Opinion ID: 895256
Heading Depth: 1
Heading Rank: 4

Heading: Interpretation of the Agreements

Text: We disagree, however, with the court of appeals' conclusion regarding interpretation of the word any in the following contract provision: The Authority intends to call a bond election in the near future but is not obligated to do so.... The Authority does agree, however, that it shall include in any bond election it does hold subsequent to the effective date of this Agreement bond authorization in an amount sufficient to pay the purchase price of the Facilities. The Authority says this provision requires the reimbursement measure be placed on one ballot only, upon which it will have fulfilled its contractual obligation. The Developers, on the other hand, contend the provision requires that the Authority place the measure on every bond authorization ballot until the end of time, or until the measure is approved. The court of appeals agreed with the Authority, holding that, although the pertinent sentence could reasonably be interpreted either way, ... the balance of the paragraph clearly indicates that only one election was contemplated. Kirby Lake II, 274 S.W.3d at 46. Texas courts defining any have generally interpreted it to mean every. [9] Those decisions, however, have been so rooted in context that they provide little guidance in this case. See Texas Co. v. Schriewer, 38 S.W.2d 141, 144 (Tex.Civ. App.-Waco 1931) (The word `any' is a flexible word that may have any one of several meanings according to its use.... Its meaning is often restrained, limited, or influenced by the subject-matter or manner in which it is used.), aff'd in part, rev'd in part sub nom. Smith v. Tex. Co., 53 S.W.2d 774 (Tex. Comm'n App.1932). Accordingly, we will examine the Agreements' grammatical structure, in context. The Authority and the Kirby Lake II court point to the use of singular nouns in the succeeding sentence as indicative that any means one time: The paragraph's first sentence states that the Water Authority `intends to call a bond election' but it cannot predict when or if `such an election... will occur.' Unlike `any,' the words `a' and `an' are always singular. Kirby Lake II, 274 S.W.3d at 46. However, the fact that a and an are singular does not foreclose interpreting any to mean each or one of allboth of which would require singular antecedents. See, e.g., Schriewer, 38 S.W.2d at 145 (In its broad, distributive sense, the sense in which the word is very frequently used, it may have the meaning of `all,' `every,' `each,' or `each one of all.'). The more conventional grammatical meaning of the term, then, suggests that the proposition must be included in every bond election the Authority holds, until the voters approve reimbursement. Moreover, the Developers argue that the Authority ignores the Agreements' overall structure and purpose, which was to construct facilities that the Authority would ultimately purchase (Subject to other terms and provisions hereof, the Developer agrees to sell and the Authority agrees to purchase all the completed portions of the facilities....). We agree with the Developers that we must evaluate the overall agreement to determine what purposes the parties had in mind at the time they signed the Agreements. See Don's Bldg. Supply, Inc. v. OneBeacon Ins. Co., 267 S.W.3d 20, 23 (Tex.2008) (Effectuating the parties' expressed intent is our primary concern.). Section 4.01 provides that the Developer shall lease all operable portions of the facilities to the Authority without charge until such time as the Authority acquires such portions; provided that such lease shall terminate upon the acquisition by the Authority of all the Facilities. (Emphasis added.) Had the parties envisioned only one bond election, they could have easily stated that the Authority may lease the facilities until conclusion of that particular election. Instead, the Agreement permits a continued leasehold until such time as the Authority acquires [the Facilities]. Moreover, the Agreement is silent as to the parties' obligations in the event the bond measure does not pass. While it expressly acknowledges that the Authority has no existing voter authorization to issue any bonds to pay for the cost of the Facilities, and does not anticipate that funds will be available for such costs without a voter approved bond sale,  it at no point relinquishes the Authority from its obligation to include [the bond measure] in any bond election it does hold. (Emphases added.) The Kirby Lake II court noted that the Agreement does not state that a bond measure would be submitted to voters repeatedly until approved. 274 S.W.3d at 46. However, assuming that any means every, such additional language would be superfluous, as the Agreement plainly states that the Authority is to include the measure in any bond election it does hold. The more blatant omission would be the absence of a provision limiting the Authority's perpetual lease of the facilities without charge in the event the measure does not pass. Unless the Authority were obligated to submit a measure to reimburse the Developers in each bond election, the Developers would have essentially forfeited their interest in facilities they built and paid for. See Aquaplex, Inc. v. Rancho La Valencia, Inc., 297 S.W.3d 768, 774 (Tex.2009) (Forfeitures are not favored in Texas, and contracts are construed to avoid them.). It is unlikely that the Developers intended to convey water and sewer lines as a gift. Because we conclude that the contract, as a whole, contemplates the eventual sale of the Facilities, and because we construe contracts to avoid forfeiture where possible, we hold that the Agreements require the Authority to submit a bond proposal in every bond election it chooses to hold. See REO Indus., Inc. v. Natural Gas Pipeline Co. of Am., 932 F.2d 447, 454 (5th Cir. 1991) (Texas courts will not construe a contract to result in a forfeiture unless it cannot be construed in any other way.); Sheppard v. Avery, 89 Tex. 301, 34 S.W. 440, 442 (1896) (A forfeiture of rights of property is not favored by the courts, and laws will be construed to prevent rather than to cause such forfeiture.).
The Authority contends, in the alternative, that the lower court's judgments should be affirmed because the law disfavors perpetual contracts. It is true, as the Authority observes, that the Agreements contain no time limit on its alleged duty to include reimbursement measures in every bond election. We also acknowledge the prospect that voters may never approve such a measure. In Fort Worth Independent School District v. City of Fort Worth, 22 S.W.3d at 841, we noted that contracts which contemplate continuing performance (or successive performances) and which are indefinite in duration can be terminated at the will of either party (quotations omitted). Yet the Authority ignores the line of cases that distinguish between contracts of indefinite duration and contracts that specify determinable events. See generally Trient Partners I Ltd. v. Blockbuster Entertainment Corp., 83 F.3d 704 (5th Cir.1996) (applying Texas law); City of Big Spring v. Bd. of Control, 404 S.W.2d 810 (Tex.1966). Where a contract's language specifies a fixed and determinable term, the rule of law that a contract may be terminated at the end of a reasonable time does not apply. ( Big Spring, 404 S.W.2d at 816). In City of Big Spring v. Board of Control, the City contracted to provide water to a state-run hospital at a pre-arranged rate for as long as the State of Texas shall in good faith maintain and operate said hospital. Big Spring, 404 S.W.2d at 815. Because this language fix[ed] an ascertainable fact or event, by which the terms of [the] contract's duration [could] be determined, we held that the contract was not indefinite in duration and therefore not terminable at will. Id.; see also Fluorine on Call, Ltd. v. Fluorogas Ltd., 380 F.3d 849, 856 (5th Cir.2004) (applying Texas law). The Agreements here stipulate that both lease of the facilities and the terms of the Agreements themselves terminate upon the Authority's purchase of the facilities (having attained voter-approved bond funds). Purchase of the Facilities is an ascertainable event which both parties can identify; the Agreements are thus not terminable at will. [10]
The Authority next argues that, should we interpret the Agreements to impose an ongoing obligation to submit bond proposals in each future election, the Agreements would interfere with substantive government functions, violating the reserved powers doctrine. See State ex rel. City of Jasper v. Gulf States Utils. Co., 144 Tex. 184, 189 S.W.2d 693, 698 (1945). The Authority maintains that a contract which purports to bind all future boards of directors to include certain propositions in all future elections would abrogate [its] discretion regarding its handling of future bond elections. See Todd v. Helton, 495 S.W.2d 213, 220 (Tex.1973) (noting that elections are essentially the exercise of political power, and exempt from judicial interference); State ex rel. Edwards v. Reyna, 160 Tex. 404, 333 S.W.2d 832, 833 (1960) ([T]he conduct of elections is primarily a matter for legislative regulation and control.). Certain powers are conferred on government entities for public purposes, and can neither be delegated nor bartered away. Jasper, 189 S.W.2d at 698. Government entities cannot cede ... away [such powers] through contracts with others so as to disable them from the performance of their public duties. Id.; see also Brenham v. Brenham Water Co., 67 Tex. 542, 4 S.W. 143, 149 (1887) ([Municipal] corporations may make authorized contracts, but they have no power, as a party, to make contracts or pass bylaws which shall cede away, control or embarrass their legislative or governmental powers, or which shall disable them from performing their public duties.) (quotations omitted). However, it does not apply to the case at hand. Here, the Authority contracted not to bargain away future power, but to pay an invoice for services rendered if and when funds become available through voter-approved bonds. Nor does the present situation suggest improper impediments to the Authority's governmental operations. In Clear Lake City Water Authority v. Clear Lake Utilities, we held that an agreement between the Authority and a utility company was not binding because it had the effect of potentially controlling and embarrassing [the] Authority in the exercise of its governmental powers. Clear Lake City Water Auth. v. Clear Lake Utils. Co., 549 S.W.2d 385, 392 (Tex.1977). In that case, the agreement obligated the Authority to meet all water and sewage treatment needs for the Utilities, while precluding it from extending those services directly to the landowners themselves, under terms and rates that it deems best. Id. Thus we found that the Authority had bargained away its governmental power to determine whether, on any particular date, it is in the best interests of all of its customers and the public in general, to extend water and sewer service to a particular person or entity. Id. In this case, the Authority's contractual obligation to include a bond reimbursement proposition in future elections does not affect the performance of its public duties. It neither hampers nor embarrasses the manner in which the Authority holds electionsincluding the time, place, order, number of propositions, or even whether it chooses to hold a bond election at all. Nor does it control or impede the Authority's power to determine how and to whom it will extend water services. See id. We therefore reject the Authority's contention that the Agreements run afoul of the reserved powers doctrine.