Court Opinion

ID: 35229
Source: CourtListenerOpinion
Date Created: 2010-04-25 19:25:32+00
Date Added: 2024-06-11T14:55:30.392136
License: Public Domain

United States Court of Appeals
                                                                  Fifth Circuit
                                                               F I L E D
                         REVISED MAY 18, 2004
                                                                April 29, 2004
                IN THE UNITED STATES COURT OF APPEALS
                                                           Charles R. Fulbruge III
                        FOR THE FIFTH CIRCUIT                      Clerk

                             No. 03-10728

     MARTIN K EBY CONSTRUCTION COMPANY INC

                                 Plaintiff - Appellant

     v.

     DALLAS AREA RAPID TRANSIT

                                 Defendant - Appellee

             Appeal from the United States District Court
                  for the Northern District of Texas

Before KING, Chief Judge, and BENAVIDES and CLEMENT, Circuit
Judges.

KING, Chief Judge:

     Plaintiff-Appellant Martin K. Eby Construction Company, Inc.

(Eby) appeals the district court’s judgment dismissing its action

against Defendant-Appellee Dallas Area Rapid Transit (DART).

Agreeing with the lower court that Eby must exhaust

administrative remedies before pursuing this action, we affirm.

                            I.   Background

A.   Facts

     DART is a regional transportation authority created under

                                   1
Chapter 452 of the Texas Transportation Code.     See Williams v.

Dallas Area Rapid Transit, 242 F.3d 315, 317 (5th Cir. 2001); see

also In re Dallas Area Rapid Transit, 967 S.W.2d 358, 359 (Tex.

1998).   In April 2002, after a competitive-bidding process, DART

awarded to Eby a contract to build a section of DART’s light-rail

transit line near downtown Dallas.    Construction commenced in

June 2002.   During the first six months of work on the project,

Eby made little progress.   According to Eby, this delay was

caused by numerous deficiencies and inaccuracies in the designs

that were contained in DART’s bid solicitation.    In DART’s view,

however, Eby bears significant responsibility for the

construction delays.   Regardless of the cause of the delays, we

must determine whether Eby can pursue its suit without first

exhausting administrative remedies.

     DART’s Administrative Dispute-Resolution Process

     DART’s bid solicitation for the light-rail project--which is

incorporated into the parties’ contract as an exhibit--contains a

provision stating that the bidder, by responding to the

solicitation, “agrees to exhaust its administrative remedies

under . . . [1] [DART]’s Procurement Regulations or [2] the

Disputes Clause of any resulting contract” before “seeking

judicial relief of any type in connection with any matter related

to this solicitation, the award of any contract, and any dispute

under any resulting contract.”   DART’s procurement regulations

contain procedures for resolving disagreements with its

                                 2
contractors.   They were promulgated in accordance with express

statutory authority; the Texas Legislature has empowered regional

transportation authorities, such as DART, to “adopt and enforce

procurement procedures, guidelines, and rules . . . covering:

[inter alia] the resolution of . . . contract disputes.”     TEX.

TRANSP. CODE ANN. § 452.106(a)(2)(C) (Vernon 1999).   Also, the

contract between DART and Eby contains a disputes clause, which

requires the contractor, Eby, to submit its grievances to DART’s

administrative process before seeking judicial review.

     DART’s procurement regulations and the contract’s disputes

clause both provide for a similar administrative dispute-

resolution process, and the regulations contain greater detail.

Both encompass a broad range of potential disagreements.     The

disputes clause applies to “any dispute concerning a question of

fact or law arising under or related to [the] contract.”

Expounding on the coverage of DART’s administrative process,

DART’s regulations state that the process covers “controversies

between [DART] and a contractor which arise under, or by virtue

of, a contract between them,” including, “without limitation,

controversies based upon breach of contract, mistake,

misrepresentation, or other cause for contract modification,

reformation, or rescission.”   The regulations further explain

that the “word ‘controversy’ is meant to be broad and all-

encompassing,” applying to “the full spectrum of disagreements

from pricing of routine contract changes to claims of breach of

                                 3
contract.”

     The regulations and the disputes clause both mandate that

controversies be submitted to the contracting officer--the person

executing the contract on behalf of DART--for resolution.1    The

decision of the contracting officer is final unless the

contractor appeals within ninety days.   Administrative appeals

are heard by DART’s authorized representatives, who are mostly

current or former members of the federal Armed Services Board of

Contract Appeals.   DART also has promulgated a set of extensive

procedural rules for adjudicating appeals; the rules envision a

quasi-judicial proceeding that includes, among other things,

discovery and a de novo hearing where the contractor can be

represented by counsel.

     Regarding the finality of the administrative decision, the

regulations and the disputes clause contain nearly identical

language: “The decision . . . shall be final and conclusive as to

questions of fact unless determined by a court of competent

jurisdiction to have been fraudulent, capricious, arbitrary, so

grossly erroneous as necessarily to imply bad faith, or not

     1
          Eby complains that the disputes clause does not require
DART to submit its grievances to the administrative process. But
both DART’s regulations and the disputes clause indicate that the
dispute-resolution process is intended to resolve all conflicts
between the parties. Further, DART’s regulations contain a
provision explicitly stating that “[a]ll controversies involving
claims asserted by [DART] against a contractor which cannot be
resolved by mutual agreement shall be the subject of a decision
by the Contracting Officer.”

                                 4
supported by substantial evidence.”2   Further, the administrative

resolution is not final on questions of law.   The regulations and

the disputes clause permit a dissatisfied contractor to seek

judicial review of the administrative decision within two years

of the contractor’s receipt of the decision.

     Although Eby did not submit its grievances to the

administrative process described above, it asserts that it

complained to DART regarding the allegedly inadequate bid

specifications.   According to Eby, DART neither accepted

responsibility for the design defects nor compensated Eby for

most of the cost overruns that it had incurred in performing the

work.3   Substantial construction remains to be done, and Eby

anticipates significant additional losses if it is forced to

complete the project.   Frustrated with this state of affairs, Eby

filed suit in federal court against DART in January 2003.

B.   Proceedings in the District Court

     In its complaint, Eby pleaded two causes of action: breach

     2
          At various places in its brief, Eby claims that DART’s
administrative process intends to resolve conclusively any
questions of fact. But, as shown here, DART’s procurement
regulations and the disputes clause of the parties’ contract both
provide for substantial-evidence review of DART’s findings of
fact. Regardless, we do not, in this appeal, express any opinion
on the extent to which a subsequent court should defer to any
findings of fact made during DART’s administrative process.
     3
          Eby’s complaint acknowledges that DART has paid Eby for
individual change-order claims filed by Eby in accordance with
the contract. But Eby maintains that this procedure is
inadequate to compensate it for the losses it has suffered and
will continue to suffer.

                                 5
of contract and misrepresentation.   As remedies, Eby sought

rescission of the agreement and compensation on a quantum meruit

basis.   In response, DART moved to dismiss, contending first that

Eby had failed to state a claim on which relief could be granted

because it had not exhausted its administrative remedies.

Second, DART asserted that Eby’s misrepresentation claim should

be dismissed because it is a tort claim and governmental immunity

bars tort claims against DART.

     The district court granted DART’s motion to dismiss both of

Eby’s claims under Rule 12(b)(6).    First, the court held that Eby

could not pursue its breach-of-contract claim without first

exhausting the administrative procedure that has been established

by DART in accordance with Texas statutory law and incorporated

into the parties’ contract.4   Second, the court concluded that

governmental immunity bars Eby’s tort claim of misrepresentation.

Accordingly, in July 2003, the district court entered a judgment

that Eby take nothing on its claims against DART.5   Eby appeals,

challenging both of the district court’s rulings.

     4
          Rule 12(b)(6) forms a proper basis for dismissal for
failure to exhaust administrative remedies. Taylor v. United
States Treasury Dep’t, 127 F.3d 470, 476-78 & n.8 (5th Cir.
1997).

     5
          When a district court dismisses a claim under
Rule 12(b)(6) for failure to exhaust administrative remedies, the
dismissal is without prejudice to the claimant’s right to return
to court after it has exhausted its administrative remedies. See
Taylor, 127 F.3d at 478; Crawford v. Tex. Army Nat’l Guard, 794
F.2d 1034, 1035, 1037 (5th Cir. 1986).

                                 6
                       II.   Standard of Review

     The grant of a Rule 12(b)(6) motion to dismiss is reviewed

de novo.   Gregson v. Zurich Am. Ins. Co., 322 F.3d 883, 885 (5th

Cir. 2003).    Further, this court accepts “all well-pleaded facts

as true, viewing them in the light most favorable to the

plaintiff.”    Jones v. Greninger, 188 F.3d 322, 324 (5th Cir.

1999).   “Thus, the court should not dismiss [a] claim unless the

plaintiff would not be entitled to relief under any set of facts

or any possible theory that [it] could prove consistent with the

allegations in the complaint.”     Id.

                III.   Eby’s Breach-of-Contract Claim

     Eby maintains that the district court erred by requiring it

to exhaust DART’s administrative dispute-resolution process

before seeking relief for breach of contract in a court of law.

It challenges both the district court’s reliance on the parties’

contract and the court’s reliance on the dispute-resolution

procedures promulgated by DART at the direction of the Texas

Legislature.   Defending the district court’s judgment, DART

primarily contends that the doctrine of exhaustion of

administrative remedies requires Eby to submit its grievances to

DART’s administrative process before pursuing judicial review.

Alternatively, DART relies on both its bid solicitation and the

parties’ contract in maintaining that Eby agreed to exhaust

administrative remedies before seeking judicial review.

                                   7
     As DART asserts, Texas courts generally do require a party

to exhaust its administrative remedies before seeking judicial

review of the decision of a governmental entity.   See Tex. Dep’t

of Transp. v. Jones Bros. Dirt & Paving Contractors, Inc., 92
S.W.3d 477, 484-85 (Tex. 2002); Tex. Educ. Agency v. Cypress-

Fairbanks I.S.D., 830 S.W.2d 88, 89-90 & n.1 (Tex. 1992); Tex.

State Bd. of Exam’rs in Optometry v. Carp, 343 S.W.2d 242, 246-47

(Tex. 1961); Firefighters’ & Police Officers’ Civil Serv. Comm’n

v. Herrera, 981 S.W.2d 728, 732 (Tex. App.--Houston [1st Dist.]

1998, pet. denied); Caspary v. Corpus Christi Downtown Mgmt.

Dist., 942 S.W.2d 223, 226 (Tex. App.--Corpus Christi 1997, writ

denied); Bandera Downs, Inc. v. Alvarez, 824 S.W.2d 319, 321

(Tex. App.--San Antonio 1992, no writ); see also Glasscock

Underground Water Conservation Dist. v. Pruit, 915 S.W.2d 577,

580 (Tex. App.--El Paso 1996, no writ) (“In most instances, a

party must exhaust available administrative remedies before

resorting to the courts.” (citing Webb County Appraisal Dist. v.

New Laredo Hotel, Inc., 792 S.W.2d 952, 954 (Tex. 1990))).     But,

as Eby notes, none of these cases is precisely on point; they all

deal with administrative procedures codified in a statute.6

DART’s dispute-resolution process, by contrast, is found only in

its own procurement regulations and in the parties’ contract.

     6
          Cf. Taylor, 127 F.3d at 476-77 (applying the
“jurisprudential exhaustion doctrine” and dismissing plaintiff’s
suit against the IRS for failure to exhaust the IRS’s non-
statutory administrative procedure for Privacy Act requests).

                                8
Thus, this case presents a question of first impression in Texas-

-i.e., whether a contractor can sue a regional transportation

authority for breach of contract without first submitting its

claim to the authority’s administrative process.    As we explain

below, we conclude that the Texas Supreme Court, if faced with

this situation, would hold that Eby must first exhaust the

administrative remedies provided in DART’s regulations before

pursuing a breach-of-contract action in a court of law.      See,

e.g., Mayo v. Hartford Life Ins. Co., 354 F.3d 400, 406 (5th Cir.

2004) (stating the general rule that, when faced with an

unsettled question of substantive state law in a diversity case,

a federal court must make an “Erie-guess” as to how the state’s

highest court would answer the question).

     Eby asserts that, because DART lacks governmental immunity

from Eby’s breach-of-contract claim, Eby has the right to sue

without first exhausting administrative remedies.    Eby argues

that, under Texas law, DART waived its governmental immunity from

Eby’s breach-of-contract action by contracting with Eby.     Eby is

half right.   In Texas, governmental immunity embraces two

principles: “immunity from suit and immunity from liability.”

Travis County v. Pelzel & Assocs., Inc., 77 S.W.3d 246, 248 (Tex.

2002).   Thus, although Eby is correct that DART waived immunity

from liability by contracting with Eby, DART retains immunity

from suit on the contract, unless that immunity has been

expressly waived.   Id. (“When a governmental entity contracts

                                 9
with a private party . . . it is liable on its contracts as if it

were a private party.     But a governmental entity does not waive

immunity from suit simply by contracting with a private party.

Express consent is required to show that immunity from suit has

been waived.” (citations omitted)).

     Eby maintains that DART’s immunity from suit has been waived

by the Texas Legislature.    In Eby’s view, the Legislature waived

DART’s governmental immunity from suit by declaring in DART’s

enabling legislation that it “may sue and be sued.”      TEX. TRANSP.

CODE ANN. § 452.054(b).   Texas courts are divided, however, on

whether such language is sufficiently clear and unambiguous to

constitute a waiver of immunity.       See, e.g., Satterfield &

Pontikes Constr., Inc. v. Irving Indep. Sch. Dist., 123 S.W.3d
63, 65-68 (Tex. App.--Dallas 2003, no pet.) (disagreeing with

several other Texas Courts of Appeals and holding that “sue and

be sued” language does not waive a governmental entity’s

immunity).   In any event, Eby’s argument is beside the point.

Even if DART lacks governmental immunity, as Eby argues, Eby

would not be relieved of its obligation to exhaust administrative

remedies.

     Eby cites no authority for the proposition that a plaintiff

is only required to exhaust administrative remedies against a

defendant who enjoys governmental immunity.7      Cf. State v. Fid. &

     7
          Eby contends that General Services Commission v.
Little-Tex Insulation Co., 39 S.W.3d 591 (Tex. 2001), does stand

                                  10
Deposit Co. of Md., 127 S.W.3d 339, 345-47 (Tex. App.--Austin

2004, no pet.) (holding that the State waived its sovereign

immunity from the defendant’s counterclaims by filing suit, and

then separately analyzing whether the defendant’s counterclaims

must nonetheless be dismissed for failure to exhaust statutorily

prescribed administrative remedies).   On the contrary, since

DART’s administrative process culminates in the opportunity for

judicial review, it makes little sense to say that the process is

for such a proposition. But Little-Tex is inapposite. Recall
that, although the State of Texas waives immunity from liability
by entering into an agreement, it generally retains immunity from
suit on its contracts. In Little-Tex, the Texas Supreme Court
considered whether the State waives its immunity from suit by
accepting benefits under a contract. Id. at 595. The Court took
note of the Texas Legislature’s recent enactment of a detailed
statute governing the resolution of certain contract claims
against the State. See TEX. GOV’T CODE ANN. §§ 2260.001-.108
(Vernon 2000). (This statute does not apply to claims against
political subdivisions like DART. See id. § 2260.001(1), (4);
Stephens v. Dallas Area Rapid Transit, 50 S.W.3d 621, 632-34
(Tex. App.--Dallas 2001, pet. denied) (holding that DART is both
a governmental entity and “a legally constituted political
subdivision of the state”).) This newly enacted legislation
established an administrative process to which plaintiffs must
submit their claims before seeking the Legislature’s consent to
sue the State under Chapter 107 of the Texas Civil Practice and
Remedies Code. TEX. GOV’T CODE ANN. § 2260.005. The Court
rejected the plaintiffs’ waiver-by-conduct argument “in light of
the Legislature’s enactment of” this administrative process for
disposing of contract claims against the State. Little-Tex, 39
S.W.3d at 597. True, the Little-Tex opinion indicates that a
plaintiff does not have to submit to the administrative
procedures in Chapter 2260 of the Texas Government Code if she
has already obtained the Legislature’s consent to sue, since the
process serves as a prerequisite to requesting such consent. Id.
But, while the obligations of this particular administrative
scheme are tied to the existence of governmental immunity,
Little-Tex does not state, or even imply, that exhaustion of
administrative remedies is generally not required when a
defendant lacks governmental immunity from suit.

                               11
enforceable only if DART is immune from suit in a court of law.

Further, while Eby focuses heavily on the apparent waiver of

governmental immunity in DART’s enabling legislation, it ignores

the fact that the very same legislation also explicitly delegated

to DART the power to “adopt and enforce” dispute-resolution

procedures, TEX. TRANSP. CODE ANN. § 452.106(a)(2)(C) (emphasis

added), strongly suggesting that participation in those

procedures is not merely voluntary.   Put another way, the

Legislature’s waiver of DART’s governmental immunity does not

equate to permission for contractors to sue DART without first

submitting their claims to the statutorily authorized

administrative process.   Although the Legislature may have

intended to waive DART’s governmental immunity, it also seems to

have intended to require contractors to submit their claims to

DART’s administrative process before bringing suit.    To conclude

otherwise would fail to give effect to the language of Section

452.106(a)(2)(C).   See, e.g., Perkins v. State, 367 S.W.2d 140,

146 (Tex. 1963) (“[I]t is settled that every word in a statute is

presumed to have been used for a purpose; and a cardinal rule of

statutory construction is that each sentence, clause and word is

to be given effect if reasonable and possible.”).

     In addition, Eby--both by submitting a bid and by entering

into the contract--agreed to submit its claims to DART’s

                                 12
administrative process.8   Nevertheless, Eby contends that DART

cannot enforce Eby’s agreement to submit its disputes with DART

to DART’s administrative process because Eby has alleged material

breach.   Eby correctly states the general rule that, when a party

materially breaches a contract, the nonbreaching party can cease

performance and sue.   But the cases cited by Eby all involve

appeals from a verdict against the breaching party.   See Graco

Robotics, Inc. v. Oaklawn Bank, 914 S.W.2d 633, 637 (Tex. App.--

Texarkana 1995, no writ); Tribble & Stephens Co. v. Consol.

     8
          We note that this court has enforced a contractually
established disputes procedure in a federal government contract.
See Patton Wrecking & Demolition Co. v. TVA, 465 F.2d 1073 (5th
Cir. 1972). (Several years after we decided Patton Wrecking,
Congress enacted the Contract Disputes Act of 1978, as amended,
41 U.S.C. §§ 601-613, which requires federal government
contractors to submit their claims to an administrative dispute-
resolution process that is somewhat similar to DART’s, see id.
§§ 605-609.) Eby argues that we should not look to Patton
Wrecking for guidance, since the Wunderlich Act, 41 U.S.C.
§§ 321-322, governed judicial review of the administrative
determination in that case, see 465 F.2d at 1078. Eby portrays
the Wunderlich Act as a restrictive piece of legislation that
curtails the rights of contractors, and Eby asserts that Texas
law affords it greater rights than federal-government contractors
subject to the Act. But Eby fails to recognize that Congress
passed the Wunderlich Act to protect contractors and to overrule
a Supreme Court decision that essentially had eliminated, absent
fraud, judicial review of administrative determinations rendered
under disputes clauses in federal-government contracts. See
Revision Notes and Legislative Reports, 41 U.S.C.A. § 321 (West
1987); United States v. Wunderlich, 342 U.S. 98, 100-01 (1951).
The Wunderlich Act requires judicial review--under standards
substantially similar to those provided in DART’s regulations and
disputes clause--of administrative adjudications of disputes
arising under federal-government contracts. See 41 U.S.C.
§§ 321-322. We therefore view Patton Wrecking as a relevant
guidepost that counsels in favor of enforcing Eby’s promise to
exhaust administrative remedies.

                                13
Servs., Inc., 744 S.W.2d 945, 947 (Tex. App.--San Antonio 1987,

writ denied); Shintech Inc. v. Group Constructors, Inc., 688
S.W.2d 144, 147 (Tex. App.--Houston [14th Dist.] 1985, no writ);

see also Brown & Root U.S.A., Inc. v. J.I. Ramirez Constructors,

Inc., No. 04-95-00200-CV, 1997 WL 61488, at *3 (Tex. App.--San

Antonio Feb. 12, 1997, no writ) (not designated for publication)

(“Once a breach by Brown & Root was established, the contractual

conditions to seeking further relief were dispensed with or

relinquished by Brown & Root . . . .” (emphasis added)).   None

addresses a motion to dismiss for failure to exhaust

administrative remedies.   Eby provides no authority for the

proposition that, merely by alleging material breach, it can

avoid its obligation to exhaust administrative remedies before

pursuing its breach-of-contract claim in court.

     As we have said in the context of determining whether a

plaintiff has stated an actionable claim for relief, “[w]hile the

district court must accept as true all factual allegations in the

complaint, it need not resolve unclear questions of law in favor

of the plaintiff.”   Kansa Reins. Co. v. Cong. Mortgage Corp. of

Tex., 20 F.3d 1362, 1366 (5th Cir. 1994) (citation omitted).

Similarly, we believe (contrary to Eby’s assertion) that the

district court, in adjudicating DART’s Rule 12(b)(6) motion to

dismiss for failure to exhaust administrative remedies, was not

required to treat the contract between DART and Eby as having

been materially breached and therefore rescinded.   Accordingly,

                                14
we conclude that Eby’s allegation of material breach does not

prevent enforcement of its promise to exhaust DART’s

administrative dispute-resolution process before filing suit.9

     In sum, the Texas Legislature has delegated to DART the

authority to adopt and to enforce administrative procedures for

resolving disputes with its contractors, and Eby has agreed to

submit its contractual disputes with DART to DART’s

administrative process.    Having failed to exhaust its

administrative remedies, Eby nonetheless seeks to proceed with

this suit.   We conclude that, if the Texas Supreme Court were to

confront this situation, it would hold that Eby must exhaust the

administrative remedies provided in DART’s dispute-resolution

procedures before seeking relief on the parties’ contract in a

court of law.

                 IV.   Eby’s Misrepresentation Claim

     Viewing Eby’s misrepresentation claim as one sounding in

tort, the district court dismissed it as barred by governmental

immunity.    Although Eby concedes that DART enjoys immunity from

tort claims, Eby asserts that the district court erred in

dismissing its misrepresentation claim because (says Eby) it is a

     9
          Eby also complains that DART’s administrative
procedures and the disputes clause of the parties’ contract
impermissibly limit the remedies that it can seek for breach of
contract. We do not decide here the remedies that will be
available to Eby in a subsequent proceeding in federal or state
court after it properly has exhausted DART’s administrative
process.

                                  15
quasi-contractual cause of action--not a tort claim.    This, Eby

reasons, is because Texas law recognizes an equitable right to

rescind a contract when one of the parties was induced to enter

into the contract by a misrepresentation of fact, such as

inadequate bid specifications.    Eby therefore concludes that

governmental immunity does not bar its quasi-contractual

misrepresentation claim against DART.

     DART rejects Eby’s characterization of this claim as quasi-

contractual, asserting that causes of action based on

misrepresentation sound in tort under Texas law.    Thus, DART

concludes that the district court correctly dismissed Eby’s

misrepresentation claim as barred by governmental immunity.

Alternatively, DART maintains that its administrative process

covers this claim, regardless of whether it is labeled a contract

claim or a tort claim.   DART therefore contends that, even if it

is not immune from this claim, Eby must still exhaust the claim

before seeking judicial review.

     We begin by pointing out that Eby’s misrepresentation claim

appears to be redundant to its first cause of action for breach

of contract.   In its complaint, Eby’s primary allegation in

support of its breach-of-contract claim is that the designs

contained in DART’s bid solicitation were materially inadequate

and that DART therefore breached its duty to furnish reasonably

accurate bid information.   Then, under the heading

“misrepresentation,” Eby averred that it had justifiably relied

                                  16
to its detriment on misrepresentations made by DART in its bid

materials to the effect that those materials were sufficiently

accurate to be relied on for development of a bid price.           While

the language employed differs somewhat, the gravamen of both of

Eby’s claims is that DART’s bid specifications contained material

misrepresentations.

     When pressed at oral argument to identify the difference

between its two claims, Eby responded by noting that it alleged,

in its first count, that DART’s breach involved refusal to

cooperate with Eby in resolving the problems caused by the

deficient bid materials.          Thus, Eby asserted that its first claim

encompasses performance issues, which are not duplicated by the

misrepresentation claim.          Even so, Eby has shown only that its

first claim includes allegations not present in its second claim;

it has not demonstrated that the averments in its second claim

add to what is alleged in the first count.          Moreover, Eby seeks

the same contractual relief on both claims: rescission and

recovery in quantum meruit.          Eby’s misrepresentation claim is,

therefore, just a subset of its breach-of-contract claim.

     With this in mind, it is clear that Eby’s misrepresentation

claim, as it is presented here, is a contractual one.           See

RESTATEMENT (SECOND)   OF   CONTRACTS § 164(1) (1981) (“If a party’s

manifestation of assent is induced by either a fraudulent or a

material misrepresentation by the other party upon which the

recipient is justified in relying, the contract is voidable by

                                       17
the recipient.”).   Thus, the district court erred in dismissing

this claim as a tort claim barred by governmental immunity.

Nevertheless, we affirm the district court’s dismissal of Eby’s

misrepresentation claim.    Since DART’s administrative process is

certainly broad enough to encompass this claim, see supra Part

I(A), it also must be exhausted, for the reasons discussed above

in Part III.   We accordingly affirm the district court’s

dismissal of this claim, although not on the basis of

governmental immunity.     See, e.g., Chiu v. Plano Indep. Sch.

Dist., 339 F.3d 273, 283 (5th Cir. 2003) (“This Court may affirm

on grounds other than those relied upon by the district court.”).

                            V.   Conclusion

     Accordingly, we affirm the judgment of the district court

dismissing Eby’s suit.

                                   18