Clear Creek Independent School District v. Cotton Commerical USA, Inc. F/K/A Cottonwood Debris Company, LLC
529 S.W.3d 569
Tex. App.2017Background
- After Hurricane Ike, Clear Creek ISD (CCISD) entered a written Restoration Service Agreement with Cotton Commercial (Cotton) for “restoration services”; Cotton subcontracted debris removal to Cottonwood.
- Cottonwood billed CCISD on a per-crew basis; CCISD later discovered fabricated crew sheets and fuel tickets and stopped further payments, paying roughly half of charges for debris removal.
- Cotton Commercial invoked an arbitration clause and asserted a counterclaim for breach seeking unpaid contract balance (~$705,000); an arbitrator found CCISD materially breached and awarded Cotton ~$669,122.60 (offsetting $36,000 for work not done) and found Cotton/Cottonwood had made false representations.
- Cotton Commercial moved to confirm the arbitration award in district court; CCISD filed a plea to the jurisdiction asserting governmental immunity under Texas law and alternatively moved to vacate the award.
- The trial court denied CCISD’s plea and confirmed the award; the court of appeals affirmed, holding the Restoration Agreement was a “contract subject to” chapter 271 and thus CCISD waived immunity for breach adjudication.
Issues
| Issue | Plaintiff's Argument (CCISD) | Defendant's Argument (Cotton) | Held |
|---|---|---|---|
| Whether trial court had subject-matter jurisdiction to confirm arbitrator’s award given governmental immunity | Restoration Agreement lacks an essential term (no written scope of work), so §271.152 waiver does not apply; immunity bars suit and confirmation | Agreement is a written contract for services that states essential terms; chapter 271 waived immunity so court has jurisdiction to confirm award | Court held agreement met §271.151(2) (essential terms satisfied); §271.152 waiver applies; trial court had jurisdiction to confirm award |
| Whether arbitrator’s resolution of immunity precludes court review | Arbitrator’s award exceeded authority because immunity remains; award should be vacated | Arbitrator’s findings are conclusive; arbitration decision precludes relitigation | Court ruled immunity questions are for judiciary; arbitrator’s legal conclusions not binding on jurisdictional review; court reviews de novo |
| Whether the contract’s lack of detailed “debris-removal” description prevents waiver for debris claim | Absence of explicit “debris removal” term means contract isn’t for those services | Parties’ performance, contract language (restoration services, authority to subcontract), and evidence make scope sufficiently definite | Court held “restoration services” sufficiently definite; parties’ performance clarified scope; waiver applies to debris claim |
| Whether interest award exceeded waiver under §271.153 | Interest is equitable and immunity to equitable claims remains | §271.153 allows "interest as allowed by law" so interest is authorized; immunity waived for interest | Court held §271.153 authorizes pre- and post-judgment interest; immunity does not bar interest award |
Key Cases Cited
- Cotton Commercial USA, Inc. v. Clear Creek Indep. Sch. Dist., 387 S.W.3d 99 (Tex. App.—Houston [14th Dist.] 2012) (prior appeal compelling arbitration)
- Rusk State Hosp. v. Black, 392 S.W.3d 88 (Tex. 2012) (governmental immunity implicates jurisdiction)
- Reata Constr. Corp. v. City of Dallas, 197 S.W.3d 371 (Tex. 2006) (judiciary decides immunity and waiver issues)
- City of Houston v. Williams, 353 S.W.3d 128 (Tex. 2011) (standards for §271.152 waiver; essential terms include time, price, services)
- Lubbock Cty. Water Control & Improvement Dist. v. Church & Akin, L.L.C., 442 S.W.3d 297 (Tex. 2014) (any written contract stating essential terms for providing services triggers §271 waiver)
- Fischer v. CTMI, L.L.C., 479 S.W.3d 231 (Tex. 2016) (contract definiteness, role of part performance and avoiding forfeiture)
- Kirby Lake Dev., Ltd. v. Clear Lake City Water Auth., 320 S.W.3d 829 (Tex. 2010) (what constitutes essential terms of a written agreement)
- Tex. Nat. Res. Conservation Comm’n v. IT-Davy, 74 S.W.3d 849 (Tex. 2002) (only legislature can waive sovereign immunity)