City of Houston v. Southern Electrical Services, Inc., As Assignee of The Morganti Group, Inc.--Appeal from 157th District Court of Harris County

Opinion issued December 7, 2006

 

 

In The

Court of Appeals

For The

First District of Texas

 

NO. 01-06-00015-CV

 

THE CITY OF HOUSTON, Appellant

 

V.

 

SOUTHERN ELECTRICAL SERVICES, INC.

AS ASSIGNEE OF THE MORGANTI GROUP, INC. AND

THE MORGANTI GROUP INC., Appellees

 

On Appeal from the 157th District Court

Harris County, Texas

Trial Court Cause No. 2005-35287

 

MEMORANDUM OPINION ON REHEARING

We grant appellant's motion for rehearing, vacate our June 8, 2006 judgment, withdraw our June 8, 2006 opinion, and issue this opinion in its place.

Appellant, the City of Houston (the City), appeals the trial court's order denying the City's plea to the jurisdiction, which asserted that the trial court did not have subject-matter jurisdiction over the claim asserted by appellee Southern Electrical Services, Inc. (SES) because (1) SES had failed to plead and could not demonstrate a waiver of the City's "sovereign/governmental immunity" (1) and (2) SES did not have standing to bring a cause of action for breach of contract and, therefore, the trial court should not have granted leave to amend SES's petition to add The Morganti Group, Inc. (Morganti) as a plaintiff. On appeal, appellant raises these same two issues. We reverse and remand.

DISCUSSION

Appellee Southern Electrical Services, Inc., sued appellant, the City of Houston (the City), for breach of contract and, in the alternative, quantum meruit. The City specially excepted, asserting, among other things, that SES had not pleaded a basis for a waiver of the City's governmental immunity and that SES did not have standing to sue the City because the City did not have privity of contract with SES. The City also asserted a general denial and several affirmative defenses, including the doctrines of sovereign immunity and governmental immunity and SES's lack of standing to bring the lawsuit. SES sought leave to file an amended petition. The City opposed SES's motion and filed a plea to the jurisdiction, asserting governmental immunity and SES's lack of standing. The trial court granted SES's motion for leave to file, and SES filed its first amended original petition. The amended petition added Morganti as a plaintiff and asserted that the Texas legislature had waived the City's immunity from suit through the Local Government Code, which provided that a home rule municipality "may plead and be impleaded in any court" and that the City had waived its governmental immunity in the Houston City Charter, which provides that the City "may sue and be sued." Tex. Loc. Gov't Code Ann. 51.075 (Vernon 1999); Houston, Tex., Charter art. II, 1. The trial court denied the City's plea to the jurisdiction, and the City appealed.

DISCUSSION
Standard and Scope of Review

Subject-matter jurisdiction is essential for a court to have the authority to resolve a case. Tex. Ass'n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440, 443 (Tex. 1993). The plaintiff has the burden to plead facts affirmatively showing that the trial court has subject-matter jurisdiction. Id. at 446. A party may challenge a court's subject-matter jurisdiction by filing a plea to the jurisdiction. See Tex. Dep't of Transp. v. Jones, 8 S.W.3d 636, 638-39 (Tex. 1999). Because jurisdiction is a question of law, we review de novo the trial court's ruling on such a plea. Mayhew v. Town of Sunnyvale, 964 S.W.2d 922, 928 (Tex. 1998). In conducting this de novo review, we do not look at the merits of the plaintiff's case but consider only the plaintiff's pleadings and the evidence pertinent to the jurisdictional inquiry. County of Cameron v. Brown, 80 S.W.3d 549, 555 (Tex. 2002). We construe the pleadings liberally in favor of conferring jurisdiction. Tex. Dep't of Transp. v. Ramirez, 74 S.W.3d 864, 867 (Tex. 2002). If the allegations in the plaintiff's petition do not establish jurisdiction, but do not affirmatively demonstrate incurable defects in jurisdiction, the issue is one of pleading sufficiency, and the plaintiff should be afforded the opportunity to amend. County of Cameron, 80 S.W.3d at 555.

Standing

In its first issue, the City contends that SES did not have standing to bring a breach of contract or quantum meruit action against the City because SES did not have a contract with the City, and SES did not establish that the trial court had subject- matter jurisdiction over its claims. The City argues that, because the original petition did not demonstrate that the trial court had jurisdiction, the defects could not be cured, and the trial court erred in granting SES's motion for leave to amend its original petition.

Standing is a component of subject-matter jurisdiction. Tex. Ass'n of Bus., 852 S.W.2d at 445-46. A plaintiff has standing to sue when it is personally aggrieved by the alleged wrong. Nootsie, Ltd. v. Williamson County Appraisal Dist., 925 S.W.2d 659, 661 (Tex. 1996). A plaintiff may also have standing by assignment of a cause of action. See Sw. Bell Tel. Co. v. Marketing on Hold, Inc., 170 S.W.3d 814, 823 (Tex. App.--Corpus Christi 2005, pet. filed) (holding that appellee had standing by virtue of assignment of claims). A claim may be assigned except when such an assignment is invalid as against public policy. State Farm Fire & Cas. Co. v. Gandy, 925 S.W.2d 696, 707 (Tex. 1996). The supreme court has held assignments invalid as against public policy in four instances: (1) a cause of action for legal malpractice arising out of litigation, (2) Mary Carter agreements, (3) a plaintiff's claim against one joint tortfeasor to another joint tortfeasor as part of a settlement between the plaintiff and the assignee tortfeasor, and (4) interests in an estate. Id. at 707-11.

In this case, appellee sued "as assignee of The Morganti Group, Inc." and alleged in its original petition, "Morganti has assigned this claim to SES." The breach of contract and quantum meruit claims asserted by SES do not fall within the types of claims that, for public policy reasons, cannot be assigned. Accordingly, we hold that SES's allegation of assignment was sufficient to establish standing and that the trial court did not err in granting SES's motion for leave to file an amended petition. We overrule the City's first issue. (2)

Governmental Immunity

In the its second issue, the City contends that its immunity from suit is not waived by the "plead and be impleaded" language in section 51.075 of the Local Government Code, or by the "sue and be sued" language in article II, section 1 of the Houston City Charter. See Tex. Loc. Gov't Code 51.075; Houston,Tex., Charter art. II, 1. After we issued our original opinion in this case overruling the City's second issue, the supreme court held, in Tooke v. City of Mexia, that the phrases "sue and be sued" and "plead and be impleaded," by themselves, do not waive governmental immunity. 197 S.W.3d 325, 342-43 (Tex. 2006) (overruling Missouri Pac. R.R. v. Brownsville Navigation Dist., 453 S.W.2d 812 (Tex. 1970). Therefore, such language in section 51.075 of the Local Government Code and the Houston City Charter cannot be the basis for ruling that the City's governmental immunity has been waived.

However, in Tooke, the supreme court noted that the Legislature had recently enacted sections 271.151-.106 of the Local Government Code, waiving immunity from suit for contract claims against most local governmental entities and applying to contracts executed before the effective date of the act, unless immunity had been waived before the act became effective. Tooke, 197 S.W.3d at 344-45. Although appellees urge this Court to decide this appeal based on sections 271.151-.160, we conclude that the issue of the application of this statute should be fully developed in the trial court. See City of Houston v. Clear Channel Outdoor, Inc., 197 S.W.3d 386 (Tex. 2006).

CONCLUSION

We reverse the trial court's order denying the City's plea to the jurisdiction and remand the case for further proceedings.

 

Sam Nuchia

Justice

 

Panel consists of Chief Justice Radack and Justices Taft and Nuchia.

1. Sovereign immunity refers to the State's immunity from suit and liability and protects the State and the various divisions of the State, including agencies, hospitals, and universities. Wichita Falls State Hosp. v. Taylor, 106 S.W.3d 692, 694 n.3 (Tex. 2003). Governmental immunity protects political subdivisions of the State, including counties, cities, and school districts. Id. Thus, the doctrine applicable to the City of Houston is governmental immunity.

2. In its first issue, the City also complains that it is inconsistent to plead both breach of contract and quantum meruit. However, SES's claim for quantum meruit is clearly an alternative pleading.