Court Opinion

ID: 4683968
Source: CourtListenerOpinion
Date Created: 2021-05-05 06:19:55.8543+00
Date Added: 2024-06-11T08:04:18.630551
License: Public Domain

VACATE; DISMISS and Opinion Filed May 3, 2021

                                    S  In The
                            Court of Appeals
                     Fifth District of Texas at Dallas
                                No. 05-20-00685-CV

                    CITY OF HEATH, Appellant
                              V.
            ROBERT WILLIAMSON D/B/A PCNETSYS, Appellee

                On Appeal from the 439th Judicial District Court
                           Rockwall County, Texas
                      Trial Court Cause No. 1-19-1576

                        MEMORANDUM OPINION
                  Before Justices Schenck, Reichek, and Carlyle
                           Opinion by Justice Reichek
      In this interlocutory appeal, the City of Heath challenges the trial court’s order

denying its plea to the jurisdiction on a breach of contract claim brought by Robert

Williamson d/b/a PCNETSYS.          See TEX. CIV. PRAC. & REM. CODE ANN. §

51.014(a)(8). The City asserts that appellee’s claim does not fall within the limited

waiver of immunity provided by chapter 271 of the Texas Local Government Code.

For reasons set out below, we agree. Accordingly, we vacate the trial court’s order

denying the City’s plea to the jurisdiction and dismiss the suit for want of

jurisdiction.
                              FACTUAL BACKGROUND

      On June 27, 2018, appellee presented then-City Manager Ed Thatcher with a

monthly retainer agreement to provide information technology consulting services

to the City. The agreement, whose term ran from July 1, 2018 through October 1,

2021, provided in part as follows:

      For a monthly retainer of $3500 I will provide to the City of Heath
      information technology consulting services as may be required by the
      City. These services will be executed on-site and/or off-site as is
      appropriate for the service or task required at the time. This fee will
      cover all required information technology consulting services. There
      will be no additional fees for any information technology consulting
      services.

The agreement also addressed projects outside the scope of the agreement and fees

for services performed outside of normal business hours. Thatcher signed the

agreement.

      For several months thereafter, appellee performed consulting services and was

paid by the City. Nine months into the agreement, however, the City gave him

written notice that it was terminating the agreement effective April 30, 2019.

      Appellee sued the City for breach of contract, alleging the City gave him

notice it would no longer use him and hired a different party to provide the

information technology services that it “continues to require.” As damages, appellee

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sought lost profits and “loss of the benefit/expectation of the contract.”1 In a

supplemental petition, appellee alleged that the City waived its immunity under

chapter 271 of the local government code.

        The City filed an answer and plea to the jurisdiction, asserting section

271.152’s limited waiver of immunity for contract claims did not apply because (1)

the City’s governing body never “properly executed” the contract and (2) the

contract is void because it creates an unconstitutional debt under article XI, sections

5 and 7 of the Texas Constitution. Appellee filed a response, and both sides

presented evidence in support of their positions.                     After considering the plea,

appellee’s response, the respective briefs, and the evidence, the trial court denied the

plea. This appeal followed.

                                       STANDARD OF REVIEW

        A plea to the jurisdiction is a dilatory plea by which a party challenges a trial

court’s jurisdiction to determine the subject matter of the action. Bland Indep. Sch.

Dist. v. Blue, 34 S.W.3d 547, 554 (Tex. 2000). The purpose of the plea is to defeat

a claim without regard to whether it has merit. Id. We review a trial court’s order

denying a jurisdictional plea based on governmental immunity de novo. Tex. Nat.

Res. Conservation Comm’n v. IT-Davy, 74 S.W.3d 849, 855 (Tex. 2002).

    1
      Appellee also alleged a cause of action for promissory estoppel, seeking damages incurred as a result
of his detrimental reliance on the promise that the City would continue to use his services “as required”
through October 1, 2021. In his brief, appellee asserts he withdrew this claim; thus, we need not address
it.
                                                   –3–
      In performing our de novo review, we consider only the pleadings and

evidence pertinent to the jurisdictional inquiry. Cty. of Cameron v. Brown, 80

S.W.3d 549, 555 (Tex. 2002). The plaintiff has the initial burden to plead facts

affirmatively showing that the trial court has jurisdiction. Tex. Ass’n of Bus. v. Tex.

Air Control Bd., 852 S.W.2d 440, 446 (Tex. 1993). We construe the pleadings in

the plaintiff’s favor and look to the pleader’s intent. Brown, 80 S.W.3d at 555.

      When a plea to the jurisdiction challenges the existence of jurisdictional facts,

a trial court’s review “mirrors that of a traditional summary judgment motion.”

Mission Consol. Indep. Sch. Dist. v. Garcia, 372 S.W.3d 629, 635 (Tex. 2012). The

trial court must take as true all evidence favorable to the nonmovant, indulging every

reasonable inference and resolving any doubts in the nonmovant’s favor. Tex. Dep’t

of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 228 (Tex. 2004). If there is a fact

issue on the jurisdictional issue, the trial court must deny the plea. Id. at 227–28.

However, if the evidence is undisputed or if the plaintiff failed to raise a fact question

on the jurisdictional issue, the trial court rules on the plea to the jurisdiction as a

matter of law. Id. at 228.

                                      DISCUSSION

      Below and on appeal, appellee has interpreted his contract to mean that he was

entitled to payment of the monthly retainer fee only if he provided the services

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during that month; in other words, if the City chose not to use his services for a

month, or more, there would be no obligation to pay. Further, he presented evidence

that he was paid for all services he provided.

        The City argues that, given appellee’s construction of his own contract, he has

failed to plead any direct damages because there are no damages owing or payable

under the terms of the contract. Consequently, the City argues, appellee has failed

to plead a viable contract claim within the City’s limited waiver of immunity under

chapter 271.2

        Section 271.152 provides a limited waiver of immunity for contract claims

against governmental entities. It provides:

        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 contract, subject to the
        terms and conditions of this subchapter.

TEX. LOC. GOV’T CODE ANN. § 271.152. A “[c]ontract subject to this subchapter”

means “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.” Id. § 271.151(2)(A). The statute’s plain language

    2
      The City raises this specific argument for the first time on appeal. An appellate court “must consider
all of a defendant’s immunity arguments, whether the governmental entity raised other jurisdictional
arguments in the trial court or none at all.” Dallas Metrocare Servs. v. Juarez, 420 S.W.3d 39, 41 (Tex.
2013) (per curiam); Rusk State Hosp. v. Black, 392 S.W.3d 88, 94–97 (Tex. 2012).
                                                   –5–
waives a governmental entity’s immunity from suit for breach of a written contract.

City of Houston v. Williams, 353 S.W.3d 128, 134 (Tex. 2011).

      To trigger section 271.152’s waiver of immunity, though, a party must claim

damages within the limitations set out in section 271.153. Zachry Const. Corp. v.

Port of Houston Auth. of Harris Cty., 449 S.W.3d 98, 110–11 (Tex. 2014) (“[Chapter

271] does not waive immunity from suit on a claim for damages not recoverable

under Section 271.153.”). As relevant here, section 271.153 limits recoverable

damages to “the balance due and owed by the local governmental entity under the

contract.” TEX. LOC. GOV’T CODE ANN. § 271.153(a)(1). A “balance due and owed”

is “simply the amount of damages for breach of contract payable and unpaid.”

Zachry, 449 S.W.3d at 111. Consequential damages, however, are excluded from

recovery, except for under circumstances not applicable here. See TEX. LOC. GOV’T

CODE ANN. § 271.153(b)(1).

      In Tooke v. City of Mexia, 197 S.W.3d 325 (Tex. 2006), the Texas Supreme

Court considered whether the plaintiffs’ contract claim fell within the statute’s

limited waiver of immunity. There, Judy Tooke and her husband, Everett, entered a

three-year contract with the City of Mexia to furnish labor and equipment for

collecting brush and leaves curbside in the City. Id. at 329. The City terminated the

contract fourteen months later, and the Tookes sued for breach of contract, “asserting

that they had relied on a three-year term in purchasing equipment.” Id. at 330. The

                                         –6–
Tookes claimed unspecified damages but, at trial, sought jury findings only on lost

profits and attorney’s fees, which the jury awarded. Id.

      While the case was pending on appeal, the legislature enacted sections

271.151–.160 of the local government code, waiving immunity from suit for contract

claims against most local government entities in certain circumstances. Id. at 344.

The supreme court, applying the statute retroactively, determined that the Tookes’

only claim was for lost profits, which were consequential damages excluded from

recovery under the statute. Id. at 345–46. Thus, the court concluded that the City’s

immunity from the Tookes’ claim had not been waived. Id. at 346. The court noted

that the Tookes did not claim the City failed to pay for work they had already

performed; rather they sought recovery only for lost profits they would have made

had the contract remained in place. Id. at 346.

      Similarly here, appellee is not alleging that he has not been paid for work he

performed; in fact, the pleadings and evidence establish the contrary. Appellee and

Thatcher both testified by affidavit that appellee had been paid for the services he

provided. In addition, appellee’s petition sought damages for “lost profits, and loss

of the benefit/expectation of the contract.” Consequently, the record shows appellee

is seeking to recover the monies he would have made had the contract continued

throughout its term, which, under Tooke, is a damage excluded under the statute.

See id.; see also La Joya Indep. Sch. Dist. v. Trevino, No. 13-17-00333-CV, 2019

WL 1487358, at *1 (Tex. App.—Corpus Christi–Edinburg Apr. 4, 2019, pet. dism’d)

                                        –7–
(mem. op.) (concluding that plaintiff’s breach of contract claim seeking recovery of

fees and commissions he would have earned for future services had contract

continued through end of term constituted lost profits, which were consequential

damages excluded from recovery under section 271.153).              We conclude that

appellees’ pleadings do not invoke chapter’s 271’s limited statutory waiver of

immunity for breach of contract claims. We sustain the City’s issue regarding

damages.

      Appellee requests that, in the event this Court concludes the plea should be

granted, we remand to allow him to “conduct targeted discovery and to amend its

pleadings based on such discovery.” In particular, appellee seeks to discover

additional evidence on whether the City approved or ratified the contract. We note

that appellee filed two supplemental petitions after the City filed its plea.

      Appellate courts generally must remand a case to afford parties an opportunity

to cure jurisdictional defects in their pleadings when the parties did not have that

opportunity in the first instance because the jurisdictional issue arose for the first

time on appeal. See Rusk State Hosp., 392 S.W.3d at 96–97. Here, however, the

jurisdictional bar does not arise from a lack of factual allegations but from the nature

of the claim and the damages sought. Even if we assume the City approved or

ratified the contract, we have determined that the damages sought do not fall within

the limited waiver of immunity, and additional evidence regarding approval or

ratification of the contract would not change that result. Moreover, appellee has not

                                          –8–
attempted to explain what damages he could seek that would fall within the statute,

given his construction of his contract and his admission that he has been paid for his

services.   Accordingly, we conclude appellee is not entitled to an additional

opportunity to amend his pleadings. See Trevino, 2019 WL 1487358 (denying

opportunity to replead where breach of contract pleadings affirmatively negated

existence of jurisdiction).

      We vacate the trial court’s order denying the City’s plea to the jurisdiction

and dismiss the suit for want of jurisdiction.

                                            /Amanda L. Reichek/
                                            AMANDA L. REICHEK
                                            JUSTICE

200685F.P05

                                         –9–
                                  S
                           Court of Appeals
                    Fifth District of Texas at Dallas
                                 JUDGMENT

CITY OF HEATH, Appellant                     On Appeal from the 439th Judicial
                                             District Court, Rockwall County,
No. 05-20-00685-CV          V.               Texas
                                             Trial Court Cause No. 1-19-1576.
ROBERT WILLIAMSON D/B/A                      Opinion delivered by Justice
PCNETSYS, Appellee                           Reichek; Justices Schenck and
                                             Carlyle participating.

       In accordance with this Court’s opinion of this date, we VACATE the trial
court’s order denying the City of Heath’s plea to the jurisdiction and DISMISS the
suit for want of jurisdiction.

      It is ORDERED that appellant CITY OF HEATH recover its costs of this
appeal from appellee ROBERT WILLIAMSON D/B/A PCNETSYS.

Judgment entered May 3, 2021

                                      –10–