C ourt’s analy sis strips the l ang uag e in the “USE” provision of i ndepende nt meaning

. The Court say s “to be used onl y as a L ake marina” is j ust a restriction on use. But that

rea ding rende rs meaning less the clause that immediately follows. After stating that the proper ty is

S e e W E B S T E R ’ S T H IR D N E W I N T E R N A T IO N A L D IC T IO N A R Y 2 6 1 7 ( 3 r d e d

. 1 9 6 1 ) ( “ w i l l ” m a y b e “ u s e d t o e x p r e s s 8 a c o m m a n d , e x h o r t a t i o n , o r i n j u n c t i o n ” )

. 5“to be used onl y as a L ake marina, restaura nt,” etc., the agr eeme nt say s: “L essee ag ree s to rest rict their use to such purposes, an d n ot to use, or to permit the use of, the premises for any other purpose . . . .” We can only g ive independe nt meaning to both clause s by rea ding the first clause as

a mandated use, and the second as a restric ted use. Under the Court’s re ad i n g, t h es e two clause s mean the e x act sa me thing. The heading s and structure of the lease ag ree ment also indicate that the District contra cted for a marina with other attendant uses. The “mar ina only ” provision falls under the “USE” section in the lease

. I mmediately following the “USE” section is a sec t i o n t i t l ed “PROHI BI TI ONS ON USE.” Under the Court’s rea ding, the “USE” section contains only a prohibition on use. I t se ems odd to rea d th e “U S E ” s ec t i on as nothing more than a restric tion on use, since it is so clea rly separ ated from the “PROHI BI TI ONS ON USE” section. I would g ive some weig ht to the structure and hea dings of

the ag ree ment that provide further support for the conclusion that Church & Akin was oblig ated to oper ate a marina. Even if Church & Akin need not opera te a marina, it must at the very least provide a ticketing service

. The Court worrie s that the ticket provi s ion does not provide the essential terms of the
contra ct. But a contra ct satisfies this re quirement wher e it outlines the parties, subject matter, and basic obliga tions. The ticketing clause meets this low threshold. I t tells Church & Akin ever y thing 9 it needs to know—what is to be provided, for how much, and to whom. I do not see how Church & Akin could be confuse d about its responsibility under this clause

. The Court arg ues that the clause

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. 9 6d o es n ot supply essential terms beca use i t does not tell us the price at which the t ickets shou l d b e sold to the public or the quantity

. I disag ree . We have held that “[ w] h er e t h e p arties have done

ever y thing else nece ssary to make a binding ag ree ment for the sale of g oods or service s, their failure
to specify the price does not leave the contra ct so incomplete that it cannot be en forced.” I f the 1 0 price for a sale or service betwee n the parties need not be stip u l at ed , then surely the price of an ancillar y transac tion betwee n a contra cting party and the t h i rd -p ar t y visitors to the lake is not

nece ssary to cre ate an enfor cea ble contra ct either. And as for quantity , the clause can be rea sonably

rea d as requirin g t h e m ar i n a to provide ticketing service s to all visitors to the lake. But even so, enfor cea ble contract s such as output or require ment contra cts reg ularly do not stipulate quantity

. Thus, the Court’s conc erns r eg arding price and quantity are unfounded. As with any other co n t ra ct , we should also take into consideration the surrounding circ umstances at the time of contra cting

. The District had been using this proper ty as a marina for 1 1 deca des. A prac tical rea ding sensitive to context and circ umstance confirms that these parties never envisio n ed t h e possibili ty that Church & Akin could be allowed to let a massive rec rea tional are a sit fallow, while at the same time car ry ing out i t s co n t ra ctual duties to preve nt permissive waste, maintain the premises in “as g ood” condition, make nece ssary repa irs, preven t nuisance s, and purcha se proper

ty and liability insurance for “all ac t ivities.” The Court’s wooden approa ch to lang uag e stands in uneasy o p p o s i t i o n to other portions of the ag ree ment, the circ umstances

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. 11 7surrounding the contra ct, and our “pr actica l” and “ utilit aria n” appr oach to c ontrac t inter preta tion. Church & Akin had a contra ctual obliga tion to opera te a marina, and, at the very least , p rovi de a ticketing service for a dmission t o the lake. B. The ser

vices re quired by

the lease are service s to the District. I would also conclude that these obliga tory service s are service s to the District. We have held that construction of public infrastruc ture by third-par ty contra ctors constitutes a service to the
contra cting authority (eve n though the public enjoy s the bene fits of the i nfra structure ). J ust as a 1 2 third-par ty contra ctor who builds roads or bridg es primarily for the public there by provides a service
to the g overning authority , Church & Akin provides a service to the District by opera ting the marina. After all, Church & Akin took over a function t hat t he Dist rict would h av e o t h erw ise perf ormed. The District had opera ted a marina on the proper ty for many y ear s, and considere d those opera tions
to be an important part of its service to the public. Fur ther, the specific ticketing service , while small, is also a direc t serv i ce t o t he District beca use selling the tickets assisted the District in manag ing the flow of visitors to the lake. The Court say s this case would be differ ent if Church & Akin wer e not a lessee and had just
contra cted to opera te the marina. But surely Church & Akin’s status as a tenant does not deter mine whether its use of that proper ty is a service to the District. The more acc urate version of the analog y p o s i t ed by the Court is that of a local g overnme nt entity leasing a pre- exis ting road t o a 1 3 construction company and including a require ment that the lessee repa ir potholes. The fac t that the

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_ _ _ . 13 8pothole repa ir clause is pa rt of the lease ag ree ment does not c hang e the nature of the service being provided. Nor should it. I worry that the Court’s decision paves the way for local g overnme nts to avoid immunit y waiver s. All they need do now is turn the service provider into a lessee. Not only is this result problematic, but the statutory lang uag e does not support a distinction that relies on the label we apply

to the contra cting party
. Thus, I reje ct the Court’s ar g ument that Church & Akin’s
tenanc y chang es the a

naly sis of whether

opera ting the ma

rina is a se rvice to the District. * * * Ch urch & Akin was obliga ted under the lease ag ree ment to opera te a marina, restaur ant , r e ta il and g as store, and rec rea tional fac ility

. Church & Akin also had a duty to provide ticketing service s. These are service s to the District. I would there fore conclude that th e District does not enjoy immunit y . Be cause the Court holds otherwise, I respe ctfully

dissent.

____________________________________ Don R. Wi llett J ustice

OP INION DELIVERED: J uly 3, 2014

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