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City of New Braunfels v. Carowest Land, Ltd.

Court of Appeals of Texas, Third District, Austin

May 16, 2019

City of New Braunfels, Texas; and YC Partners Ltd., d/b/a Yantis Company, Appellants
v.
Carowest Land, Ltd., Appellee

          FROM THE 22ND DISTRICT COURT OF COMAL COUNTY NO. C2017-0474A THE HONORABLE MARGARET G. MIRABAL, JUDGE PRESIDING

          Before Justices Baker, Triana, and Smith.

          OPINION

          GISELA D. TRIANA, JUSTICE.

         The City of New Braunfels and YC Partners, Ltd., d/b/a Yantis Company appeal district court orders denying each of their pleas to the jurisdiction asserted in a suit brought against them by local property owner Carowest Land, Ltd. See Tex. Civ. Prac. & Rem. Code § 51.014(a)(8) (permitting interlocutory appeal of an order granting or denying a plea to the jurisdiction). We will reverse the district court's order denying the City's plea to the jurisdiction and will dismiss Yantis's appeal.

         This is the third appeal this Court has been called on to resolve in an ongoing dispute among the City, Yantis, and Carowest. As a result, much of the background of this controversy has been discussed in two earlier opinions, City of New Braunfels v. Carowest Land, Ltd., 432 S.W.3d 501 (Tex. App.-Austin 2014, no pet.) (Carowest I), and City of New Braunfels v. Carowest Land, Ltd., 549 S.W.3d 163 (Tex. App.-Austin 2017, pet. Filed) (Carowest II). See also Carowest Land, Ltd. v. Y.C. Partners, Ltd., No. 03-11-00715-CV, 2012 Tex.App. LEXIS 3598 (Tex. App.-Austin, May 1, 2012, no pet.) (mem. op.) (granting appellant Carowest's unopposed motion to dismiss appeal); City of New Braunfels v. Carowest Land, Ltd., No. 03-11-00211-CV, 2011 Tex.App. LEXIS 5039 (Tex. App.-Austin, July 1, 2011, no pet.) (mem. op.) (granting appellant City's unopposed motion to dismiss appeal). In this latest appeal, the issue is whether the district court has subject-matter jurisdiction to adjudicate the merits of a claim by Carowest seeking a declaratory judgment and attorney's fees as allowed by the Uniform Declaratory Judgments Act (UDJA). See Tex. Civ. Prac. & Rem. Code §§ 37.004, .009. Accordingly, we take as true the facts alleged by Carowest in its live pleadings or for which it has presented evidence except to the extent the City has presented evidence sufficient to negate those facts. See, e.g., Texas Dep't of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 226 (Tex. 2004).

         Carowest's dispute with the City and Yantis

         Carowest owns a 240-acre property in New Braunfels, a portion of which Carowest voluntarily conveyed to the City to allow for construction of a drainage channel. The City hired Yantis to construct the drainage channel. This project came to be called the South Tributary Project, and it did not go smoothly. See Carowest I, 432 S.W.3d 507-12 (detailing the facts of the underlying dispute). Eventually, in July of 2009, the City and Carowest entered into a Letter Agreement in an attempt to "resolve issues related to the South Tributary Project." The Letter Agreement allowed Carowest to modify the location and design of the channel (the Modification) in exchange for Carowest paying for certain costs related to the Modification. Under the Letter Agreement, Carowest would receive all fill from the South Tributary Project.

         The parties also agreed to work in good faith to complete the South Tributary Project, they agreed Carowest would convey land to the City for certain other projects, and they agreed that Carowest would receive 13, 944 cubic yards of fill from another project-the North Tributary Project-to compensate for the fill the City took from the South Tributary Project that was supposed to have been given to Carowest. The City also hired Yantis as the contractor on the North Tributary Project. The Letter Agreement also contained an indemnity clause under which Carowest agreed:

to indemnify the City and hold the City harmless for any claims brought by The Yantis Company for any Modification Costs incurred by Yantis, such as delay costs, claimed by Yantis and directly attributable to the Modification (the "Yantis Claims"). Any invoices related to these Yantis Claims submitted to the City shall be promptly provided to Carowest. If either party disputes any claim, the claim shall be submitted to Halff and Pape-Dawson . . . .

         Among the many continuing points of contention between the parties, Yantis ended up submitting to the City a delay claim for $556, 248 for work Yantis attributed to the Modification on the South Tributary Project. Pursuant to the Letter Agreement's indemnity provision, the City submitted the claim to Carowest, and on May 13, 2010, the City directed Carowest "to negotiate with Yantis and work out a payment, if any, for delay damages and obtain a release for the benefit of the City." However, in October 2009, unbeknownst to Carowest, the City and Yantis had executed a change order containing language that Carowest says had already released all of Yantis's claims against the City for the Carowest portion of the South Tributary Project. In addition, on May 31, 2010, Yantis applied to the City for a progress payment for Yantis's work on the South Tributary Project. As a condition of receiving that payment, Yantis executed a "Partial Waiver and Release of Lien," which stated, "Yantis hereby acknowledges complete satisfaction of, and waives and releases, any and all claims of every kind against [the City], the [South Tributary] Project and the property." Despite these releases, Yantis resubmitted its delay claim to the City in July 2010, this time seeking $276, 270.80 in damages related to the Carowest portion of the South Tributary Project. In October 2010, the City sent a letter to Yantis containing the City's "written response to Yantis' delay claim against the City." The letter stated that "based on the execution of [the October 2009 change order], Yantis has waived 'any and all costs associated with or resulting from the change(s) ordered herein, including all impact, delays, and acceleration costs'." (Emphasis and punctuation in original.) Because Yantis did not abandon its delay claim and the City did not rescind its request that Carowest handle Yantis's delay claim, Carowest sued Yantis and the City in November 2010. During the course of the ongoing lawsuit, Carowest asserted multiple causes of action, including three sets of declaratory claims. The City asserted counterclaims, including a breach-of-contract claim seeking monetary damages for alleged breach of the Letter Agreement by Carowest. The City filed a plea to the jurisdiction, asserting that Carowest's claims were barred by sovereign immunity. The trial court denied that plea and the City appealed. This Court resolved that interlocutory appeal in 2014 in Carowest I, which is further discussed below. In 2015, the parties agreed to sever two of Carowest's three sets of declaratory judgment claims, which related to the North Tributary Project, into a separate suit. The suit on the North Tributary Project declaratory claims eventually formed the basis for Carowest II. The remaining set of declaratory judgment claims related to the validity of Yantis's delay claim and the parties' corresponding obligations under the Letter Agreement pertaining to the South Tributary Project. The district court granted summary judgment in favor of Carowest on the declaratory claims related to the South Tributary Project in 2016, specifically ordering that:

a. The October 21, 2009 Change Order fully and finally released and waived the Yantis Delay Claim.
b. The May 31, 2010 Waiver fully and finally released and waived the Yantis Delay Claim.
c. Under the July 27, 2009 Letter Agreement, the City has no right to indemnification from Carowest for the Yantis Delay Claim.

         Carowest sought the first two of these declarations solely against Yantis and the third solely against the City. The district court expressly declined to dispose of any other claims by Carowest, including the claim for attorney's fees under section 37.009 of the Civil Practice and Remedies Code. In January 2017, Carowest filed an opposed motion to sever the South Tributary Project declaratory claims into a separate cause. Carowest argued that severance was appropriate because the South Tributary Project declaratory claims "are not interwoven with the other counts because they were purely legal issues decided by summary judgment on an undisputed record." Carowest further urged that severance would "allow the summary judgment, once the issue of fees is resolved, to become final while the remaining claims proceed."[1] The district court granted Carowest's motion in March 2017. Three months after the claims were severed, this Court issued its opinion in Carowest II, holding that sovereign immunity barred the North Tributary Project declaratory claims. Believing that Carowest II's ...


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