Alamo Community College Dist. v. Obayashi Corp.

• Decision Date: 31 August 1998
• Docket Number: No. 04-98-00232-CV,04-98-00232-CV
• Citation: 980 S.W.2d 745
• Parties: 131 Ed. Law Rep. 531 ALAMO COMMUNITY COLLEGE DISTRICT, Appellant, v. OBAYASHI CORPORATION, Appellee.
• Court: Texas Court of Appeals

Page 745

980 S.W.2d 745

131 Ed. Law Rep. 531

ALAMO COMMUNITY COLLEGE DISTRICT, Appellant, v. OBAYASHI CORPORATION, Appellee.

No. 04-98-00232-CV.

Court of Appeals of Texas San Antonio.

Aug. 31, 1998.

James M. Heidelberg, Nancy H. Reyes, Schulman, Walheim & Heidelberg, Inc., San Antonio, for Appellant.

Donald O. Ferguson, Gardner & Ferguson, Inc., San Antonio, for Appellee.

Before RICKHOFF, STONE and DUNCAN, JJ.

OPINION

DUNCAN, Justice.

This interlocutory appeal presents two issues. First, has the Texas Legislature waived sovereign immunity for, and granted its consent to sue, Alamo Community College District? We hold the legislature waived sovereign immunity for ACCD and consented to suits against it by subjecting ACCD and all other community college districts to the same general law governing independent school districts, which are not immune from suit. On this basis alone, we might affirm the trial court's order overruling ACCD's plea to the jurisdiction. We decline to do so, however, because the parties' briefs focus not on whether consent has been granted but whether it is required. Whether consent is required is thus the second issue presented. Specifically, the parties ask us to decide an issue left open by the supreme court's recent opinion in Federal Sign ¹: is legislative consent to sue required when a private citizen fully performs its contract with a governmental entity and the governmental entity then breaches the contract by failing to pay the agreed price? We hold legislative consent is not required and therefore affirm the trial court's order denying ACCD's plea to the jurisdiction.

FACTUAL AND PROCEDURAL BACKGROUND

For purposes of a plea to the jurisdiction, we take the factual allegations in the plaintiff's petition as true. Brannon v. Pacific Employers Ins. Co., 148 Tex. 289, 224 S.W.2d 466, 469 (1949). Therefore, for purposes of this appeal, the material facts are undisputed.

ACCD contracted with Obayashi for construction relating to a drainage project at the San Antonio College campus. The base contract price for the project was $983,000. This base price, however, was subject to equitable adjustments for Obayashi's increased costs arising out of material unknown conditions:

4.3 CLAIMS AND DISPUTES

4.3.6 Claims for Concealed or Unknown Conditions.... The Architect and [3 D/I, ACCD's Project Manager] will promptly investigate such conditions and, if they differ materially and cause an increase or decrease in [Obayashi's] cost of, or time required for, performance of any part of the Work, will recommend an equitable adjustment in the Contract Sum or Contract Time, or both.....

4.4 RESOLUTION OF CLAIMS AND DISPUTES

4.4.1 The Architect will review Claims and take one or more of the following preliminary actions, in consultation with [3 D/I], within ten days of receipt of a Claim: (1) request additional supporting data from the claimant, (2) submit a schedule to the parties indicating when the Architect, in consultation with [3 D/I], expects to take action, (3) reject the Claim in whole or in part, stating reasons for rejection, (4) recommend approval of the Claim by the other party or (5) suggest a compromise.....

4.4.4 If a Claim has not been resolved after consideration of the foregoing and of the further evidence presented by the parties or requested by the Architect, the Architect and [3 D/I] will notify the parties in writing that the Architect's and [3 D/I]'s decision will be made within seven days.

This equitable adjustment clause was included in the contract, at least in part, because ACCD had instructed the prospective bidders not to include in their bids any costs that might arise out the many underground utility lines that were known to criss-cross the campus. Rather, ACCD instructed its bidders, when one of the unknown, underground utility lines was discovered, the additional cost would be dealt with on a case-by-case basis.

After Obayashi completed the contract work, ACCD paid it the base contract price of $983,000. ACCD also paid Obayashi an additional $37,167.51 for four of Obayashi's thirty-two equitable adjustment claims. But the remaining twenty-eight equitable adjustment claims, which totaled $420,538, were not paid or apparently even processed. As a result, Obayashi sued ACCD for this amount under various tort and contract theories. ACCD answered and ultimately filed a plea to the jurisdiction, which argued all of Obayashi's claims were barred by sovereign immunity because ACCD is an arm of the State of Texas, and the State has not consented to suits against ACCD in general or this suit in particular. The trial court rejected ACCD's argument and, without stating a reason for its ruling, denied ACCD's plea to the jurisdiction. ACCD appealed. See TEX. CIV. PRAC. & REM.CODE ANN. § 51.014(a)(8) (Vernon Supp.1998) (governmental unit may appeal interlocutory order granting or denying plea to the jurisdiction).

STATUTORY CONSENT TO SUIT

Historically, the State of Texas and its agencies have enjoyed sovereign immunity from suit. Federal Sign v. Texas Southern Univ., 951 S.W.2d 401, 405 (Tex.1997). "Immunity from suit bars a suit against the State unless the State expressly gives its consent to the suit." Id. (emphasis in original). "Legislative consent for suit ... must be 'by clear and unambiguous language.' " Id. (quoting University of Texas Med. Branch at Galveston v. York, 871 S.W.2d 175, 177 (Tex.1994); Duhart v. State, 610 S.W.2d 740, 742 (Tex.1980)). However, "[t]he rule requiring a waiver of governmental immunity to be clear and unambiguous cannot be applied so rigidly that the almost certain intent of the Legislature is disregarded." City of La Porte v. Barfield, 898 S.W.2d 288, 292 (Tex.1995). "If a statute leaves no reasonable doubt of its purpose, [the supreme court] will not require perfect clarity, even in determining whether governmental immunity has been waived." Id. Applying this rule in Barfield, the court held the legislature waived the State's immunity from suit under the Anti-Retaliation Law even though "the waiver of immunity was not expressed in so many words," because "the inference of waiver ... is unavoidable." Id. at 297. We believe the same is true in this case.

ACCD is a junior college community district organized pursuant to chapter 130 of the Texas Education Code. See TEX. EDUC.CODE ANN. § 130.162 (Vernon Supp.1998) (defining ACCD service area). Under chapter 130, ACCD's board of trustees' "powers and duties" "in the ... management and control of the junior college" are governed by "the general law governing the ... management and control of independent school districts insofar as the general law is applicable." Id. § 130.084 (Vernon 1991). ² Part of the "general law" governing the management and control of independent school districts is the Texas Legislature's consent to suits against "[t]he trustees of an independent school district ... in the name of the district...." Id. § 11.151(a) (Vernon 1996) ³; Dillard v. Austin Indep. Sch. Dist., 806 S.W.2d 589, 594 (Tex.App.--Austin 1991, writ denied); see Missouri Pac. R.R. Co. v. Brownsville Navigation Dist., 453 S.W.2d 812, 813 (Tex.1970) (statute enabling governmental entity to "sue or be sued" waives immunity from suit).

ACCD recognizes the relationship between sections 11.151(a) and 130.084 but argues the two sections, when read together, do not establish a waiver of the district's sovereign immunity from suit because the language is not "specific and unambiguous." We agree the waiver is not specific to ACCD, as it is with some universities. See, e.g., TEX. EDUC.CODE ANN. §§ 76.04 (University of Texas at Tyler), 111.33 (University of Houston) (Vernon 1991). But a waiver need not be specific to a particular entity to be "clear and unambiguous," as evidenced by section 11.151(a), which clearly and unambiguously waives immunity for all independent school districts.

By subjecting junior college districts like ACCD to the same general law applicable to independent school districts, it appears to us, clearly and unambiguously, the Texas Legislature granted its consent to sue junior college community districts and we so hold. ⁴

THE REACH OF FEDERAL SIGN

As noted above, this appeal also presents an issue left open by the Supreme Court of Texas' recent opinion in Federal Sign: If a private citizen fully performs its contract with a governmental entity, and the governmental entity then breaches the contract by failing to pay the agreed price, must the private citizen establish a waiver of sovereign immunity by obtaining legislative consent to sue? Not surprisingly, ACCD reads the Federal Sign majority opinion broadly, concluding "a private citizen must have legislative consent to sue the State on a breach of contract claim." Federal Sign, 951 S.W.2d at 408. Obayashi, on the other hand, relies upon the Federal Sign concurring opinion, which suggests a different result might obtain on hypothetical facts almost identical to the allegations in this case because "the State may waive immunity by conduct other than simply executing a contract...." Id. at 412-13 (Hecht, J., concurring). Our initial task, therefore, as an intermediate court, is somewhat delicate: Do we follow the broad language contained in the majority opinion in Federal Sign or the suggestion contained in the concurring opinion?

We are unable to read the majority opinion as broadly as ACCD suggests for several reasons. First and foremost, despite the broad language quoted above, the majority opinion itself recognizes "[t]here may be other circumstances where the State may waive its immunity by conduct other than simply executing a contract...." Federal Sign, 951 S.W.2d at 408 n. 1. Moreover, four of the six justices who joined the Federal Sign majority opinion also joined the concurring opinion. See and compare Federal Sign, 951 S.W.2d at 403 (Baker, J., joined by Phillips, C.J., and Gonzalez, Hecht, Cornyn, and Owen, JJ.) wit...