Wheelabrator Air Pollution Control, Inc. v. City of San Antonio Acting Through the City Public Service Board of San Antonio, Texas
489 S.W.3d 448
Tex.2016Background
- In 2004 CPS Energy (the City of San Antonio’s municipal utility) contracted with Wheelabrator to design and build pollution‑control equipment for a CPS Energy coal‑fired power plant; Wheelabrator completed work and CPS Energy withheld the 10% contract retainage.
- Wheelabrator sued in 2011 for breach of contract (or quantum meruit) and sought attorney’s fees, alleging CPS Energy unlawfully withheld payment.
- CPS Energy asserted governmental immunity and argued Chapter 271’s pre‑2005 version (in effect when the contract was executed) did not authorize recovery of attorney’s fees; it moved to dismiss Wheelabrator’s attorney’s‑fees claims for lack of jurisdiction.
- The trial court consolidated related cases, granted CPS Energy’s plea to the jurisdiction as to attorney’s fees, and dismissed those claims; the court of appeals affirmed and the case came to the Texas Supreme Court.
- The central legal question before the Court was whether CPS Energy acted in a proprietary or governmental capacity when it entered the contract, because proprietary acts are not shielded by governmental immunity and would permit Wheelabrator’s suit to proceed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether CPS Energy acted in a proprietary or governmental capacity when it contracted for utility pollution‑control work | Wheelabrator: operation of a public utility is proprietary; contract arises from proprietary function | CPS Energy: not disputed that utility operations generally proprietary, but immunity and statutory limits control recovery of fees | Held: CPS Energy acted in a proprietary capacity (operation of a municipal utility), so governmental immunity does not bar the suit |
| Whether Wheelabrator’s claim for attorney’s fees is barred by governmental immunity | Wheelabrator: attorney’s fees are ancillary to the breach‑of‑contract claim and follow its proprietary nature; immunity inapplicable | CPS Energy: Chapter 271 as written in 2004 did not waive immunity for attorney’s fees; plea to jurisdiction is proper to dismiss fees claim | Held: Because underlying contract claim arises from a proprietary function, immunity does not bar the attorney’s‑fees claim; court did not decide merits of entitlement to fees |
| Whether a plea to the jurisdiction may be used to resolve entitlement to attorney’s fees | Wheelabrator: plea to jurisdiction cannot resolve merits and is premature; discovery may develop waiver/contract bases | CPS Energy: jurisdictional facts are undisputed and statute controls; dismissal appropriate | Held: Court framed the plea as proper to resolve immunity; because immunity did not apply, the plea dismissal of fees was improper; merits left for trial |
| Whether Chapter 271’s 2004 text limits recovery such that attorney’s fees cannot be awarded | Wheelabrator: additional development may show contractual or statutory bases; merits unresolved | CPS Energy: the pre‑2005 statute disallowed fees for such contracts so claim fails | Held: Court did not resolve statutory‑merits question because immunity issue controlled; remanded for further proceedings |
Key Cases Cited
- Rusk State Hosp. v. Black, 392 S.W.3d 88 (Tex. 2012) (immunity from suit implicates subject‑matter jurisdiction)
- Texas Dep’t of Parks & Wildlife v. Miranda, 133 S.W.3d 217 (Tex. 2004) (scope and procedure for plea to the jurisdiction review)
- PKG Contracting, Inc. v. City of Mesquite, 197 S.W.3d 388 (Tex. 2006) (use of TTCA classifications to determine proprietary vs. governmental capacity in contract disputes)
- Tooke v. City of Mexia, 197 S.W.3d 325 (Tex. 2006) (borrowing TTCA classifications in contract‑claims context)
- San Antonio Indep. Sch. Dist. v. City of San Antonio, 550 S.W.2d 262 (Tex. 1977) (municipal operation of a public utility is a proprietary function)
- Bland Indep. Sch. Dist. v. Blue, 34 S.W.3d 547 (Tex. 2000) (purpose and effect of dilatory pleas to the jurisdiction)
- Wells Fargo Bank NA v. Murphy, 458 S.W.3d 912 (Tex. 2015) (Texas follows the American Rule: attorney’s fees recoverable only by statute or contract)