Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

C. Borunda Holdings, Inc. v. Lake Proctor Irrigation Authority of Comanche County

Supreme Court of Texas

February 23, 2018

C. Borunda Holdings, Inc., Petitioner,
v.
Lake Proctor Irrigation Authority of Comanche County, Texas, Respondent

         On Petition for Review from the Court of Appeals for the Eleventh District of Texas

          PER CURIAM

         This governmental-immunity case raises a first-impression issue deriving from the Court's decisions in Reata Constr. Corp. v. City of Dallas, 197 S.W.3d 371 (Tex. 2006), and City of Dallas v. Albert, 354 S.W.3d 368 (Tex. 2011). The question is whether a defendant can prevail on the merits of its germane, connected, and properly defensive counterclaims against a governmental entity when the governmental entity recovers monetary relief on its affirmative claims by filing a lien and a lis pendens and then nonsuits its affirmative claims. We hold that the governmental entity's nonsuit does not negate the defendant's right to pursue its counterclaims to the extent it seeks an offset against the amount the governmental entity recovered through the litigation process.

         Petitioner C. Borunda Holdings, Inc., operates pecan orchards. It entered into a series of water-supply agreements with the Lake Proctor Irrigation Authority, a political subdivision. See Tex. Spec. Dist. Code § 7502.002 ("The Lake Proctor Irrigation Authority of Comanche County is (1) a conservation and reclamation district under Section 59, Article XVI, Texas Constitution; and (2) a political subdivision of this state."). Lake Proctor later sued Borunda, alleging that Borunda had breached the 2012 and 2013 agreements by underpaying Lake Proctor in the amount of $111, 481.41. Borunda filed counterclaims alleging that Lake Proctor breached the contracts and committed fraud by failing to make reasonable efforts to provide Borunda water on a comparable basis to other customers. According to Borunda, Lake Proctor's breach during an historic drought caused Borunda to lose more than 2, 000 pecan trees and face imminent financial ruin.

         Shortly after Lake Proctor filed suit, it recorded a crop lien and a lis pendens against Borunda's orchards. Borunda later decided to sell some of its land to generate cash and avoid bankruptcy, but Lake Proctor's lien and lis pendens prevented it from doing so. Allegedly in dire financial straits, Borunda paid Lake Proctor $118, 045.52 (the amount Lake Proctor sought, plus attorney's fees) to remove the lien and lis pendens, but Borunda continued to pursue its counterclaims seeking an offset against that payment.

         Lake Proctor then filed a plea to the jurisdiction, arguing that immunity deprived the trial court of jurisdiction over Borunda's counterclaims. The trial court ultimately entered an agreed order on the plea, finding that it had subject-matter jurisdiction "only . . . to the extent that [Borunda] seeks monetary damages as an offset for damages sought by [Lake Proctor] for breach of contract based on [the 2012 and 2013 agreements, ] which shall not exceed the monetary damages for the affirmative claims asserted by [Lake Proctor]." A few months later, Lake Proctor nonsuited its claims against Borunda and filed a second plea to the jurisdiction and a motion for summary judgment. In these new pleadings, Lake Proctor argued that because it was no longer pursuing its claim for damages against Borunda, immunity barred Borunda's counterclaims and Borunda could not prevail on any claim for an offset.

         We held in Reata that when a governmental entity asserts claims for monetary relief, immunity does not protect the entity against the defendant's counterclaims for monetary relief that are "germane to, connected with, and properly defensive to" the government's claims. 197 S.W.3d at 376-77. This is not because the governmental entity "waives" its immunity by filing a claim for affirmative relief. Id. Instead, the scope of governmental immunity simply does not reach the defensive counterclaims to the extent that any recovery on the counterclaims serves as an "offset" against the government's recovery on its affirmative claims. Id. at 377.

         Reata led to the subsequent issue of whether governmental immunity applies to germane, connected, and properly defensive counterclaims if the governmental entity nonsuits its affirmative claims without having recovered on them. We resolved that issue in Albert, holding that a governmental entity that voluntary nonsuits its affirmative claims without having recovered on them does not "reinstate" immunity against the defendant's counterclaims. 354 S.W.3d at 374-75. Because the governmental entity "did not have immunity from suit as to [the defensive counterclaims], it could not either 'reinstate' such immunity, or, put differently, in effect create it, by nonsuiting" its affirmative claims. Id.

         We acknowledged in Albert, however, that the defendant in that case could not prevail on the merits of its counterclaims because the governmental entity was no longer "pursuing a claim for damages to which an offset would apply, " so the governmental entity "would not have a recovery for the [counterclaims] to offset." Id. at 376. The governmental entity could therefore obtain summary judgment on the merits of the counterclaims because they sought only an offset against the governmental entity's recovery, yet the governmental entity had waived any such recovery. Id. But the governmental entity could not prevail on jurisdictional grounds because immunity did not bar the counterclaims. Id.; see also Sharyland Water Supply Corp. v. City of Alton, 354 S.W.3d 407, 414 (Tex. 2011) ("Even if [the governmental entity's] rescission counterclaim meant that it was not entitled to immunity from suit at least up to the amount of an offset, the offset disappeared when [the governmental entity's] counterclaim was defeated on summary judgment.").

         In this case, the trial court granted Lake Proctor's second plea to the jurisdiction in part, finding as it had in its agreed order on the first plea that it had subject matter jurisdiction to the extent that Borunda sought an offset against Lake Proctor's recovery. On the same day, however, the trial court granted summary judgment for Lake Proctor, ordering that Borunda take nothing on its counterclaims seeking that offset. The court of appeals affirmed. __S.W.3d ___, 2016 WL 7650559, at *2 (Tex. App.-Eastland December 26, 2016). Borunda then petitioned for review in this Court.

         The ultimate issue in this case is whether Lake Proctor was entitled to summary judgment on the merits of Borunda's counterclaims after Lake Proctor recovered the money it was seeking and then nonsuited its affirmative claims. The result turns on whether Borunda relinquished or waived its right to pursue its counterclaim for an offset against Lake Proctor when it paid Lake Proctor's claims in full.

         As an initial matter, we are not concerned here with whether governmental immunity bars Borunda's counterclaims. Under Reata, it clearly does not because those counterclaims were germane to, connected to, and properly defensive to Lake Proctor's affirmative claim for breach of contract, and sought only to offset any damages Lake Proctor might recover. See Reata, 197 S.W.3d at 377. This is not because Lake Proctor waived immunity by filing its affirmative claims, but because "governmental entities do not have immunity from offsetting claims germane to, connected to, and properly defensive to monetary claims by the entities." Albert, 354 S.W.3d at 376. And under Albert, Lake Proctor's nonsuit of its affirmative claims did not reinstate or create immunity from Borunda's counterclaims because Lake Proctor "could not reinstate or create something it did not have." Id.; see City of Dall. v. Martin, 361 S.W.3d 560, 561 (Tex. 2011) ("[B]y non-suiting its counterclaim the City did not reinstate immunity from suit. . . ."). Just as Lake Proctor "generally cannot waive immunity from suit by its actions, it cannot create immunity by its actions." Albert, 354 S.W.3d at 376. The trial court thus had jurisdiction over Borunda's properly asserted counterclaims even though Lake Proctor nonsuited its affirmative claims. See id. at 375.

         We are concerned here instead with whether Lake Proctor was entitled to summary judgment on the merits of Borunda's counterclaims. Lake Proctor moved for summary judgment on the ground that Borunda could not prevail on its counterclaims because, having nonsuited its claims, Lake Proctor could obtain no "recovery" against which any judgment on the counterclaims could offset. The trial court granted the motion, and the court of appeals affirmed, holding that, "with [Lake Proctor's] claims to affirmative relief gone, there was nothing against which Borunda could apply an offset, and Borunda could not recover a judgment from [Lake Proctor].___" S.W.3d at ___.

         But unlike the governmental entities in Albert and Sharyland, Lake Proctor did recover on its claims against Borunda through this litigation before it nonsuited those claims. In fact, Lake Proctor recovered all the monetary relief it was seeking in this case when Borunda paid that amount to remove the lien and lis pendens. The question, then, is whether Borunda may still seek and obtain an offset against that amount based on Lake Proctor's alleged breaches of the water-supply agreements. This is not an immunity or jurisdictional issue; it is an issue that goes to the merits of Borunda's counterclaims. ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.