Manassas Travel, Inc. v. N & N Travel & Tours, Inc.--Appeal from County Court at Law No 7 of Bexar County

MEMORANDUM OPINION
No. 04-06-00285-CV
MANASSAS TRAVEL, INC.,
Appellant
v.
N&N TRAVEL AND TOURS, INC.,
Appellee
From the County Court at Law No. 7, Bexar County, Texas
Trial Court No. 284450A
Honorable Irene Rios, Judge Presiding

Opinion by: Catherine Stone, Justice

 

Sitting: Catherine Stone, Justice

Karen Angelini, Justice

Steven C. Hilbig, Justice

 

Delivered and Filed: May 9, 2007

 

REVERSED AND DISMISSED FOR WANT OF JURISDICTION

Manassas Travel, Inc. appeals from a post-answer default judgment rendered in favor of N&N Travel and Tours, Inc. The primary question presented is whether the value of this case at filing, i.e., the amount in controversy, exceeded the county court at law's $100,000 maximum jurisdictional limit. Because we conclude that the case's value at the time of filing exceeded $100,000, we hold the county court at law lacked jurisdiction over this matter. Accordingly, we reverse the judgment of the trial court and dismiss the case for want of jurisdiction.

Background

The facts relevant to this appeal are largely undisputed. Manassas Travel, Inc. ("MTI") and N&N Travel and Tours, Inc. ("N&N") are both travel companies which provide travel-related services to agents and employees of the federal government. N&N was the prime contractor on a government contract known as the Air Force Education and Training Command Contract (the "AETC Contract"), which required N&N to provide travel-related services to various United States Air Force bases. MTI, along with five other travel agencies, was a subcontractor on the AETC Contract. The term of the AETC Contract began in October 2001 and expired on December 31, 2005.

In conjunction with the AETC Contract, N&N negotiated a contract with Worldspan (the "Worldspan Contract") for a Global Distribution System ("GDS"), a computer network which would allow its travel agents to determine hotel availability, make flight reservations, and secure auto rentals for its customers. The Worldspan Contract provided that N&N would use Worldspan as its exclusive GDS provider. In exchange, Worldspan agreed to pay N&N $1.99 per segment of each flight booked at any of the bases N&N serviced, along with certain bonuses depending upon the volume of travel bookings. (1) The contract between N&N and Worldspan was intended to remain in effect until the AETC Contract expired or either party terminated the agreement.

In April of 2004, N&N assigned the Worldspan Contract to MTI. (2) Under the parties' oral assignment agreement, MTI agreed to pay N&N as much as $1.99 per segment generated at any of the bases N&N serviced. MTI complied with the parties' oral assignment agreement for more than a year. Following its June 2005 payment, however, MTI ceased making payments to N&N because N&N had allegedly become indebted to MTI for certain monies under the AETC Contract. When MTI ceased making payments to N&N, N&N filed suit against MTI in Bexar County Court at Law No. 7 on November 28, 2005, claiming that MTI breached its contract with N&N by refusing to forward to N&N revenues generated under the Worldspan Contract after June 2005.

MTI filed a plea to the jurisdiction, asserting that the county court at law lacked jurisdiction because N&N sought damages exceeding $100,000. At the hearing on its plea, MTI argued that N&N's pleadings show the value of the case at filing was at least $125,000. MTI reminded the court that N&N's complaint concerned MTI's failure "to forward revenues generated under the Worldspan Contract for all periods after June 2005," i.e., the months of July through December 2005. MTI illustrated for the court that if it were to multiply the number of segments booked during the first three months of the relevant time period (75,150 segments) by the amount per segment N&N claims it is owed ($1.99), the resulting amount, after deducting pertinent expenses, is almost $125,000, an amount well above the court's $100,000 maximum limit. MTI thus argued the court lacked jurisdiction over this matter.

N&N responded that the amount in controversy did not exceed the court's $100,000 maximum limit at filing because the only months relevant to the court's jurisdictional inquiry were July and August 2005. According to N&N, July and August 2005 represented the only two months that MTI was delinquent on its payments. N&N asserted that it did not have a claim for delinquent payments for the months of September through December 2005 at the time of filing because, under the parties' accepted billing practices, such payments were not due from MTI until a date well after the petition was filed. N&N thus encouraged the court not to include N&N's "unripe" claims concerning the months of September through December 2005 when determining the amount in controversy. (3)

The trial court denied MTI's plea to the jurisdiction. The court then granted a plea to the jurisdiction filed by N&N regarding MTI's counterclaims against N&N. The court also granted N&N a temporary injunction, which N&N had requested as a discovery sanction against MTI. Over the ensuing weeks, N&N repeatedly asked MTI to produce certain documents and its corporate representative for deposition. When MTI did not produce the requested discovery by the deadlines established by the trial court, N&N filed a "Rule 215 Motion for Rendition of Default Judgment Against [MTI]." The trial court, after hearing, granted N&N's motion for rendition of judgment and entered a default judgment in favor of N&N. The trial court awarded N&N actual damages for its breach of contract claim in the amount of $195,774, prejudgment interest in the amount of $1,456.20, and attorney's fees in the amount of $112,884.50.

Standard of Review

"Subject matter jurisdiction is essential to the authority of a court to decide a case." Tex. Ass'n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440, 443 (Tex. 1993). The burden is on the plaintiff to plead sufficient facts affirmatively establishing subject matter jurisdiction. Id. at 446. Whether a plaintiff has alleged sufficient facts to demonstrate subject matter jurisdiction is a question of law, which we review de novo. Tex. Natural Res. Conservation Comm'n v. IT-Davy, 74 S.W.3d 849, 855 (Tex. 2002). In reviewing a trial court's ruling on a plea to the jurisdiction, we construe the pleadings in favor of the pleader and look to the pleader's intent. Tex. Ass'n of Bus., 852 S.W.2d at 446. We are not required to look solely to the pleadings when deciding a plea to the jurisdiction; we may consider evidence relevant to jurisdiction when it is necessary to resolve the jurisdictional issue raised. Bland Indep. Sch. Dist. v. Blue, 34 S.W.3d 547, 555 (Tex. 2000).

County Courts at Law

"County courts at law are courts of limited jurisdiction." United Servs. Auto. Ass'n v. Brite, 215 S.W.3d 400, 401 (Tex. 2007). Many county courts at law, including the county court at law in this case, lack jurisdiction over a "matter in controversy" that exceeds $100,000. See Tex. Gov't Code Ann. 25.0003(c)(1) (Vernon 2004) (providing that county courts at law have jurisdiction concurrent with that of the district court in "civil cases in which the matter in controversy exceeds $500 but does not exceed $100,000, excluding interest, statutory or punitive damages and penalties, and attorney's fees and costs, as alleged on the face of the petition."); see also id. 25.0172 (Bexar County Court at Law Provisions). The supreme court has indicated that "the 'matter in controversy' includes all of the damages the plaintiff seeks to recover at the time suit is filed." Brite, 215 S.W.3d at 401.

Discussion

MTI claims that the county court at law in this case, Bexar County Court at Law No. 7, never acquired jurisdiction over N&N's case because the amount in controversy exceeded the statutorily prescribed maximum limit of the court at the time suit was filed. MTI therefore asserts the trial court erred by denying its plea to the jurisdiction. We agree.

"The general rule is that the allegations of the plaintiff's petition must state facts which affirmatively show the jurisdiction of the court in which the action is brought. Richardson v. First Nat'l Life Ins. Co., 419 S.W.2d 836, 839 (Tex. 1967). Texas Rule of Civil Procedure 47(b) expressly requires that an original pleading "contain . . . the statement that the damages sought are within the jurisdictional limits of the court." Tex. R. Civ. P. 47(b) (emphasis added). N&N's petition alleges an unliquidated, unspecified amount of damages for MTI's refusal to "forward [to N&N] revenues generated under the Worldspan Contract for all periods after June 2005." N&N pleaded that its damages exceeded the court's statutory minimum jurisdictional limit, but did not plead that its damages were below the court's $100,000 maximum limit. N&N's petition therefore failed to assert that the matter in controversy was within the monetary limitations of the county court at law's jurisdiction. N&N could have remedied this defect, however, by proving jurisdiction in the trial court, as its petition did not affirmatively demonstrate an absence of jurisdiction. See Peek v. Equip. Serv. Co., 779 S.W.2d 802, 804 (Tex. 1989) ("Even if the jurisdictional amount is never established by pleading, in fact, a plaintiff may recover if jurisdiction is proved at trial.").

N&N asserts that it established jurisdiction in the trial court by presenting proof that, at filing, the months of July and August 2005 represented the only two months that MTI was delinquent on its payments to N&N. According to N&N, the evidence before the trial court demonstrated that N&N would not know whether it had a claim against MTI for the months of September through December 2005 until a date well after it filed its petition. N&N notes it presented evidence to the court that, for more than a year, Worldspan, MTI, and N&N operated according to a payment schedule whereby N&N would not receive payment from MTI for a given month's revenue until at least three to four months after that particular month had ended. Ginger Skelton, MTI's Director of Accounting, testified that, at the end of each month, Worldspan would calculate the total number of segments for which it owed MTI and forward payment to MTI for such segments approximately 60 to 90 days later. Once MTI received a payment from Worldspan, MTI would then remit N&N's share of such payment to N&N approximately 30 to 60 days later. Therefore, under this billing procedure, N&N would not expect payment from MTI for the month of September 2005 until sometime in December 2005 or payment for the months of October through December 2005 until an even later date. N&N thus claims it established jurisdiction in the trial court by demonstrating to the court that when the total number of segments generated during the months of July and August 2005 (48,775) is multiplied by the amount per segment it is claiming it is owed ($1.99), the resulting amount ($97,062.25) is below the county court at law's $100,000 maximum jurisdictional limit.

N&N, however, ignores the fact that its pleadings indicate it was seeking to recover damages for "all periods after June 2005." (emphasis added). The supreme court has previously held that "the 'matter in controversy' includes all of the damages the plaintiff seeks to recover at the time suit is filed." Brite, 215 S.W.3d at 401 (emphasis added). In light of such precedent, we must consider the damages N&N sought to recover for the months of September through December 2005 when determining the value of the case at filing. Turning to the evidence, the record shows that when only the first three months of the relevant time period are considered -- July, August, and September -- the amount in controversy rises to about $123,810, an amount well above the court's $100,000 maximum jurisdictional limit.

 
Conclusion

The amount in controversy in this case exceeded $100,000 at the time N&N filed suit, and thus the county court at law lacked jurisdiction over this matter. Accordingly, we reverse the trial court's judgment and dismiss the case for want of jurisdiction.

 

Catherine Stone, Justice

 

1. A "segment" is a leg of an itinerary from boarding the plane at one location to departing the plane at another location.

2. Several months after the assignment, MTI entered into its own contract with Worldspan. This contract replaced the previous contract N&N had assigned to MTI.

3. N&N also asked the trial court to determine the amount in controversy using a figure of $1.75 per segment -- as opposed to the $1.99 figure noted in its petition -- because N&N concluded MTI may have owed it only $1.75 per segment.