Thursday, August 7, 2008

Water Authority not immune from suit for breach of contract

Fourteenth Court of Appeal rejects water authority's claim of governmental immunity, and reaches merits of appeal in breach of contract dispute stemming from voters' failure to approve financing for water & sewer facilities in bond elections. Appellate panel finds that the Authority did not breach the contract in light of the language in the underlying agreement. Authority was not required to put the proposal before the voters repeatedly until passed.

Jurisdiction

In its first issue, the Water Authority argues that the trial court did not have subject matter jurisdiction because governmental immunity from suit has not been waived. However, in a practically identical case (at least in regard to the jurisdictional issue), a separate panel of this court has held that immunity from such suits has been waived under section 271.152 of the Local Government Code. Tex. Loc. Gov't Code ' 271.152; Clear Lake City Water Auth. v. Friendswood Dev. Co., Ltd., No. 14-07-00096-CV, 2008 WL 2130435, at *12 (Tex. App.- Houston [14th Dist.] May 22, 2008, no pet. h.). For the reasons expressed in that opinion, we overrule the Water Authority's first issue and proceed to consider the substantive issues.

Breach

In its second issue, the Water Authority contends that the trial court erred in holding that the Water Authority breached the agreements as a matter of law and in refusing to hold that the Water Authority did not breach the agreements as a matter of law. More specifically, the Water Authority argues that the agreements required it to place the bond authorization proposal on an election ballot only one time, and not on every subsequent ballot until the measure passed, as argued by appellees and found by the trial court.

It is undisputed that the Water Authority placed a proposal on the first two election ballots occurring after the agreements became effective but then failed to do so in a third election. Thus, the key question here is one of contract interpretation.

The agreements at issue here obligated the Water Authority to place the bond authorization issue on "any bond election it [holds] subsequent to the effective date of [the] Agreement." Put quite simply, the Water Authority interprets this sentence as requiring it to place the measure on only the very next ballot, while appellees interpret it as requiring the measure to be repeatedly placed on ballots until approved.

In context, the sentence containing the phrase "any bond election" clearly refers to the next election held after the effective date of the agreement.

It is also worth noting what the agreement does not say. Had the possibility of repeated ballot placement been contemplated, the parties likely would have stated so in express terms. The agreement uses the noun phrase "any bond election," which is singular, rather than the phrase "any bond elections," which is plural. See William A. Sabin, The Gregg Reference Manual 238, 259 (9th ed. 2001). The agreement also does not state that a bond measure would be submitted to voters repeatedly until approved.

To the contrary, the central point of the paragraph, as explained above, is that the bond measure would be included on the very next bond proposal ballot. We therefore find the agreement to be unambiguous in obligating the Water Authority to place the measure only on the next ballot after the effective date of the agreement.
* * *

As mentioned above, it is undisputed, and has been conclusively established, that the Water Authority placed a bond proposal sufficient to pay for the facilities on the very next bond election ballot after the agreement was signed. Accordingly, we find that as a matter of law, the Water Authority did not breach the agreement. The trial court erred in holding otherwise. We thus sustain the Water Authority's second issue.
* * * *
The trial court erred in granting summary judgment favoring appellees and in refusing to grant summary judgment favoring the Water Authority. We therefore reverse the trial court's judgment and render judgment that appellees take nothing on their breach of contract causes of action against the Water Authority.

Clear Lake City Water Authority v. Kirby Lake Development
(Tex.App.- Houston [14th Dist.] Aug. 7, 2008)(Hedges) (local governmental entity, contract construction, no breach of contract)
Opinion by Chief Justice Hedges
Panel composition: Before Chief Justice Hedges, Justices Hudson and Boyce
Appellate cause number: 14-08-00013-CV
Full case style: Clear Lake City Water Authority v. Kirby Lake Development, LTD., Miter Development Company, L.L.C. and Taylor Lake, LTD.
Appeal from 113th District Court of Harris County
Trial Court Judge: Hon. Patricia Hancock
Disposition: Reversed and Rendered