Dalmac Construction Co. v. Texas A & M

• Decision Date: 29 July 1999
• Parties: (Tex.App.-Austin 1999) Dalmac Construction Company, Inc., Appellant v. Texas A&M University and Board of Regents of Texas A&M University, Appellees NO. 03-98-00531-CV
• Court: Texas Court of Appeals

Page 654

35 S.W.3d 654 (Tex.App.-Austin 1999)

Dalmac Construction Company, Inc., Appellant v. Texas A&M University and Board of Regents of Texas A&M University, Appellees

NO. 03-98-00531-CV

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN

July 29, 1999

Released for Publication February 15, 2000.

FROM THE DISTRICT COURT OF TRAVIS COUNTY, 261ST JUDICIAL DISTRICT NO. 98-02855, HONORABLE PAUL DAVIS, JUDGE PRESIDING

Before Chief Justice Aboussie, Justices Kidd and Patterson

Patterson, Justice

Appellant DalMac Construction Company ("DalMac") brought suit against appellees Texas A&M University and the Board of Regents of Texas A&M University ("A&M") for claims arising out of a construction project. A&M filed a plea to the jurisdiction asserting that its sovereign immunity from suit deprived the trial court of jurisdiction. The trial court agreed and dismissed DalMac's claims for want of jurisdiction. On appeal, DalMac challenges this dismissal on the grounds that (1) A&M waived immunity from suit on the contract by its conduct, (2) DalMac is entitled to discovery on the facts relating to A&M's claim of immunity from suit, and (3) the trial court had jurisdiction to hear DalMac's constitutional claims absent legislative consent to sue. In light of this Court's decisions in Aer-Aerotron, Inc. v. Texas Department of Transportation, No. 3-97-649-CV (Tex. App.-Austin June 17, 1999, no pet. h.), and Little-Tex Insulation Co. v. General Services Commission, No. 3-98-297-CV (Tex. App.-Austin July 29, 1999, no pet. h.), we will reverse the order of dismissal and remand the cause to the district court for further proceedings.

FACTS AND PROCEDURAL BACKGROUND¹

In 1993, A&M contracted with DalMac for construction of a $30 million Recreational Sports Building and Natatorium ("RSB"). DalMac had submitted a bid for the project based upon plans and specifications prepared by A&M's architect. A&M awarded the contract to DalMac in the amount of $30 million on February 15, 1993. Work began on the project on March 5, 1993. DalMac completed the project in November 1995.

According to DalMac's allegations, DalMac discovered "almost immediately" that the plans and specifications on which it bid did not adequately describe and define the work to be performed. DalMac also discovered that the plans and specifications were frequently in conflict and unclear, and that some of the specifications and plans were impossible to meet.

Seeking additional information to clarify the specifications and scope of the work to be performed under the contract, DalMac submitted numerous Requests for Information ("RFIs") to A&M. By February 14, 1994, DalMac had submitted 275 RFIs. DalMac alleges that A&M did not respond to the RFIs in a timely or adequate manner. DalMac complains that for the first three months of the project A&M's average response time was 25 days, and that A&M took over a year to respond to some RFIs.

Because of changes in the plans and specifications, DalMac rescheduled work and incurred expenses beyond the original contract price. As a result of the corrections and clarifications, DalMac submitted change proposals, in accordance with the terms of the contract, to perform different or additional work beyond the scope of the original contract. A&M denied many of the change proposals and others went unanswered. When proposed change orders were denied, DalMac followed the dispute resolution process specified in the contract. One month before construction on the RSB was completed, DalMac sought additional time to complete the project and submitted a claim for an adjustment to the contract price in the amount of $2.4 million to cover increased costs of construction. A&M paid $255,171 of the claim. DalMac alleges that the project was completed in November 1995. After exhausting administrative remedies, including non-binding arbitration, DalMac filed suit seeking damages in excess of $3 million.

In its petition, DalMac alleged that A&M failed to perform according to the terms of the contract and violated various provisions of the United States and Texas Constitutions, including denial of procedural and substantive due process, taking property without compensation, violation of the open courts provision, and impairment of contracts. DalMac also argued that it was entitled to discovery of facts supporting its claim that A&M had waived sovereign immunity. Following a July 1, 1998 hearing, the district court dismissed DalMac's claims for want of jurisdiction.

DISCUSSION

DalMac acknowledges that it did not seek legislative permission to sue A&M. Relying upon Federal Sign v. Texas Southern University, 951 S.W.2d 401 (Tex. 1997), DalMac contends that legislative consent was not required and that it is entitled to bring suit because A&M waived sovereign immunity and consented to suit by accepting the benefits of full performance of the contract by DalMac.

In analyzing whether a state entity waives immunity in a contractual dispute, we do not write on a clean slate. In Federal Sign, the Texas Supreme Court held that the State does not automatically waive immunity from suit when it enters into a contract with a private person or entity. 951 S.W.2d at 408. Starting from the premise that "sovereign immunity, unless waived, protects the State of Texas, its agencies and its officials from lawsuits for damages," id. at 404, the majority of the court stated: "[A] private citizen must have legislative consent to sue the State on a breach of contract claim. The act of contracting does not waive the State's immunity from suit." Id. at 407. Despite Federal Sign's allegations of waiver by conduct of the State, the court declined to find waiver.

We acknowledge, however, a narrow opening left by the supreme court. In an oft-cited footnote, the court observed that its opinion should not "be read too broadly" and further noted: "There may be other circumstances where the State may waive its immunity by conduct other than simply executing a contract so that it is not always immune from suit when it contracts." Id. at 407 n.1 (...