                              Fourth Court of Appeals
                                     San Antonio, Texas
                                   DISSENTING OPINION
                                        No. 04-14-00429-CV

                                     CITY OF SAN ANTONIO,
                                            Appellant

                                                  v.

                                   CASEY INDUSTRIAL, INC.,
                                           Appellee

                     From the 408th Judicial District Court, Bexar County, Texas
                                  Trial Court No. 2008-CI-06252
                            Honorable Michael E. Mery, Judge Presiding

Opinion by: Sandee Bryan Marion, Chief Justice
Dissenting Opinion by: Patricia O. Alvarez, Justice

Sitting:          Sandee Bryan Marion, Chief Justice
                  Patricia O. Alvarez, Justice
                  Jason Pulliam, Justice

Delivered and Filed: July 1, 2015

           The majority assumes only arguendo that Casey raised a genuine issue of material fact on

whether Casey complied with the contract’s provisions to seek additional compensation, but it

concludes Casey failed to raise a fact issue on any damages due for additional work CPS Energy

directed it to perform. Based on these conclusions, the majority decides CPS Energy’s immunity

was not waived, and the trial court erred by denying CPS Energy’s plea to the jurisdiction. Because

Casey met its evidentiary burden and CPS Energy failed to conclusively disprove its immunity

was waived, I would affirm the trial court’s order. Therefore, I respectfully dissent.
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                                   PLEA TO THE JURISDICTION

        In its plea to the jurisdiction, CPS Energy asserted its immunity from suit was not waived

and it moved to dismiss Casey’s claims. CPS Energy argued Casey failed to meet the statutory

requirements to waive CPS Energy’s immunity under Texas Local Government Code sections

271.152 and 271.153. See TEX. LOC. GOV’T CODE ANN. § 271.152 (West 2005); id. § 271.153

(West Supp. 2014). After Casey met its burden to raise a fact issue on waiver of immunity, then,

as the movant, CPS Energy had to conclusively disprove any essential element of waiver. In

reviewing the evidence, we take all of Casey’s evidence as true, and resolve any doubts and make

all reasonable inferences in its favor. See Tex. Dep’t of Parks & Wildlife v. Miranda, 133 S.W.3d

217, 228 (Tex. 2004). I address the evidence pertaining to the two sections’ requirements.

                               SECTION 271.152 REQUIREMENTS

A.      Casey’s Burden

        Casey’s burden was to plead facts supported by some evidence sufficient to raise a genuine

issue of material fact that it met the requirements of section 271.152. See Zachry Const. Corp. v.

Port of Hous. Auth. of Harris County, 449 S.W.3d 98, 110 (Tex. 2014). It pled that its suit was

against CPS Energy, a local governmental entity; that CPS Energy entered into a contract with

Casey; and its suit comprised claims for breach of that contract. I recite the supporting evidence.

        •   The City of San Antonio is a local governmental entity. See TEX. LOC. GOV’T CODE
            ANN. § 271.152 (“local governmental entity” (emphasis added)).
        •   Acting through CPS Energy, the City was authorized by statute to enter into a contract
            with Casey for the J.T. Deely power station modifications. See id. (“authorized by
            statute . . . to enter into a contract” (emphasis added)); City of San Antonio ex rel.
            City Pub. Serv. Bd. of San Antonio v. Casey Indus., Inc., 381 S.W.3d 589, 596 (Tex.
            App.—San Antonio 2012, pet. denied) (citing TEX. LOC. GOV’T CODE ANN. § 271.119
            (“Design-Build Contracts for Facilities”)).
        •   It did so in August 2004. See TEX. LOC. GOV’T CODE ANN. § 271.152 (“enters into a
            contract” (emphasis added)); Casey Indus., 381 S.W.3d at 596–97.

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        •   In its pleadings, Casey (1) alleged that CPS Energy breached the August 2004 contract
            and (2) provided evidence of the executed contract and affidavits supporting its
            allegations of breach. Casey also provided evidence that contract provisions under
            paragraph 14.1.2 include procedures for CPS Energy or Casey to modify the scope of
            work, change the performance schedule, and seek an increase or decrease in the D/B
            contractor’s (Casey’s) compensation. It argued and pled evidence showing that it
            complied with the procedures to raise, discuss, and resolve a claim. See TEX. LOC.
            GOV’T CODE ANN. § 271.152 (“claim for breach of contract” (emphasis added)).

        Taking Casey’s evidence as true and making all reasonable inferences in its favor, I

conclude Casey met its burden to raise a genuine issue of material fact that CPS Energy’s immunity

was waived under section 271.152. See Miranda, 133 S.W.3d at 228; see also Zachry Const., 449

S.W.3d at 109 (“The waiver does not depend on the outcome, though it does require a showing of

a substantial claim that meets the Act’s conditions.”).

B.      CPS Energy’s Burden

        Although Casey met its burden, CPS Energy’s plea to the jurisdiction could be granted if

CPS Energy conclusively disproved any essential element of waiver of immunity. See Miranda,

133 S.W.3d at 226–28; Elliott-Williams Co. v. Diaz, 9 S.W.3d 801, 803 (Tex. 1999) (“The

defendant as movant must disprove at least one of the essential elements of the plaintiff’s causes

of action to prevail on summary judgment.”). To conclusively disprove any waiver of immunity,

CPS Energy argued that Casey did not comply with what CPS Energy asserts are the applicable

contract procedures, e.g., contract Article 9.1 Change Orders. CPS Energy contended that the only

contractual procedure to modify Casey’s scope of work was the change order provision, Casey

never requested a change order for the work in question, CPS Energy did not issue one, and

therefore any additional work Casey did was not covered by a written contract. Thus, CPS Energy

argues, without a written contract for the additional work, Casey did not meet section 271.152’s

requirements and CPS Energy’s immunity was not waived.


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C.      Contract Provisions to Request Additional Compensation

        But CPS Energy’s view ignores other contract provisions that expressly create procedures

for Casey to request additional compensation. I trace the path along the applicable contract articles

and recite some of the evidence relating to each article.

        1.      Article 14.1.2

        In its January 3, 2006 letter, CPS Energy notified Wheelabrator that Wheelabrator was in

default under the contract. Under Article 14.1.2, a default by Wheelabrator constitutes a Force

Majeure.

        Provided D/B Contractor is not in Default itself, a Default by Wheelabrator under
        Section 14.1.1, which results in an impairment or frustration of D/B Contractor’s
        Work through no fault of D/B Contractor, shall be considered a “Force Majeure”
        event and will entitle D/B Contractor to request an extension of time and/or
        additional compensation by Notice to Owner as required in Section 9.1.3.

(Emphasis added).

        2.      Article 9.1.3

        Wheelabrator’s default—a force majeure—invokes Article 9.1.3’s provisions.

        D/B Contractor shall provide Owner with Notice of any circumstance described in
        Section 9.1.4 which D/B Contractor believes will entitle D/B Contractor to a
        Change Order modifying the Scope of Work, Project Schedule, Contract Price, or
        other obligations of D/B Contractor under this Agreement. D/B Contractor shall
        bear the burden of establishing that it is entitled to such relief under Section 9.1.4,
        that the relief sought is the minimum relief required, and that any monetary relief
        requested by D/B Contractor is in excess of any insurance proceeds recoverable by
        D/B Contractor. Such Notice shall be issued within ten (10) Days after D/B
        Contractor’s knowledge of a circumstance described in Section 9.1.4, and such
        Notice shall describe such occurrence in detail. Within ten (10) Days following
        delivery of such Notice, or such other period as may be agreed upon by the Parties,
        D/B Contractor shall submit to Owner a written estimate (including detailed
        calculations supporting such estimates) of any adjustments to the Scope of Work
        (including adjustments to the Facility Guarantees or warranties), Project Schedule,
        Contract Price (including adjustments to the Schedule of Values and other
        obligations of D/B Contractor under this Agreement requested by it. Following
        Owner’s receipt of such Notice, Owner shall determine whether it agrees with such
        adjustments to the Scope of Work, Project Schedule, Contract Price or any other
        obligations of D/B Contractor. If Owner agrees with such adjustments, the Parties

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Dissenting Opinion                                                                   04-14-00429-CV


        shall execute an appropriate Change Order. In the event that the Parties reach
        agreement on all terms of a Change Order except for a lump sum price, Owner may
        direct D/B Contractor to proceed with such additional Work with the price to be
        established in accordance with Section 9.1.5. If Owner disagrees with such
        adjustments, the Parties shall attempt to negotiate an equitable resolution, failing
        which the Parties shall resolve such disagreement in accordance with Article 15.
        Pending such resolution, the Owner shall issue a Construction Change Directive in
        accordance with Section 9.2.

(Emphasis added). Casey’s December 30, 2005 letter advised CPS Energy that Wheelabrator’s

problems were costing Casey money, and if Wheelabrator failed to compensate Casey, “Casey will

formally notify CPS that your action is requested. At that time, Casey will request that CPS

exercise your rights, through the Contract, to compensate Casey for the recovery costs.”

(emphasis added).

        Even if the December 30, 2005 letter alone was not sufficient notice under Article 9.1.3,

the record shows Casey had recurring project status meetings with CPS Energy and one may

reasonably infer that Casey informed CPS Energy of Wheelabrator’s performance issues. E.g.,

Casey’s December 30, 2005 letter to CPS Energy states Casey will give CPS Energy copies of the

documents Casey issues to Wheelabrator regarding project progress; CPS Energy’s January 3,

2006 letter referring to the “December 14, 2005 Weekly Construction Meeting.” Further, CPS

Energy declared Wheelabrator in default, and CPS Energy unquestionably knew that Wheelabrator

was failing to perform and Wheelabrator’s default would impair or frustrate Casey’s work.

        Taking Casey’s evidence as true and making reasonable inferences in its favor, Casey gave

CPS Energy written notice in accordance with Article 9.1.3 and Casey was entitled to request relief

under Article 9.1.3. In such a circumstance, if the parties agree on relief, CPS Energy issues a

change order. If the parties do not agree, then Article 15, Claims and Dispute Resolution, is

invoked.




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        3.      Article 15, Claims and Dispute Resolution

        Article 15.2.1 addresses claims procedures:

        A Claim is a demand or assertion by the Parties, as a matter of right, adjustment or
        interpretation of Contract terms, payment of money, Extension of Time or other
        relief with respect to the terms of the Contract. The term “Claim” also includes
        other disputes and matters in question between the Owner, Wheelabrator and/or
        D/B Contractor arising out of or relating to the Contract.

(Emphasis added).

        Article 15.2.2 addresses initiating a claim:

        Claims must be initiated within 10 days after occurrence of the event giving rise to
        such Claim or within 10 days after the claimant first recognizes the condition giving
        rise to the Claim, whichever is later. Claims must be initiated by written notice to
        the other Parties. Claims submitted to the Owner after the ten-day period will be
        rejected.

(Emphasis added).

        Taking Casey’s evidence as true and making all reasonable inferences in its favor, I

conclude Casey’s December 30, 2005 letter to CPS Energy, combined with Casey’s project reports

and CPS Energy’s written declaration that Wheelabrator was in default, satisfied the written notice

requirement. See Zachry Const., 449 S.W.3d at 110 (requiring the claimant to “plead facts with

some evidentiary support that constitute a claim for which immunity is waived”).                After

intervening months and meetings, Casey’s letter of August 3, 2007 states it has already tried the

lower levels for dispute resolution, and it is seeking senior level review.         Casey attached

documentation “in accordance with . . . Article 9 of the Contract” which “includes backup

documentation to identify and support individual cost issues.” CPS Energy’s letter of July 27,

2007 shows the items in dispute under Article 15.1.1.

        Even assuming Casey did not meet the Article 15.2.2 notice requirement, CPS Energy may

have waived notice. See Jernigan v. Langley, 111 S.W.3d 153, 156 (Tex. 2003) (“‘Waiver is

defined as ‘an intentional relinquishment of a known right or intentional conduct inconsistent with

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Dissenting Opinion                                                                    04-14-00429-CV


claiming that right.’” (quoting Sun Exploration & Prod. Co. v. Benton, 728 S.W.2d 35, 37 (Tex.

1987))). In its August 15, 2007 letter, CPS Energy acknowledged outstanding disputed items,

requested more information on the claims, and participated in dispute resolution procedures under

Article 15. I agree with the majority’s conclusion that “[t]he 2007 correspondence indicates the

parties’ attempt to resolve their dispute pursuant to the contract’s ‘Clams and Dispute Resolution’

provisions as set forth in Article 15 of the contract.”

        Article 15.2.4 addresses procedures for making a claim for “other reasonable grounds”:

        If the D/B Contractor wishes to make a Claim for an increase in either the
        Wheelabrator Contract Price or D/B Contractor’s Contract Price, or if the D/B
        Contractor believes additional cost is involved for reasons including, but not
        limited to, (1) an order by the Owner to stop or repair Work where the D/B
        Contractor nor Wheelabrator was at fault, (2) in a situation in which the Work is
        considered additional to the Specifications, (3) a written order for a change in the
        Work issued by the Owner, or (4) other reasonable grounds, written Notice as
        provided herein shall be given by the D/B Contractor before proceeding to execute
        the Work.

(Emphasis added). This provision is not expressly tied to, or limited by, the change order

procedure. It requires notice, but making reasonable inferences in Casey’s favor based on the

evidence in the record such as the correspondence and weekly project meetings, Casey either gave

notice or CPS Energy waived the notice requirement.

        Article 15.4.4 provides for redress from a rejected claim:

        The Owner will approve or reject Claims by written decision, which shall state the
        reasons therefore and which shall notify the D/B Contractor of any change in the
        Contract Price or Contract Time, or both. The approval or rejection of a Claim by
        the Owner shall be subject to dispute resolution as outlined in Section 15.1 prior to
        litigation.

(Emphasis added).

        Article 15.1, Procedure for Dispute Resolution, requires the parties to “use their Best

Efforts in good faith to reach a reasonable and equitable resolution of the matter.” If project level

managers are unable to resolve the matter, it is referred to senior officers. If they cannot resolve

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Dissenting Opinion                                                                     04-14-00429-CV


the matter, the parties must use their “Best Efforts in good faith” to agree on non-judicial

resolution. If the dispute resolution fails, neither party may sue until at least thirty days after the

senior officers received written notice of the dispute. Although Article 15.1 seeks to promote

alternate dispute resolution and avoid litigation, it expressly anticipates the parties may seek relief

in court.

        Viewing the parties’ evidence in the light most favorable to Casey, Miranda, 133 S.W.3d

at 228, I conclude CPS Energy failed to meet its burden to disprove as a matter of law any essential

element of section 271.152, see Elliott-Williams Co., 9 S.W.3d at 803; cf. Mission Consol. Indep.

Sch. Dist. v. Garcia, 372 S.W.3d 629, 642 (Tex. 2012) (granting a plea to the jurisdiction on a

claim because the governmental entity negated an essential element of plaintiff’s claim and

plaintiff failed to raise a fact question on the negated element). Because “Section 271.152 uses

Section 271.153 to further define to what extent immunity has been waived,” I next consider

whether Casey’s claimed damages are of the type recoverable under section 271.153. See Zachry

Const., 449 S.W.3d at 110.

                                 SECTION 271.153 REQUIREMENTS

A.      Casey’s Burden

        To show CPS Energy’s immunity was waived, Casey must also raise a genuine issue of

material fact on whether its damages are recoverable under section 271.153. See id.; Miranda,

133 S.W.3d at 228. Casey may recover damages from CPS Energy’s alleged breach of contract

for “(2) the amount owed for change orders or additional work the contractor is directed to perform

by a local governmental entity in connection with the contract.” TEX. LOC. GOV’T CODE ANN.

§ 271.153(a) (emphasis added).




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Dissenting Opinion                                                                    04-14-00429-CV


        Disregarding the $150,000 per day liquidated damages provision, the majority states that

“Casey points to no evidence of any directive from CPS Energy” to perform any additional work.

But Casey’s vice-president’s affidavit averred that Casey performed work Wheelabrator—not

Casey—was otherwise obligated to perform and includes letters between CPS Energy and Casey.

For example, in an attachment to Casey’s August 3, 2007 letter to CPS Energy, Casey quoted

Article 20.20 of the contract: “[Casey] and its surety shall bear no responsibility or liability for

the Wheelabrator obligations, Wheelabrator’s design or the Performance Guarantees associated

with the Wheelabrator portion of the Work.” (emphasis added).              Casey insisted that “as

construction manager Casey bore no responsibility for ensuring Wheelabrator’s performance,” and

Article 9.4 states that “[Casey] and Wheelabrator accepts [sic] the risk of mistake or error relating

to the portion of their respective Work as outlined in [the Split Contract Matrix].” There is also

evidence of weekly construction meetings and numerous letters between the parties addressing the

scope and progress of the construction. Further, in its response to CPS Energy’s motion to dismiss,

Casey pled that “Casey followed a process that was directed by CPS, all the while reserving

Casey’s rights to bring a claim for the Wheelabrator-caused impacts associated with the default as

acknowledged by CPS” and added that “Casey was continuously following CPS’[s] direction.”

B.      CPS Energy’s Burden

        To be entitled to a grant of its plea to the jurisdiction, CPS Energy’s burden is to

conclusively disprove CPS Energy directed Casey to perform additional work in connection with

the contract. See TEX. LOC. GOV’T CODE ANN. § 271.153(a)(2); Miranda, 133 S.W.3d at 228.

CPS Energy’s evidence includes an affidavit that insists CPS Energy had little or no visibility into

the Casey-Wheelabrator interactions. It also argued that as of August 2006 Casey had not raised

any issues related to “the steel painting it performed which was within Wheelabrator’s scope of



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Dissenting Opinion                                                                   04-14-00429-CV


work or its costs related to an increase in steel quantities for the Project.” But CPS Energy

acknowledged that on May 2, 2007, Casey informed CPS Energy that Casey would seek

compensation from CPS Energy for the steel painting costs. This evidence supports the reasonable

inference that CPS Energy directed Casey to perform work that—at least in Casey’s view—Casey

was not otherwise obligated to perform by the contract.

        Article 20.20 requires Casey to “act as the overall construction manager of the Project” and

to “oversee Wheelabrator’s . . . performance,” but Casey insists the article’s disclaimer that Casey

“shall bear no responsibility or liability for the Wheelabrator obligations” shows Casey was not

responsible for performing Wheelabrator’s work. Given Casey’s reliance on Article 20.20’s

disclaimer, it is not reasonable to infer that Casey volunteered to perform Wheelabrator’s work at

considerable expense to itself but at no cost to CPS Energy. To the contrary, considering the direct

and circumstantial evidence, it is quite reasonable to infer that Casey performed Wheelabrator’s

work because CPS Energy directed Casey to do so. It was CPS Energy’s burden to prove as a

matter of law that in its many communications to Casey, including letters and project meetings, it

did not direct Casey to perform the additional work. The evidence does not show CPS Energy met

that burden.

                                           CONCLUSION

        It is undisputed that Wheelabrator defaulted and Casey performed some of the work

originally assigned to Wheelabrator. CPS Energy seems to view Casey as a prime contractor with

an obligation to perform Wheelabrator’s work at no additional cost to CPS Energy. Casey sees

itself as Wheelabrator’s co-contractor, not its prime contractor, and Casey raises Article 20.20 as

evidence it was not obligated to perform Wheelabrator’s work without additional compensation.




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Dissenting Opinion                                                                   04-14-00429-CV


        Although many statements in CPS Energy’s affidavits contradict assertions in, and

reasonable inferences I draw from, Casey’s evidence, this court must leave disputed questions of

material fact to the fact-finder. See Miranda, 133 S.W.3d at 228. Casey argued and pled facts

with supporting evidence that it complied with the contract’s procedures to request additional

compensation. Whether Casey can prove by a preponderance of the evidence that it actually

complied with the contract’s provisions is not the question before us. See Zachry Const., 449

S.W.3d at 110 (restating the claimant’s burden: “the claimant must plead facts with some

evidentiary support that constitute a claim for which immunity is waived, not [prove] that the

claimant will prevail”).

        Our question is whether, viewing all the evidence in the light most favorable to Casey and

making all reasonable inferences in its favor, Casey raised a genuine issue of material fact on

whether its claims meet the statutory requirements to waive CPS Energy’s immunity. The

evidence shows Casey raised a genuine issue of material fact on whether it asserted a claim for

breach of a written contract, and thus Casey met its burden under section 271.152. The evidence

also shows Casey raised a genuine issue of material fact on whether CPS Energy directed Casey

to perform “additional work . . . in connection with the contract,” and thus Casey met its burden

under section 271.153.

        Because Casey met its burdens, and CPS Energy failed to conclusively disprove any

essential element of waiver, I would affirm the trial court’s order. Because the majority reverses

the trial court’s order, I respectfully dissent.


                                                      Patricia O. Alvarez, Justice




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