City of El Paso v. High Ridge Constr., Inc.

• Citation: 442 S.W.3d 660
• Decision Date: 31 July 2014
• Docket Number: No. 08–13–00187–CV.,08–13–00187–CV.
• Parties: The CITY OF EL PASO, Texas, Appellant, v. HIGH RIDGE CONSTRUCTION, INC., Appellee.
• Court: Court of Appeals of Texas

442 S.W.3d 660

The CITY OF EL PASO, Texas, Appellant

v.HIGH RIDGE CONSTRUCTION, INC., Appellee.

No. 08–13–00187–CV.

Court of Appeals of Texas, El Paso.

July 31, 2014.

Henry J. Paoli, Scott Hulse PC, El Paso, for Appellee.

Laura P. Gordon, Asst. City Attorney, El Paso, for Appellant.

Before RODRIGUEZ, J., BARAJAS, C.J. (Senior Judge), sitting by assignment, and CHEW, C.J. (Senior Judge), sitting by assignment.

OPINION

YVONNE T. RODRIGUEZ, Justice.

This is an accelerated appeal from an order denying a plea to the jurisdiction filed by the City of El Paso. See Tex.Civ.Prac. & Rem.Code Ann. § 51.014(a)(8) (West Supp.2013). We reverse in part and affirm in part.

FACTUAL SUMMARY

In 2009, Congress enacted the American Recovery and Reinvestment Act (ARRA) in response to the Great Recession. As a result of ARRA, the federal government provided increased funding for weatherization services. Those funds were administered by the Texas Department of Housing and Community Affairs (TDHCA) though local weatherization grants distributed to large cities, councils of government, and community action programs on a one-time basis. In order to receive these funds, the City entered into a contract with TDHCA to administer $4,007,592 of ARRA funds through the El Paso Weatherization Assistance Program (EP–WAP). Under the EP–WAP, the City reimbursed TDHCA-approved contractors who provided weatherization services, including the installation of energy efficient appliances, in qualified low income residential properties.¹

On March 23, 2010, the City Council passed a resolution authorizing the City Manager to execute standard contracts between the City of El Paso and TDHCA-approved contractors to perform eligible weatherization energy conservation services on approved residential units pursuant to the EP–WAP. The following day, the City entered into a contract with High Ridge Construction, Inc. to deliver energy assessment and weatherization emergency conservation installment services related to the EP–WAP for eligible residential properties in El Paso. The contract expressly provided that the City would not pay High Ridge more than $600,000 for services performed under the contract.

The City hired employees to supervise and administer the EP–WAP. Ed Gonzalez served as the EP–WAP Project Coordinator and Robert Veliz served as the Lead Project Inspector. In October 2010, the City became aware that Veliz had issued work orders to High Ridge which exceeded the contractual cap of $600,000 and had authorized High Ridge to perform weatherization services at the Muñoz Apartments without work orders. The City paid High Ridge a total of $1,429,725.72, but it refused to pay an additional $753,869.55 for materials and services High Ridge provided to various residential dwellings, including the Muñoz Apartments.² High Ridge filed suit against the City asserting claims for breach of contract and an unconstitutional taking of private property. It asserted that the City's immunity from suit was waived pursuant to Section 271.151 of the Texas Local Government Code. It also claimed that the City is estopped from denying its contractual obligations because it had accepted the benefits of High Ridge's performance under the contract. The City answered and filed a plea to the jurisdiction asserting governmental immunity.

After High Ridge amended its petition, the City filed another plea to the jurisdiction. High Ridge subsequently filed its second amended petition which continued to assert its breach of contract and unconstitutional takings claims and added a claim of equitable estoppel. In response, the City filed a plea to the second amended petition. In this plea, the City challenged High Ridge's pleadings on their face and based on jurisdictional evidence attached to the plea. The trial court denied the plea to the jurisdiction.

STANDARD OF REVIEW

A plea to the jurisdiction is a dilatory plea by which a party challenges the court's authority to determine the subject matter of the action. Harris County v. Sykes, 136 S.W.3d 635, 638 (Tex.2004) ; Bland Independent School District v. Blue, 34 S.W.3d 547, 554 (Tex.2000). The burden is on the plaintiff to allege facts affirmatively demonstrating that the trial court has subject matter jurisdiction. Texas Department of Criminal Justice v. Miller, 51 S.W.3d 583, 587 (Tex.2001) ; City of El Paso v. Mazie's, L.P., 408 S.W.3d 13, 18 (Tex.App.-El Paso 2012, pet. denied). Whether a party has alleged facts that affirmatively demonstrate a trial court's subject matter jurisdiction is a question of law which is subject to de novo review. Texas Department of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 226 (Tex.2004) ; Mazie's, 408 S.W.3d at 18. Likewise, whether undisputed evidence of jurisdictional facts establishes a trial court's jurisdiction is also a question of law subject to de novo review. Miranda, 133 S.W.3d at 226. In some cases, disputed evidence of jurisdictional facts that also implicate the merits of the case may require resolution by the finder of fact. Id.

In a plea to the jurisdiction, a defendant may challenge the plaintiff's pleadings, the existence of jurisdictional facts, or both. Miranda, 133 S.W.3d at 226–27. Here, the City's plea to the jurisdiction is directed both at the pleadings and the existence of jurisdictional facts. When examining the pleadings, we construe them liberally in favor of conferring jurisdiction. See Texas Department of Transportation v. Ramirez, 74 S.W.3d 864, 867 (Tex.2002). If the pleadings do not contain sufficient facts to affirmatively demonstrate the trial court's jurisdiction but do not affirmatively demonstrate incurable defects in jurisdiction, the issue is one of pleading sufficiency and the plaintiffs should be afforded the opportunity to amend. Miranda, 133 S.W.3d at 226–27. On the other hand, if the pleadings affirmatively negate the existence of jurisdiction, then a plea to the jurisdiction may be granted without allowing the plaintiffs an opportunity to amend. Id. at 227.

When a plea to the jurisdiction challenges the existence of jurisdictional facts, the appellate court considers relevant evidence submitted by the parties when necessary to resolve the jurisdictional issues presented. Miranda, 133 S.W.3d 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).” Miranda, 133 S.W.3d at 228. Under this standard, when reviewing a plea in which the pleading requirement has been met, we credit as true all evidence favoring the nonmovant and draw all reasonable inferences and resolve any doubts in the nonmovant's favor. Id. The movant must assert the absence of subject-matter jurisdiction and present conclusive proof that the trial court lacks subject-matter jurisdiction. Id. If the movant discharges this burden, the nonmovant must present evidence sufficient to raise a material issue of fact regarding jurisdiction, or the plea will be sustained. Id. If the evidence creates a fact question regarding the jurisdictional issue, then the trial court cannot grant the plea to the jurisdiction, and the fact question will be resolved by the fact finder. Id. at 227–28. The trial court rules on the plea to the jurisdiction as a matter of law if the relevant jurisdictional evidence is undisputed or it fails to raise a fact question on the jurisdictional issue. Id. at 228.

GOODS OR SERVICES

Issues One and Two are related. In Issue One, the City asserts that it retains its governmental immunity from suit for breach of contract because High Ridge has failed to allege that the weatherization contract provided goods or services to the City. In its second issue, the City argues that it retains its governmental immunity from suit for breach of contract because the undisputed jurisdictional evidence negates that High Ridge provided goods or services to the City. We will consider Issue Two first because it will unnecessary to examine the sufficiency of the pleadings if the jurisdictional evidence negates jurisdiction.

Governmental Immunity

Sovereign immunity protects the State from lawsuits for money damages. Reata Construction Corporation v. City of Dallas, 197 S.W.3d 371, 374 (Tex.2006) ; Texas Natural Resource Conservation Commission v. IT–Davy, 74 S.W.3d 849, 853 (Tex.2002). It also deprives a trial court of subject-matter jurisdiction. Miranda, 133 S.W.3d at 224. Political subdivisions of the state, including cities, are entitled to such immunity—referred to as governmental immunity—unless it has been waived. Reata, 197 S.W.3d at 374.

Governmental immunity has two components: immunity from liability, which bars enforcement of a judgment against a governmental entity, and immunity from suit, which bars suit against the entity altogether.

Tooke v. City of Mexia, 197 S.W.3d 325, 332 (Tex.2006). By entering into a contract, a governmental entity necessarily waives immunity from liability, voluntarily binding itself like any other party to the terms of agreement, but it does not waive immunity from suit. Tooke, 197 S.W.3d at 332. The Supreme Court noted in Tooke that it has “consistently deferred to the Legislature to waive sovereign immunity from suit, because this allows the Legislature to protect its policymaking function.” Id. To ensure that this legislative control is not lightly disturbed, a waiver of immunity must be clear and unambiguous. Id. at 332–33.

Governmental–Proprietary Dichotomy

The City's arguments on appeal include an assertion that it is entitled to governmental immunity from suit for breach of contract because it was exercising a governmental function when it entered into the weatherization contract, namely, community development activities authorized under Chapters 373 and 374 of the Local Government Code. See Tex.Civ.Prac. & Rem.Code Ann. § 101.025(a)(34) (West 2011) (designating as a governmental activity “community development or urban renewal activities undertaken by...