Court Opinion

ID: 2749980
Source: CourtListenerOpinion
Date Created: 2014-11-08 05:28:45.559408+00
Date Added: 2024-06-11T11:26:38.720641
License: Public Domain

Reversed and Rendered and Memorandum Opinion filed November 6, 2014.

                                     In The

                    Fourteenth Court of Appeals

                             NO. 14-13-00882-CV

         STAFFORD MUNICIPAL SCHOOL DISTRICT, Appellant
                                       V.
            THE HANOVER INSURANCE COMPANY, Appellee

                   On Appeal from the 268th District Court
                           Fort Bend County, Texas
                    Trial Court Cause No. 13-DCV-206179

                 MEMORANDUM OPINION

      Stafford Municipal School District (“Stafford”) appeals an order denying its
plea to the jurisdiction asserting governmental immunity pursuant to Texas Local
Government Code § 271.152 (West 2005). We reverse and render.

                                I. BACKGROUND

      In August 2011, Stafford contracted with Fort Bend Mechanical (“FBM”)
for the construction of a maintenance building, parking and detention pond. FBM,
as principal, secured The Hanover Insurance Company (“Hanover”) as surety on
the performance and payment bond, binding Stafford, the obligee, in the total
amount of the construction project. The bond provided, “if the said Principal shall
faithfully perform the work in accordance with the plans, specifications and
contract documents, then this obligation shall be void; otherwise to remain in full
force and effect.”

      In September 2011, in order to perform electrical and technological services
under its contract with Stafford, FBM contracted with various subcontractors,
including Facility Solutions Group (“Facility Solutions”).        Facility Solutions
completed its work in February 2012, and it billed FBM for amounts due under its
contract. FBM failed to pay. In May 2012, Facility Solutions then gave notice to
both FBM and Hanover that it was seeking to recover $126,512.00 under the
contract and/or the performance bond. Neither FBM nor Hanover responded to
Facility Solutions.

      As a result, Facility Solutions sued Hanover in its capacity as surety.
Facility Solutions did not sue FBM. Instead, it relied solely on its subcontract with
FBM. Hanover then filed a third-party petition and amended petition against
Stafford. In its amended third-party petition, Hanover claimed Stafford “failed and
refused to pay any amount of FBM’s pay application” in the amount of
$241,940.95, and therefore breached its contract with FBM.           Hanover urged
Stafford waived governmental immunity because it entered into the contract with
FBM, that Stafford breached that contract, and that, “as surety for FBM,” Hanover
was entitled to any “defenses and third party claims that FBM has or may have in
this suit.” Hanover also pleaded it was “entitled to bring this action for SBSD’s
[Stafford’s] breach of contract under the principals of subrogation.”       In sum,
Hanover urged Stafford was liable to Facility Solutions for sums allegedly due

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under the subcontract between Facility Solutions and FBM—a contract to which
Stafford was not a party.

      Stafford filed a plea to the jurisdiction, original answer, and affirmative
defenses, asserting “Hanover has failed to proffer relevant evidence to support its
jurisdictional argument regarding the existence of a contract.” Stafford further
affirmatively pleaded there was no privity of contract and that there were “prior
material breaches of agreements by FBM.”             The trial court denied the plea.
Stafford filed its notice of interlocutory appeal.

                                    II. ANALYSIS

      In its first issue, Stafford asserts there was no waiver of governmental
immunity because there was no contract between it and Facility Solutions or
between it and Hanover. In its second issue Stafford argues equitable subrogation
is not a viable avenue for relief, and in its third issue Stafford addresses public
policy concerns.

A.    Standard of Review

      Subject matter jurisdiction is essential to a trial court’s authority to act.
Brownlow v. State, 251 S.W.3d 756, 759 (Tex. App.—Houston [14th Dist.] 2008,
aff’d 319 S.W.3d 649 (Tex. 2010)). In filing a plea to the jurisdiction, the party
challenges the trial court’s subject matter jurisdiction. Bland Indep. Sch. Dist. v.
Blue, 34 S.W.3d 547, 554 (Tex. 2000). A trial court must grant a plea to the
jurisdiction when the pleadings do not state a cause of action upon which the trial
court has jurisdiction. Harris County v. Sykes, 136 S.W.3d 635, 639 (Tex. 2004).
Whether a court has jurisdiction is a question of law we review de novo. State v.
Holland, 221 S.W.3d 639, 642 (Tex. 2007).

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      In reviewing an order on a plea to the jurisdiction, we consider the pleadings
and evidence relevant to the issue of jurisdiction, as well as evidence tending to
negate the existence of jurisdiction.     See Tex. Dep’t of Parks & Wildlife v.
Miranda, 133 S.W.3d 217, 226–28 (Tex. 2004). The plaintiff bears the burden of
pleading specific allegations of fact which affirmatively demonstrate the trial
court’s jurisdiction to hear the case. Tex. Ass’n of Bus. v. Tex. Air Control Bd., 852
S.W.2d 440, 446 (Tex. 1993); see also Miranda, 133 S.W.3d at 226. If the
evidence creates a fact question regarding jurisdiction, then the plea must be
denied. See Harris County Flood Control Dist. v. Great Am. Ins. Co., 359 S.W.3d
736, 742 (Tex. App.—Houston [14th Dist.] 2011, pet. denied) (citing Miranda,
133 S.W.3d at 226–28). But, if the relevant evidence is undisputed or fails to raise
a fact question on the jurisdictional issue, then the court rules on the plea to the
jurisdiction as a matter of law. Id. We do not consider the merits of the case.
County of Cameron v. Brown, 80 S.W.3d 549, 555 (Tex. 2002).

B.    Immunity

      Governmental immunity has two components: immunity from liability and
immunity from suit. Tooke v. City of Mexia, 197 S.W.3d 325, 332 (Tex. 2006).
Immunity from suit is a bar to the suit in its entirety. Id. When a governmental
entity enters into a contract, it waives immunity from liability; however, that
waiver of liability does not establish waiver of immunity from suit. For there to be
waiver of immunity from suit, the Legislature must specifically provide for the
waiver. See Tooke, 197 S.W.3d at 332–33 (requiring clear and unambiguous
language for waiver of governmental immunity).

      Texas Local Government Code Section 271.152, entitled “Waiver of
Immunity to Suit for Certain Claims,” provides:

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      A local governmental entity that is authorized by statute or the
      constitution to enter into a contract and that enters into a contract
      subject to this subchapter waives sovereign immunity to suit for the
      purpose of adjudicating a claim for breach of the contract, subject to
      the terms and conditions of this subchapter.
Tex. Local Gov’t Code § 271.152 (West 2005) (Emphasis added).
      Section 271.151 defines “governmental entity” as “a political subdivision of
this State . . . including a . . . public school district.” Tex. Local Gov’t Code §
271.151(3) (West 2005); see also Witchita Falls State Hosp. v. Taylor, 106 S.W.3d
692, 694 n.3 (Tex. 2003); Gatesco Q.M., Ltd. v. City of Houston, 333 S.W.3d 338,
348 n.7 (Tex. App.—Houston [14th Dist.] 2010, no pet.).

      Section 271.151(2) defines “contract subject to this subchapter” 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 governmental entity.”
Tex. Loc. Gov’t Code § 271.151(2) (West 2005) (Emphasis added).
      Section 271.153, entitled “Limitation on Adjudication Awards,” provides the
total amount of money awarded in a breach-of-contract action brought against a
governmental entity is limited to “the balance due and owed by the local
governmental entity under the contract . . . .” Tex. Loc. Gov’t Code § 271.153(a)
(West 2005) (Emphasis added). Thus, the party seeking to establish waiver must
allege a local governmental entity is involved, the entity entered into a contract
subject to the subchapter, and the adjudication involves the breach of that contract.

C.    Waiver

      To determine if a waiver of governmental immunity has occurred, we review
the substance of Hanover’s third-party petition. See Miranda, 133 S.W.3d at 226–
28. Hanover alleged there was a contract between Stafford and FBM, and that
Stafford breached the FBM-Stafford contract, resulting in FBM’s non-payment to

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Facility Solutions.1 Hanover did not allege, however, that there was any contract
between Stafford and Facility Solutions.

      Rather, Hanover asserted Stafford’s alleged failure to pay FBM caused
FBM’s non-payment to Facility Solutions. Hanover has failed to meet its burden
to prove there was a “contract subject to this subchapter” wherein Facility
Solutions provided goods or services to Stafford, as required in Section 271.152(2),
and there was no “balance due and owed” by Stafford under a contract with
Facility Solutions, as required in Section 271.153(a).           See City of Boerne v.
Vaughan, No. 04-12-00177-CV, 2012 WL 2839889, at *1 (Tex. App.—San
Antonio July 11, 2012, no pet.) (mem. op.) (concluding because third-party
petition did not establish contract was for the provision of goods and services to
the city, there was no waiver of immunity). The only allegation here is there was a
contract between Stafford and FBM. Hanover did not allege a contract existed
between Facility Solutions and Stafford or a breach of any such contract. As a
result, Hanover’s third-party breach-of-contract claim also does not adjudicate a
claim for breach of the contract, as required by Section 271.151(2) because there is
no contract between Stafford and Hanover or between Stafford and Facility
Solutions. See Tex. Loc. Gov’t Code § 271.151(2). The only contract to which
Stafford was a party is the construction contract between it and FBM, which is not
in dispute.

      Additionally, Hanover did not allege the “essential terms” of a contract
between Stafford and Facility Solutions or between Stafford and Hanover. In fact,
there was no allegation Stafford knew of the “essential terms” of the subcontract
between FBM and Facility Solutions. Hanover failed to allege affirmative facts on

      1
         FBM did not sue Stafford for breach of contract, nor did Stafford seek relief from
Hanover for performance under the bond.

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this required element of Section 271.152(2).       See Tex. Loc. Gov’t Code §
271.151(2); see also Judson Independent School Dist. v. ABC/Associated Benefit
Consultants, Inc., 244 S.W.3d 617, 620–21 (Tex. App.—San Antonio 2008, no
pet.) (concluding request for proposal and minutes of meeting did not amount to a
contract stating essential terms, and because “the balance due and owed” under the
contract was not owed by the governmental entity which was sued, there was no
waiver of immunity); Learners Online, Inc. v. Dallas Independent School Dist.,
333 S.W.3d 636, 643–44 (Tex. App.—Dallas 2009, no pet.) (holding even though
parties were aware of memorandum of understanding and grant application, the
documents did not constitute “essential terms” of a contract; they indicated the
terms to be included in a subcontract at a future date and did not meet requirements
of Section 271.152); ICI Const., Inc. v. Orangefield Independent School Dist., 339
S.W.3d 235, 239 (Tex. App.—Beaumont 2011, no pet.) (concluding various
documents did not constitute evidence of essential terms because they did not
establish basis of agreement and costs for repairs; therefore, no waiver of
immunity); see also Lower Colorado River Authority v. City of Boerne, Texas, 422
S.W.3d 60, 67 (Tex. App.—San Antonio 2013, pet. filed) (holding Section
271.252’s specificity as to the necessity of the “adjudicating a claim for breach of
the contract” is controlling, and does not include adjudicating claims for
declaratory judgment).

      Further, because Hanover did not allege the existence of a contract between
Stafford and Facility Solutions or between Stafford and Hanover, there was no
allegation the “contract” on which Hanover relies was “properly executed on
behalf of the local governmental entity.”      See Vantage Sys. Design, Inc. v.
Raymondville Indep. Sch. Dist., 290 S.W.3d 312, 316 (Tex. App.—Corpus Christi
2009, pet. denied) (holding school district could not waive governmental immunity

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without proof of a signed and executed contract between the parties); Tex. Loc.
Gov’t Code § 271.152(2).

      Therefore, we sustain appellant’s first issue.            We need not address
appellant’s second and third issues.

                                 III. CONCLUSION

      Facility Solutions sued Hanover to recover on a performance bond where
Hanover was the surety and FBM was the principal. Facility Solutions did not sue
Stafford, nor was there any contract between Facility Solutions and Stafford. To
establish a waiver of governmental immunity, Hanover was required to allege
sufficient affirmative facts to establish there was a contract between it and Stafford
or between Stafford and Facility Solutions. It did not do so. Further, there was no
allegation of any contract for the provision of goods or services to Stafford, nor
was there any allegation as to its execution.

      Therefore, we reverse the trial court’s order and render judgment that
Hanover’s claim against Stafford be dismissed.

                                       /s/       John Donovan
                                                 Justice

Panel consists of Chief Justice Frost and Justices Donovan and Brown.

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