City of Galveston, Dorothy Palumbo, City Attorney and Sterling W. Patrick, Director of Grants and Housing v. CDM Smith, Inc.City of Galveston, Dorothy Palumbo, City Attorney and Sterling W. Patrick, Director of Grants and Housing v. CDM Smith, Inc.
Roland Garcia, Houston, TX, for Appellee.
Panel consists of Justices Jamison, Busby, and Brown.
OPINION
Martha Hill Jamison, Justice
When the legislature enacted chapter 271 of the Local Government Code, it loosened the immunity bar so “that all local governmental entities that have been given or are given the statutory authority to enter into contracts shall not be immune from suits arising from those contracts.”1 In five issues, appellants City of Galveston, Dorothy Palumbo, and Sterling W. Patrick challenge the trial court‘s denial of their plea to the jurisdiction, contending that they are immune from suit in conjunction with claims arising from the City‘s contract with appellee CDM Smith, Inc.2 Concluding the City‘s immunity has been waived as to CDM‘s breach of contract claim, we affirm the trial court‘s denial of the plea to the jurisdiction as to that claim. As to CDM‘s other claims, we reverse the trial court‘s order denying the City‘s plea to the jurisdiction and render judgment granting the plea and dismissing those claims for lack of jurisdiction.
Background
Congress enacted the
The City and CDM have divergent views regarding the nature of their agreement. The City argues it is a “platform for further activities“; that through it, the City could authorize the Program Administrator to perform services for the City; and without such further authorizations, the parties had no obligations to provide or pay for services. CDM asserts that the agreement is a services contract requiring CDM to provide professional management
When CDM completed services for the City, CDM would submit invoices to the City, and the City would review the invoices for compliance with HUD and State requirements and then forward them to the responsible state agency for payment.3 The agency would then release Program funds to pay for CDM‘s services.
The City fell behind on payments, and the parties executed a task order modification that was made part of the contract and required the City to process and submit invoices for payment within 15 days of receiving an invoice from CDM. CDM sued the City and Palumbo and Patrick, in their official capacities, after the City purportedly stopped submitting invoices for payment. CDM asserted claims for breach of contract, violation of the
Discussion
The City argues it is entitled to immunity from suit because none of the potential theories of waiver of immunity asserted by CDM apply to the facts of this case. CDM asserts immunity has been waived under the following theories: (1)
The City is a local governmental entity. See Lubbock Cnty. Water Control & Imp. Dist. v. Church & Akin, L.L.C., 442 S.W.3d 297, 300 & n. 4 (Tex.2014);
A suit asserting that a government officer “acted without legal authority” and seeking to compel the official “to comply
We review a plea challenging the trial court‘s jurisdiction de novo.5 State v. Holland, 221 S.W.3d 639, 642 (Tex.2007). We first look to the pleadings to determine if the pleader has alleged facts that affirmatively demonstrate the court‘s jurisdiction to hear the cause. Tex. Dep‘t of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 226 (Tex.2004). We construe the pleadings liberally in favor of the plaintiff, look to the pleader‘s intent, and accept as true the factual allegations in the pleadings. Id. If the issue is one of pleading sufficiency, the plaintiffs should be afforded the opportunity to amend unless the pleadings affirmatively negate jurisdiction. Id. at 227.
When a plea to the jurisdiction challenges the existence of jurisdictional facts, we consider relevant evidence submitted by the parties. See id. at 227. The standard of review for a jurisdictional plea based on evidence “generally mirrors that of a summary judgment under Texas Rule of Civil Procedure 166a(c).” Id. at 228. Under this standard, we credit evidence favoring the nonmovant and draw all reasonable inferences in the nonmovant‘s favor. See id. The defendant must assert the absence of subject-matter jurisdiction and present conclusive proof that the trial court lacks subject-matter jurisdiction. Id. If the defendant discharges this burden, the plaintiff must present evidence sufficient to raise a material issue of fact regarding jurisdiction, or the plea will be sustained. Id.
I. Waiver of Immunity for Contracts for Services
In its fourth issue, the City contends, with regard to CDM‘s breach of contract claim, that the City‘s immunity from suit was not waived under chapter 271 of the Local Government Code.6 Under chapter 271, the legislature waived sovereign immunity as to local governmental entities that enter into contracts for goods or services for the purpose of adjudicating claims for breach of contract.
A. Essential Terms of the Contract
The City argues the contract does not include an essential term of the parties’ agreement because the City‘s payment obligation was contingent on receipt of funds from the State. CDM contends this argument has been waived because the City raised it for the first time on appeal. CDM further argues that the pay-
The City cites two cases in support of its argument that the contract does not include the parameters for payment as an essential term. In the first case, ICI Construction provided repairs of damage caused to Orangefield Independent School District facilities by Hurricane Rita. ICI Const., Inc. v. Orangefield Indep. Sch. Dist., 339 S.W.3d 235, 236-37 (Tex.App.-Beaumont 2011, no pet.). ICI argued that purchase orders, pay applications, checks, and admissions of the District‘s superintendent, when read together, constituted the essential terms necessary for the formation of a written contract between ICI and the District for the repair work. Id. at 238. The court concluded that these documents did not comprise the essential terms of the parties’ agreement because itemized invoices provided to the District by ICI did not show the amount the District agreed to pay for the repairs and none of the documents showed which properties were to be repaired. Id. at 239-40.
In the other case, the City of Lubbock Water District leased property to be used as a lake marina, restaurant, gas station, and recreational facility. Church & Akin, 442 S.W.3d at 299. In holding that the lease was not a contract to provide goods or services to the Water District, the supreme court noted that chapter 271‘s waiver of immunity “will typically apply only to contracts in which the governmental entity agrees to pay the claimant for the goods or services that the claimant agrees to provide to the governmental entity.” Id. at 304. The lease contained no terms in which the Water District agreed to pay the lessee for services. Id. at 305.
Here, by contrast, the contract identifies the maximum compensation to be paid to CDM ($23,028,023), the scope of work to be compensated, and the procedure for payment. The contract initially provided that payment was contingent on the City‘s receipt of funds. However, the original contract was later modified by the parties, altering the payment parameters. Under the modification, payments for “completed milestones” were to be “processed and submitted” by the City to the responsible state agency within 15 days of receiving an invoice from CDM. Moreover, progress payments of the prior balance owed to CDM were to be made according to a specified schedule. Because the contract and its modification set forth the City‘s basic obligations with regard to payment, we conclude they include that essential term of the parties’ agreement. See Kirby Lake Dev., Ltd. v. Clear Lake City Water Auth., 320 S.W.3d 829, 838 (Tex.2010) (noting written contracts stated essential terms because names of the parties, property at issue, and basic obligations were clearly outlined).
B. Services Provided to the City
The City also argues that the contract was not for services to the City; rather its purpose was “to identify and direct funds to citizens whose homes were in need of repair due to damages suffered by Hurricane Ike.” CDM argues that the contract identifies many services to be provided directly to the City, including “professional management and operational services“; assisting the City‘s Grants and Housing Department with Program design, the pre-application and application processes, “project development and implementation, bidding, pre-construction,
Waiver of immunity is triggered by the mere act of entering into a contract for goods or services. W. Tex. Mun. Power Agency v. Republic Power Partners, L.P., 428 S.W.3d 299, 308 (Tex.App.-Amarillo 2014, no pet.) (citing
The City cites three cases in support of the argument that the contract does not provide for services to the City. See Church & Akin, 442 S.W.3d at 303; City of El Paso v. High Ridge Const., Inc., 442 S.W.3d 660, 670 (Tex.App.-El Paso 2014, pet. filed); E. Houston Estate Apartments, L.L.C v. City of Houston, 294 S.W.3d 723, 734 (Tex.App.-Houston [1st Dist.] 2009, no pet.). Each case is distinguishable from the facts of this case.
In the first case, as set forth above, Church & Akin leased a marina from the Lubbock County Water Control and Improvement District. Church & Akin, 442 S.W.3d at 303. The lease prohibited Church & Akin from using the premises for any other purpose than as a marina without consent.8 Id. Church & Akin argued that by operating the marina it was providing a service to the Water District. Id. at 302. The supreme court disagreed because under the lease, the Water District did not contractually obligate Church & Akin to operate a marina—it only restricted Church & Akin from using the premises for a different purpose without consent. Id. at 303. The court concluded, “When a party has no right under a contract to receive services, the mere fact that it may receive services as a result of the contract is insufficient to invoke chapter 271‘s waiver of immunity.” Id.
In the second case, the City of Houston loaned East Houston Estate Apartments funds, furnished by the federal government, to assist in the rehabilitation of an apartment complex. E. Houston Estate Apartments, 294 S.W.3d at 726. The Apartments argued that because the terms of the loan agreement and restrictive covenants restricted the amount of rent to be charged, they were providing low-income housing as a service to the City. Id. at 734. The First Court of Appeals disagreed, concluding that although the City would benefit in a general way from having the apartment complex re-
furbished, the loan agreement did not obligate the Apartments to provide any services directly to the City. Id. at 736. Instead, the benefit ran from the federal government to the Apartments, not to the City. Id.
In the third case, the El Paso Court of Appeals held that a contract between the City of El Paso and High Ridge Construction required High Ridge to provide services to the City. High Ridge Const., 442 S.W.3d at 670. Although the primary purpose of the contract was to provide weatherization services to private citizens, High Ridge also was required to provide a warranty on its work to its clients and the City and indemnify and defend the City from any causes of action or claims arising from High Ridge‘s actions. Id. The court acknowledged that the weatherization services themselves did not provide a direct benefit to the City, but the warranty and indemnification provisions did, and thus immunity was waived under chapter 271.9 Id. at 669-70.
In the first two cases, the governmental entity either did not receive—or was not entitled to receive—a direct benefit. In the third case, although the weatherization service did not benefit the City of El Paso directly, other provisions of the contract did. In this case, although the services provided under the agreement benefitted individual citizens of Galveston, the City also enjoyed direct benefits through CDM‘s providing management and operational services, assisting the City‘s Grants and Housing Department with the Program, and developing and completing a neighborhood master plan and housing market study that the City would own. We conclude the agreement in this case provides services to the City.
Our sister courts have reached similar conclusions. A contract for consultants to provide feasibility studies and financing options for providing a municipal power agency with electric energy provided services to the agency, W. Tex. Mun. Power Agency, 428 S.W.3d at 309; a development agreement required a real estate developer to provide services to a city by constructing a road, designing and constructing a turn lane, and working with the Texas Department of Transportation concerning location, alignment, design and construction of the lane, Town of Flower Mound v. Rembert Enters., Inc., 369 S.W.3d 465, 473 (Tex.App.--Fort Worth 2012, pet. denied); and a contract requiring San Antonio Water System to identify, pursue, and find feasibility studies that subsequently became property of the Lower Colorado River Authority provided services to the River Authority, City of San Antonio ex rel. San Antonio Water Sys. v. Lower Colo. River Auth., 369 S.W.3d 231, 235 (Tex.App.-Austin 2011, no pet.), disagreed with on other grounds by Zachry Const. Corp. v. Port of Houston Auth. of Harris Cnty., 449 S.W.3d 98, 109-10 (Tex.2014).
We overrule appellants’ fourth issue.
II. Claim for Interest under Prompt Payment Act
In its third issue, the City contends that the
We therefore do not reach appellants’ third issue.
III. Ultra Vires Breach of Contract Claims
In its second issue, the City asserts that CDM‘s ultra vires claims against Patrick are barred because CDM seeks retrospective monetary relief.10 CDM argues that it seeks prospective relief compelling Patrick and Palumbo to correct violations of law in the future by “processing and sending CDM[‘s] invoices to the [Land Office]” and “carrying out the City‘s prior determination to approve for payment $6 million of CDM Smith‘s invoices.”
We note that CDM‘s ultra vires claims were brought against both Patrick and Palumbo and CDM seeks a declaratory judgment that Patrick and Palumbo are acting outside of their authority and contrary to law by: 1) maintaining that [the task order modifying the contract] changed the [contract] from a “time and materials” contract to a “performance-based contract;” 2) refusing to approve the CDM invoices and send them to the State for payment; 3) failing to comply with HUD directives; and 4) violating the
CDM also seeks a writ of mandamus to compel Patrick and Palumbo “to approve the CDM invoices for payment and submit them to the [Land Office], to have CDM[‘s] invoices paid, and to promptly produce the requested documents as ordered by the Texas Attorney General.”11
We first discuss CDM‘s ultra vires claims one through three, which relate to alleged breaches of contract by the City. We note that CDM has not alleged a statutory or constitutional provision that Patrick and Palumbo allegedly violated as to these claims. However, because we conclude that CDM‘s pleadings affirmatively negate jurisdiction in that CDM seeks retrospective monetary relief, we need not decide whether CDM properly alleged a violation of law.
In every suit against a governmental entity for money damages, a court must first determine the parties’ contractual or statutory rights. Id. at 374. If the sole purpose is to obtain a money judgment, immunity is not waived. Id. As set forth above, this does not mean that a judgment involving the payment of money necessarily implicates immunity. Id. However, a plaintiff may not convert a claim for payment of a past due sum (damages) into a prayer for an injunction against refusing to pay the sum, for a declaration that the sum must be paid, or for an order reversing a governmental entity‘s decision not to pay. Id.
CDM cites Heinrich in support of its claims for relief as to its ultra vires contract claims. However, the relief CDM seeks is distinguishable from that requested in Heinrich. In Heinrich, the plaintiff requested prospective injunctive relief regarding her claims as a widow over pension benefit payments. Id. at 369. The widow had been receiving monthly payments, but the pension fund reduced her payments by one-third when her son turned 23. Id. The widow brought ultra vires claims against the board members in their official capacities and sought declaratory and injunctive relief reinstating full pension benefit payments. Id. at 369-70. The monthly pension benefit payments were future recurring benefits, and the widow only sought to have them increased to their original amount. Id. at 377.
As Heinrich made clear, immunity for an ultra vires act is only a waiver with regard to bringing future acts into compliance with the law. Id. at 376; see Multi-Cnty. Water Supply Corp. v. City of Hamilton, No. 10–11-00037-CV, 2012 WL 579554, at *5 (Tex.App.-Waco Feb. 22, 2012, pet. denied) (mem.op.). A suit brought under the ultra vires acts waiver of governmental immunity thus cannot be used to obtain monetary relief for past damages from such acts. Heinrich, 284 S.W.3d at 374-76; City of Hamilton, 2012 WL 579554, at *5. Private parties cannot circumvent governmental immunity by characterizing a contract dispute seeking monetary damages as a declaratory-
Here, the alleged breaches of contract—based on the City‘s refusal to approve CDM‘s invoices and submit them for payment in a timely manner—have already occurred and are not recurring because the contract has expired and CDM is no longer providing services to the City.12 CDM seeks to compel the City to submit invoices to be paid by the Land Office. These claims are based on alleged past breaches of contract—for which money damages are available—disguised as claims for prospective relief. See, e.g., id., 74 S.W.3d at 856 (noting plaintiff could not confer jurisdiction on trial court by characterizing breach of contract claim as a declaratory judgment claim); City of Hamilton, 2012 WL 579554, at *5 (holding when plaintiff alleged only that governmental officials acted contrary to contract, claim was simply a breach of contract suit to enforce plaintiff‘s interpretation of the contract); Tex. Logos, L.P. v. Tex. Dep‘t of Transp., 241 S.W.3d 105, 121-22 (Tex.App.-Austin 2007, no pet.) (“[A] declaratory claim that would be proper if asserted to compel the state to act within its statutory powers prospectively may nonetheless be barred by sovereign immunity to the extent it alleges past statutory violations that implicate a right to money damages.“). Accordingly, we conclude these claims are for retrospective relief, and thus CDM‘s pleadings affirmatively negate jurisdiction as to these claims, as they are related to the City‘s alleged past breaches of contract.
Because CDM‘s pleadings affirmatively negate jurisdiction as to CDM‘s ultra vires contractual claims, we conclude the trial court lacked jurisdiction over them. We sustain appellants’ second issue.
IV. Public Information Act Claims
In its fifth and final issue, the City asserts that its immunity has not been waived as to CDM‘s claims under the
The Act waives immunity for requestors seeking to compel a governmental body to make information available for public inspection under certain circumstances. City of El Paso v. Abbott, 444 S.W.3d 315, 322 (Tex.App.-Austin 2014, pet. filed). As relevant here, a requestor who submits a request to a governmental body for inspection or copies of public information may file suit for a writ of mandamus compelling a governmental body to make information available for public inspection if the government body refuses to supply information that the attorney general has determined is public information subject to disclosure.
The City submitted evidence establishing the following undisputed facts. CDM made two requests for documents. Palumbo, as City Attorney, sought a ruling from the Texas Attorney General related to CDM‘s first request. See
ments. Palumbo alternatively offered to allow CDM to inspect the records in person for the lower cost of labor of assembling the records. CDM complained that the charge was excessive, but the Attorney General ruled that the City‘s charge was permissible.
CDM made its second document request, purportedly narrowing the scope of the original request. Palumbo again requested a ruling from the Attorney General on the responsiveness of the documents. The Attorney General ruled that the City was required to release some of the documents requested but could withhold other documents that were related to litigation and excepted from the disclosure requirement. See
In sum, the City‘s jurisdictional evidence established that the City offered to produce the responsive documents for the cost of production, which in the first instance was approved by the Attorney General, or for the lesser cost of making the docu-
The City‘s jurisdictional evidence conclusively shows that it offered to produce the documents that were deemed responsive for the cost of production or to make them available for review. CDM has not presented any evidence to show there is a disputed material fact as to this issue. CDM complains that the City‘s cost estimate is too high but presented no evidence to this effect. The fact that the City asks to recover its costs for producing or making the documents available does not reflect that the City is unwilling to disclose the responsive information. See id. at 326.
We conclude that the City established as a matter of law that it did not refuse to supply information that the Attorney General determined was public information subject to disclosure and that CDM failed to raise a fact issue on that point. In that connection, assuming without deciding that governmental officials may be sued for violations of the Act, CDM similarly failed to raise a fact question on whether Patrick and Palumbo violated the Act such that immunity would be waived for their ultra vires acts. See Heinrich, 284 S.W.3d at 372 (noting for immunity to be waived for ultra vires acts, a suit must allege and ultimately prove that the officer acted without legal authority or failed to perform a purely ministerial act.). Accordingly, the trial court lacked jurisdiction over all of CDM‘s claims under the Act.
We sustain appellants’ fifth issue.
Conclusion
Having concluded that chapter 271 of the Local Government Code provides a waiver of immunity as to CDM‘s breach of contract claim, we affirm the trial court‘s denial of the City‘s plea to the jurisdiction as to that claim. We reverse the trial court‘s denial of the plea as to CDM‘s ultra vires claims and claims under the Texas Public Information Act and render judgment dismissing those claims.
Martha Hill Jamison
Justice