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Dallas/Fort Worth International Airport Board v. Vizant Technologies, LLC

Supreme Court of Texas

May 17, 2019

Dallas/Fort Worth International Airport Board, Petitioner,
Vizant Technologies, LLC Respondent

          Argued January 22, 2019

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



         The plaintiff in this case claims that a governmental entity breached a contractual promise to make a good-faith effort to obtain authorization for a higher payment than the parties' written contract required the entity to make. We must decide whether governmental immunity applies and, if so, whether chapter 271 of the Texas Local Government Code waives that immunity. We conclude that governmental immunity applies and chapter 271 does not waive the entity's immunity. We reverse the court of appeals' judgment in part and render judgment dismissing all of the plaintiff's claims.

         I. Background

         The Dallas-Fort Worth International Airport Board operates the DFW International Airport. See Tex. Transp. Code. §§ 22.074(c), (d). In 2012, the Board's staff retained Vizant Technologies[1] to analyze the airport's payment-processing costs (including costs for processing credit-card payments) and to provide recommendations on how the airport could reduce those costs. Exercising delegated authority, the Board's staff negotiated and executed a written Consulting Agreement providing for a three-year term. The contract required the Board to pay Vizant a consulting fee to be calculated as (1) fifty percent of any refunds the airport received from its payment-processing vendors as a result of Vizant's recommendations, plus (2) a specified percentage[2] of the amount by which Vizant's recommendations reduced the Board's historical payment-processing costs.

         "Notwithstanding" these provisions, the contract stated that Vizant's "compensation under this Agreement shall not exceed $50, 000," and Vizant must "stop work once its compensation reaches" that amount.[3] But it further provided that "[i]n the event" Vizant's fee exceeds $50, 000, the Board "will make a good faith effort to receive board authorization to increase the compensation," and "if approved," the parties would amend the contract to reflect the higher amount. Vizant alleges that it agreed to the $50, 000 cap only because the Board's staff assured Vizant that the Board always approves such increases.

         According to Vizant, its services ultimately saved the airport about $820, 000, and its fee under the agreed formula exceeded $300, 000. Vizant submitted an invoice for $50, 000 and requested that the Board approve an amendment authorizing the higher amount. The Board's staff paid the $50, 000 and ultimately asked to Board to approve an increase to $330, 000, but the Board denied that request. Vizant sued the Board for breach of contract, fraud, fraudulent inducement, and promissory estoppel, alleging in part that the Board failed to make the promised good-faith effort to authorize the increased compensation.[4]

         The Board filed a plea to the jurisdiction asserting that governmental immunity bars Vizant's claims. The trial court denied the plea, holding that governmental immunity does not apply because the Board's management of the airport's payment-processing costs is a proprietary (rather than governmental) function. See Wasson Interests v. City of Jacksonville, 559 S.W.3d 142, 146 (Tex. 2018) ("Wasson II ") ("The governmental/proprietary dichotomy recognizes that immunity protects a governmental unit from suits based on its performance of a governmental function but not a proprietary function.").

         The Board filed an interlocutory appeal from the trial court's denial of its jurisdictional plea.[5] The court of appeals reversed in part and affirmed in part. Dall./Fort Worth Int'l Airport Bd. v. Vizant Techs., LLC, 565 S.W.3d 69, 71 (Tex. App.-Dallas 2017). It reversed and rendered judgment dismissing Vizant's fraud and estoppel claims, concluding that governmental immunity applies because the Board was engaged in a governmental function and no statute waives the Board's immunity against those claims. Id. at 74-75. But it affirmed the trial court's denial of the Board's plea against Vizant's breach-of-contract claim, holding that-although governmental immunity applies-chapter 271 of the Texas Local Government Code waives the Board's immunity against that claim. Id. at 75.[6] The Board filed a petition for review challenging the court of appeals' holding on the contract claim, which we granted.[7]

         II. Governmental Immunity

         We first address whether governmental immunity applies to Vizant's breach-of-contract claim. Governmental immunity generally protects local governmental entities against both lawsuits and legal liabilities. City of Houston v. Hous. Mun. Emps. Pension Sys., 549 S.W.3d 566, 575 (Tex. 2018). Vizant does not dispute that the Board qualifies as a local governmental entity, [8] but argues that immunity does not apply here because the Board was acting in a proprietary capacity when it entered into the contract. The trial court agreed with Vizant, but the court of appeals disagreed and held that the Board was acting in a governmental capacity. We agree with the court of appeals.[9]

         Because immunity is inherent in the state's sovereignty, certain local governmental entities enjoy its protection only when they act "as a branch" of the state and not when they act "in a proprietary, non-governmental capacity." Wasson II, 559 S.W.3d at 146 (quoting Wasson Interests v. City of Jacksonville, 489 S.W.3d 427, 430 (Tex. 2016) ("Wasson I")). As we recognized in Wasson II, deciding whether an entity enters a contract as a governmental or proprietary function can be quite difficult. Id. at 147. But here, it is not. Pursuant to its constitutional authority, [10] the legislature has enumerated particular functions as governmental or proprietary for purposes of determining whether immunity applies to tort claims, see Tex. Civ. Prac. & Rem. Code § 101.0215(a), and these designations "aid our inquiry" in cases involving contract claims as well. Wasson II, 559 S.W.3d at 148 (quoting Wasson I, 489 S.W.3d at 439).

         Regarding the Board's functions, the legislature has unambiguously declared that the "maintenance, operation, [and] regulation" of an airport and the "exercise of any other power granted" for that purpose, whether exercised "severally or jointly" by local governments, "are public and governmental functions, exercised for a public purpose, and matters of public necessity." Tex. Transp. Code § 22.002(a); see also Tex. Civ. Prac. & Rem. Code § 101.0215(a)(10) (listing "airports" as a governmental function under the Tort Claims Act). Because the Board entered into the contract with Vizant for the purpose of analyzing and reducing the airport's expenses, it was acting in its governmental capacity and governmental immunity applies.

         III. Waiver of Immunity

         We next address whether the legislature has waived the Board's immunity against Vizant's contract claim. A governmental entity waives its immunity from liability by entering into a contract, voluntarily binding itself like any other party to the agreement. Tooke v. City of Mexia, 197 S.W.3d 325, 332 (Tex. 2006). But only the legislature can waive governmental immunity from suit, and when it chooses to waive such immunity it must express that intent using "clear and unambiguous" language. Lubbock Cty. Water Control & Imp. Dist. v. Church & Akin, L.L.C., 442 S.W.3d 297, 301 (Tex. 2014). Unless waived, immunity from suit deprives trial courts of jurisdiction over suits against the government. State v. Lueck, 290 S.W.3d 876, 880 (Tex. 2009).

         A. Chapter 271

         Vizant argues, and the court of appeals agreed, that chapter 271 of the Local Government Code waives the Board's immunity against Vizant's contract claim. Chapter 271 provides that a

local governmental entity that is authorized by statute or the constitution to enter into a contract and that enters into a contract subject to this subchapter waives sovereign immunity to suit for the purpose of adjudicating a claim for breach of the contract, subject to the terms and conditions of this subchapter.

Tex. Loc. Gov't Code § 271.152.

         A "contract subject to this subchapter" is "a written contract stating the essential terms of the agreement for providing goods or services to the local governmental entity that is properly executed on behalf of the local governmental entity." Id. ยง 271.151(2)(A). The subchapter's "terms and conditions" include section 271.153, which limits "the total amount of money awarded in an adjudication brought against a ...

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