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Texas Municipal League Intergovernmental Risk Pool v. City of Abilene

Court of Appeals of Texas, Eleventh District

May 10, 2018


          On Appeal from the 350th District Court Taylor County, Texas Trial Court Cause No. 11018-D

          Panel consists of: Willson, J., Bailey, J., and Dauphinot, S.J. [7]



         This interlocutory appeal involves a claim of governmental immunity in an insurance dispute. The Texas Municipal League Intergovernmental Risk Pool challenges the trial court's denial of its plea to the jurisdiction. In its sole issue, the Risk Pool, a governmental entity protected by governmental immunity, asserts that the trial court erred by denying its plea to the jurisdiction because its insured, the City of Abilene, failed to plead a valid waiver of immunity under Section 271.152 of the Texas Local Government Code. See Tex. Loc. Gov't Code Ann. § 271.152 (West 2016). We affirm.

         Background Facts

         The underlying lawsuit arises from an insurance claim for hail damage. The Risk Pool is a self-insurance pool of local governments. See Tex. Gov't Code Ann § 2259.031(a) (West 2016). As such, the Risk Pool is a governmental entity that enjoys governmental immunity the same as other political subdivisions. See Ben Bolt-Palito Blanco Consol. Indep. Sch. Dist. v. Tex. Political Subdivisions Prop./Cas. Joint Self-Ins. Fund, 212 S.W.3d 320, 324-26 (Tex. 2006). The City is a member of the Risk Pool.

         The City purchased real and personal property insurance to cover over 400 structures located in Abilene. On June 12, 2014, a wind and hailstorm moved through Abilene causing extensive property damage. The following day, the City reported the damage to the Risk Pool, and the Risk Pool promptly sent an adjuster to evaluate the claim.

         On August 20, 2014, the City executed the original Proof of Loss in accordance with the time limits set forth in the Property Coverage Document.[1]Based on the loss and damage known at the time, the City's initial claim amounted to $1, 799, 101.51, which the Risk Pool calculated using its own valuation of the property at the time of the loss less the deductible. The Risk Pool promptly paid that amount.

         The parties continued to assess the damage over the course of two years, and the Risk Pool's adjuster submitted supplemental reports regarding damage that was not included in the original estimate. The parties do not dispute that the Risk Pool made supplemental payments to the City in April 2015, February 2016, and March 2016. Furthermore, it is undisputed that as of June 2016 the Risk Pool had paid the City a total of $6, 948, 132.78 for damages caused by the 2014 storm.

         On June 13, 2016, the City submitted an additional Proof of Loss for a significantly higher amount than it had previously reported. In the subsequent Proof of Loss, the City claimed that its damages less the deductible and prior payments amounted to $19, 960, 422.44. The City subsequently requested a 180-day extension to invoke the appraisal provision in the Property Coverage Document. The Risk Pool granted the City an extension on August 15, 2016.

         On August 26, 2016, the City demanded an appraisal of the damage pursuant to the procedures set out in the Property Coverage Document.[2] The Risk Pool declined to participate in an appraisal because discussions were still ongoing between the parties. Accordingly, the Risk Pool asserted that an appraisal was not warranted because there was a lack of a disagreement regarding the "amount of the loss."

         Following multiple failed attempts to resolve the dispute without court intervention, the City filed the underlying lawsuit asserting a claim for breach of contract against the Risk Pool. The City alleged that the Risk Pool failed to properly investigate and evaluate the damage caused by the storm.

         The City subsequently filed an amended petition that expanded upon its original allegations. In the amended petition, the City sought damages exclusively under Section 271.153 of the Texas Local Government Code for its cause of action for breach of contract. Additionally, the City sought to compel the Risk Pool to participate in the appraisal process in accordance with the Property Coverage Document to determine the amount of the City's damages.

         Subsequently, the City filed a verified motion to compel appraisal and abate the case pending completion of the appraisal. The Risk Pool objected to the City's motion on the basis that the Risk Pool's governmental immunity deprived the trial court of subject-matter jurisdiction to order an appraisal. The Risk Pool also argued that, even if the trial court had jurisdiction, the City failed to comply with the contractual conditions precedent to invoke the appraisal right.

         The Risk Pool also filed an amended partial plea to the jurisdiction in response to the City's amended petition. In the amended partial plea, the Risk Pool asserted that Section 271.152 of the Texas Local Government Code did not waive immunity for a claim for specific performance. The Risk Pool also challenged the sufficiency of the City's jurisdictional pleadings. ...

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