Texas N.R.C. Comm'n v. It-Davy

Decision Date26 August 1999
Docket NumberIT-D
Citation998 S.W.2d 898
Parties(Tex.App.-Austin 1999) Texas Natural Resource Conservation Commission, Appellant v.avy, Appellee NO. 03-98-00653-CV
CourtTexas Court of Appeals

FROM THE DISTRICT COURT OF TRAVIS COUNTY, 200TH JUDICIAL DISTRICT NO. 98-07589, HONORABLE PETER M. LOWRY, JUDGE PRESIDING

Before Chief Justice Aboussie, Justices Kidd and B. A. Smith

Mack Kidd, Justice

Appellee IT-Davy sued appellant Texas Natural Resource Conservation Commission (the "Commission") for claims arising out of a contract for the clean-up of a hazardous waste site. The Commission brings this interlocutory appeal of the trial court's order denying its plea to the jurisdiction,1 asserting that the trial court erred in failing to dismiss the cause for lack of jurisdiction on the basis of sovereign immunity. We will affirm the order of the trial court.

BACKGROUND

We determine the trial court's jurisdiction from the good-faith factual allegations made in appellee's pleadings. See Brannon v. Pacific Employers's Ins. Co., 224 S.W.2d 466, 469 (Tex. 1949); Texas Parks & Wildlife Dep't v. Callaway, 971 S.W.2d 145, 147 (Tex. App.-Austin 1998, no pet.). Therefore, our recitation of the facts comes from IT-Davy's amended petition. Moreover, the Commission has stipulated to this version of the facts for purposes of its plea to the jurisdiction.

In 1990, the Commission sought bids from contractors for the clean-up of the Sikes Disposal Pits (the "Sikes site") in Harris County. The Sikes site had been used as a dumping area for unsegregated chemical wastes from area petrochemical companies in the late 1960s and early 1970s. As a result, the soil and groundwater on the site were contaminated to the extent that the United States Environmental Protection Agency ("EPA") placed the Sikes site on the National Priorities List under the Superfund program of the Comprehensive Environmental Response, Compensation and Liability Act. See 42 U.S.C.A. 9601-9626 (West 1991). EPA and the Commission agreed on a plan to remediate the Sikes site. EPA would fund up to 90% of the costs and the Commission would administer the clean-up, including the hiring of contractors to perform the clean-up.

The Commission issued an Invitation for Bids (the "Invitation") seeking contractor bids for the remediation of the Sikes site. The project involved the excavation and incineration of contaminated soils, sediments, and other wastes, as well as the treatment of contaminated surface water and groundwater. The Commission envisioned a two-phase clean-up operation: Phase A, involving the construction of the incineration facility necessary for the remediation of the waste; and Phase B, involving the Trial Burn of the incineration facility and the subsequent incineration of the waste. The Invitation included detailed reports containing information regarding the contamination level of the soil and the groundwater. The Invitation further provided that bidding contractors could rely on the accuracy of the technical data found in the reports.

IT-Davy submitted a bid that was accepted by the Commission in March 1990. IT-Davy and the Commission entered into the Contract for Phase B Remediation Services - Sikes Disposal Pits Remedial Action (the "Contract") on July 27, 1990. The Contract provided in relevant part:

If [the Commission] finds that conditions materially differ and will cause an increase or decrease in the CONTRACTOR'S cost or the time required to perform any part of the work under this Agreement, whether or not changed as a result of such conditions, the [Commission] shall make an equitable adjustment and modify this Agreement in writing.

* * * * *

If any change under this article causes an increase or decrease in the CONTRACTOR'S cost or time required to perform any part of the work under this Agreement, whether or not changed by any order, the [Commission] shall make an equitable adjustment. . . . In the case of defective specifications for which the [Commission] is responsible, the equitable adjustment shall include any increased cost the CONTRACTOR reasonably incurred in attempting to comply with those defective specifications.

* * * * *

Except as may be otherwise provided in this Agreement, all claims, counterclaims, disputes, and other matters in question between [the Commission] and the CONTRACTOR arising out of or relating to this Agreement or the breach thereof will be decided by arbitration if the parties mutually agree to arbitration or otherwise in a court of competent jurisdiction in the City of Austin, Travis County, Texas.

IT-Davy began the remediation of the Sikes site in October 1990. During the clean-up, IT-Davy encountered conditions at the site that differed materially from the conditions it expected based upon the data provided by the Commission in the Invitation, and which conditions IT-Davy relied upon in structuring its bid. IT-Davy continued work on the Sikes site, but began a dialogue with the Commission over cost overruns due to the materially different conditions encountered at the site. After completion of the work, IT-Davy sought equitable adjustments from the Commission pursuant to the Contract. In a letter to the Executive Director of the Commission, IT-Davy outlined its position regarding the materially different site conditions and the charges incurred by IT-Davy as a result:

                Material Density of the Contaminated Soil$3,739,290
                The actual waste feed material density at the site was lower than the density figures
                provided to IT[Davy] when IT[Davy] submitted its bid for the Contract
                Level of Groundwater Contamination$1,242,444
                The concentration of contaminated water requiring on-site treatment was greater than
                the average contamination level reported in the Remedial Investigation Report
                Dual Stack Test Requirement                     $  607,289
                [The Commission] required IT[Davy] to test and sample both stacks on the incineration
                facility when testing of only one stack was necessary under the Contract
                Repeated Shallow Excavation                     $  560,102
                [The Commission] directed IT[Davy] to excavate contaminated soils from the site in
                multiple shallow cuts, which were in many cases unnecessary and increased IT[Davy] costs
                beyond what it had reasonably anticipated for excavation
                Selection of POHCs                              $  303,644
                [The Commission] ordered IT[Davy] to demonstrate the efficiency of the incineration
                facility using one volatile principal organic hazardous constituent ("pohc") and one
                semi-volatile POHC.  This requirement was contrary to EPA guidance, unreasonable and
                unnecessary for establishing destruction removal efficiency
                Flood Damage Repair                             $  270,887
                Flood damage caused IT[Davy] to incur costs that were not anticipated in the bidding of
                the Contract.  Under the Contract, [the Commission] had responsibility to insure the
                remediation work against damages from causes beyond the control of IT[Davy]. [The
                Commission] has been unreasonable in refusing to compensate IT-Davy for these costs
                                                        TOTAL   $  6,723,655
                

(Emphases in original.) The Commission responded in a letter from the Executive Director:

We appreciate the good work [IT-Davy] did at the Sikes site and the fact that the site was able to [sic] removed from the list of Superfund sites requiring remediation. We believe we have paid all amounts due not only under the original contract but also under the numerous contract amendments that we agreed to during the course of the cleanup.

If you feel the need to pursue additional remedies, we intend to participate in those with the good faith we have demonstrated over the past several years. But we must decline your most recent demand for payment.

IT-Davy sought arbitration of the dispute over payment pursuant to the Remedies provision of the Contract, but the Commission denied this request.

IT-Davy then brought suit seeking declaratory relief and money damages, alleging causes of action for breach of contract, negligent misrepresentation, and quantum meruit/promissory estoppel. The Commission responded with a plea to the jurisdiction and a denial of the allegations. The trial court held a hearing on the Commission's plea. The...

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