City of New Braunfels, Texas; and YC Partners Ltd., d/b/a Yantis Company, Appellants v. Carowest Land, Ltd., Appellee
No. 03-17-00696-CV
TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN
May 16, 2019
Gisela D. Triana, Justice
FROM THE 22ND DISTRICT COURT OF COMAL COUNTY
NO. C2017-0474A
THE HONORABLE MARGARET G. MIRABAL, JUDGE PRESIDING
O P I N I O N
This is the third appeal this Court has been called on to resolve in an ongoing dispute among the City, Yantis, and Carowest. As a result, much of the background of this controversy has been discussed in two earlier opinions, City of New Braunfels v. Carowest Land, Ltd., 432 S.W.3d 501 (Tex. App.—Austin 2014, no pet.) (Carowest I), and City of New Braunfels v. Carowest Land, Ltd., 549 S.W.3d 163 (Tex. App.—Austin 2017, pet. filed)
(Carowest II). See also Carowest Land, Ltd. v. Y.C. Partners, Ltd., No. 03-11-00715-CV, 2012 Tex. App. LEXIS 3598 (Tex. App.—Austin, May 1, 2012, no pet.) (mem. op.) (granting appellant Carowest’s unopposed motion to dismiss appeal); City of New Braunfels v. Carowest Land, Ltd., No. 03-11-00211-CV, 2011 Tex. App. LEXIS 5039 (Tex. App.—Austin, July 1, 2011, no pet.) (mem. op.) (granting appellant City’s unopposed motion to dismiss appeal). In this latest appeal, the issue is whether the district court has subject-matter jurisdiction to adjudicate the merits of a claim by Carowest seeking a declaratory judgment and attorney’s fees as allowed by the Uniform Declaratory Judgments Act (UDJA). See
Carowest’s dispute with the City and Yantis
Carowest owns a 240-acre property in New Braunfels, a portion of which Carowest
The parties also agreed to work in good faith to complete the South Tributary Project, they agreed Carowest would convey land to the City for certain other projects, and they agreed that Carowest would receive 13,944 cubic yards of fill from another project—the North Tributary Project—to compensate for the fill the City took from the South Tributary Project that was supposed to have been given to Carowest. The City also hired Yantis as the contractor on the North Tributary Project. The Letter Agreement also contained an indemnity clause under which Carowest agreed:
to indemnify the City and hold the City harmless for any claims brought by The Yantis Company for any Modification Costs incurred by Yantis, such as delay costs, claimed by Yantis and directly attributable to the Modification (the “Yantis Claims”). Any invoices related to these Yantis Claims submitted to the City shall be promptly provided to Carowest. If either party disputes any claim, the claim shall be submitted to Halff and Pape-Dawson . . . .
Among the many continuing points of contention between the parties, Yantis ended up submitting to the City a delay claim for $556,248 for work Yantis attributed to the Modification on the South Tributary Project. Pursuant to the Letter Agreement’s indemnity provision, the City submitted the claim to Carowest, and on May 13, 2010, the City directed Carowest “to negotiate with Yantis and work out a payment, if any, for delay damages and obtain a release for the benefit of the City.” However, in October 2009, unbeknownst to Carowest, the City and Yantis had executed a change order containing language that Carowest says had already released all of Yantis’s claims against the City for the Carowest portion of the South Tributary Project. In addition, on May 31, 2010, Yantis applied to the City for a progress payment for Yantis’s work on the South Tributary Project. As a condition of receiving that payment, Yantis executed a “Partial Waiver and Release of Lien,” which stated, “Yantis hereby acknowledges complete
satisfaction of, and waives and releases, any and all claims of every kind against [the City], the [South Tributary] Project and the property.” Despite these releases, Yantis resubmitted its delay claim to the City in July 2010, this time seeking $276,270.80 in damages related to the Carowest portion of the South Tributary Project. In October 2010, the City sent a letter to Yantis containing the City’s “written response to Yantis’ delay claim against the City.” The letter stated that “based on the execution of [the October 2009 change order], Yantis has waived ‘any and all costs associated with or resulting from the change(s) ordered herein, including all impact, delays, and acceleration costs’.” (Emphasis and punctuation in original.) Because Yantis did not abandon its delay claim and the City did not rescind its request that Carowest handle Yantis’s delay claim, Carowest sued Yantis and the City in November 2010. During the course
a. The October 21, 2009 Change Order fully and finally released and waived the Yantis Delay Claim.
b. The May 31, 2010 Waiver fully and finally released and waived the Yantis Delay Claim.
c. Under the July 27, 2009 Letter Agreement, the City has no right to indemnification from Carowest for the Yantis Delay Claim.
Carowest sought the first two of these declarations solely against Yantis and the third solely against the City. The district court expressly declined to dispose of any other claims by Carowest, including the claim for attorney’s fees under section 37.009 of the Civil Practice and Remedies Code. In January 2017, Carowest filed an opposed motion to sever the South Tributary Project declaratory claims into a separate cause. Carowest argued that severance was appropriate because the South Tributary Project declaratory claims “are not interwoven with the other counts because they were purely legal issues decided by summary judgment on an undisputed record.” Carowest further urged that severance would “allow the summary judgment, once the issue of fees is resolved, to become final while the remaining claims proceed.”1 The district court granted Carowest’s motion in March 2017. Three months after the claims were severed, this Court issued its opinion in Carowest II, holding that sovereign immunity barred the North Tributary Project declaratory claims. Believing that Carowest II’s reasoning should also apply to the more recently severed South Tributary Project declaratory claims, the City and
Yantis each filed a plea to the jurisdiction in the new lawsuit. In two separate orders, the district court denied the pleas, and the City and Yantis appealed.
The parties all argue that the present interlocutory appeal should be guided by a controlling prior opinion of this Court: the City and Yantis argue that Carowest II’s disposition of the North Tributary Project declaratory claims requires us to reverse in this case as well, while Carowest observes that Carowest II did not address
This Court’s prior opinions
So far, Carowest has sought determination of three sets of questions under the UDJA: (1) whether the City violated the Texas Open Meetings Act (TOMA) in meetings relating to the North Tributary Project, (2) whether the City’s contract awarding Yantis the North Tributary Project was void under Local Government Code chapter 252, and (3) whether Yantis’s delay claims related to the South Tributary Project are valid. This Court directly addressed these UDJA claims in its prior opinions. The parties have brought the third set of questions (those related to the South Tributary Project) before us in this appeal because of our differing
resolutions of whether the district court had jurisdiction over the North Tributary Project declaratory claims in Carowest I and II.
Carowest I
In Carowest I, this Court was asked to determine whether the district court had jurisdiction over a host of claims by Carowest, including the three sets of UDJA claims. This Court concluded that the district court had subject-matter jurisdiction over all the UDJA claims. Carowest I, 432 S.W.3d at 535. This Court reasoned that Carowest’s UDJA claims under the Texas Open Meetings Act fell within TOMA’s express waiver of immunity allowing an interested person to bring an action by mandamus or injunction to reverse a violation or threatened violation of TOMA. See
Similarly, this Court determined that Carowest’s claims under Local Government Code chapter 252 fell within that statute’s express waiver of immunity, which provides: “[i]f the contract is made without compliance with this chapter, it is void and the performance of the contract, including the payment of any money under the contract, may be enjoined by . . . any property tax paying resident of the municipality.”
Finally, this Court concluded that the claims for declaratory relief related to Yantis’s delay claim were properly before the district court “by virtue of the waiver of immunity in Local Government Code chapter 271, subsection I and the limited jurisdiction that arises by virtue of the City’s claim for monetary relief.” Id. at 534. This Court further determined that the declaratory claims concerning the Yantis delay claim were not moot and would remain a justiciable controversy “as long as Carowest is prosecuting a viable declaratory claim seeking to invalidate the ‘North Tributary Deal’ in which the delay claim purportedly was settled.” Id. at 535. The record included a Rule 11 agreement from May 9, 2011, signed by counsel for the City and Yantis, in which Yantis agreed to release the City from Yantis’s delay claim if “Yantis is awarded the North Tributary Contract . . . at the New Braunfels City Council meeting scheduled for this evening.” The offer to release the claim would have been withdrawn by its own terms if Yantis had not been awarded the contract. Carowest had separately asserted that this was an
impermissible quid-pro-quo arrangement negotiated in an improperly convened executive session such that the North Tributary Contract entered into as a result of this negotiation and the accompanying agreement to settle the delay claim were invalid or void. This Court continued, “even if the release is assumed to resolve the delay claim prospectively from the date of its execution, the validity of the delay claim would still remain a live and justiciable issue to the extent it bears upon the parties’ past compliance with the Letter Agreement’s indemnification provisions.” Id.
Thus this Court concluded the district court did not err in overruling the City’s plea to the jurisdiction as to Carowest’s UDJA claims.
Carowest II
The merits of Carowest’s severed UDJA claims relating to the North Tributary Project under TOMA and Local Government Code chapter 252 proceeded to a jury trial on the merits and a bench trial on attorney’s fees, costs, and expenses. Carowest II, 549 S.W.3d at 168. The district court entered declaratory judgment in favor of Carowest and awarded attorney’s fees, costs, and expenses against the City and Yantis jointly and severally. Id. at 169. On appeal, this Court concluded that two intervening Texas Supreme Court opinions, one addressing sovereign immunity and one addressing the redundant remedies doctrine, required a different outcome than that reached in Carowest I. Id. at 172-74; see Patel v. Texas Dep’t of Licensing & Regulation, 469 S.W.3d 69, 79 (Tex. 2015) (redundant remedies doctrine); Zachry Constr. Corp. v. Port of Hous. Auth. of Harris Cty., 449 S.W.3d 98, 109-10 (Tex. 2014) (sovereign immunity). This Court reasoned that in Zachry Construction, the Texas Supreme Court directed that the scope of an express waiver of immunity is limited to the express relief provided in the statute.
Carowest II, 549 S.W.3d at 173. Therefore, this Court concluded that section 551.142 of TOMA waives immunity from suit for only injunctive and mandamus relief and section
Jurisdiction over declarations related to the Yantis delay claim
Although the question of the City’s immunity is once again before us, this appeal differs from Carowest I in that the underlying suit seeks solely declaratory relief and differs from Carowest II in that it is an interlocutory appeal with alleged waivers of immunity that were not at issue in Carowest II. We review de novo whether the district court lacked jurisdiction due to the City’s assertion of immunity. Ben Bolt-Palito Blanco Consol. Indep. Sch. Dist. v. Texas Political Subdivisions Prop./Cas. Joint Self-Ins. Fund, 212 S.W.3d 320, 324 (Tex. 2006) (“Whether a trial court has jurisdiction is a question of law subject to de novo review.”). “Governmental immunity protects a political subdivision performing governmental functions as the state’s agent.” Rosenberg Dev. Corp. v. Imperial Performing Arts, Inc., No. 17-0660, 2019 Tex. LEXIS 242, at *2 (Tex. Mar. 8, 2019). In addition, “sovereign immunity bars UDJA actions against the state and its political subdivisions absent a legislative waiver.” Texas Dep’t of Transp. v. Sefzik, 355 S.W.3d 618, 620 (Tex. 2011) (per curiam).
Carowest argues the district court has jurisdiction over the South Tributary Project UDJA claims for two reasons: (1) the City asserted counterclaims for affirmative relief against Carowest in the parent cause, and (2) chapter 271 of the Local Government Code waives immunity for declaratory judgment claims arising from contracts subject to that chapter. Carowest asserts that Carowest I’s acknowledgment of the “waiver of immunity in Local Government Code chapter 271, subsection I and the limited jurisdiction that arises by virtue of the City’s claim for monetary relief” continues to apply to the present appeal. Carowest I, 432 S.W.3d at 534. However, unlike the circumstances in Carowest I, this appeal concerns a bare claim for declaratory relief. In the suit initiated by Carowest in 2010, the City had asserted claims for monetary relief based on breach of a contract that this Court determined invoked the limited jurisdiction that exists “if the governmental entity interjects itself into or chooses to engage in litigation to assert affirmative claims for monetary damages.” Reata Constr. Corp. v. City of Dallas, 197 S.W.3d 371, 375 (Tex. 2006); Carowest I, 432 S.W.3d at 526-27. However, in the severed cause on appeal, the City has not asserted any claim for relief. In the absence of any affirmative claim for relief by the City, the limited jurisdiction that might have arisen from the City’s claims for affirmative relief is not available. See Sharyland Water Supply Corp. v. City of Alton, 354 S.W.3d 407, 415 (Tex. 2011) (plaintiff cannot recover if the government is not pursuing a claim for damages to which an offset would apply). The City’s counterclaims in the cause of action filed in 2010 do not waive governmental immunity in the cause that was severed in 2017 on Carowest’s motion.2
Nor does Local Government Code chapter 271 waive immunity for Carowest’s
To prevail on its motion to sever, Carowest argued that its South Tributary Project declaratory claims were independent claims that could have been asserted in a separate lawsuit and that the claims “are not interwoven with the other counts because they were purely legal issues decided by summary judgment on an undisputed record.”
Yantis’s interlocutory appeal
Having determined that governmental immunity shields the City from Carowest’s declaratory claim against it, we next consider whether Yantis may appeal from the district court’s interlocutory order denying Yantis’s plea to the jurisdiction. “A person may appeal from an interlocutory order of a district court, county court at law, statutory probate court, or county court that: . . . grants or denies a plea to the jurisdiction by a governmental unit as that term is defined in Section 101.001.”
Yantis argues that it should be considered an “organ of government” essentially because Yantis’s actions relevant to this lawsuit have been on the City’s behalf, Yantis is being sued for merely following the City’s directives, and Yantis’s position is aligned with the City. However, the delay claim at issue in this appeal is a claim that Yantis had, if at all, against the City. In submitting the delay claim to the City and maintaining the claim even after the City opined that the claim had been released, it does not appear that Yantis was carrying out the City’s directives with no independent discretion. In any event, Yantis’s argument does not explain how, in providing construction services for the drainage channel and billing the City for those services, Yantis was acting as part of a larger governmental system. Nor are we persuaded that the existence of statutes authorizing the City to enter into contracts with private entities satisfies section 101.001’s requirement that an entity’s status and authority be “derived from the Constitution of Texas or from laws passed by the legislature under the constitution.” Cf. id. at 909-10 (discussing laws that supported private university’s status as a governmental unit as to its law enforcement function and comparing and contrasting those attributes to the charter schools at issue in LTTS Charter School, 342 S.W.3d at 78). Because Yantis has not shown that it is a governmental entity under section 101.001, Yantis may not pursue an interlocutory appeal.
Conclusion
We conclude that the City’s immunity was not waived and that Yantis has not demonstrated that it is a governmental unit entitled to an interlocutory appeal of a ruling on a plea to the jurisdiction. Accordingly, we reverse the district court’s order denying the City’s plea to the jurisdiction, dismiss Yantis’s appeal for lack of jurisdiction, and remand the case to the trial court for further proceedings consistent with this opinion.
Gisela D. Triana, Justice
Before Justices Baker, Triana, and Smith
Reversed and Remanded in part; Dismissed in part
Filed: May 16, 2019