341 S.W.3d 16
Tex. App.2010Background
- Lease agreement: 60-month term signed November 2007 for additional space; construction addendum required Hoppenstein to renovate per MCAD-approved floor plan; renovations to be completed in workmanlike manner and in compliance with codes; MCAD retained right to inspect and object to deficiencies; commencement date to be set upon completion of renovations and a commencement letter signed.
- Hoppenstein alleges renovations completed by May 1, 2008 and MCAD occupied renovated premises thereafter; Hoppenstein claims MCAD breached by interfering with renovations, not paying rent after May 31, 2008, not paying for authorized renovation extras, and abandoning premises June 1, 2009; Hoppenstein seeks past damages for first three components and future damages for anticipatory breach.
- MCAD answers with denial and immunity defenses; moves to dismiss future-damage portion as protected by governmental immunity; argues lease never commenced due to incomplete renovations.
- The court previously held the lease not a contract for goods or services under §271.152, but granted rehearing to reconsider in light of Kirby Lake Development; on rehearing, the court reverses and finds waiver applies to the lease.
- Issue framing: whether the lease is a contract for services triggering §271.152 waiver; whether waiver is contract-by-contract rather than promise-by-promise; court addresses scope of damages for anticipatory breach and classifies damages as direct rather than consequential.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is MCAD’s immunity waived under §271.152 because the lease provides services to MCAD? | Hoppenstein; lease includes mandatory renovations for MCAD; constitutes services | MCAD; immunity not waived for post-abandonment rents | Yes; lease constitutes services and §271.152 waiver applies |
| Does §271.152 waiver apply on a contract-by-contract basis rather than promise-by-promise? | Waiver covers all damages flowing from the services provisions | Waiver limited to breaches of service provisions only | Waiver applies to the contract’s service provisions; damages for anticipatory breach recoverable as direct damages |
Key Cases Cited
- Kirby Lake Dev., Ltd. v. Clear Lake City Water Auth., 320 S.W.3d 829 (Tex. 2010) (contract to construct infrastructure is a contract for services under §271.152)
- Ben Bolt-Palito Blanco Consol. Indep. Sch. Dist. v. Tex. Political Subdivisions Prop./Cas. Joint Self-Ins. Fund, 212 S.W.3d 320 (Tex. 2006) (statutory waiver scope relevant to local government contracts)
- Dixon v. Modelist, 157 S.W.3d 454 (Tex.App.-Houston [14th Dist.] 2004) (anticipatory breach damages for future rentals)
- Austin Hill Country Realty, Inc. v. Palisades Plaza, Inc., 948 S.W.2d 293 (Tex. 1997) (present value of future rentals in anticipatory breach)
- Randall's Food & Drugs, L.P. v. Patton, 2008 WL 3876149 (Tex.App.-Houston [1st Dist.] 2008) (mem. op. (lost))
- Mood v. Kronos Prods., Inc., 245 S.W.3d 8 (Tex.App.-Dallas 2007) (lost profits as damages under contract)
- Cherokee County Cogeneration Partners, L.P. v. Dynegy Mktg. & Trade, 305 S.W.3d 309 (Tex.App.-Houston [14th Dist.] 2009) (lost profits may be direct or consequential damages)
- Miga v. Jensen, 96 S.W.3d 207 (Tex. 2002) (definition of lost profits and damages)
- In re Bank One, N.A., 216 S.W.3d 825 (Tex.2007) (documents incorporated by reference form part of contract)