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Texas Municipal League Intergovernmental Risk Pool v. City of Hidalgo

Court of Appeals of Texas, Thirteenth District, Corpus Christi-Edinburg

January 9, 2020


          On appeal from the 139th District Court of Hidalgo County, Texas.

          Before Chief Justice Contreras and Justices Hinojosa and Tijerina



         Appellant Texas Municipal League Intergovernmental Risk Pool (the Risk Pool) brings this interlocutory appeal of the trial court's order granting a motion filed by the City of Hidalgo (the City) to compel the parties to participate in a contractual appraisal proceeding. The Risk Pool contends by one issue that the order constituted an implicit and erroneous denial of its plea to the jurisdiction. We affirm.

         I. Background

         The Risk Pool is a governmental self-insurance fund whose members include the City and nearly 2, 800 other Texas political subdivisions. See Tex. Gov't Code Ann. § 2259.031. The City became a member of the Risk Pool by virtue of a "Liability/Property Interlocal Agreement" (the Agreement) signed in 1989. The Agreement stated in part:

In consideration of the execution of this Agreement by and between the Pool Member and the Fund[1] and of the contributions of the Pool Member, the coverage elected by the Pool Member is afforded according to the terms of the TML Liability Self-Insurance Plan and the TML Property Self-Insurance Plan. The affirmative declaration of contributions and limits of liability in the Declarations of Coverage and Endorsements determines the applicability of the Self-Insurance Plans.
Each Pool Member agrees to adopt and accept the coverages, provisions, terms, conditions, exclusions and limitations as further provided for in the TML Self-Insurance Plans or as specifically modified by the Pool Member's Declarations of Coverage.
This Interlocal Agreement shall be construed to incorporate the TML Liability Self-Insurance Plan and/or the TML Property Self Insurance Plan, Declarations of Coverage, and Endorsements and addenda whether or not physically attached hereto.

         The Agreement defines "TML Municipal Property Self-Insurance Plan" as "[t]he property coverage document that sets forth in exact detail the coverages provided as part of the overall plan."

         Here, the terms and conditions of the coverage provided by the Risk Pool to the City are set forth in a "Property Coverage Document" (the Coverage Document) dated October 1, 2014. The Coverage Document provides in relevant part:


         D. PROOF OF LOSS

It shall be necessary for the Member to render a signed and sworn proof of loss to the Fund or its appointed representative, within 60 days, stating the place, time, and cause of the loss, damage, or expense, the interest of the Member and of all others, the value of the property involved in the loss, and the amount of loss, damage, or expense.

         E. APPRAISAL

If the Member and the Fund fail to agree as to the amount of loss, each shall, upon the written demand either of the Member or of the Fund made within 60 days after receipt of proof of loss by the Fund, select a competent and disinterested appraiser. The appraisers then shall select a competent and disinterested umpire. If they should fail for 15 days to agree upon such umpire, then upon request of the Member or of the Fund, such umpire shall be selected by a judge of a court of record in the county and state in which such appraisal is pending. Then, at a reasonable time and place, the appraisers shall appraise the loss, stating separately the value at the time of loss and the amount of loss. If the appraisers fail to agree, they shall submit their differences to the umpire. An award in writing by any two shall determine the amount of loss. The Member and the Fund shall each pay its chosen appraiser and shall bear equally the other expenses of the appraisal and of the umpire.

         F. LOSS PAYABLE

Loss, if any, shall be adjusted with and payable to the Member, whose receipt shall constitute a release in full of all liability under this Agreement with respect to such loss.

(Emphasis added.)

         In 2016, a storm damaged State Farm Arena, which is owned by the City and covered by its Risk Pool policy. The City filed a claim with the Risk Pool for roof and structural damage caused by wind, hail, and water. According to the City, the arena sustained over $7 million in damages, but after adjustment, the Risk Pool paid out only $283, 666.81 in benefits. In May of 2018, the City filed suit against the Risk Pool alleging that it breached the policy by wrongfully and negligently denying part of its claim. In particular, the City alleged that the Risk Pool failed to perform a thorough investigation of the damage as required by the policy. The City's petition contained a section entitled "Equitable Relief: Demand for Appraisal" which stated: "Pursuant to the Coverage Document and Tex. Local Gov't Code § 271.154, [the City] hereby demands Appraisal, and names the following appraiser: Mark Barber . . . ." In the alternative, the City requested damages, interest, and attorney's fees.

         The Risk Pool answered the suit and filed a partial plea to the jurisdiction, contending that its governmental immunity to suit has not been waived with respect to the City's claims for equitable relief or attorney's fees. On August 6, 2018, the City filed a response to the partial plea to the jurisdiction as well as an amended petition, both contending that the Risk Pool's immunity was waived by Texas Local Government Code § 271.152 with respect to all of the City's claims. The amended petition stated: "Plaintiff names the following appraiser [sic] competent and disinterested appraiser: Don Staples . . . ."

         Two days later, the City filed a "Motion to Compel Appraisal and Stay Proceedings Pending Appraisal" arguing that "completion of the appraisal process may preclude the need for further litigation" and that "judicial efficiency would be furthered by appraisal and staying the litigation pending its completion." The City noted in its motion that the Risk Pool had "rejected the City's invocation of appraisal and refused to participate in the appraisal process" prior to the City's initial filing of suit. In response, the Risk Pool filed an "Objection and Plea to the Jurisdiction" arguing that: (1) local government code chapter 271 does not waive immunity to suits seeking equitable relief or specific performance; (2) chapter 271 does not waive immunity as to the City's breach of contract claim because the Coverage Document was not "executed" by the Risk Pool; and (3) even if immunity was waived, the City is not entitled to appraisal because it did not timely provide proof of loss or name a disinterested appraiser as required by the policy. The Risk Pool concurrently filed a separate amended plea to the jurisdiction reiterating the first two arguments. The City filed a response to the amended plea to the jurisdiction, and the Risk Pool filed a reply to the response.

         On September 28, 2018, the trial court rendered an order granting the City's motion to compel appraisal, ordering the Risk Pool to designate its appraiser within seven days, and staying all further proceedings in the trial court ...

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