

Opinion issued April 26, 2012


In The
Court of
Appeals
For The
First District
of Texas
————————————
NO. 01-11-00778-CV
———————————
Port Freeport f/k/a Brazos River Harbor Navigation District, Appellant
V.
RLB
Contracting Inc.,
Appellee

 

 
On Appeal from the 239th District Court
Brazoria County, Texas

Trial Court Case No. 48914
 

 
O P I N I O N
          Appellant, Port Freeport f/k/a Brazos River Harbor Navigation
District (“Port Freeport”) challenges the trial court’s denial of its plea to
the jurisdiction.  It its sole issue,
Port Freeport argues that the claim of appellee, RLB Contracting Inc. (“RLB”),
for breach of contract does not fall within the scope of the waiver of
governmental immunity in Texas Local Government Code section 271.152.[1]
We affirm.
                                                                                                                                                                
Background
Port Freeport and RLB entered into a construction contract
for RLB to provide excavating, hauling, and compacting services for Port
Freeport’s Velasco Terminal Site Civil Project (“the Project”).  This contract was comprised of over one
hundred pages.  The specific agreement
between Port Freeport and RLB provided that RLB, as the Contractor,
shall complete all Work as specified or indicated in the
Contract Documents.  The Work . . .
generally consists of mechanical excavation to specified grades in upland areas
and to EL (-) 12-ft from the channel area, placement and compaction of
excavated material to specified grades in the backlands area; and installation
of scour protection revetment, footbridge, protective dolphins, mooring points,
building pad, access road, and utilities required to support the barge fleeting
area as shown in the drawings for the VELASCO TERMINAL SITE CIVIL PROJECT.
 
It further provided that Goldston Engineering, Inc., the Project designer, was the
“Engineer” for purposes of the contract documents.  
Relevant to this appeal, the contract between RLB and Port
Freeport also provided a “contract price” of $6,938,000 and stated,
The
above total price includes the cost of the unit rate items listed below.  In the unit rates, the Bidder [RLB] shall
provide an all-in rate for adjusting the price of a work item should the
quantity be adjusted as a result of a change in the scope of work, or the
actual quantity differ from the quantity stipulated as
a basis of the bid.  If the Bidder notes
any variances from the estimated quantities, he shall use the stipulated
estimated quantities for his Base Bid and shall advise the Owner of such
variances.
 
The contract then provided a “unit
rate” of $7 per cubic yard for the “excavation, transport, placement and
compaction of fill material in designated areas on site.”  It provided a quantity of 365,000 cubic yards
to be excavated at a total price of $2,555,000. 
The contract also established payment procedures; provided Contractor
representations that RLB was “familiar with the nature and extent of the
Contract Documents, Work, site, locality, and all local conditions” and had
“reviewed and checked all information and data shown or indicated on the
Contract Documents,” among other things; and incorporated other general
documents into the agreement between the parties, including the “General
Conditions of the Construction Contract.”
          The
General Conditions, in relevant part, contained articles addressing “differing
subsurface or physical conditions,” procedures for changes in the work and for
providing notice of claims and disputes under the contract, methods for
determining cost of the work, allowances, and unit price of the work, and methods
 
for
changing the contract price and contract times. 
Specifically, article 4.03 of the General Conditions provided:
4.03
Differing Subsurface or Physical
Conditions
 
A.
Notice: If Contractor believes that
any subsurface or physical condition at or contiguous to the Site that is
uncovered or revealed either:
 
1. is of such a nature as to establish that any “technical
data” on which Contractor is entitled to rely . . . is materially inaccurate;
or
 
2. is of such a nature as to require a change in the Contract
Documents; or
 
3. differs materially from that shown or indicated in the
Contract Documents; or
 
4. is of an unusual nature, and differs materially from
conditions ordinarily encountered and generally recognized as inherent in work
of the character provided for in the Contract Documents;
 
then
Contractor shall, promptly after becoming aware thereof and before further
disturbing the subsurface or physical conditions or performing any Work in
connection therewith (except in an emergency . . .), notify Owner and Engineer
in writing about such condition. 
Contractor shall not further disturb such condition or perform any Work
in connection therewith (except as aforesaid) until receipt of written order to
do so.
 
Article 4.03 went on to provide
that the Engineer would review the condition and determine the necessity of any
further action and would advise the Owner, Port Freeport, in writing.  It further provided that “[t]he Contract
Price or the Contract Times, or both, will be equitably adjusted to the extent
that the existence of such differing subsurface or physical condition causes an
increase or decrease in Contractor’s cost of, or time required for, performance
of the Work,” subject to certain conditions.
          Article
10.05(A) provided the procedure for addressing “Claims and Disputes”:[2]
A.
Notice: Written notice stating the
general nature of each Claim, dispute, or other matter shall be delivered by
the Contractor to Engineer and the Owner promptly (but in no event later than
30 days) after the start of the event giving rise thereto.  Notice of the amount or extent of the Claim,
dispute or other matter with supporting data shall be delivered to the Engineer
and the Owner within 60 days after the start of such event. . . .  A Claim for an adjustment in Contract Price
shall be prepared in accordance with the provision of Paragraph 12.01 B.  A Claim for an adjustment in Contract Time
shall be prepared in accordance with the provisions of Paragraph 12.02 B.  Each Claim shall be accompanied by
Contractor’s written statement that the adjustment claimed is the entire
adjustment to which the claimant believes it is entitled as a result of said
event.
 
Article 10.05 further provided
that the Engineer would render a formal decision in writing which, if approved
by the Owner, would be “final and binding” on the parties unless one of them
provided to the other a written notice of intent to appeal the decision.  Article 10.05(F) provided: “No claim for an
adjustment in Contract Price or Contract Time will be valid if not submitted in
accordance with this Paragraph 10.05.”
          Article 11.03 addressed “Unit Price
Work” and provided:
A.
Where the Contract Documents provide that all or part of the Work is to be Unit
Price Work, initially the Contract Price will be deemed to include for all Unit
Price Work an amount equal to the sum of the unit price for each separately
identified item of Unit Price Work times the estimated quantity of each item as
indicated in the Agreement.
 
B.
The estimated quantities of items of Unit Price Work are not guaranteed and are
solely for the purpose of comparison of bids and determining an initial
Contract Price.  Determinations of the
actual quantities and classifications of Unit Price Work performed by Contractor
will be made by Engineer. . . .
 
C.
Each unit price will be deemed to include an amount considered by Contractor to
be adequate to cover Contractor’s overhead and profit for each separately
identified item.
 
D.
Owner or Contractor may make a Claim for an adjustment in the Contract Price in
accordance with Paragraph 10.05 if:
 
1. the quantity
of any item of Unit Price Work performed by Contractor differs materially and
significantly from the estimated quantity of such item indicated in the
Agreement; and 
 
2. there is no corresponding adjustment with respect to any
other item of Work; and 
 
3. Contractor
believes that Contractor is entitled to an increase in Contract Price as a
result of having incurred additional expense or Owner believes that Owner is
entitled to a decrease in Contract Price and the parties are unable to agree as
to the amount of any such increase or decrease.
 
          Article
12.01 provided that any change to the Contract Price must be made by a written
Change Order and any Claim for an adjustment “shall be based on written notice
submitted by the party making the Claim to the Engineer and the other party to
the Contract in accordance with the provisions of article 10.05.  Article 12.01(B) provided:
The
value of any Work covered by a Change Order or of any Claim for an adjustment
in the Contract Price will be determined as follows:
 
1. where the
Work involved is covered by unit prices contained in the Contract Documents, by
application of such unit prices to the quantities of the items involved
(subject to the provisions of Paragraph 11.03). . . .
 
Article 12.02 addressed changes of Contract Time, which
also required a change order.  Article
12.02(B) provided, “Any adjustment of the Contract Times covered by a Change
Order or any Claim for an adjustment in the Contract Time will be determined in
accordance with the provisions of this Article 12.”
A dispute over various
aspects of the contract’s performance resulted in RLB filing suit against Port
Freeport, alleging multiple causes of action for breach of contract, including
the claim that Port Freeport
has
not fully compensated [RLB] in accordance with the terms of the Contract, and
has materially breached the Contract by interfering with [RLB’s] performance of
the Contract, failing to execute change orders in accordance with the Contract,
changing the scope of Plaintiff’s work under the Contract but failing to
compensate Plaintiff for the additional delays, costs and expenses resulting
from the changes in Plaintiff’s scope of work, failing to adjust the Contract
amount and time in accordance with the terms of the Contract, withholding
Liquidated Damages due under the Contract, and failing to pay Plaintiff in
accordance with the terms of the Contract.
 
          RLB
alleged that the contract provided for extension of the time to complete
performance under certain circumstances and that it “provided for price
adjustments for changes in the scope of work and other events.”  It alleged that it “encountered a number of
issues which complicated and delayed its performance, and caused [it] to incur
additional and unforeseen expenses and costs.” 
RLB contended that one such complication was that 
[t]he
material excavated by [it] was significantly wetter and more silty than the parties anticipated.  This resulted in the need to treat more
material with lime than the parties originally anticipated in order to
effectively dry it, decreased productivity, extended the time to complete the
Project, and substantially increased Plaintiff’s costs.  Plaintiff was required to excavate, haul,
lime and compact a material and significant additional amount of this wetter
than anticipated fill material not anticipated under the Contract and not
contemplated in the Contract unit prices. 
Defendant refused to appropriately adjust the Contract price and failed
to fully compensate Plaintiff for this additional work, or extend the contract
time for this additional work.  Plaintiff
is entitled to a Contract price increase of $436,120 plus an additional amount
for fuel escalation during the extended performance period. . . .
 
RLB alleged that Port Freeport “is amenable to suit for
breach of contract pursuant to a waiver of immunity set forth in Texas Local
Government Code § 271.152 in that [Port Freeport] executed a written
contract stating the essential terms of the agreement for providing goods and
services to a local governmental entity that was properly executed on behalf of
the local governmental entity.”  RLB also
alleged that “[a]ll conditions precedent to this
action, recovery under the Contract, and recovery for the claims asserted in
this case have occurred, been performed or are waived, excused, and/or [Port
Freeport] is estopped to assert them.”  Specifically,
RLB alleged that it “gave proper notice in accordance with the Contract of its
claims under the Contract including without limitation, written notices on
January 28, 2008, May 2, 2008, May 8, 2008, June 17, 2008, June 30, 2008, July
9, 2008, July 10, 2008, September 5, 2008, September 10, 2008, and October 20,
2008.  These notices were supplemented by
additional oral notices and discussions.” 
It further pled that any additional requirements that it give notice
have “been waived by [Port Freeport], [Port Freeport] is estopped to assert
such requirement, [Port Freeport] is precluded from asserting such a
requirement by reason of its prior material breach of the Contract, and/or the
notice provisions in the contract are void under Texas Civil Practice and
Remedies Code section 16.071.”  RLB
sought total damages in the amount of $1,329,750.
Port Freeport filed a plea to the jurisdiction challenging
the trial court’s jurisdiction to hear RLB’s claims.  It argued that “RLB failed to meet the
adjudication procedures requirements of the contract, including notice and
alternative dispute resolution.”[3]  Specifically, it argued that “[i]f RLB believed that the conditions of the worksite were
materially different than anticipated, then the Contract Documents provided
that RLB had to (i) provide Port Freeport with
written notice and, (ii) stop performing any further work until Port Freeport’s
engineers could assess the issue” in compliance with article 4.03 of the
General Conditions.  Port Freeport argued
that because RLB failed to comply with the contractual, mandatory pre-suit
adjudication procedure, its immunity from suit was not waived.
The trial court denied the plea to the jurisdiction, and
this appeal followed.  See Tex.
Civ. Prac. & Rem. Code Ann. § 51.014(a)(8) (Vernon Supp. 2011) (allowing interlocutory appeal of grant
or denial of plea to jurisdiction by governmental unit).
                                                                                                                                           
Plea to the Jurisdiction
In its sole issue, Port Freeport argues that the trial
court erred in denying its plea to the jurisdiction.
A.              
Standard of Review
A plea to the jurisdiction challenges the trial court’s
subject matter jurisdiction to hear the case. 
See Bland Indep.
Sch. Dist. v. Blue, 34 S.W.3d
547, 554 (Tex. 2000). 
Subject matter jurisdiction is essential to the authority of a court to
decide a case and is never presumed.  Tex. Ass’n
of Bus. v.
Tex. Air Control Bd., 852 S.W.2d 440, 443–44 (Tex. 1993).  The existence of subject matter jurisdiction
is a question of law.  State Dep’t of Hwys.
& Pub. Transp. v. Gonzalez, 82 S.W.3d 322, 327 (Tex. 2002).  Therefore, we review the trial court’s ruling
on a plea to the jurisdiction de novo.  Id.
The plaintiff has the burden to allege facts affirmatively
demonstrating that the trial court has subject matter jurisdiction.  Tex. Ass’n of Bus., 852 S.W.2d at 446.  When a plea to the jurisdiction challenges
the existence of jurisdictional facts, the trial court must consider relevant
evidence submitted by the parties.  Tex. Dep’t of Parks &
Wildlife v. Miranda, 133 S.W.3d 217, 227 (Tex. 2004).  If the evidence creates a fact question
regarding jurisdiction, the trial court cannot grant the plea to the
jurisdiction, and the fact issue will be resolved by the fact finder; however,
if the relevant evidence is undisputed or fails to raise a fact question on the
jurisdictional issue, the trial court rules on the plea as a matter of
law.  Id. at 227–28.  In deciding a plea to the jurisdiction, a
court may not consider the merits of the case, but only the plaintiff’s
pleadings and the evidence pertinent to the jurisdictional inquiry.  Cnty. of Cameron v. Brown, 80 S.W.3d 549, 555
(Tex. 2002).  In conducting our review,
we take as true all evidence favorable to the nonmovant
and indulge every reasonable inference and resolve any doubts in the nonmovant’s favor.  Miranda, 133 S.W.3d at
228.
B.              
Waiver of Immunity
Governmental immunity has two components—immunity from
liability and immunity from suit.  Tooke v. City of Mexia, 197 S.W.3d 325, 332 (Tex. 2006).  A unit of state government is immune from
suit and liability unless the state consents. 
See Tex. Dep’t of Transp. v. Jones,
8 S.W.3d 636, 638 (Tex. 1999).  Immunity from suit defeats a trial court’s
subject matter jurisdiction and is properly asserted in a plea to the
jurisdiction.  Id. at 639.  Immunity from liability protects the state
from money judgments even if the Legislature has expressly given consent to
sue.  Tex. Natural Res. Conservation Comm’n v. IT-Davy, 74 S.W.3d 849, 853 (Tex. 2002).
By entering into a contract, a governmental entity waives
its immunity from liability for breach of the contract, “but does not, merely
by entering into a contract, waive immunity from suit.”  Tex. A&M Univ.-Kingsville v. Lawson,
87 S.W.3d 518, 520 (Tex. 2002); Gen. Servs.
Comm’n v.
Little-Tex Insulation Co., 39 S.W.3d 591, 594
(Tex. 2001).  When a
state contracts, it is liable on contracts made for its benefit as if it were a
private person.  Little–Tex Insulation Co., 39 S.W.3d at 594 (citing Fed. Sign v. Tex. S. Univ., 951 S.W.2d
401, 405 (Tex. 1997)).  Immunity from
suit bars a suit against a governmental entity unless the Legislature expressly
consents to the suit by resolution or by clear and unambiguous statutory
language.  Tooke, 197 S.W.3d at 332–33; see
also Tex. Gov’t Code Ann. §
311.034 (Vernon Supp. 2011) (providing that statute shall not be construed as
waiving sovereign immunity unless waiver is effected by clear and unambiguous
language).
Local Government Code
Section 271.152 waives a governmental entity’s immunity from suit for certain
contracts:
A
local governmental entity that is authorized by statute or the constitution to
enter into a contract and that enters into a contract subject to this
subchapter waives sovereign immunity to suit for the purpose of adjudicating a
claim for breach of the contract, subject to the terms and conditions of this
subchapter.
 
Tex.
Loc. Gov’t Code Ann. §
271.152 (Vernon 2005). 
The Local Government Code defines “a contract subject to this
subchapter” as “a written contract stating the essential terms of the agreement
for providing goods or services to the local governmental entity that is
properly executed on behalf of the local governmental entity.”  Id. § 271.151(2) (Vernon 2005).  
Thus, 
[f]or
section 271.152’s waiver of immunity to apply, three elements must be
established: (1) the party against whom the waiver is asserted must be a “local
governmental entity” as defined by section 271.151(3), (2) the entity must be
authorized by statute or by the Constitution to enter into contracts, and (3)
the entity must in fact have entered into a contract that is “subject to this
subchapter,” as defined by section 271.151(2).
 
City of Houston v. Williams, 353 S.W.3d
128, 134–35 (Tex. 2011).  A
contract must meet five elements in order to be a contract subject to section
271.152’s waiver of immunity: “(1) the contract must be in writing, (2) state
the essential terms of the agreement, (3) provide for
goods or services, (4) to the local governmental entity, and (5) be executed on
behalf of the local governmental entity.” 
Id. at 135.
          Section
271.153 provides “Limitations on Adjudication Awards”:
(a)
The total amount of money awarded in an adjudication brought against a local
governmental entity for breach of a contract subject to this subchapter is
limited to the following:
 
(1)
the balance due and owed by the local governmental entity under the contract as
it may have been amended, including any amount owed as compensation for the
increased cost to perform the work as a direct result of owner-caused delays or
acceleration;
 
(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;
 
(3)
reasonable and necessary attorney’s fees that are
equitable and just; and
 
(4) interest as
allowed by law. . . .
 
Tex.
Loc. Gov’t Code Ann. §
271.153 (Vernon Supp. 2011).
          Section
271.154 provides:
Adjudication
procedures, including requirements for serving notices or engaging in
alternative dispute resolution proceedings before bringing a suit or an
arbitration proceeding, that are stated in the contract subject to this
subchapter or that are established by the local governmental entity and
expressly incorporated into the contract or incorporated by reference are
enforceable except to the extent those procedures conflict with the terms of
this subchapter.
 
Id. § 271.154 (Vernon 2005).  
 
The statute does not define
“adjudication procedures,” but it provides:
“Adjudication”
of a claim means the bringing of a civil suit and prosecution to final judgment
in county or state court and includes the bringing of an authorized arbitration
proceeding and prosecution to final resolution in accordance with any mandatory
procedures established in the contract subject to this subchapter for the
arbitration proceedings.
 
Id. § 271.151(1).
C.              
Analysis
The parties do not dispute that Port Freeport is a local
governmental entity empowered to enter into contracts as contemplated by
section 271.152.  See Williams, 353 S.W.3d at 134–35; see also Tex. Loc. Gov’t Code Ann. § 271.151(3)
(providing that “‘[l]ocal governmental entity’ means
a political subdivision of this state,” including “special-purpose district or
authority” such as “navigation district”).  Nor do the parties dispute that the nature of
the contract between them was a written contract for “goods or services” provided
to a local governmental entity as contemplated by section 271.151.  See Williams,
353 S.W.3d at 135; see also Tex. Loc. Gov’t Code Ann. § 271.151(2)
(defining “contract subject to this subchapter”);.
Port Freeport argues that RLB’s claim for an “equitable
adjustment” of the unit price for the excavation work does not fall within
section 271.152’s waiver of immunity from suit because: (1) the contract does
not state the essential terms of the agreement between the parties on this claim;
(2) RLB’s claim is properly characterized as an equitable claim, rather than as
a breach of contract claim, and does not fall within that waiver; and (3) RLB
did not comply with contractual pre-suit procedures, and thus RLB did not
satisfy the “terms and conditions” of the subchapter because it did not comply
with section 271.154.
1.                
Does
the contract provide the essential terms?
Port Freeport argues that, because RLB did not comply with
the provisions of article 4.03 regarding changed site conditions and “did not
await a written change work directive from the Port before excavating the
materials it now claims were wetter and siltier[,] . . . [t]here is no written contract between these
parties for RLB to remove what it now claims to be materially different
materials for the materially different price it now seeks.”  It further argues that RLB’s claim for an
“equitable adjustment” is not based on a written contract that states an
essential price term.
The “essential terms” of an agreement include, among other
things, “the time of performance, the price to be paid, . . .
and the service to be rendered.”  Id. at 138–39 (quoting Kirby Lake Dev. Ltd. v. Clear Lake City
Water Auth., 320 S.W.3d 829, 838 (Tex. 2010)).  “Contracts should be examined on a
case-by-case basis to determine which terms are material or essential.”  Parker
Drilling Co. v. Romfor Supply Co., 316 S.W.3d 68,
74 (Tex. App.—Houston [14th Dist.] 2010, pet. denied) (citing T.O. Stanley Boot Co. v. Bank of El Paso,
847 S.W.2d 218, 221 (Tex. 1992)).  A
contract is legally binding “if its terms are sufficiently definite to enable a
court to understand the parties’ obligations.” 
Fort Worth
Indep. Sch. Dist. v. City of Fort
Worth, 22 S.W.3d 831, 846 (Tex. 2000).
The contract at issue here provides the time for
performance and the service to be rendered. 
It also provides the total contract price, and it lists a “unit rate”
and estimated quantity for the “excavation, transport, placement and compaction
of fill material in designated areas on site” as comprising an estimated
$2,555,000 of the total contract cost. 
Thus, the contract provides the essential terms of time of performance,
the price to be paid, and the service to be rendered.  See id.  Furthermore, article 11.03 of the contract addresses
the final calculation of payment due for “Unit Price Work,” including the
method by which the parties may seek an adjustment of the contract price.  The contract between Port Freeport and RLB
provides:
In
the unit rates, the Bidder [RLB] shall provide an all-in rate for adjusting the
price of a work item should the quantity be adjusted as a result of a change in
the scope of work, or the actual quantity differ from
the quantity stipulated as a basis of the bid. 
If the Bidder notes any variances from the estimated quantities, he
shall use the stipulated estimated quantities for his Base Bid and shall advise
the Owner of such variances.
 
Articles 4.03, 10.05, and 12.01
also address methods for making claims for changes in the contract price, and
other portions of the agreement refer to circumstances and procedures for
obtaining change orders on the scope and time of work to be performed.  Therefore, the contract contains the
essential provisions for resolving RLB’s allegations regarding its compensation
under the contract.  See id.; T.O. Stanley Boot
Co., 847 S.W.2d at 221; Parker Drilling Co., 316 S.W.3d at 74.
We observe that Port Freeport’s argument on appeal relates
to only one of RLB’s breach of contract claims in the suit below.  Port Freeport does not challenge on appeal
the trial court’s determination that it has jurisdiction to hear RLB’s claims
relating to its other allegations regarding failure to pay and adjustments to
the contract time, as asserted in RLB’s petition.  Thus, it is undisputed that the contract
falls within the provisions of chapter 271 for some of RLB’s claims.  See
City of Mesquite v. PKG Contracting, Inc., 263 S.W.3d 444, 447 (Tex. App.—Dallas
2008, pet. denied) (“Once the trial court determines whether the contract falls
within the provisions of section 271.152, it need not parse further the
pleadings or the contract to determine whether the legislature has waived
immunity for breach of contract claims.”).
We further observe that RLB’s pleadings do not refer to
the provisions of article 4.03 and that the facts and causes of action alleged
in its pleadings could apply to several of the contract’s provisions, including
those in article 11.03.  See Williams, 353 S.W.3d
at 141 (holding that reviewing court is to construe pleadings liberally in
favor of plaintiff and look to pleader’s intent in determining whether
jurisdiction is proper).
We conclude that the contract contains all terms essential
to resolution of RLB’s breach of contract claims.  
2.                
Is
RLB’s claim properly characterized as an equitable claim?
Port Freeport also argues that RLB’s claim is essentially
a claim for equitable relief rather than a claim for breach of contract and that
equitable claims do not fall within the waiver provided by section
271.152.  
“In determining whether jurisdiction is proper, we look to
the pleadings, ‘construing them liberally in favor of the plaintiffs and
looking to the pleader’s intent.’”  Id. (quoting City of Waco v. Kirwan, 298 S.W.3d 618,
621 (Tex. 2009)).  RLB’s pleadings allege
only claims for breach of contract and make no reference to any “equitable
adjustment.”  See id. (stating, “the City’s argument fails because the
Firefighters’ claim is, overall, one for breach of contract” in determining
that Firefighters’ claims that “could depend on a showing that certain parts of
the City of Houston Code of Ordinances violated state law” were included within
scope of section 271.152’s waiver, and observing that “[r]elevant
statutes can form a part of an employment contract”).  Thus, Port Freeport mischaracterizes RLB’s
pleadings.  The actual language
of RLB’s pleadings express an intent to allege only a breach of contract
cause of action.
We conclude that RLB has pled a breach of contract claim,
not a claim in equity, and, thus, its claims fall within the scope of section
271.152.
3.                
Does
section 271.154 prevent waiver of immunity to suit?
Finally, Port Freeport argues that RLB’s failure to comply
with the procedures for addressing changes in site conditions under article
4.03 of the contract constitutes a failure to comply with contractual
“adjudication procedures” under section 271.154.  It argues that such a failure means that its
immunity from suit is not waived for this claim.
In Kirby Lake
Development, Ltd., the Texas Supreme Court addressed the question of
whether an agreement fell outside section 271.152’s waiver of immunity because
the plaintiff failed to plead for damages allowed by section 271.153.  320 S.W.3d at 839–40 (citing section
271.153’s provision limiting “[t]he total amount of money awarded in an
adjudication brought against a local governmental entity for breach of
contract” to “the balance due and owed by the local governmental entity under
the contract”).  The water authority
argued that there was no “balance due and owed,” and thus its immunity from
suit was not waived.  Id.  The
supreme court held, “The purpose of section 271.153 is
to limit the amount due by a governmental agency on a contract once liability
has been established, not to foreclose the determination of whether liability
exists.”  Id. at 840.
The Dallas Court of Appeals considered an argument essentially
identical to Port Freeport’s argument under section 271.154 in PKG Contracting, in which the City
argued that “there is no waiver of immunity because PKG failed to comply with
notice provisions in the contract for delay and extra work performed.”  263 S.W.3d at 447.  The court reasoned:
Section
271.154 provides that if the parties agree to a particular procedure for
adjudication of claims on the contract, that procedure will be enforced “except
to the extent those procedures conflict with the terms” of section
271.151–.160.  However, failure to give a
contractual notice or to follow a contract procedure does not mean the suit is
not for the purpose of adjudicating a claim for breach of a contract as defined
by section 271.151(2).  Whether PKG
complied with the notice provisions of the contract may be an affirmative
defense to the merits of the suit, but it would not deprive the trial court of
subject matter jurisdiction.
 
Id. at 447–48 (internal citations omitted) (quoting Tex. Local Gov’t Code Ann. § 271.154).
Likewise, we read nothing in the plain language of section
271.154 to support Port Freeport’s argument that its immunity is not waived for
this claim because RLB allegedly failed to comply with contractual notice
procedures.  Section 271.154 provides
that such procedures are enforceable, but it does not provide that compliance
with them is a prerequisite to invoking the waiver in section 271.152.  See Tex. Local Gov’t Code Ann. § 271.154; PKG Contracting, 263 S.W.3d at 447–48; see also Fireman’s Fund Cnty.
Mut.
Ins. Co. v. Hidi, 13 S.W.3d 767, 768–69 (Tex. 2000) (stating that in
construing statute, courts should look to plain meaning of words used in
statute).
We conclude that section 271.154 does not prevent the
application of section 271.152’s waiver provision under the facts of this case.
Thus, we conclude that the trial court did not err in
denying Port Freeport’s plea to the jurisdiction.  We overrule Port Freeport’s sole issue.
                                                                                                                                                                   
Conclusion
We affirm the order of the trial court denying Port
Freeport’s plea to the jurisdiction.
 
 
                                                                   Evelyn
V. Keyes
                                                                   Justice

 
Panel
consists of Justices Keyes, Bland, and Sharp.




[1]           See
Tex. Loc. Gov’t
Code Ann. § 271.152 (Vernon 2005) (waiving
governmental immunity from suit for certain types of contracts).


[2]           The contract defines “Claim” as “A
demand or assertion by Owner or Contractor seeking an adjustment of Contract
Price or Contract Times, or both, or other relief sought by Contractor with
respect to the terms of the Contract. . . .”


[3]           Port Freeport also moved for
traditional and no evidence summary judgment, which was denied by the trial
court.  The only ruling before this Court
on interlocutory appeal is the trial court’s denial of the plea to the
jurisdiction.


