Univ. of Hous. Sys. v. Ground Tex. Constr., Inc.

• Citation: 650 S.W.3d 832
• Decision Date: 10 May 2022
• Docket Number: 14-20-00401-CV
• Parties: UNIVERSITY OF HOUSTON SYSTEM, Appellant v. GROUND TEXAS CONSTRUCTION, INC., Appellee
• Court: Court of Appeals of Texas

650 S.W.3d 832

UNIVERSITY OF HOUSTON SYSTEM, Appellant
v.
GROUND TEXAS CONSTRUCTION, INC., Appellee

NO. 14-20-00401-CV

Court of Appeals of Texas, Houston (14th Dist.).

Opinion filed May 10, 2022

Lea Brigtsen, William Sumner Macdaniel, for Appellant.

Neftali Arroyo, Christina Stone, Dallas, Allan G. Levine, Houston, for Appellee Ground Texas Construction, Inc.

Brian Schrumpf, Spring, for Appellee Flash Funding, LLC.

John Patout Jr., for A-Status Construction Inc. and A Status Construction LLC.

Panel consists of Chief Justice Christopher and Justices Hassan and Poissant.

Margaret "Meg" Poissant, Justice

In this interlocutory appeal, appellant University of Houston System ("UH") appeals the denial of its plea to the jurisdiction in the lawsuit brought by appellee Ground Texas Construction, Inc. ("GTC"). See Tex. Civ. Prac. & Rem. Code Ann. § 51.014(8) (authorizing interlocutory appeal from denial of a plea to the jurisdiction). In two issues, UH argues that GTC failed to establish a waiver of sovereign immunity because (1) GTC failed to provide timely and proper notice to UH as required by Texas Government Code §§ 2253.027, 2253.041, which UH argues is a jurisdictional statutory prerequisite to filing suit; and (2) UH obtained a payment bond as required under § 2253.027. See Tex. Gov't Code Ann. §§ 2253.027, 2253.041. We affirm.

I. BACKGROUND

On or about February 8, 2019, UH contracted with A-Status Construction, Inc., and A-Status Construction, LLC (together "A-Status") for the construction of a parking lot on UH's property in Katy, Texas. A-Status hired GTC as a subcontractor for work on the project, which included earthwork/grading, concrete paving, storm drainage and water lines, landscaping, and irrigation. The total for the subcontract was $1,525,000.00. After GTC performed work on the project and A-Status failed to compensate GTC for the work, GTC attempted to collect on A-Status's construction bond, but learned that the bond was fraudulent.

On November 12, 2019, Flash Funding, LLC filed a lawsuit against GTC, seeking to recover money owed by GTC for work Flash Funding performed on UH's project as a subcontractor for GTC. On February 25, 2020, GTC filed a third-party petition against UH, asserting causes of action for breach of contract and quantum meruit and seeking to recover $421,957.99 for unpaid labor and materials. GTC argued that UH was liable pursuant to

650 S.W.3d 836

§ 2253.027 of the Government Code because it failed to obtain a valid payment bond for the project from A-Status. See id. § 2253.027(a). GTC further stated that it provided notice to UH and A-Status on December 2, 2019, as required by § 2253.027. See id. § 2253.027(b).

UH filed a plea to the jurisdiction and argued that sovereign immunity barred GTC's suit because: (1) UH obtained a bond from A-Status and UH did not know the bond was fraudulent; and (2) GTC failed to comply with the requirements that the statutory notice include a sworn statement of account and be mailed on or before by the 15th day of the third month following the month in which labor and materials were provided. See id. §§ 2253.027(b), 2253.041. GTC argued UH did not obtain a bond as required by statute and that GTC satisfied the statutory notice requirements. On May 5, 2020, the trial court signed an order denying UH's plea to the jurisdiction. This interlocutory appeal followed. See Tex. Civ. Prac. & Rem. Code Ann. § 51.014(8).

II. DISCUSSION

In its first issue, UH argues that the trial court erred in denying its plea to the jurisdiction because GTC did not provide UH with notice as required by § 2253.027(b), and thus, UH argues there was no waiver of immunity. GTC argues that the notice provision in § 2253.027(b) is not a jurisdictional prerequisite to filing suit against a governmental entity for the entity's failure to obtain a payment bond. Whether the notice provision in Government Code § 2253.027(b) is a jurisdictional prerequisite to suit a is a question of first impression.

In its second issue, UH argues that its immunity was not waived because it obtained a bond from A-Status, albeit a fraudulent one. UH argues that it got a "bond" and that it did not know that the bond was fraudulent, thereby preventing the application of § 2253.027(a). This is also a question of first impression.

We discuss these in reverse order.

A. STANDARD OF REVIEW

1. Plea to the Jurisdiction

A plea to the jurisdiction is a dilatory plea used to defeat a cause of action without regard to whether the claims asserted have merit. Bland Indep. Sch. Dist. v. Blue , 34 S.W.3d 547, 554 (Tex. 2000). The plea challenges the trial court's subject matter jurisdiction. Id. "A jurisdictional plea may challenge the pleadings, the existence of jurisdictional facts, or both." Alamo Heights Indep. Sch. Dist. v. Clark , 544 S.W.3d 755, 770 (Tex. 2018). Whether a trial court has subject matter jurisdiction and whether the pleader has alleged facts that affirmatively demonstrate the trial court's subject matter jurisdiction are questions of law that we review de novo. Tex. Dep't of Parks & Wildlife v. Miranda , 133 S.W.3d 217, 226 (Tex. 2004).

We first look to the pleadings to determine if the pleader has alleged facts that affirmatively demonstrate the court's jurisdiction to hear the case. See id. We construe the pleadings liberally in favor of the pleader, look to the pleader's intent, and accept as true the factual allegations in the pleadings. See id. at 226, 228. If the defendant challenges the existence of jurisdictional facts with supporting evidence, then the standard of review mirrors that of a summary judgment. See Sampson v. Univ. of Tex. at Austin , 500 S.W.3d 380, 384 (Tex. 2016) ; Carmichael v. Tarantino Props., Inc. , 604 S.W.3d 469, 474 (Tex. App.—Houston [14th Dist.] 2020, no pet.). If the relevant evidence is undisputed or fails to raise a fact question on the jurisdiction issue, then the trial court rules on

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the plea as a matter of law. Miranda , 133 S.W.3d at 228. However, if the evidence creates a fact issue regarding the...