City of Austin v. Util. Assocs., Inc.

• Decision Date: 24 March 2017
• Docket Number: NO. 03–16–00565–CV, NO. 03–16–00586–CV,03–16–00565–CV
• Citation: 517 S.W.3d 300
• Parties: The CITY OF AUSTIN and Elaine Hart, in her official capacity as City Manager of the City of Austin, Appellants v. UTILITY ASSOCIATES, INC.; and Mr. V. Bruce Evans, a resident of Austin, Texas, Individually, Appellees Appellants, The City of Austin ; and Elaine Hart, in her official capacity as City Manager of the City of Austin// Cross–Appellants, Utility Associates, Inc. and Mr. V. Bruce Evans, a Resident of Austin v. Appellees, Utility Associates, Inc. and Mr. V. Bruce Evans, a Resident of Austin// Cross–Appellees, The City of Austin ; and Elaine Hart, in her official capacity as City Manager of the City of Austin
• Court: Texas Court of Appeals

517 S.W.3d 300

The CITY OF AUSTIN and Elaine Hart, in her official capacity as City Manager of the City of Austin, Appellants

v.UTILITY ASSOCIATES, INC.; and Mr. V. Bruce Evans, a resident of Austin, Texas, Individually, Appellees

Appellants, The City of Austin ; and Elaine Hart, in her official capacity as City Manager of the City of Austin// Cross–Appellants, Utility Associates, Inc. and Mr. V. Bruce Evans, a Resident of Austin

v.Appellees, Utility Associates, Inc. and Mr. V. Bruce Evans, a Resident of Austin// Cross–Appellees, The City of Austin ; and Elaine Hart, in her official capacity as City Manager of the City of Austin

NO. 03–16–00565–CV

NO. 03–16–00586–CV

Court of Appeals of Texas, Austin.

Filed: March 24, 2017

Jose Ortiz, Nathaniel Peter Holzer, Shelby A. Jordan, Jordan, Hyden, Womble, Culbreth & Holzer, PC, Peter Barlow, Smith, Gambrell & Russell, LLP, Austin, TX, for Appellees.

Matthew Tynan, Austin, TX, for Appellants.

Before Justices Puryear, Pemberton, and Field

OPINION

Bob Pemberton, Justice

These consolidated causes arise from a lawsuit seeking to challenge a municipal contract procurement. One cause presents competing interlocutory appeals from a district-court order that granted a plea to the jurisdiction in part, denied it in part, and dismissed some of the claims over which jurisdiction was challenged. The other cause presents an interlocutory appeal challenging portions of a temporary injunction. The net effect of our holdings below is that we dismiss additional claims for want of jurisdiction and vacate the challenged portions of the temporary injunction.

BACKGROUND

After requesting and evaluating proposals through what it represented to be an objective, competitive process, the City of Austin awarded and later executed a $12.2 million contract to Taser International, Inc., for the provision of body-worn cameras for use by the Austin Police Department (APD). One of the vendors that had submitted a competing proposal, Utility Associates, Inc., accused City staff of manipulating or corrupting the selection process to favor Taser. Utility protested the award unsuccessfully through the City's internal administrative processes, then sought judicial relief through suit against the City and, in her official capacity, the City Manager (collectively, the City Defendants).¹ Utility was later joined as a plaintiff by a resident City taxpayer, V. Bruce Evans (collectively, Plaintiffs). In their live pleadings, Plaintiffs asserted claims for injunctive relief, declaratory relief under the Uniform Declaratory Judgments Act (UDJA),² and the attorney's fees that the UDJA would authorize with the declaratory claims.³

The substantive relief Plaintiffs sought fell into two basic categories:

(1) The first category of claims sought to establish that the contract award to Taser had been unlawful or void and, on that basis, prevent the City from performing the contract. Specifically, Plaintiffs sought declarations that the City Defendants had "engaged in an improper procurement unauthorized by law" and that "the award of the RFP [request for proposals] to Taser by the City Council ... is void as unauthorized by law." Predicated on those same legal determinations, Plaintiffs sought an injunction barring the City Defendants from "performing any aspect of the Contract [with Taser]."

(2) The second category was calculated to secure the contract award for Utility upon the invalidation of the award originally made to Taser. Plaintiffs alleged (and would later present evidence) that City staff had utilized a scoring system in evaluating the competing proposals and that Utility had been assigned a score second only to Taser's assigned score. Premised on their allegations that Taser's scores and resultant award had been illegitimate, Plaintiffs sought an injunction "requiring the [City Defendants] to award the Contract to Utility as the highest scoring responsible Offeror," and a corresponding declaration that "the Contract for the RFP be awarded to Utility as the highest scoring responsive Offeror for the RFP." Relatedly, Plaintiffs prayed for an additional injunction calculated to preserve Utility's runner-up status in the procurement and its claimed interest in obtaining the contract award in lieu of Taser, barring the City Defendants from "cancelling the procurement for, or awarding the Contract to, anyone other than the highest scoring responsible Offeror."

Following an evidentiary hearing, Plaintiffs obtained a temporary injunction that purported to preserve the status quo pending trial with respect to each set of claims, barring the City Defendants from, respectively: (1) "performing any of their obligations arising under or in furtherance of the Contract" with Taser; or (2) "cancelling or otherwise terminating [the RFP] for body worn cameras." The City Defendants perfected an interlocutory appeal of this order,⁴ which we docketed as Cause No. 03–16–00565–CV.

The City Defendants also interposed pleas to the jurisdiction, principally asserting governmental immunity as a bar to suit. The parties' arguments in this regard centered largely on the extent to which Plaintiffs' claims were authorized under a provision of Chapter 252 of the Local Government Code. Chapter 252, titled, "Purchasing and Contracting Authority of Municipalities," requires municipalities to use prescribed competitive processes when entering into certain contracts requiring expenditures of municipal funds.⁵ Subchapter D of Chapter 252 authorizes enforcement of the chapter's requirements through criminal penalties,⁶ removal and other professional sanctions against an offending municipal official or employee,⁷ and also the following civil remedy found in Section 252.061:

If 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:

(1) any property tax paying resident of the municipality; or

(2) a person who submitted a bid for a contract for which the competitive sealed bidding requirement applies, regardless of residency, if the contract is for the construction of public works.⁸

Section 252.061, as this Court has recognized previously, effects a waiver of immunity to the extent of the claims it authorizes against the municipality whose actions are in question.⁹

The City Defendants further contended that Plaintiffs' UDJA claims (to the extent not already barred by governmental immunity) were jurisdictionally barred as remedies redundant of the relief provided under Section 252.061 and serving merely as an impermissible vehicle for recovering otherwise-unauthorized attorney's fees. Following a hearing at which no additional evidence was presented, the district court granted the City Defendants' plea to the extent of dismissing all of Plaintiffs' claims under the UDJA, for both declarations and attorney's fees. However, the district court denied the plea "as to Plaintiffs' claim under Tex. Loc. Gov't Code § 252.061." The effect of these rulings was to maintain jurisdiction over all of Plaintiffs' claims for injunctive relief, but only those claims. The City Defendants perfected an appeal of the order denying their plea in part, and Plaintiffs cross-appealed the order granting the plea in part and dismissing their UDJA-based claims.¹⁰ These appeals were docketed under Cause No. 03–16–00586–CV, and subsequently consolidated with Cause No. 03–16–00565–CV on the City Defendants' unopposed motion.

Following completion of briefing, City staff placed on the Austin City Council agenda a request for authorization to negotiate and execute a smaller ($4 million) version of a body-camera-purchase contract with Taser through an alternative means—a non-competitive, "direct purchase" arrangement through a buying cooperative administered by the Texas Association of School Boards. Although apparently not disputing the legality of this contracting method or procedure in itself, Plaintiffs have urged that this effort "circumvents" the earlier temporary injunction barring the City Defendants from "cancelling or otherwise terminating [the RFP] for body worn cameras" (i.e., the portion aimed at preserving the status quo as to the second category of Plaintiffs' underlying claims). Plaintiffs obtained a February 15 temporary restraining order barring the City Defendants "from entering into any contract or agreement for the purchase[ ] of bodyworn cameras" pending a hearing to determine whether the order should be made a temporary injunction. This TRO has since expired, but in the interim Plaintiffs sought injunctive relief from this Court to the same effect. We issued a temporary stay in order to preserve our jurisdiction and the parties' claimed rights.¹¹

ANALYSIS

The most pivotal considerations in our disposition of these appeals are the legal principles that define and limit the district court's subject-matter jurisdiction to adjudicate Plaintiffs' claims. We review questions of subject-matter jurisdiction de novo.¹² This inquiry is not necessarily confined to the precise jurisdictional challenges or arguments presented by the parties, because jurisdictional requirements may not be waived and "can be—and if in doubt, must be—raised by a court on its own at any time," including on appeal.¹³ Accordingly, the discussion that follows departs somewhat from the parties' own framing of the jurisdictional issues.¹⁴

Plaintiffs had the burden of pleading or presenting evidence of facts that would demonstrate the district court's jurisdiction to entertain their claims.¹⁵ To invoke the district court's subject-matter jurisdiction here, Plaintiffs' chief challenge is to avoid or overcome the City's governmental immunity.

Do Plaintiffs' claims implicate governmental immunity?

Governmental immunity protects political subdivisions of the State, including municipalities, and generally their agents, when performing "governmental" as opposed to "proprietary" functions.¹⁶ There is...