Clear Lake City Water Authority v. Friendswood Development Co.
344 S.W.3d 514
| Tex. App. | 2011Background
- Consolidated appeals on remand from the Texas Supreme Court involving Clear Lake City Water Authority (Authority) and Developers (Kirby Lake, Miter, Taylor Lake, Friendswood).
- Developers built water/sewer facilities under pre-funding agreements; Authority would operate under a rent-free lease and buy facilities with bond funds reimbursing ~70% of construction.
- Two 1998 bond elections included reimbursement measures; 2004 election did not, but voters approved bonds for purchase; Authority breached by omitting the 2004 measure.
- Trial court granted summary judgments for Developers; appellate court initially reversed then was directed by Supreme Court to reconsider contract interpretation.
- Supreme Court held Authority breached by failing to include the 2004 bond measure; issues on remand concern causation, interest, and equitable relief.
- On remand, Kirby Lake plaintiffs awarded damages; Friendswood case involved a separate damages award and challenged interest and injunctive relief.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Causation and breach impact on condition precedent | Developers: breach prevented voter approval, excusing nonoccurrence. | Authority: nonoccurrence not excused; could show voters would reject bonds. | Developers win: breach excused nonoccurrence; causation established. |
| Interest under Purchase Price formula | Damages recoverable under benefit-of-the-bargain; formula applies even without bonds issued. | Without bonds, rate cannot be determined; rate should be zero. | Kirby Lake: damages recoverable; Friendswood: remand on interest amount due under 3.02. |
| Pre- and post-judgment interest | Contract rate applies per section 3.02; rate aligns with agreement. | Statutory rates govern when contract rate applies only to purchase price. | Kirby Lake: authority to apply statutory rates; Friendswood: remand on 3.02 interest for Friendswood. |
| Writ of execution and injunctive relief | Writs and tax-levy provisions are authorized remedies under law. | Writs/injunction may be improper or premature. | Kirby Lake: premature to rule on writ; Friendswood: Water Code §49.066(b) permits tax levy to pay judgment. |
Key Cases Cited
- Kirby Lake Development Ltd. v. Clear Lake City Water Authority, 320 S.W.3d 829 (Tex. 2010) ( Supreme Court reversing contract interpretation and holding breach for failure to include 2004 bond measure)
- Clear Lake City Water Auth. v. Kirby Lake Dev., Ltd., 274 S.W.3d 41 (Tex. App.-Hou. [14th Dist.] 2008) (contract interpretation reversed, then remanded by Supreme Court)
- Clear Lake City Water Auth. v. Friendswood Dev. Co., 2008 WL 5131932 (Tex.App.-Hou. [14th Dist.] Dec. 9, 2008) (mem. op.) (Tex. App.-Hou. [14th Dist.] 2008) (mem. op. reversed by Kirby Lake IV on contract issues)
- Mays v. Pierce, 203 S.W.3d 564 (Tex.App.-Hou. [14th Dist.] 2006) (damages measured to restore party to position absent breach)
- Miga v. Jensen, 96 S.W.3d 207 (Tex. 2002) (damages measured by difference in economic position under contract)
- Italian Cowboy Partners v. Prudential Ins. Co. of Am., 341 S.W.3d 323 (Tex. 2011) (damages evidence regarding money needed to restore position)
- Keck, Mahin & Cate v. Nat'l Union Fire Ins. Co. of Pittsburgh, 20 S.W.3d 692 (Tex. 2000) (causation and damages principles cited in contract damages)