City of Dallas v. First Trade Union Bank

• Decision Date: 25 July 2003
• Docket Number: No. 05-02-00953-CV.,05-02-00953-CV.
• Citation: 133 S.W.3d 680
• Parties: CITY OF DALLAS, Appellant, v. FIRST TRADE UNION SAVINGS BANK, Appellee.
• Court: Texas Court of Appeals

133 S.W.3d 680

CITY OF DALLAS, Appellant, v. FIRST TRADE UNION SAVINGS BANK, Appellee.

No. 05-02-00953-CV.

Court of Appeals of Texas, Dallas.

July 25, 2003.

Rehearing Overruled September 4, 2003.

Charles Estee, Assistant City Attorney, Dallas, for Appellant.

Van Alan Cates, Houston, for Appellee.

Before Justices MOSELEY, LANG and LAGARDE.¹

OPINION

Opinion By Justice MOSELEY.

The City of Dallas (the "City") filed a plea to the jurisdiction, asserting the trial court lacked subject-matter jurisdiction over this suit because appellee, First Trade Union Savings Bank (the "Bank"), lacked standing to sue the City, or in the alternative, because the Bank's claims sounded in tort and were barred by governmental immunity. The trial court denied the City's plea to the jurisdiction. In this interlocutory appeal, the City again asserts that the Bank lacks standing to sue and that the Bank's tort claims are barred by governmental immunity. Additionally, for the first time, the City asserts that all of the Bank's claims, tort or otherwise, are barred by governmental immunity. We have jurisdiction over this interlocutory appeal. Tex. Civ. Prac. & Rem.Code Ann. § 51.014(a)(8) (Vernon Supp.2003). We affirm the trial court's order denying the City's plea to the jurisdiction.

BACKGROUND

The record reflects that in 1992 the City contracted with Computer Engineering Associates, Inc. ("CEA") for the installation of an access control security system at the City's Love Field airport. Pursuant to a contract with CEA, Amwest Surety Insurance Company ("Amwest") agreed to provide a payment and performance bond for the project. In 1994, the City declared CEA in default and made a claim on the performance bond against Amwest for completion of the project. Amwest performed under the terms of the bond and arranged to complete the installation project.

In 1995, CEA entered into a lending agreement with the Bank. As part of the agreement, the Bank acquired a security interest in CEA's accounts receivables, consisting, in part, of contractual agreements with private and governmental entities. Within a year, CEA defaulted on the Bank's loan and filed for bankruptcy. The bankruptcy court granted the Bank's motion to lift the automatic stay, allowing the Bank to liquidate its security interests and to exercise all its rights and remedies in connection with CEA's contracts.

The Bank sued the City, alleging that: (1) the Bank had a security interest in CEA's contract with the City, and that the bankruptcy court's order lifting the automatic stay caused an assignment to take place to the Bank of CEA's rights in the Love Field installation contract; and (2) the City had breached its contract with CEA by wrongfully declaring CEA in default on the Love Field project. Based on these allegations, the Bank asserted that the City had materially breached the contract with CEA in several ways; that it had breached the warranty of specifications in the contract by providing defective design specifications; and that the City's actions had led to its unjust enrichment at the expense of CEA. The City responded to the Bank's suit and moved for summary judgment, which was denied.

Thereafter, the City filed a plea to the jurisdiction. It asserted that the Bank had no standing to assert CEA's claims against the City because any such claims had been previously assigned to Amwest. It also asserted that the Bank's claims were tort claims, and thus were barred by governmental immunity. The Bank responded that its claims were not tort claims barred by governmental immunity. The Bank also asserted that CEA had not waived or assigned its contractual claims against the City to Amwest, and that the City's agreement with Amwest recognized those claims remained in existence. The trial court denied the plea, and the City filed this interlocutory appeal.

JURISDICTION

Subject-matter jurisdiction is essential for a court to have the authority to resolve a case. Tex. Ass'n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440, 443 (Tex. 1993). A party may challenge a court's subject-matter jurisdiction by filing a plea to the jurisdiction. Tex. Dep't of Transp. v. Jones, 8 S.W.3d 636, 638-39 (Tex.1999). As a question of law, we review the trial court's ruling on such a plea de novo. Mayhew v. Town of Sunnyvale, 964 S.W.2d 922, 928 (Tex.1998). In conducting this de novo review, we do not look at the merits of the plaintiff's case but consider only the plaintiff's pleadings and the evidence pertinent to the jurisdictional inquiry. County of Cameron v. Brown, 80 S.W.3d 549, 555 (Tex.2002). The plaintiff has the burden to plead facts affirmatively showing the trial court has subject-matter jurisdiction. Tex. Ass'n of Bus., 852 S.W.2d at 446. We construe the pleadings liberally in favor of conferring jurisdiction. Tex. Dept. of Transp. v. Ramirez, 74 S.W.3d 864, 867 (Tex.2002) (per curiam). "When a plaintiff fails to plead facts that establish jurisdiction, but the petition does not affirmatively demonstrate incurable defects in jurisdiction, the issue is one of pleading sufficiency," and the trial court should not grant a plea to the jurisdiction until the plaintiff has an opportunity to amend. See County of Cameron, 80 S.W.3d at 555 (citing Peek v. Equip. Serv. Co. of San Antonio, 779 S.W.2d 802, 804-05 (Tex.1989)). However, if the pleadings affirmatively negate a court's subject-matter jurisdiction, then the trial court may grant a party's plea to the jurisdiction without providing an opportunity to amend. Id.

Standing is a component of subject-matter jurisdiction and is reviewed under the same standard. Tex. Ass'n of Bus., 852 S.W.2d at 445-46. To establish standing, the plaintiff must show: (1) a real controversy exists between the parties; and (2) the controversy will actually be determined by the judicial relief sought. Id. However, some standing questions require a trial court to consider evidence, in addition to the pleadings, before the court can determine whether it has subject-matter jurisdiction. Bland Indep. Sch. Dist. v. Blue, 34 S.W.3d 547, 555 (Tex.2000). A trial court has the discretion to determine a standing issue at a preliminary hearing or wait until the merits of the case have been more fully developed. Id. at 554.

Standing

The City asserts in its first issue that the trial court erred by denying its plea to the jurisdiction because the Bank lacked standing to bring this suit. Specifically, the City contends that the Bank lacked standing because: (1) when CEA defaulted on the contract before the Bank acquired a security interest in CEA's accounts receivables, any rights that CEA had in the Love Field installation contract were previously transferred to Amwest; (2) that the contract prevented CEA from assigning its interest in the contract to the Bank; and (3) that the bankruptcy court's order lifting the automatic stay did not assign CEA's rights in the contract to the Bank.

Due to the nature of the City's challenges to the Bank's standing in this case, we conclude the trial court would have to consider evidence before it could determine the City's contentions that the Bank lacked standing. See Bland Indep. Sch. Dist., 34 S.W.3d at 555. Thus, we conclude the trial court did not abuse its discretion by denying the City's plea to the jurisdiction until the merits of the case are more fully developed. See id. at 554. Consequently, we resolve the City's first issue against it. See id.

Governmental Immunity from Suit

The City's second issue argues that governmental immunity bars the Bank's claims in whole or in part. The City asserted below, and asserts now, that the Bank's claims sounded in tort and were barred by governmental immunity (immunity from suit).² The Bank responded below, and here, that its claims are for breach of contract, and not claims in tort. The City also raises, for the first time on appeal, that all of the Bank's claims, tort or otherwise, are barred by governmental immunity because the Bank did not plead any waiver of immunity from suit.

Sovereign immunity protects the state, state agencies, and other governmental entities from lawsuits for damages.³ Gen. Servs. Comm'n v. Little-Tex Insulation Co., Inc., 39 S.W.3d 591, 594 (Tex. 2001). Cities are generally considered agents of the state for purposes of governmental immunity when exercising governmental powers for a public purpose. See Fort Worth Indep. Sch. Dist. v. City of Fort Worth, 22 S.W.3d 831, 840 (Tex.2000); City of LaPorte v. Barfield, 898 S.W.2d 288, 291 (Tex.1995). Governmental immunity encompasses two principles: immunity from liability and immunity from suit. Fed. Sign v. Tex. S. Univ., 951 S.W.2d 401, 405 (Tex.1997). Immunity from suit protects the state from being sued without its consent. Jones, 8 S.W.3d at 638. Absent the state's consent to suit, a trial court lacks subject matter jurisdiction. Id. Therefore, immunity from suit is properly asserted in a plea to the jurisdiction. Id. at 639. Immunity from liability protects the state from liability even if the Legislature has expressly consented to suit. Id. at 638. However, immunity from liability is an affirmative defense and does not affect a court's jurisdiction to hear a case. Id. In considering a plea to the jurisdiction we are only concerned with immunity from suit.

Immunity from Suit in Tort Claims

The City argues that the trial court erred by denying the City's plea to the jurisdiction because immunity from suit bars the Bank's tort claims. Specifically, the City asserts the Bank's wrongful claim on bond cause of action, even though couched as a breach of contract claim, sounds in tort and is not within the limited waiver of immunity contained in the Texas Tort Claims Act (TTCA). Tex. Civ. Prac. & Rem.Code Ann. §§ 101.001-101.109 (Vernon 1997 & Supp.2003). The City further asserts that Texas does not recognize a wrongful termination and wrongful claim on a bond cause of action.

The City may not address...