Texas Municipal League Intergovernmental Risk Pool v. City of Hidalgo

NUMBER 13-19-00096-CV

COURT OF APPEALS

THIRTEENTH DISTRICT OF TEXAS

CORPUS CHRISTI – EDINBURG

TEXAS MUNICIPAL LEAGUE

INTERGOVERNMENTAL RISK POOL, Appellant,

v.

CITY OF HIDALGO, Appellee.

On appeal from the 139th District Court

of Hidalgo County, Texas.

MEMORANDUM OPINION

Before Chief Justice Contreras and Justices Hinojosa and Tijerina

Memorandum Opinion by Chief Justice Contreras

Appellant Texas Municipal League Intergovernmental Risk Pool (the Risk Pool)

brings this interlocutory appeal of the trial court’s order granting a motion filed by the City

of Hidalgo (the City) to compel the parties to participate in a contractual appraisal

proceeding. The Risk Pool contends by one issue that the order constituted an implicit

and erroneous denial of its plea to the jurisdiction. We affirm.

I. BACKGROUND

The Risk Pool is a governmental self-insurance fund whose members include the

City and nearly 2,800 other Texas political subdivisions. See TEX. GOV’T CODE ANN.

§ 2259.031. The City became a member of the Risk Pool by virtue of a “Liability/Property

Interlocal Agreement” (the Agreement) signed in 1989. The Agreement stated in part:

In consideration of the execution of this Agreement by and between the Pool

Member and the Fund[1] and of the contributions of the Pool Member, the

coverage elected by the Pool Member is afforded according to the terms of

the TML Liability Self-Insurance Plan and the TML Property Self-Insurance

Plan. The affirmative declaration of contributions and limits of liability in the

Declarations of Coverage and Endorsements determines the applicability

of the Self-Insurance Plans.

Each Pool Member agrees to adopt and accept the coverages, provisions,

terms, conditions, exclusions and limitations as further provided for in the

TML Self-Insurance Plans or as specifically modified by the Pool Member’s

Declarations of Coverage.

This Interlocal Agreement shall be construed to incorporate the TML

Liability Self-Insurance Plan and/or the TML Property Self Insurance Plan,

Declarations of Coverage, and Endorsements and addenda whether or not

physically attached hereto.

The Agreement defines “TML Municipal Property Self-Insurance Plan” as “[t]he property

coverage document that sets forth in exact detail the coverages provided as part of the

overall plan.”

Here, the terms and conditions of the coverage provided by the Risk Pool to the

City are set forth in a “Property Coverage Document” (the Coverage Document) dated

October 1, 2014. The Coverage Document provides in relevant part:

IV. IN THE CASE OF LOSS

....

1 The “Fund” refers to the Texas Municipal League Joint Self-Insurance Fund, which was later

combined with other funds and renamed the Risk Pool. Who We Are, TEX. MUN. LEAGUE INTERGOV’TAL RISK

POOL, https://www.tmlirp.org/who-we-are/ (last visited January 6, 2020).

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D. PROOF OF LOSS

It shall be necessary for the Member to render a signed and

sworn proof of loss to the Fund or its appointed

representative, within 60 days, stating the place, time, and

cause of the loss, damage, or expense, the interest of the

Member and of all others, the value of the property involved

in the loss, and the amount of loss, damage, or expense.

E. APPRAISAL

If the Member and the Fund fail to agree as to the amount of

loss, each shall, upon the written demand either of the

Member or of the Fund made within 60 days after receipt of

proof of loss by the Fund, select a competent and

disinterested appraiser. The appraisers then shall select a

competent and disinterested umpire. If they should fail for 15

days to agree upon such umpire, then upon request of the

Member or of the Fund, such umpire shall be selected by a

judge of a court of record in the county and state in which such

appraisal is pending. Then, at a reasonable time and place,

the appraisers shall appraise the loss, stating separately the

value at the time of loss and the amount of loss. If the

appraisers fail to agree, they shall submit their differences to

the umpire. An award in writing by any two shall determine

the amount of loss. The Member and the Fund shall each pay

its chosen appraiser and shall bear equally the other

expenses of the appraisal and of the umpire.

F. LOSS PAYABLE

Loss, if any, shall be adjusted with and payable to the

Member, whose receipt shall constitute a release in full of all

liability under this Agreement with respect to such loss.

(Emphasis added.)

In 2016, a storm damaged State Farm Arena, which is owned by the City and

covered by its Risk Pool policy. The City filed a claim with the Risk Pool for roof and

structural damage caused by wind, hail, and water. According to the City, the arena

sustained over $7 million in damages, but after adjustment, the Risk Pool paid out only

$283,666.81 in benefits. In May of 2018, the City filed suit against the Risk Pool alleging

that it breached the policy by wrongfully and negligently denying part of its claim. In

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particular, the City alleged that the Risk Pool failed to perform a thorough investigation of

the damage as required by the policy. The City’s petition contained a section entitled

“Equitable Relief: Demand for Appraisal” which stated: “Pursuant to the Coverage

Document and Tex. Local Gov’t Code § 271.154, [the City] hereby demands Appraisal,

and names the following appraiser: Mark Barber . . . .” In the alternative, the City

requested damages, interest, and attorney’s fees.

The Risk Pool answered the suit and filed a partial plea to the jurisdiction,

contending that its governmental immunity to suit has not been waived with respect to the

City’s claims for equitable relief or attorney’s fees. On August 6, 2018, the City filed a

response to the partial plea to the jurisdiction as well as an amended petition, both

contending that the Risk Pool’s immunity was waived by Texas Local Government Code

§ 271.152 with respect to all of the City’s claims. The amended petition stated: “Plaintiff

names the following appraiser [sic] competent and disinterested appraiser: Don

Staples . . . .”

Two days later, the City filed a “Motion to Compel Appraisal and Stay Proceedings

Pending Appraisal” arguing that “completion of the appraisal process may preclude the

need for further litigation” and that “judicial efficiency would be furthered by appraisal and

staying the litigation pending its completion.” The City noted in its motion that the Risk

Pool had “rejected the City’s invocation of appraisal and refused to participate in the

appraisal process” prior to the City’s initial filing of suit. In response, the Risk Pool filed

an “Objection and Plea to the Jurisdiction” arguing that: (1) local government code

chapter 271 does not waive immunity to suits seeking equitable relief or specific

performance; (2) chapter 271 does not waive immunity as to the City’s breach of contract

claim because the Coverage Document was not “executed” by the Risk Pool; and (3)

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even if immunity was waived, the City is not entitled to appraisal because it did not timely

provide proof of loss or name a disinterested appraiser as required by the policy. The

Risk Pool concurrently filed a separate amended plea to the jurisdiction reiterating the

first two arguments. The City filed a response to the amended plea to the jurisdiction,

and the Risk Pool filed a reply to the response.

On September 28, 2018, the trial court rendered an order granting the City’s motion

to compel appraisal, ordering the Risk Pool to designate its appraiser within seven days,

and staying all further proceedings in the trial court until completion of the appraisal. This

interlocutory appeal followed.

II. APPELLATE JURISDICTION

The City argues that we lack jurisdiction over the appeal because the trial court

never explicitly ruled on the Risk Pool’s pleas to the jurisdiction. We address this issue

first.

Unless an interlocutory appeal is authorized by statute, our jurisdiction extends

only to the review of final judgments. Bison Bldg. Materials, Ltd. v. Aldridge, 422 S.W.3d

582, 585 (Tex. 2012). We strictly apply statutes granting interlocutory appeals because

they are a narrow exception to the general rule that interlocutory orders are not

immediately appealable. CMH Homes v. Perez, 340 S.W.3d 444, 447 (Tex. 2011).

Under the civil practice and remedies code, a party may appeal an interlocutory

order that “grants or denies a plea to the jurisdiction by a governmental unit.” TEX. CIV.

PRAC. & REM. CODE ANN. § 51.014(a)(8).2 Here, the trial court granted the City’s motion

to compel appraisal but did not explicitly rule on the Risk Pool’s pleas to the jurisdiction.

2 The Risk Pool is a governmental unit. See Tex. Mun. League Intergov’tal Risk Pool v. City of

Abilene, 551 S.W.3d 337, 340 (Tex. App.—Eastland 2018, pet. dism’d).

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The City points out that there is no statute allowing the interlocutory appeal of an order

compelling appraisal.

The City directs us to a very similar case involving appraisal under the same

Coverage Document. See Tex. Mun. League Intergov’tal Risk Pool v. City of Abilene,

551 S.W.3d 337 (Tex. App.—Eastland 2018, pet. dism’d). There, the City of Abilene filed

a wind and hailstorm claim with the Risk Pool and later sued, alleging that the Risk Pool

failed to properly investigate and evaluate the damage. Id. at 341. As here, the City of

Abilene moved to compel appraisal under the policy, and the Risk Pool filed a plea to the

jurisdiction. Id. The trial court denied the plea to the jurisdiction and granted the motion

to compel appraisal, and the Risk Pool appealed. Id. Prior to its discussion of the issues

in the appeal, the Eastland court of appeals noted that, because there is no statutory

authorization for an interlocutory appeal of an order compelling appraisal, its analysis

would be limited to whether the trial court erred in denying the plea to the jurisdiction. Id.

at 342 n.4.

Unlike in the City of Abilene case, the trial court here did not explicitly deny the

City’s plea to the jurisdiction. Nevertheless, as the Risk Pool notes, the Texas Supreme

Court has held that a trial court’s interlocutory ruling on the merits of a case operates as

an implicit denial of a plea to the jurisdiction and is subject to appeal under § 51.014(a)(8).

Thomas v. Long, 207 S.W.3d 334, 339–40 (Tex. 2006) (“Because a trial court cannot

reach the merits of a case without subject matter jurisdiction, a trial court that rules on the

merits of an issue without explicitly rejecting an asserted jurisdictional attack has implicitly

denied the jurisdictional challenge.”). In Thomas, the trial court reached the merits by

rendering a partial judgment stating that the plaintiff was entitled to be reinstated in his

employment, though it did not explicitly rule on the defendant’s jurisdictional plea. Id. at

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337. Similarly, the trial court in this case reached the merits of the City’s claims by

ordering the parties to participate in appraisal pursuant to the terms of the Coverage

Document.3 Therefore, the trial court implicitly denied the Risk Pool’s plea to the

jurisdiction, and we have jurisdiction over the appeal.4 See TEX. CIV. PRAC. & REM. CODE

ANN. § 51.014(a)(8).

II. SUBJECT MATTER JURISDICTION

A. Standard of Review

A plea to the jurisdiction is a dilatory plea used to defeat a cause of action without

regard to whether the asserted claims 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.; see Tex. Dep’t of Transp. v. Jones, 8 S.W.3d 636, 638 (Tex. 1999).

The plaintiff has the initial burden to plead facts affirmatively showing that the trial

court has jurisdiction. Tex. Ass’n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440, 446

(Tex. 1993). 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 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.

3 As noted, an order compelling appraisal was the City’s primary requested relief in its petition. The

City requested damages only “[i]n the alternative” to the equitable relief claim.

4 As in City of Abilene, we lack jurisdiction to consider the merits of the order compelling appraisal

because there is no statute authorizing an interlocutory appeal of such an order. See id. at 342 n.4. Our

analysis is limited to the question of whether the trial court had subject matter jurisdiction to render that

order. See id.

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When a plea to the jurisdiction challenges the existence of jurisdictional facts, we

consider relevant evidence submitted by the parties when necessary to resolve the

jurisdictional issues raised, even when the evidence implicates the merits of the cause of

action. Id. at 227; Blue, 34 S.W.3d at 555. In considering the evidence, we take as true

all evidence favorable to the non-movant and indulge every reasonable inference and

resolve any doubts in the non-movant’s favor. Miranda, 133 S.W.3d at 227–28.

B. Applicable Law

1. Sovereign Immunity

The doctrine of sovereign immunity holds that “no state can be sued in her own

courts without her consent, and then only in the manner indicated by that consent.” Tooke

v. City of Mexia, 197 S.W.3d 325, 331 (Tex. 2006) (citing Hosner v. DeYoung, 1 Tex. 764,

769 (1847)); see Nevada v. Hall, 440 U.S. 410, 414 (1979) (“The immunity of a truly

independent sovereign from suit in its own courts has been enjoyed as a matter of

absolute right for centuries. Only the sovereign’s own consent could qualify the absolute

character of that immunity.”). Thus, unless waived by the legislature, sovereign immunity

deprives a Texas court of subject matter jurisdiction over any lawsuit against a Texas

governmental unit such as the Risk Pool. Tex. Parks & Wildlife Dep’t v. Sawyer Tr., 354

S.W.3d 384, 388 (Tex. 2011).

For the legislature to validly waive sovereign immunity, it must consent to suit by

“clear and unambiguous” statutory language. TEX. GOV’T CODE ANN. § 311.034; Tooke,

197 S.W.3d at 332–33. Any ambiguity in a statute must be resolved in favor of retaining

immunity. Tooke, 197 S.W.3d at 330, 342; see Wichita Falls State Hosp. v. Taylor, 106

S.W.3d 692, 697 (Tex. 2003).

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2. Chapter 271

Chapter 271, subchapter I of the Texas Local Government Code (the Local

Government Contract Claims Act, or the Act) clearly and unambiguously waives

sovereign immunity for certain contract claims against local governmental entities. See

TEX. LOC. GOV’T CODE ANN. § 271.151–.160. In particular, § 271.152 provides that 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.” Id. § 271.152. As relevant here, a “contract subject

to this subchapter” is “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)(A).

In a suit against a local governmental entity under chapter 271, “the total amount

of money” the claimant may recover “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, including interest as calculated under

Chapter 2251, Government Code.

Id. § 271.153(a). Damages awarded in such a suit “may not include: (1) consequential

damages, except as expressly allowed under [§ 271.153](a)(1); (2) exemplary damages;

or (3) damages for unabsorbed home office overhead.” Id. § 271.153(b).

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Section 271.154 states:

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.

3. Zachry and Subsequent Cases

The Texas Supreme Court has held that, in order to invoke the chapter 271 waiver

of immunity, the claimant “must plead facts with some evidentiary support that constitute

a claim for which immunity is waived.” Zachry Const. Corp. v. Port of Hous. Auth. of

Harris Cty., 449 S.W.3d 98, 110 (Tex. 2014). Immunity is not waived for claims which

seek monetary damages that are impermissible under the statute. See id.; Tooke, 197

S.W.3d at 346 (finding immunity was not waived where claimants alleged breach of a

contract subject to the Act but requested only consequential damages). That is because

the waiver of immunity in chapter 271 is “subject to the terms and conditions of this

subchapter,” see TEX. LOC. GOV’T CODE ANN. § 271.152, and among those terms and

conditions are the damages limitations in § 271.153. See Zachry, 449 S.W.3d at 109

(“Section 271.153’s limitations on recovery are incorporated into Section 271.152 by its

last ‘subject to’ clause and are thereby conditions on the Act’s waiver of immunity.”).

In City of Abilene, the Eastland court of appeals applied Zachry to determine

whether immunity barred the City of Abilene’s request to compel the Risk Pool to

participate in a contractual appraisal process pursuant to the same Coverage Document

at issue in this case. 551 S.W.3d at 341–46. As here, the Risk Pool cited Zachry in

arguing that immunity was not waived as to the appraisal request because (1) it amounted

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to a request for specific performance, and (2) specific performance is not permitted as a

remedy under § 271.153. See id. The court held that the motion to compel appraisal was

not a request for specific performance; rather, it was a “contractual adjudication

procedure” which is “enforceable” by any party under § 271.154. Id. at 345 (noting that

“there is nothing in the language of Section 271.154 indicating that it can only be invoked

by a governmental defendant”). The court disagreed with the Risk Pool’s argument that,

under Zachry, § 271.154 acts as a “limitation” on chapter 271’s waiver of immunity. See

id. (noting that the Zachry Court characterized § 271.154 as a “preservation of

procedures” that “provides for enforcement of contractual adjudication procedures”).

In Mission Consolidated Independent School District v. ERO International, LLP,

579 S.W.3d 123, 127 (Tex. App.—Corpus Christi–Edinburg 2019, no pet.), we declined

to follow City of Abilene. In ERO, the defendant school district argued that chapter 271

did not waive its immunity to the claimant’s breach of contract suit because the claimant

did not timely comply with contractual adjudication procedures before filing suit. Id. at

126. We agreed that the claimant did not comply with the contract’s adjudication

procedures; therefore, the claimant did not show “a substantial claim that meets the Act’s

conditions” and the chapter 271 waiver of immunity did not apply. Id. at 127–28. Relying

on Zachry, we held that § 271.154, regarding the enforceability of contractual adjudication

procedures, operates as a “limitation” on the chapter 271 waiver:

We acknowledge that Zachry’s specific holding concerned section 271.153;

however, we find that the court’s reasoning is equally applicable to section

271.154. The court in Zachry stated that it was “obvious” that the “terms

and conditions” of the Act serve as “limitations on the waiver of immunity.”

Zachry’s analysis and conclusion specifically concerned section 271.153,

but it is heavily implied that all of the Act’s subchapters serve as limitations

on the waiver of immunity. For example, in categorizing the sections of the

Act, the court in Zachry noted that sections 271.156, 271.157, 271.158, and

271.160 dealt specifically with the “scope of immunity,” whereas sections

271.153, 271.154, and 271.155 dealt with the “litigation and adjudication of

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a claim.” Nevertheless, despite only dealing with the “litigation and

adjudication of a claim,” the court ultimately held that section 271.153 was

a “limitation” on the waiver of immunity and that immunity was not waived

for claims that failed to meet the conditions of that section. In other words,

a plaintiff must plead damages satisfying section 271.153 to invoke the Act’s

waiver of immunity. The court continued by observing that the Act only

waives immunity for contract claims “that meet certain conditions: the

existence of a specific type of contract, a demand for certain kinds of

damages, a state forum, etc. The waiver does not depend on the outcome,

though it does require a showing of a substantial claim that meets the Act’s

conditions.” We find the same analysis applicable to section 271.154: even

though section 271.154 is only related to “the litigation and adjudication of

a claim,” it is one of the Act’s “conditions,” and as such, serves as a limitation

on the waiver of immunity. Accordingly, to show waiver of immunity, a

claimant must plead facts showing that the conditions of section 271.154

have been met.

Id. at 127–28 (citations omitted). We observed that a contrary conclusion had been

reached by the Eastland court of appeals in City of Abilene and by the Dallas court of

appeals in Romulus Group, Inc. v. City of Dallas, No. 05-16-00088-CV, 2017 WL

1684631, at *6 (Tex. App.—Dallas May 2, 2017, pet. denied) (mem. op.) (holding that “the

waiver of immunity is not dependent on compliance with section 271.154”). We

explained, though, that both City of Abilene and Romulus were based on the holdings in

City of Mesquite v. PKG Contracting, Inc., 263 S.W.3d 444, 448 (Tex. App.—Dallas 2008,

pet. denied), and Santa Rosa Independent School District v. Rigney Construction &

Development, LLC, No. 13-12-00627-CV, 2013 WL 2949566 (Tex. App.—Corpus Christi–

Edinburg June 13, 2013, pet. denied) (mem. op.), both of which were later disapproved

of in Zachry. See ERO, 579 S.W.3d at 127. We elaborated:

It is true that only section 271.153 was at issue in Zachry, not section

271.154. Thus, Zachry only directly repudiated Santa Rosa and City of

Mesquite to the extent they concluded that compliance with section 271.153

does not affect waiver of immunity. However, it is important to note that the

courts in Santa Rosa and City of Mesquite used the same analysis that was

disapproved of in Zachry to conclude that section 271.154 also does not

affect waiver of immunity. For this reason, we find Zachry controlling on the

proper analysis. . . .

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. . . Romulus implies that sections 271.153, 271.156, and 271.157 are the

only conditions on the waiver of immunity under the Act. However, Zachry

stated, “[t]he Act waives immunity for contract claims that meet certain

conditions: the existence of a specific type of contract [referring to section

271.157], a demand for certain kinds of damages [referring to section

271.153], a state forum [referring to section 271.156], etc.” By adding “etc.,”

Zachry indicated that sections 271.153, 271.156, and 271.157 are not the

only conditions on the waiver of immunity. In fact, Zachry specifically

rejected interpretations of section 271.152 that would only incorporate some

of, but not all, of the other sections in the Act. Just like section 271.153,

section 271.154 is incorporated into section 271.152 by its last “subject to”

clause; thus, section 271.154 is a “condition[] on the Act’s waiver of

immunity.”

Id. at 128–29 (citations omitted).

The day after we handed down ERO, the Texas Supreme Court specifically held

in Hays Street Bridge Restoration Group v. City of San Antonio that § 271.152 waives

immunity for a claim for specific performance of a chapter 271 contract. 570 S.W.3d 697,

699 (Tex. 2019). That case involved a 2002 agreement executed by the City of San

Antonio and a group of residents aiming to restore and preserve the landmark Hays Street

Bridge. Id. at 700. Ten years later, the group sued, alleging that the city breached the

agreement by failing to apply certain funds to the bridge project, and requesting only

specific performance as a remedy. Id. at 700–01. Citing Zachry, the San Antonio court

of appeals held that chapter 271 did not waive the city’s immunity from a suit for specific

performance, and it dismissed the case. Id. at 701 (citing City of San Antonio v. Hays St.

Bridge Restoration Gp., 551 S.W.3d 755, 762–63 (Tex. App.—San Antonio 2017), rev’d,

570 S.W.3d at 706–708).

The Texas Supreme Court reversed, observing that § 271.153 “limits damages,

not remedies,” and “damages” means “money.” Id. Though the § 271.152 waiver applies

only to claims that request relief permitted by chapter 271—and though § 271.153 permits

only certain types of damages—the statute does not purport to restrict the recovery of

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non-monetary forms of relief such as specific performance. See id. (holding that to read

§ 271.153 “as impliedly prohibiting every suit seeking an equitable remedy against a local

governmental entity would too greatly restrict the general waiver of immunity” in

§ 271.152). Thus, the Act waived the city’s immunity from suit on the claim for specific

performance. Id.

C. Analysis

On appeal, the Risk Pool contends that the trial court “ignored” the framework

established in Zachry and “created” a waiver of immunity beyond the scope of what was

intended by the legislature. It argues that, by granting the City’s motion to compel

appraisal, the trial court granted the equitable relief of specific performance, and it

contends that specific performance is not among the remedies permitted by chapter 271.

Therefore, according to the Risk Pool, it retains immunity with respect to the City’s motion

to compel appraisal.

The Risk Pool acknowledges the ruling in Hays Street but contends that case is

distinguishable because a different version of the statute applies. Because the contract

at issue in Hays Street was executed in 2002, the Court in that case applied the original

2005 version of chapter 271. See id. at 699 n.2 (citing Act of May 23, 2005, 79th Leg.,

R.S., ch. 604, § 1, sec. 271.151(2), 2005 Tex. Gen. Laws 1548, 1548 (current version at

TEX. LOC. GOV’T CODE ANN. § 271.151(2)(A))). In 2013, the Texas Legislature amended

§ 271.153 to add subsection (c), which states: “Actual damages, specific performance,

or injunctive relief may be granted in an adjudication brought against a local governmental

entity for breach of a contract described by Section 271.151(2)(B).” Act of May 24, 2013,

83rd Leg., R.S., ch. 1138, § 3, 2013 Tex. Gen. Laws 2756, 2758 (codified at TEX. LOC.

GOV’T CODE ANN. § 271.153(c)). Section 271.151(2)(B), enacted in the same law,

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expands the definition of “contract subject to this subchapter” to include “a written

contract, including a right of first refusal, regarding the sale or delivery of not less than

1,000 acre-feet of reclaimed water by a local governmental entity intended for industrial

use.” Id. § 2 (codified at TEX. LOC. GOV’T CODE ANN. § 271.151(2)(B)). We assume but

do not decide that these amendments apply here.5

It is undisputed that the contract at issue in this case is not of the type described

in § 271.151(2)(B). Thus, § 271.153(c) does not serve to explicitly authorize the award

of specific performance. But Hays Street held that the § 271.152 waiver—which has not

been amended—extends to claims for specific performance of a chapter 271 contract.

See 570 S.W.3d at 708. The question we must answer, therefore, is whether the

enactment of §§ 271.151(2)(B) and 271.153(c) abrogates this ruling. The Hays Street

Court explicitly declined to address this question. See id. at 708 n.65 (noting that the City

of San Antonio argued “that 2013 amendments to the Act waiving immunity for specific

performance of one type of contract indicates that immunity is not waived for any other,”

but not addressing the argument because the 2013 amendments apply “only

prospectively”).

5 It is unclear which version of the statute applies in this case. The 2013 amendments apply only

to “a claim that arises under a contract executed on or after the effective date of this Act,” i.e., May 24,

2013. Act of May 24, 2013, 83rd Leg., R.S., ch. 1138, § 4(c), 2013 Tex. Gen. Laws 2756, 2758. “A claim

that arises under a contract executed before the effective date of this Act is governed by the law in effect

on the date the contract was executed, and the former law is continued in effect for that purpose.” Id. Here,

the only contract in the record that was signed on behalf of the City was the original 1989 Agreement. See

TEX. LOC. GOV’T CODE ANN. § 271.151(2)(A) (stating that a “contract subject to this subchapter” must be,

among other things, “properly executed on behalf of the local governmental entity”); Hous. Auth. of City of

Dallas v. Killingsworth, 331 S.W.3d 806, 811 (Tex. App.—Dallas 2011, pet. denied) (noting that a contract

is “properly executed” when it is “signed in accordance with the requirements for making it correct or valid”).

In its response to the Risk Pool’s plea to the jurisdiction, filed before Hays Street was handed down, the

City acknowledged that “it was the intent of the parties that the signature attached [to the 1989 Agreement]

would be given a new effect each Fund Year” and, therefore, “a new contract was executed on October 1,

2015.” In its appellee’s brief, the City neither cites Hays Street nor addresses whether the 2013

amendments apply.

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The Risk Pool observes that § 271.153(c) is the “only place where the Legislature

has chosen to expressly waive governmental immunity from claims for equitable relief

and, particularly, specific performance.” It argues that, under rules of statutory

construction, the enactment of § 271.153(c) “reflects an express legislative decision to

waive that government immunity for only a defined and very limited set of claims for

equitable relief, and that equitable relief remains unavailable in any other cases, like this

one, which do not involve a water reclamation contract specified in Section 271.153(c).”

See ConocoPhillips Co. v. Koopmann, 547 S.W.3d 858, 876 (Tex. 2018) (discussing the

interpretative canon of expressio unius est exclusio alterius, i.e., “the express mention of

one thing excludes another”). In response, the City argues that its request to compel

appraisal was not a demand for specific performance—instead, it is a “contractual

adjudication procedure,” which is “enforceable” under § 271.154.

Even assuming the order on appeal constitutes an award of specific performance,

we nevertheless find that the 2013 amendments to chapter 271 do not abrogate the

holding in Hays Street. The only section of the Act which waives immunity is § 271.152,

and that section has not been amended. Zachry held that, because the chapter 271

waiver is “subject to the terms and conditions of the Act,” immunity is not waived for claims

which request damages that are impermissible under § 271.153. See Zachry, 449

S.W.3d at 109. But the 2013 amendments do not explicitly restrict the availability of

equitable relief or specific performance. Had the legislature intended to restrict the

availability of equitable relief or specific performance to cases involving water contracts

under § 271.152(2)(B), it could have easily done so using the unambiguous, unmistakable

language which the statute already employs to limit the availability of money damages.

Compare TEX. LOC. GOV’T CODE ANN. § 271.153(a) (stating that “the total amount of

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money awarded . . . is limited to the following . . .”) and id. § 271.153(b) (“Damages

awarded . . . may not include . . .”) with id. § 271.153(c) (“Actual damages, specific

performance, or injunctive relief may be granted . . . .”).

Moreover, “the force of any negative implication” based on the expressio unius

canon “depends on context.” Forest Oil Corp. v. El Rucio Land & Cattle Co., 518 S.W.3d

422, 429 (Tex. 2017) (citing Marx v. Gen. Revenue Corp., 568 U.S. 371, 381 (2013)).

The canon “does not apply unless it is fair to suppose that [the legislature] considered the

unnamed possibility and meant to say no to it.” Id. The intent of the legislature “must be

expressed clearly, either explicitly or by necessary implication.” Id. We cannot conclude

that the legislature intended to restrict the availability of equitable relief or specific

performance by enacting the 2013 amendments. The amendments do not explicitly do

so, and such restriction is not necessarily implied. Instead, as set forth in Hays Street,

the waiver of immunity in chapter 271 extends to claims for specific performance of a

contract subject to the Act.6

The Risk Pool emphasizes that, as we held in ERO, § 271.154 serves as a

“condition[] on the Act’s waiver of immunity” and does not create an additional waiver of

immunity. See ERO, 579 S.W.3d at 129. That is true, and we continue to disavow City

6 We note that, unlike here, the award of specific performance in Hays Street was made after a full

trial on the merits. See Hays St. Bridge Restoration Gp. v. City of San Antonio, 570 S.W.3d 697, 701 (Tex.

2019). The Risk Pool does not argue in its brief that Hays Street is distinguishable for this reason. In any

event, we note that contractual appraisal provisions in insurance policies are treated like arbitration clauses

and may generally be enforced prior to trial as a means to resolve disputes about the amount of loss for a

covered claim. See City of Abilene, 551 S.W.3d at 344 (“In the context of an insurance contract, appraisal

is not sought in equity as a substitute for inadequate monetary damages, but rather it is a procedural vehicle

provided by the contract to determine the amount of loss.”); Vanguard Underwriters Ins. Co. v. Smith, 999

S.W.2d 448, 451 (Tex. App.—Amarillo 1999, no pet.) (holding that insurance policy appraisal clause was

“in its essence, one requiring arbitration” and applying caselaw relating to arbitration clauses); see also In

re Universal Underwriters of Tex. Ins. Co., 345 S.W.3d 404, 407 (Tex. 2011) (orig. proceeding) (noting that

“[a]ppraisals can provide a less expensive, more efficient alternative to litigation” and “should generally go

forward without preemptive intervention by the courts”).

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of Abilene’s implications to the contrary. But our decision here does not assume or rely

on the notion that an additional waiver is created under § 271.154; instead, our holding is

based on the clear and unambiguous general waiver in § 271.152 combined with the lack

of any provision elsewhere in the Act explicitly limiting or restricting the availability of

equitable relief or specific performance.

The Risk Pool finally argues that the City did not establish its entitlement to

appraisal under the Coverage Document because it did not timely (1) file a sworn proof

of loss, (2) demand appraisal, or (3) designate a disinterested appraiser. It contends that,

because of this, the City failed to comply with “contractual adjudication procedures” and

therefore it cannot invoke the chapter 271 waiver. See id. Assuming but not deciding

that the Risk Pool’s factual allegations are true, we disagree that this deprives the trial

court of subject matter jurisdiction here. Section IV.D of the Coverage Document states

that “[i]t shall be necessary for the Member to render a signed and sworn proof of loss to

the Fund or its appointed representative, within 60 days . . . .” Section IV.E provides: “If

the Member and the Fund fail to agree as to the amount of loss, each shall, upon the

written demand either of the Member or of the Fund made within 60 days after receipt of

proof of loss by the Fund, select a competent and disinterested appraiser.” But nowhere

does the Coverage Document explain what happens in the event that the parties disagree

on the amount of loss but (1) the claimant fails to timely file a sworn proof of loss, (2)

either party fails to timely file a demand for appraisal, or (3) either party fails to timely

name a competent and disinterested appraiser. This stands in contrast to ERO, where

the applicable contractual provision explicitly stated that “[c]omplaints that are not filed in

accordance with the time lines shall be dismissed.” Id. at 125. Because the Coverage

Document does not contain similar language, we cannot conclude that the City’s alleged

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failures to comply with these provisions would mean that it has not shown a “substantial

claim that meets the Act’s conditions.” See Zachry, 449 S.W.3d 98, 109 (holding that the

chapter 271 waiver “require[s] a showing of a substantial claim that meets the Act's

conditions”).

III. CONCLUSION

In light of the Texas Supreme Court’s ruling in Hays Street, and for the other

reasons set forth above, we conclude that the trial court did not err by denying the Risk

Pool’s plea to the jurisdiction.7 We overrule its issue on appeal and affirm the judgment

of the trial court.

DORI CONTRERAS

Chief Justice

Delivered and filed the 9th

day of January, 2020.

7 We express no opinion on the merits of whether the City is entitled to appraisal. Rather, as noted,

this opinion is limited to whether the trial court had jurisdiction to order it in this case.

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