Court Opinion

ID: 6347202
Source: CourtListenerOpinion
Date Created: 2022-06-06 11:11:10.436938+00
Date Added: 2024-06-11T13:25:58.781365
License: Public Domain

In the
                    Court of Appeals
            Second Appellate District of Texas
                     at Fort Worth
                 ___________________________
                      No. 02-21-00135-CV
                 ___________________________

           BIG BLUE PROPERTIES WF, LLC, Appellant

                                 V.

WORKFORCE RESOURCE, INC., D/B/A WORKFORCE SOLUTIONS NORTH
     TEXAS A/K/A TEXAS WORKFORCE SOLUTIONS, Appellee

              On Appeal from the 78th District Court
                      Wichita County, Texas
               Trial Court No. DC78-CV2020-0243

             Before Sudderth, C.J.; Kerr and Wallach, JJ.
               Memorandum Opinion by Justice Kerr
                           MEMORANDUM OPINION

      Appellant Big Blue Properties, LLC sued appellee Workforce Resource, Inc.,

d/b/a Workforce Solutions North Texas a/k/a Texas Workforce Solutions to collect

unpaid rent due under three commercial leases. Workforce Resource filed a plea to

the jurisdiction claiming that, as a local governmental entity, it is immune from suit

and that Section 271.152 of the Texas Local Government Code did not waive its

immunity. See Tex. Loc. Gov’t Code Ann. § 271.152. The trial court agreed, granted

the plea, and dismissed Big Blue’s breach-of-contract claim. Big Blue has appealed,

arguing in four issues that the trial court erred by granting Workforce Resource’s

jurisdictional plea because Section 271.152 waived Workforce Resource’s

governmental immunity. But because the leases at issue are not contracts for the

provision of services to Workforce Resource, Section 271.152 does not apply and

thus does not waive Workforce Resource’s immunity. See id. §§ 271.151(2)(A), .152.

Accordingly, we will affirm the trial court’s judgment.

                                    I. Background

      In November 2017, Workforce Resource—a local-workforce-development

organization—solicited proposals to consolidate its operations in one place.1 The

      1
        Workforce Resource serves some eleven North Texas counties and “is led by a
local board consisting of 27 volunteer members, a majority of which come from
private industry. It is part of a statewide system of local boards which set policy and
oversee expenditures of funds in their individual areas. These boards are non-profit
and receive funding from the U.S. Department of Labor through the Texas

                                           2
solicitation provided that “[t]he [Workforce Resource] Board reserves the right to

negotiate the final terms of any and all contracts or agreements that may be initiated”

and stated that it was “not to be construed as a purchase agreement or contract or as a

commitment of any kind.” In response to this solicitation, Big Blue offered to lease

portions of its building in Wichita Falls, Texas.

         On June 28, 2018, Workforce Resource’s board unanimously voted to proceed

to lease negotiations with Big Blue. Later that day, Workforce Resource’s executive

director, Ramona Statser,2 contacted Big Blue to inform it that Workforce Resource

would “begin negotiations” with Big Blue. Soon thereafter, on July 20, 2018, Statser

signed the first of three lease agreements with Big Blue on Workforce Resource’s

behalf. Statser went on to sign two more leases with Big Blue for two other spaces in

its building—again on Workforce Resource’s behalf—on October 31, 2018, and

January 25, 2019.

         All three leases differed from the original proposal Big Blue had presented to

Workforce Resource’s board. Some of those differences included: (1) the leased

space’s square footage; (2) the leased space’s floor plans; (3) the lease term; (4) the

security-deposit requirements; (5) the lease-termination options; (6) the rental rates;

Workforce      Commission.”       Workforce          Solutions     North        Texas,
https://ntxworksolutions.org/about-us/ (last visited May 24, 2022).

         As the executive director, Statser was a staff member who reported to the
         2

board.

                                            3
(7) guarantees regarding the leased space’s condition; and (8) the leased space’s

parking availability. None of the finalized leases containing these changes was

presented to Workforce Resource’s board for final approval. But despite the board’s

lack of affirmative assent, Workforce Resource began moving its board and executive

staff into one of the three leased spaces in fall 2018.

       None of the three written leases required either Big Blue or Workforce

Resource to provide any goods or services to the other; they provided for the

payment of rent in exchange for a leasehold interest in the property, which Big Blue

was to maintain. 3 The lease agreements signed by Big Blue and Statser provided that

“[Workforce Resource] has inspected the leased premises and accepts it in its present

(as-is) condition.” The lease agreements further stated that “[the leases] contain[ ] the

entire agreement between Landlord and Tenant and may not be changed except by

written agreement.” Although Statser and Big Blue orally negotiated for Big Blue to

conduct property renovations and construction, and although Big Blue performed

some of that work, those side agreements were never incorporated into the written

lease agreements or otherwise reduced to writing.

       Workforce Resource moved into one of the leased spaces and fulfilled its rent

obligations for that space from September 2018 through summer 2019. But after

Workforce Resource’s management changed, it stopped paying rent and sought

       Big Blue does not argue that maintenance was a service.
       3

                                             4
release from all three lease agreements. Ultimately, at the end of 2019, Workforce

Resource vacated the one leased space it had moved into.

      Big Blue sued Workforce Resource for breach of contract to collect the rent

due under all three leases, pleading that Workforce Resource was a local governmental

entity for which immunity had been waived under Local Government Code Section

271.152. Workforce Resource filed a plea to the jurisdiction challenging the

jurisdictional facts and arguing that Section 271.152 did not waive its immunity.

      It is undisputed that Workforce Resource and Big Blue entered into three

written contracts that contained each party’s basic obligations. But the parties disagree

on four issues: (1) whether Workforce Resource was authorized to enter into the lease

agreements; (2) whether the lease agreements contained the “essential terms of the

agreement”; (3) whether the lease agreements were contracts for the provision of

services to Workforce Resource; and (4) whether Statser’s negotiation and signature,

without board approval, constituted “proper execution of the lease agreements.”

      The trial court granted Workforce Resource’s plea to the jurisdiction and

dismissed Big Blue’s breach-of-contract claim, its only cause of action. 4 This appeal

followed.

      4
       Big Blue’s pleading also alleged a suit on a sworn account, which is not an
independent cause of action but a procedural device for proving certain contract
disputes. See Beach St. Foods, Inc. v. Grandy’s, LLC, No. 02-20-00135-CV,
2022 WL 187988, at *3 (Tex. App.—Fort Worth Jan. 20, 2022, no pet.) (mem. op.).

                                           5
                II. Governmental Immunity and Standard of Review

       “Sovereign immunity and its counterpart, governmental immunity, exist to

protect the State and its political subdivisions from lawsuits and liability for money

damages.” Mission Consol. ISD v. Garcia, 253 S.W.3d 653, 655 (Tex. 2008). Sovereign

immunity protects the State from lawsuits to which it has not consented while

governmental immunity provides similar protection to the State’s political

subdivisions.    City      of   Cleburne   v.   RT   Gen.,   LLC,   No.   10-20-00037-CV,

2020 WL 7394519, at *2 (Tex. App.—Waco Dec. 16, 2020, no pet.) (mem. op.).

Workforce Resource is a local governmental entity and is entitled to governmental

immunity. See Arbor E&T, LLC v. Lower Rio Grande Valley Workforce Dev. Bd., Inc.,

476 S.W.3d 25, 35–38 (Tex. App.—Corpus Christi–Edinburg 2013, no pet.); see also

Dall./Fort Worth Int’l Airport Bd. v. Vizant Techs., LLC, 576 S.W.3d 362, 366 (Tex.

2019) (“Governmental immunity generally protects local governmental entities against

both lawsuits and legal liabilities.”).

       Governmental immunity comprises two components: immunity from suit and

immunity from liability. See Tex. Dep’t of Parks & Wildlife v. Miranda, 133 S.W.3d 217,

224 (Tex. 2004) (op. on reh’g). Immunity from suit deprives the trial court of subject-

matter jurisdiction. Id.

       A party filing a plea to the jurisdiction seeks to defeat a claim by challenging the

trial court’s subject-matter jurisdiction. See Bland ISD v. Blue, 34 S.W.3d 547, 554 (Tex.

2000). The plaintiff bears the burden of establishing the trial court’s jurisdiction, a

                                                 6
burden that includes demonstrating the government’s waiver of immunity once it has

been raised. See Town of Shady Shores v. Swanson, 590 S.W.3d 544, 550 (Tex. 2019).

       A governmental entity asserting governmental immunity may challenge the

plaintiff’s pleadings or, as here, the existence of jurisdictional facts. See City of El Paso

v. Heinrich, 284 S.W.3d 366, 378 (Tex. 2009). When the governmental entity challenges

subject-matter jurisdiction based on disputed facts, the dispute may require resolution

by the factfinder. Miranda, 133 S.W.3d at 226. But whether undisputed evidence—as

presented here—establishes a trial court’s subject-matter jurisdiction is a legal

question that we review de novo. See id.

                                       III. Analysis

       In four issues, Big Blue argues that Texas Local Government Code Section

271.152 waives Workforce Resource’s immunity and that the trial court thus erred by

granting Workforce Resource’s plea to the jurisdiction because (1) Workforce

Resource was authorized to enter into the leases; (2) Workforce Resource “properly

executed” the leases; (3) the leases are contracts for the provision of services; and

(4) there is no legal impediment to enforcing the leases. Because we conclude that the

leases are not contracts for the provision of services to Workforce Resource, issue

three is dispositive, and we need not address Big Blue’s remaining issues. See Tex. R.

App. P. 47.1; Lance v. Robinson, 543 S.W.3d 723, 740 (Tex. 2018).

                                             7
A. Waiver of Immunity and the Local Government Code

       Governmental immunity may be waived only with the legislature’s express

consent. Garcia, 253 S.W.3d at 655. The legislature waives governmental immunity

through statutes, which courts narrowly construe to ensure “clear and unambiguous”

waivers. Id.; see Tex. Gov’t Code Ann. § 311.034. Chapter 271 of the Texas Local

Government Code waives governmental immunity for certain contract claims against

local governmental entities. See Tex. Loc. Gov’t Code Ann. § 271.152. For waiver to

apply, a claim must arise from a “contract subject to this subchapter.” Id. A “contract

subject to this subchapter” means a contract that (1) is in writing; (2) states the

“essential terms of the agreement”; (3) is an agreement for the provision of “goods or

services” to the governmental entity;5 and (4) is “properly executed” on the

governmental entity’s behalf. Id. § 271.151(2)(A) (defining “contract subject to this

subchapter”); Dall./Fort Worth Int’l Airport Bd., 576 S.W.3d at 368.

       Chapter 271 was meant to “loosen the [governmental] immunity bar so that all

local governmental entities that have been given or are given the statutory authority to

enter into contracts shall not be immune from suits arising from those contracts.”

Kirby Lake Dev., Ltd. v. Clear Lake City Water Auth., 320 S.W.3d 829, 838 (Tex. 2010)

(quoting Ben Bolt–Palito Blanco Consol. ISD v. Tex. Pol. Subdivisions Prop./Cas. Joint Self-

       Big Blue does not argue that any goods were involved, so we focus on the
       5

“services” aspect of Section 271.151(2)(A)’s “goods or services” language. See Tex.
Loc. Gov’t Code Ann. § 271.151(2)(A).

                                             8
Ins. Fund, 212 S.W.3d 320, 327 (Tex. 2006)). But the legislature did not intend to

sweep all governmental contracts within Chapter 271’s immunity waiver. See Water

Expl. Co. v. Bexar Metro. Water Dist., 345 S.W.3d 492, 500–01 (Tex. App.—San

Antonio 2011, no pet.). Applying the requisite “narrow” reading of the waiver, courts

have consistently interpreted “goods or services” to require some affirmative act

beyond conveying leasehold property interests. 6 See, e.g., Triple BB, LLC v. Vill. of

Briarcliff, 566 S.W.3d 385, 395 (Tex. App.—Austin 2018, pet. denied) (op. on reh’g);

Hoppenstein Props., Inc. v. McLennan Cnty. Appraisal Dist., 341 S.W.3d 16, 19–20 (Tex.

App.—Waco 2010, pet. denied) (op. on reh’g); City of San Antonio v. Reed S. Lehman

Grain, Ltd., No. 04-04-00930-CV, 2007 WL 752197, at *2 n.2 (Tex. App.—San

Antonio Mar. 14, 2007, pet. denied) (mem. op. on reh’g). The affirmative act must be

required by the written contract, and it must result in a direct benefit to the

governmental entity by conferring “goods or services” upon it. See Lubbock Cnty. Water

Control & Improvement Dist. v. Church & Akin, L.L.C., 442 S.W.3d 297, 302–03 (Tex.

2014). Thus, where a written contract does not require the provision of goods or

services to the governmental entity’s direct benefit, Chapter 271 does not waive the

entity’s immunity. See id.

       6
        The Texas Supreme Court has recognized that leasehold interests themselves
usually do not constitute contracts for the provision of “goods or services” under
Chapter 271. See Wasson Ints., Ltd. v. City of Jacksonville, 489 S.W.3d 427, 437 (Tex.
2016) (“[G]enerally, contracts for land leases . . . are not covered by Chapter 271.”).

                                          9
B. Application

       Big Blue principally relies on Houston Community College System v. HV BTW, LP,

589 S.W.3d 204 (Tex. App.—Houston [14th Dist.] 2019, no pet.). There, the Houston

Community College System granted HV BTW, LP an easement on the system’s

property. Id. at 208. As consideration for the easement, HV agreed to construct

parking facilities on the property at its sole cost and expense. Id. After signing the

contract, HV spent over $500,000 in various costs directly associated with its

contractual development obligations. Id. To obtain approval for the construction, HV

needed the system’s signature, but when the system refused to sign, HV sued it for

breach of contract. Id. The trial court implicitly denied the system’s plea to the

jurisdiction and granted HV’s summary-judgment motion. Id.

       The court of appeals affirmed the trial court’s denial of the system’s plea to the

jurisdiction, holding that the system had waived its governmental immunity by

entering into “an agreement for services within the purview of [C]hapter 271.” Id. at

212. Critical to the court’s decision was the fact that HV’s “construction of parking

facilities as consideration” for the easement constituted a “service” to the system’s

direct benefit. Id.

       Here, in contrast, Big Blue was not contractually obligated to perform any

services. Big Blue, however, argues that the leases required it to perform services in

the form of “construction services to make the leased premises ready for [Workforce

                                           10
Resource],” pointing to each lease’s delay-in-occupancy provision, which provides

that

       If Tenant is unable to occupy the leased premises on the
       Commencement Date because of construction on the leased premises to be
       completed by the Landlord that is not substantially complete . . . . the
       Commencement Date will automatically be extended to the date Tenant
       is able to occupy the Property . . . . If Tenant is unable to occupy the
       leased premises after the 90th day after the Commencement Date
       because of construction on the leased premises to be completed by Landlord that is
       not substantially complete . . . Tenant may terminate this lease by giving
       written notice to Landlord before the leased premises become[s]
       available to be occupied by Tenant and Landlord will refund to Tenant
       any amounts paid to Landlord by Tenant. [Emphases added.]

       But a private company is not contractually obligated to provide services to a

local governmental entity when the company can choose not to provide the services

without breaching the contract. See Church & Akin, 442 S.W.3d at 303 (holding that a

private marina was not obligated to provide services to a local governmental entity

when the marina “could have elected not to use the premises for any purpose”). The

leases did not require Big Blue to provide construction services, and the leases could

have been fulfilled without any such construction. Thus, while Workforce Resource

might have benefitted from Big Blue’s construction services, it had no right to them

under the leases. And “[w]hen a party has no right under a contract to receive

services, the mere fact that it may receive services as a result of the contract is

insufficient to invoke [C]hapter 271’s waiver of immunity.” Id.

       Additionally, there was no “meeting of the minds” about what construction Big

Blue would complete. Rather, Big Blue’s owner testified that, after the contracts were

                                              11
signed, the parties “would have the back and forth over what Big Blue would do

under the lease as far as the build out.” And, even if Big Blue had assumed specific

construction obligations through oral negotiation, Big Blue never reduced those

obligations to writing or incorporated them into the leases with written addenda that

our sister courts have held can satisfy Chapter 271.

      For example, in the distinguishable circumstances of Hoppenstein Properties, the

McLennan County Appraisal District (MCAD) contracted to lease property from

Hoppenstein, a private entity. 341 S.W.3d at 18. The parties supplemented their

written contract with a written “construction addendum” that required Hoppenstein

to complete specific renovations on the leased property.7 Id. After the renovations

were completed, MCAD occupied the leased premises. Id. at 19. But after a dispute

arose, Hoppenstein sued for breach of contract. See id. MCAD asserted governmental

immunity in a plea to the jurisdiction, which the trial court granted. Id. at 18–19.

      The court of appeals initially affirmed but ultimately reversed on rehearing in

light of the Texas Supreme Court’s then-recent decision in Kirby Lake Development. Id.

at 18, 20 (citing Kirby Lake Dev., 320 S.W.3d at 839). In reversing, the court of appeals

held that MCAD had waived its governmental immunity by entering into a contract

for services. Id. at 20. Critical to that holding was the fact that the written contract—

      7
        The “construction addendum” in Hoppenstein Properties required the company to
(1) remove interior walls and construct new ones according to an attached floor plan,
(2) install new carpet and tile, and (3) modify the building’s HVAC system.
341 S.W.3d at 18.

                                            12
as supplemented in writing—required Hoppenstein “to renovate the premises for

MCAD,” a “service” that directly benefitted the appraisal district. Id. As with Houston

Community College, Hoppenstein Properties is distinguishable. In both cases, written

contracts obligated private companies to perform specific “services”—in the form of

construction and development—to a governmental entity’s direct benefit. Here,

however, Big Blue had no obligation under the contracts to perform any construction,

renovation, or other property development. And even if Big Blue later agreed, during

oral negotiations, to complete certain construction or renovation work for Workforce

Resource, those agreements were never reduced to writing.

       Instead, this case is similar to Triple BB. There, the Village of Briarcliff—

through a written contract—obtained an easement to construct a water line on a

marina’s land in exchange for granting the marina a license to display a billboard on a

lot owned by the Village and for agreeing to repair the marina’s parking lot at the

Village’s expense. Triple BB, 566 S.W.3d at 391. A few years later, the marina’s owners,

the Clendenins, sold the marina and their interest in the contract to Triple BB, after

which the Village conveyed the lot to another couple, the Flowerses. Id. The

Flowerses later sold their interest to Malcolm Phillips, who demanded that Triple BB

remove the billboard. Id. In response, Triple BB sued Phillips and the Village. Id. The

trial court granted Phillips’s summary-judgment motion and the Village’s plea to the

jurisdiction. Id.

                                          13
       The court of appeals rejected Triple BB’s argument that the Clendenins’

easement conveyance alone constituted a “service” to a governmental entity under

Chapter 271. Id. at 394–95. Instead, the court of appeals held that “[b]y conveying an

easement, the Clendenins granted the Village a legal right to use their land in a certain

way. They made no promise to perform an act, and thus the contract for easement is

not a contract for service.” Id. at 395 (citations omitted). Accordingly, Chapter 271 did

not waive the Village’s immunity. Id.

       Here, the lease agreements between Big Blue and Workforce Resource do not

constitute contracts for services. The written leases gave Workforce Resource nothing

more than leasehold property interests. Such conveyances alone are insufficient to

constitute the provision of services.

       The lease agreements here also explicitly disclaimed any construction or

renovation obligation on Big Blue’s part: “[Workforce Resource] has inspected the

leased premises and accepts it in its present (as-is) condition.” The leases’ “as-is” provisions

distinguish this case from the written parking-facilities obligation in Houston Community

College. See 589 S.W.3d at 212. Further, the lease agreements here state, “[the leases]

contain[ ] the entire agreement between Landlord and Tenant and may not be

changed except by written agreement.” No written amendment was ever incorporated

into the agreements; Big Blue and Statser orally negotiated for certain work.

       Because the leases merely conveyed leasehold property interests to Workforce

Resource—without requiring that Big Blue perform some “service” for Workforce

                                              14
Resource’s benefit—and because no written addendum for services was executed, we

hold that the leases are not contracts for the provision of services to Workforce

Resource and that Section 271.152 thus does not waive Workforce Resource’s

immunity. See Tex. Loc. Gov’t Code Ann. §§ 271.151(2)(A), .152. Accordingly, the

trial court did not err by granting Workforce Resource’s plea to the jurisdiction, and

we overrule Big Blue’s third issue.

                                      IV. Conclusion

      Having concluded that the trial court did not err by granting Workforce

Resource’s plea to the jurisdiction, we affirm the trial court’s judgment.

                                                       /s/ Elizabeth Kerr
                                                       Elizabeth Kerr
                                                       Justice

Delivered: June 2, 2022

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