Wight Realty Interests, Ltd. v. City of Friendswood, Texas

Opinion issued

December 23, 2010

In The

Court of Appeals

For The

First District of Texas

NO. 01-10-00442-CV

WIGHT REALTY INTERESTS, LTD., Appellant

V.

CITY OF FRIENDSWOOD, TEXAS, Appellee

On Appeal from the 405th District Court

Galveston County, Texas

Trial Court Cause No. 09-CV-2123

O P I N

I O N

Appellant, Wight Realty Interests,

Ltd., challenges the trial court’s order granting the plea to the jurisdiction

of appellee, the City of Friendswood, in Wight Realty’s suit against the City

for breach of contract. In two issues, Wight

Realty contends that the Texas Legislature waived the City’s immunity from suit

under section 271.152 of the Texas Local Government Code, [1]

the City waived its immunity through its conduct, and, thus, the trial court

erred in dismissing its suit for lack of jurisdiction.

We reverse and remand.

Background

In

its petition, Wight Realty alleges that in July 2008, City representatives

approached David Wight, Wight Realty’s general partner, to propose the

development of youth recreational sports facilities on a tract of land owned by

Wight Realty and on two adjoining tracts of land owned by third parties. In September 2008, Wight Realty and the City

executed an earnest money contract, requiring Wight Realty to acquire the two

adjoining tracts, construct improvements on the properties for the purpose of

developing the recreational facilities, and sell the recreational facilities

and real property, with the required improvements, to the City. Wight Realty attached to its petition a copy

of this contract.

The contract provides, among other

things, that, contingent upon Wight Realty obtaining title to the adjoining

tracts of land, Wight Realty was to construct improvements on the three tracts

as specified in the contract, the City was to purchase the three tracts from

Wight Realty, and the City was to pay a specified purchase price for each of

the tracts and improvements. The contract

sets forth a specific purchase price for each tract, specific amounts attributable

to the costs associated with the land, and the costs associated with the recreational

facilities and other improvements. Wight Realty agreed to “plan, prepare,

build, and construct” the recreational facilities “according to the plan and

costs conceptually represented” in an attached exhibit. It also agreed to present to the City, from

“time to time,” “more definite plans and specifications regarding the

improvements” to be constructed. In the

event the City did not purchase the tracts as a result of a default by the

City, the City agreed to “immediately pay” Wight Realty “all sums incurred by” Wight

Realty for the costs of constructing the improvements. In regard to the two adjoining tracts of

land, the City agreed to pay, in addition to the costs of improvements, a

liquidated amount for the “agreed upon opportunity loss value.”

Wight

Realty further alleges that, after expending large sums of money purchasing the

adjoining tracts of land from third parties and constructing the recreational

facilities and improvements, the City, in October 2009, terminated the contract

and refused to pay Wight Realty any amounts that Wight Realty had expended in

constructing the recreational facilities and improvements. The City also refused to pay contractual termination

damages. Wight Realty asserts claims for

breach of contract and estoppel against the City.

The

City filed an answer, generally denying Wight Realty’s allegations, and it subsequently

filed a plea to the jurisdiction, contending that it is immune from suit. Specifically, the City argued that the waiver

of immunity provided for in section 271.152 of the Texas Local Government Code,

which waives a local governmental entity’s immunity from suit for breach of

contract claims involving the provision of “goods or services,” does not apply

to Wight Realty’s claims because its contract with Wight Realty involves the sale

of real property. In its response, Wight

Realty argued that it has provided services to the City under the contract and,

thus, section 271.152 waives the City’s immunity. Alternatively, Wight Realty argues that the

City waived its immunity through its conduct of inducing Wight Realty to

perform its contractual obligations. Wight

Realty attached to its response an affidavit from David Wight, in which Wight

testified that Wight Realty has, pursuant to the contract, acquired the two

adjoining tracts of land and constructed the recreational facilities. He further testified that that Wight Realty

has, pursuant to the contract, cleared the tracts of land, filled existing ponds

with soil, removed existing fences, dug drainage ditches and a detention pond,

graded soccer and baseball fields, excavated a parking lot area, installed

culverts, hired a civil design engineer to design the sports park and restroom

facilities, met with officials from the City of Alvin regarding drainage issues,

and worked with a pipeline easement holder for permission to build fields

across the pipeline easement. Wight noted

that Wight Realty has spent $457,910.23 to provide the above services under the

contract and these amounts are in addition to the $540,000 it has spent to acquire

the two adjoining tracts of land.

The

trial court granted the City’s plea to the jurisdiction, dismissing Wight

Realty’s claims against the City.

Standard of Review

We review de novo a trial court’s

ruling on a jurisdictional plea. See Tex.

Dep’t of Parks & Wildlife v. Miranda , 133 S.W.3d 217, 226 (Tex. 2004); Tex. Natural Res. Conservation Comm’n v.

IT-Davy , 74 S.W.3d 849, 855 (Tex. 2002). When reviewing a trial court’s

ruling on a plea, “we first look to the pleadings to determine if jurisdiction

is proper, construing them liberally in favor of the plaintiffs and looking to

the pleader’s intent,” and “we consider relevant evidence submitted by the

parties when necessary to resolve the jurisdictional issues raised.” City of Waco v. Kirwan , 298 S.W.3d 618 ,

621–22 (Tex. 2009); see also Tex. Natural

Res. Conservation Comm’n v. White , 46 S.W.3d 864, 868 (Tex. 2001) (“[W]e

consider the facts alleged by the plaintiff and, to the extent it is relevant

to the jurisdictional issue, the evidence submitted by the parties.”). In considering this evidence, we “take as true

all evidence favorable to the nonmovant” and “indulge every reasonable

inference and resolve any doubts in the nonmovant’s favor.” Kirwan , 298 S.W.3d at 622 . We review the trial court’s interpretation of

a statute de novo. See Johnson v. City of Forth Worth , 774 S.W.2d 653 , 655–56 (Tex. 1989).

In construing a statute, our objective

is to determine and give effect to the Legislature’s intent. See Nat’l

Liab. & Fire Ins. Co. v. Allen , 15 S.W.3d 525, 527 (Tex. 2000).

Governmental Immunity

In its two issues, Wight Realty argues

that the trial court erred in dismissing its breach of contract suit against

the City for lack of jurisdiction because the Texas Legislature has waived the

City’s immunity from suit under section 271.152 of the Texas Local Government

Code and the City waived its immunity from suit when it entered into the

contract that required Wight Realty to acquire real property, construct

recreational facilities on that real property, and sell the facilities and

property to the City.

Governmental

immunity protects political subdivisions of the state, including cities, from

lawsuits for money damages, unless such immunity has been waived. [2] Reata

Constr. Corp. v. City of Dallas , 197 S.W.3d 371, 374 (Tex. 2006). Governmental

immunity, like sovereign immunity, involves immunity from suit and immunity

from liability. Harris County Hosp. Dist. v. Tomball Reg’l Hosp. , 283 S.W.3d 838, 842 (Tex. 2009); Mission Consol. Indep. Sch. Dist. v. Garcia ,

253 S.W.3d 653 , 655 n.2 (Tex. 2008) (explaining that “both types of immunity

afford the same degree of protection”). Immunity

from suit is jurisdictional and bars suit, whereas immunity from liability is

not jurisdictional and protects from judgments.

Harris County Hosp. Dist. , 283

S.W.3d at 842 . Governmental immunity is

waived only by clear and unambiguous language indicating the Legislature’s

intent do so. Kirby Lake Dev., Ltd. v. Clear Lake City Water Auth. , 320 S.W.3d

829, 838 (Tex. 2010); Harris County Hosp.

Dist. , 283 S.W.3d at 842 .

Section 271.152 of the Texas Local

Government Code, which waives a local governmental entity’s immunity from suit

for certain contract claims, provides,

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 statute

defines a “[c]ontract 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) (emphasis

added). “The relevant inquiry” is

whether the contract at issue “entail[s] the provision of ‘goods or services’”

to the local governmental entity. Kirby Lake Dev., Ltd. , 320 S.W.3d at

839 . Although chapter 271 provides no

definition for the term “services,” the term is generally “broad enough to

encompass a wide array of activities.” Id . “In ordinary usage the term ‘services’ has a rather

broad and general meaning,” and “[i]t includes generally any act performed for

the benefit of another under some arrangement or agreement whereby such act was

to have been performed.” Id . (citing Van Zandt v. Fort Worth Press , 359 S.W.2d 893, 895 (Tex. 1962)).

The Texas Supreme Court has recently addressed

the scope of the waiver afforded by section 271.152. In Kirby

Lake Development, Ltd. , residential developers entered into agreements with

a local water authority requiring the developers to build water and sewer

facilities according to the authority’s specifications and then lease the

facilities to the authority free of charge until the authority purchased them. 320 S.W.3d at 832 . The authority agreed to reimburse the developers

a portion of their construction costs after it received voter-approved bond

funds. Id . at 832–33. In

considering the developers’ arguments that section 271.152 waived the

authority’s immunity from a suit arising from the agreements, the supreme court

noted that the Legislature enacted section 271.152 “to loosen the immunity bar

so that all local governmental

entities that have been given or are given the statutory authority to enter

into contracts shall not be immune from suits arising from those

contracts.” Id . at 838 (citing Ben

Bolt-Palito Blanco Consol. Indep. Sch. Dist. v. Tex. Political Subdivisions

Property/Casualty Joint Self-Insurance Fund , 212 S.W.3d 320, 327 (Tex.

2006)). It also cited the bill analysis,

in which supporters of the bill had explained that a local governmental

entity’s blanket immunity from breach of contract claims had “create[d] a

fundamentally unfair situation that denie[d] redress, for example, to a

contractor who completed a project for a city that refused to pay.” Kirby

Lake Dev., Ltd. , 320 S.W.3d at 838 n.2 (citing House Research Organization,

Bill Analysis, Tex. H.B. 2039, 79th Leg., R.S. (2005)). The court also noted that the “services provided . . . need

not be the primary purpose” of an agreement in order for immunity to be waived

under section 271.152. Id. at 839 (citing Clear Lake City Water Auth. v. Friendswood Dev. Co., Ltd. , 256

S.W.3d 735 , 746 n.13 (Tex. App.—Houston [14th Dist.] 2008, pet. dism’d)). The supreme court concluded that the agreements

obligating the developers “to construct, develop, lease, and bear all risk of

loss or damage to the facilities” entailed “services provided directly to the

[a]uthority” and, thus, the court held that the agreements “contemplate[d] the

provision of services under” section 271.152.

Id .

Here, although Wight Realty’s

contract with the City involves the sale of real property, the contract

specifically required Wight Realty to acquire adjoining tracts of land from

third parties and construct recreational facilities and associated improvements,

as detailed in the contract; the acquisition of real properties and the

construction of facilities and improvements on those properties plainly qualify

as the provision of services. See id. ; see also Clear Lake City Water Auth. v. MCR Corp. , No. 01-08-00955-CV,

2010 WL 1053057 , at *9 (Tex. App.—Houston [1st Dist.] Mar. 11, 2010, pet.

denied) (mem. op.) (rejecting governmental entity’s argument that agreement did

not involve sale of “goods” since facilities had been installed and affixed to land,

and noting that agreement was not limited to mere sale of facilities but also

required developer to “hire contractors to construct the [f]acilities and to

build the streets, roads, and bridges”). The City’s assertion that the contract involves

only the sale of real property is contradicted by the terms of the contract,

which obligated Wight Realty to provide construction services and guaranteed the

City’s payment to Wight Realty of its costs associated with the construction of

the improvements and recreational facilities in the event the City defaulted. [3] We conclude that the contract contemplated

the provision of services under section 271.152. Accordingly, we hold that the trial court

erred in granting the City’s plea to jurisdiction and dismissing Wight Realty’s

suit.

The City alternatively argues that

the trial court properly dismissed Wight Realty’s suit because the contract does

“not contain the essential terms” as required by section 271.152 and it is

“void as a matter of law because the alleged goods or services were not

contracted pursuant to bid, as statutorily required.” 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 between

Wight Realty and the City described the property to be acquired by Wight Realty

and sold to the City, identified the purchase price to be paid for the three

tracts of land, itemized the costs associated with the land and improvements,

set forth the scope of improvements to be constructed, fixed a closing date,

and required the City to make payments to Wight Realty for the costs of

improvements in the event that the City defaulted or terminated the contract. We conclude that the contract contains the

essential terms of the parties’ agreement and is covered by section 271.152. See

Kirby Lake Dev., Ltd. , 320 S.W.3d at

838 (stating that agreements, which “clearly outlined” “names of the parties,

property at issue, and basic obligations,” contained “essential terms”). The City’s alternative arguments regarding

the bidding process are not supported by the record. Although the City asserted in a single

paragraph of its plea to the jurisdiction in the trial court that the City is

required to obtain bids if a contract is in fact for the provision of goods or

services and not for real property, neither party presents any evidence related

to any bidding process. The issue

squarely presented to the trial court was whether the contract involves goods

and services as contemplated by section 271.152. We have held that the contract plainly

involves the provision of services and, thus, the City’s immunity is waived by

section 271.152.

We sustain Wight Realty’s first

issue. [4]

Conclusion

We

reverse the judgment of the trial court and remand for further proceedings

consistent with our opinion.

Terry Jennings

Justice

Panel consists of Justices Jennings,

Alcala, and Sharp.

[1] Tex. Loc. Gov’t Code Ann. § 271.152 (Vernon 2005).

[2] Although the terms sovereign immunity

and governmental immunity are often used interchangeably, sovereign immunity “extends

to various divisions of state government, including agencies, boards,

hospitals, and universities,” while governmental immunity “protects political

subdivisions of the State, including counties, cities, and school districts.” See Ben

Bolt-Palito Blanco Consol. Indep. Sch. Dist. v. Tex. Political Subdivisions

Property/Casualty Joint Self-Insurance Fund , 212 S.W.3d 320, 324 (Tex. 2006).

[3] In

support of its argument that the contract involves only the sale of real

property and that its immunity is not waived, the City cites Somerset Independent School District v.

Casias , No. 04-07-00829-CV, 2008 WL 1805533 (Tex. App.—San Antonio Apr. 23,

2008, pet. denied) (mem. op.). In Casias , the school district entered into

a contract with landowners for the purchase of real property, and as a

condition to the closing of the sale, the landowners agreed to remove all

environmental hazardous conditions or substances on the land. Id .

at *1. Although the district agreed to

reimburse the landowners up to $9,000 for the environmental clean-up expenses, the

earnest money contract expressly provided that the district “would not be

liable . . . for reimbursement of any clean-up expenses if the contract did not

close.” Id . at *1. Because the

earnest money contract expressly stated that the district’s obligations were

conditioned upon the environmental clean-up and the district would not be

liable for any clean-up expenses if the contract did not close, the court held

that the “contract itself was for the sale of land” and did not fall within the

scope of section 271.152’s waiver of immunity.

Id . at *3. In contrast, the City’s contract with Wight

obligates the City, in the event of the City’s default or termination, to pay

for costs of constructing the improvements.

We

also reject the City’s argument that section 271.152 does not apply because the

City did not receive anything from Wight.

Of course, the City did not receive the benefit of the improvements

constructed by Wight because the City elected to terminate the contract. Nothing in section 271.152 requires the City

to have actually received goods or services in order for the immunity waiver to

apply. If we adopted the City’s

argument, it would eviscerate the immunity waiver in section 271.152.

[4] Having sustained Wight Realty’s first

issue, we need not address Wight Realty’s second issue, in which it contends

that the City waived its immunity through its conduct.