Triple B Servs., LLP v. City of Conroe, No. 09-21-00096-CV, 2022 Tex. App. LEXIS 4824, 2022 WL 2720451 (Tex. App. July 14, 2022)

The Texas Court of Appeals recently affirmed a ruling granting the city of Conroe governmental immunity from a contractor’s lawsuit asserting claims for breach of contract and violation of the Texas Public Prompt Pay Act.

The city awarded Triple B Services, LLP a $4.7 million contract for the construction and widening of a section of public roadway. Triple B’s work was scheduled to be completed within 300 days of commencement, but it encountered significant delays and finished over 250 days behind schedule.

Triple B issued a change order for $515,000 in “cost impacts, delays, and disruptions,” stemming from its removal of utility lines not identified in the bid documents. The city rejected the change order, arguing that it was “not contractually obligated to identify all existing utility lines,” and that “the burden was contractually placed on [Triple B] to submit requests for information … perform an inspection of the job site, and request any additional documentation it needed to determine costs before submitting a bid.”

Triple B filed suit, alleging that the city breached its contract by failing to timely pay Triple B for owner-caused delays. Triple B also alleged a violation of the Texas Public Prompt Pay Act (Tex. Gov’t Code Ann. § 2251.001-.055) because the city failed to pay Triple B within 30 days after payment was requested. Triple B argued that the city had waived its sovereign immunity from these claims by entering into a written contract with Triple B, giving the trial court jurisdiction over the suit.

The city argued that because it neither issued nor agreed to the change order, the change order was invalid under the contract, making Triple B’s payment claim a quasi-contractual claim from which the city was immune. The trial court determined the city was immune and dismissed the suit for lack of jurisdiction.

On appeal, Triple B argued that Texas had waived the city’s governmental immunity from its claim because it was both a breach of contract claim under Section 271.152 and a claim for direct damages arising out of owner-caused delays under Section 271.153(a)(1) of the Texas Local Government Code. Alternatively, Triple B argued that immunity for breach of contract should be abrogated because the process by which immunity is decided was being abused.

The Texas Ninth Court of Appeals affirmed the dismissal for lack of jurisdiction, noting that “[g]overnmental units, including municipalities, are immune from suit unless the State consents.” There is a “heavy presumption in favor of immunity, and a statutory waiver of sovereign immunity must be clear and unambiguous.” The court reasoned that because the trial court found that Triple B’s change order was not a valid contractual claim, it was a quasi-contractual claim for which immunity had not been waived by statute.

With respect to Triple B’s contention that immunity should be abrogated, the court dispensed with this argument by reiterating that per the Texas Supreme Court, “there is but one route to the courthouse for breach-of-contract claims against the State, and that route is through the Legislature.”

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Reprinted from LexisNexis with permission. Copyright 2022 LexisNexis. All rights reserved.