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Affirmed in Part and Reversed in Part and Opinion = filed=20 July 3, 2008.

 

In The

 

Fourteenth=20 Court of Appeals

_______________

 

NO. 14-07-00752-CV

_______________

 

THE CITY OF HOUSTON, = Appellant

 

V.

 

PETROLEUM TRADERS = CORPORATION, Appellee

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On Appeal from the 151st District=20 Court

Harris County, Texas

Trial Court Cause No.=20 2006-78766

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O P I N I=20 O N

The City of Houston = appeals=20 from orders denying its plea to the jurisdiction on the claims of=20 Petroleum Traders Corporation (APTC@) for (1) breach of = contract;=20 (2) lost profits; (3) quantum meruit; (4) = attorney=3Ds fees; and (5)=20 conversion.  We conclude that the contract between the City = and PTC=20 was properly executed, and the City=3Ds immunity from suit = on=20 PTC=3Ds contract claim has = been=20 waived by statute.  We further conclude that the City is = immune from=20 suit on PTC=3Ds remaining = claims. =20 Accordingly, we affirm in part and reverse in part.

 

Background

In 2005, the City of = Houston=20 solicited bids from fuel suppliers through its Strategic = Purchasing=20 Division.  This division provided certain documents to the = bidding=20 suppliers, including a Letter of Clarification; Section A-Official = Bid=20 Form; Section B-Technical Specifications; Section C-General Terms = and=20 Conditions; and various attachments.  The City assigned these = documents the identifying number SC-R-9310-098-20598.  =

The Letter of = Clarification=20 refers to Sections A through C as both a contract and a bid = document, with=20 subsequent letters of clarification incorporated into all = bids. =20 Section A-Official Bid Form states: AThis offer shall be = irrevocable=20 for 120 days after bid opening or for 90 days after City Council = awards=20 the bid, whichever comes last . . . .@  This section = also states=20 that acceptance may be by issuance of a Notice of Award Letter = and/or a=20 Purchase Order. 

PTC was among those = who bid in=20 March 2005 for the right to provide fuel to the City.  PTC = filled out=20 the bid documents and submitted them to the City for = consideration. =20 PTC=3Ds bid was deemed the = lowest=20 responsible bid.

City Purchasing Agent = Calvin D.=20 Wells thereafter prepared a Request for Council Action to be heard = on June=20 29, 2005.  The Request for Council Action was approved at the = June=20 29, 2005 City Council meeting.  A Notice of Award Letter was = sent on=20 July 6, 2005 stating:

I am pleased to inform you that the = referenced=20 contract was approved for award to your firm by Council Motion = 2005-0636=20 for a thirty-six (36) month period for the items referenced.  = A copy=20 of the Council Motion, if needed, may be obtained by calling (713) = 247-1745.  This letter is official notification to proceed = and=20 authorizes your firm to accept purchase orders effectively from = July 5,=20 2005. 

 

At the top of the = letter, just=20 beneath the City of Houston letterhead, date, and address of PTC, = the=20 letter contained this information:

 

NOTIFICATION OF AWARD

RE:      Fuel, Low = Sulfur=20 Diesel and Reformulated Gasoline for the Finance and = Administration=20 Department.

SC-R-9130-098-20598/Line Item nos. 1-5, = 6a, 9b and=20 7a

Estimated Award = Amount:=20 $64,347,000.00/Passed June 29, 2005.

The City began to = place fuel=20 orders with PTC on July 12, 2005, and PTC began to fill those=20 orders.  The City accepted and used approximately 42,000 = gallons of=20 fuel.  The City paid invoices for that fuel until May 12, = 2006, when=20 the City stopped ordering fuel from PTC and began to use a = different=20 source.

PTC filed suit on = December 12,=20 2006, alleging claims for breach of contract and quantum=20 meruit.  The City filed a plea to the jurisdiction on = March 21,=20 2007, asserting that it is immune from suit.  On July 13, = 2007, PTC=20 added claims for taking and conversion.  The City = supplemented its=20 plea to the jurisdiction on July 24, 2007 B in part to argue it = had not=20 waived immunity by engaging in a proprietary function B and filed a second = plea to the=20 jurisdiction on August 21, 2007 to address the new taking and = conversion=20 claims.  On August 23, 2007, the trial court signed an order = denying=20 the City=3Ds first plea to the=20 jurisdiction.  On September 10, 2007 the trial court signed = an order=20 granting the City=3Ds plea to the = jurisdiction on=20 the taking claim and denying it on the conversion claim.  =

The City filed this = appeal, and=20 now challenges the denials of its plea to the jurisdiction.  = This=20 court has appellate jurisdiction to consider an interlocutory = order=20 denying a governmental unit=3Ds plea to the=20 jurisdiction.  Tex. Civ. Prac. & Rem. Code '51.014(a)(8) (Vernon = Supp.=20 2007).

Standard=20 of Review=20

A plea to the = jurisdiction=20 based on governmental immunity challenges a trial = court=3Ds subject matter=20 jurisdiction.  State v. Holland, 221 S.W.3d 639, 642 = (Tex.=20 2007); Bland Indep. Sch. Dist v. Blue, 34 S.W.3d 547, 554 = (Tex.=20 2000); Dahl ex rel. Dahl v. State, 92 S.W.3d 856, 860-861 = (Tex.=20 App.CHouston [14th Dist.] = 2002, no=20 pet.).  Subject matter jurisdiction is essential to a=20 court=3Ds authority to = act. =20 See Cont=3Dl Coffee Prods. Co. = v.=20 Cazarez, 937=20 S.W.2d 444, 448 n.2 (Tex. 1996).  The plaintiff bears the = burden to=20 plead facts affirmatively demonstrating subject matter = jurisdiction. =20 Holland, 221 S.W.3d at 642.  Upon a finding that the = trial=20 court lacks subject matter jurisdiction, the court must dismiss = the=20 suit.  Jansen v. Fitzpatrick, 14 S.W.3d 426, 431 (Tex. = App.CHouston [14th Dist.] = 2000, no=20 pet.).  A plea to the jurisdiction raises a question of law = reviewed=20 de novo on appeal.  C.L. Westbrook, Jr. v.=20 Penley, 231 S.W.3d 389, 394 (Tex. 2007); Holland, 221 = S.W.3d at=20 642. 

A plea to the = jurisdiction can=20 challenge either the pleadings or the existence of jurisdictional=20 facts.  Tex. Dept. of Parks & Wildlife v. Miranda, = 133=20 S.W.3d 217, 226-27 (Tex. 2004). 

When a plea to the = jurisdiction=20 challenges plaintiff=3Ds pleadings, the = determination=20 pivots on whether the pleader has alleged sufficient facts to = demonstrate=20 the court=3Ds subject matter = jurisdiction=20 over the matter.  Id.  We construe pleadings = liberally in=20 the plaintiff=3Ds favor and look to = the=20 pleader=3Ds intent.  = City of=20 Carrollton v. Singer, 232 S.W.3d 790, 795 (Tex. = App.CFort Worth 2007, pet. = denied).=20  When the pleadings neither allege sufficient facts nor = demonstrate=20 incurable defects in jurisdiction, the issue is one of pleading=20 sufficiency and the plaintiff should be afforded the opportunity = to=20 amend.  County of Cameron v. Brown, 80 S.W.3d 549, 555 = (Tex.=20 2002).  If the pleadings affirmatively negate jurisdiction, = then the=20 plea to the jurisdiction may be granted without leave to amend.=20 Id.

When a plea to the = jurisdiction=20 challenges jurisdictional facts, we consider the evidence = submitted by the=20 parties to address the jurisdictional issues raised.  = Miranda,=20 133 S.W.3d at 227.  AIf evidence creates a = fact=20 question regarding the jurisdictional issue, then the trial court = cannot=20 grant the plea to the jurisdiction, and the fact issue will be = resolved by=20 the fact finder.@  Id. at = 227-28.=20

Because governmental = immunity=20 involves both immunity from suit and immunity from liability, it = is=20 necessary to determine which form of immunity is being = asserted.  The=20 City does not claim immunity from liability for payment due for = fuel=20 delivered under the PTC purchase orders.  The City does claim = immunity from suit, contending that no valid contract exists and = no valid=20 waiver of authority has been invoked.  See Clear Lake City = Water=20 Auth. v. Friendswood Dev. Co., No. 14-07-00096-CV, 2008 WL = 2130435, at=20 *2 (Tex. App.CHouston [14th Dist.] = May 22,=20 2008, no pet. h) (AWhen a governmental = entity=20 enters into a contract, that entity waives immunity from liability = and=20 voluntarily binds itself, just as any other party would, to the = terms of=20 the contract, but that entity does not thereby waive immunity from = suit@). 

Analysis

The City contends the = trial=20 court erred in denying its plea to the jurisdiction on = PTC=3Ds claims for (1) = breach of=20 contract; (2) lost profits; (3) quantum meruit; (4)=20 attorney=3Ds fees; and (5)=20 conversion.  We address each claim in turn.

Breach of=20 Contract

The City contends = that the=20 trial court erred in failing to grant its plea to the jurisdiction = on=20 PTC=3Ds breach of contract=20 claim.  PTC offers two arguments in support of its contention = that=20 the City is not immune from suit on a contract claim.  =

PTC first argues that = the=20 City=3Ds actions in = contracting to=20 procure fuel constitute a proprietary function to which no = immunity from=20 suit attaches.

In the tort context,=20 A[d]etermining a=20 municipality=3Ds amenability to suit = is a=20 two-step inquiry.@  Ethio = Express Shuttle=20 Serv., Inc. v. City of Houston, 164 S.W.3d 751, 754 n.4 (Tex.=20 App.CHouston [14th Dist.] = 2005, no=20 pet.).  AFirst we determine = whether the=20 function is governmental or proprietary.@  = Id.  If the=20 function is governmental, the second step of the analysis = addresses=20 whether immunity has been waived by statute.  Id. at=20 756-57.  A[C]ases involving = claims=20 against a city begin with the threshold question of whether the = city was=20 acting in a proprietary or governmental function.@  Truong v. = City of=20 Houston, 99 S.W.3d 204, 209 (Tex. App.CHouston [1st Dist.] = 2002, no=20 pet.); Bailey v. City of Austin, 972 S.W.2d 180, 192 (Tex.=20 App.CAustin 1998, pet.=20 denied).  PTC=3Ds first argument = invites us to=20 apply the governmental/proprietary dichotomy to a contract=20 claim.

In addressing whether = the=20 governmental/proprietary dichotomy for tort claims also applies to = contract claims, we seek guidance from Tooke v. City of Mexia, = 197=20 S.W.3d 325 (Tex. 2006).  In Tooke, the Texas Supreme = Court=20 addressed a suit to recover on an alleged breach of contract by = the=20 City.  Id. at 343.  The Tookes contended that = their=20 contract dispute with the City involved a proprietary function = because the=20 City cancelled their service contract early for budgetary = reasons. =20 Id.  The supreme court stated, A[W]e have never held = that [the=20 governmental/proprietary] distinction determines whether immunity = from=20 suit is waived for breach of contract claims, and we need not = determine=20 that issue here.@  = Id.  The=20 court did not decide this issue because it concluded that the = function at=20 issue was governmental in any case B and did so based = upon the=20 criteria in section 101.0215 of the Texas Civil Practice & = Remedies=20 Code governing tort actions.  Id.  The Court = found no=20 reason to believe that the classification criteria for = governmental versus=20 proprietary functions would be different in tort and contract=20 actions.  Id. at 343-44.

As in Tooke, = we need not=20 decide whether the governmental/proprietary dichotomy applies in = contract=20 actions.  Even assuming for argument=3Ds sake that the = dichotomy does=20 apply to PTC=3Ds contract claim, the = fuel=20 purchases at issue here are a governmental function. Therefore, = PTC cannot=20 contend that the fuel purchases are a proprietary function to = which no=20 immunity from suit applies.

In analyzing the = correct=20 classification, we begin with the Texas Constitution.  It = authorizes=20 the Legislature to Adefine for all = purposes those=20 functions of a municipality that are to be considered governmental = and=20 those that are proprietary, including reclassifying a = function=3Ds classification = assigned under=20 prior statute or common law.@  Tex. Const. = art. XI,=20 '13; Tooke, 197 = S.W.3d at=20 343.  Section 101.0215 of the Texas Civil Practice & = Remedies=20 Code was written to provide guidance in determining which = functions are=20 governmental and which are proprietary.  A governmental = function is=20 Aenjoined on a = municipality by=20 law and given to it by the state as part of the state=3Ds sovereignty, to be = exercised=20 by the municipality in the interest of the general = public.@  Tex. Civ. = Prac. &=20 Rem. Code ' 101.0215(a) (Vernon=20 2006).  On the other hand, a proprietary function is one that = Aa municipality may, = in its=20 discretion, perform in the interest of the inhabitants of the = municipality=20 . . . .@  Tex. Civ. = Prac. &=20 Rem. Code ' 101.0215(b) (Vernon = 2005).=20

Among those functions = the=20 Legislature has denominated as Agovernmental@ are police and fire=20 protection, garbage collection, operation of emergency ambulance = service,=20 and vehicle and motor driven equipment maintenance.  See = Tex.=20 Civ. Prac. & Rem. Code ' 101.0215(a)(1), (6), = (18),=20 (24) (Vernon 2005).  The City claims that the fuel purchases = also are=20 governmental because they are essential to these statutory = governmental=20 functions.  PTC contends the City was engaging in a = proprietary=20 function when it purchased fuel and therefore enjoys no immunity = from suit=20 in tort.  See Tooke, 197 S.W.3d at 343 (AA municipality is not = immune=20 from suit for torts committed in the performance of proprietary = functions=20 as it is for torts committed in the performance of governmental=20 functions@).

Courts repeatedly = have=20 recognized that governmental functions encompass activities that = are=20 closely related to or necessary for performance of the = governmental=20 activities designated by statute.

For example, in = Ethio=20 Express Shuttle Service, a private bus shuttle service sued = the=20 City for negligent misrepresentation, fraud, and tortious = interference=20 with contract.  164 S.W.3d at 753.  The shuttle service=20 contended that the City had waived immunity from suit by engaging = in a=20 proprietary function.  Id.  This court determined = that=20 the City=3Ds regulation of bus = service to=20 the airport was a governmental function, noting: AWe would be remiss to = hold that=20 the City=3Ds activities are = proprietary in=20 a case in which they are so well aligned with the functions the=20 Legislature has designated as governmental.@  Id. at = 756;=20 see also City of San Antonio v. Butler, 131 S.W.3d 170, 178 = (Tex.=20 App.CSan Antonio 2004, = pet. denied)=20 (Acourts have similarly = held that=20 all actions related to a designated government function are = reclassified=20 as governmental by the statute@).

Because the operation = of a=20 shuttle service to the airport is closely related to functions on = the=20 non-exclusive list of actions deemed by the Legislature to be = governmental=20 B including airports, = regulation=20 of traffic and transportation systems B we concluded in = Ethio=20 that the city was immune from suit on the = plaintiff=3Ds claims.  = Ethio=20 Express Shuttle Serv., Inc., 164 S.W. 3d at 753; see also = City of=20 San Antonio, 131 S.W.3d at 177-78 (city was immune from tort = suit=20 arising from alcohol sales at concert because provision of alcohol = was=20 done under the umbrella operating Acivic, convention = centers, or=20 coliseums@ designated as a = governmental=20 function under section 101.0215(a)(16); Tex. River Barges v. = City of=20 San Antonio, 21 S.W.3d 347, 356-57 (Tex. App.CSan Antonio 2000, = pet. denied)=20 (because the operation of a marina, among other properties, is a=20 governmental function under section 101.0215(a)(23), immunity from = suit=20 applied to claims for conversion and interference with a = prospective=20 business relationship arising from removal of barge from marina);=20 Mitchell v. City of Dallas, 855 S.W.2d 741, 744 (Tex.=20 App.CDallas 1993),=20 aff=3Dd, 870 S.W.2d 21 (Tex. = 1994)=20 (because the maintenance of public parks is a governmental = function under=20 section 101.0215(a)(13), immunity prevented plaintiff from suing = under the=20 common law for minor son=3Ds injury in a bicycle = accident=20 in the park).

Similar reasoning = applies=20 here.  Without fuel, the City would be unable to perform = governmental=20 tasks required for the public good.  Therefore, the = City=3Ds governmental = functions=20 encompass the procurement of fuel necessary to perform those = specific=20 tasks B including police and = fire=20 protection, garbage collection, operation of emergency ambulance = service,=20 and vehicle and motor driven equipment maintenance B denominated by the = Legislature=20 as Agovernmental.@  See = Tex. Civ.=20 Prac. & Rem. Code ' = 101.0215(c)(1),(6),(18),(24)=20 (Vernon 2005); City of San Antonio, 131 S.W.3d at 177 = (Aall activities = associated with=20 the operation of one of the government functions listed in section = 101.0215(a) are governmental and cannot be considered proprietary, = regardless of the city=3Ds motive for engaging = in the=20 activity . . . actions related to a designated government function = are=20 reclassified as governmental by the statute@).

Second, PTC argues is = that even=20 if the fuel purchases at issue involve a governmental function, = immunity=20 from suit specifically has been waived in section 271.152 of the = Local=20 Government Code.  PTC specifically pleaded section 271.152 in = its=20 petition.  Section 271.152 states:

 A local governmental entity that = is=20 authorized by statute or the constitution to enter into a contract = and=20 that enters into a contract subject to this subchapter waives = sovereign=20 immunity to suit for the purpose of adjudicating a claim for = breach of the=20 contract, subject to the terms and conditions of this=20 subchapter.

 

Tex. Loc. = Gov=3Dt Code Ann. = ' 271.152 (Vernon = 2005).[1] =20 Section 271.151(2) defines a Acontract subject to = this=20 subchapter@ as:

[A] written contract stating the = essential terms=20 of the agreement for providing goods or services to the local = governmental=20 entity that is properly executed on behalf of the local = governmental=20 entity.

 

Tex. Loc. = Gov=3Dt Code Ann. = ' 271.151(2) (Vernon=20 2005). 

It is undisputed that = the=20 contract at issue here stated all essential terms and involved the = provision of goods or services.  The City contends that the = trial=20 court nonetheless erred in denying its plea to the jurisdiction = because a=20 contract is subject to section 271.152 only if it has been = Aproperly = executed.@  = Id.  The=20 City says no Aproperly = executed@ contract exists = between the=20 City and PTC because the documents upon which PTC relies were not = signed=20 by the mayor and countersigned by the City=3Ds controller.  = The City=20 further contends that APTC has not plead = that any=20 statute or provision of the Constitution authorized Houston to = enter into=20 the Solicitation.@[2]

            = The pertinent facts surrounding the formation of the contract = between the=20 City and PTC are uncontested: (1) the City solicited bids for = supplying=20 fuel; (2) PTC won the contract to supply the City=3Ds fuel needs; (3) the = City=20 Council met on June 29, 2005, and voted to approve the contract = award to=20 PTC; (4) an award letter was sent on July 6, 2005, confirming the = award;=20 (5) the contract documents were not signed by the mayor and = countersigned=20 by the city controller, (6) the City began to place orders on July = 12,=20 2005; (7) the City ceased ordering fuel from PTC in May 2006; and = (8) PTC=20 sued for breach of contract on December 12, 2006.  A legal = issue=20 remains as to the efficacy of the contract between the City and = PTC that=20 must be resolved to determine the trial court=3Ds subject matter=20 jurisdiction.  See Miranda, 133 S.W.3d at 227; see = also=20 Bland, 34 S.W.3d at 555.

In arguing that a = contract is=20 not Aproperly = executed@ if it has not been = signed by=20 the mayor and city controller, the City relies upon Article II, = section 19=20 of the 1905 City Charter. It states:

No contract shall be entered into until = after an=20 appropriation has been made therefor, nor in excess of the amount=20 appropriated, and no contract shall be binding upon the city = unless it has=20 been signed by the mayor and countersigned by the controller, and = the=20 expense thereof charged to the proper appropriation, and whenever = the=20 contract charged to any appropriation equals the amount of said=20 appropriation, no further contracts shall be countersigned by the=20 controller.

 

City of Houston = Charter, art.=20 II, '19 (Act of March 18, = 1905, 29th=20 Leg., R.S., ch. 17, art. II, ' 1, 1905 Tex. Gen. = Laws 131,=20 131, amended Jan. 27, 1968, amended Aug. 14, 1982).  =

This court rejected = the=20 City=3Ds argument in City = of=20 Houston v. Clear Channel Outdoor, Inc., 233 S.W.3d 441 (Tex.=20 App.CHouston [14th Dist.] = 2007, no=20 pet.).  In that case, the City asserted immunity from suit in = response to a breach of contract action filed against it by Clear=20 Channel.  The City argued B as it does here = B that the contract = was not=20 Aproperly = executed@ because it was not = signed by=20 the mayor and city controller.  Id. at 446.  The = City=20 relied B as it does here = B on the 1905 City=20 Charter.  Id. 

This court held that = a properly=20 executed contract was established by the combination of (1) the = contract=20 document; and (2) the City Council=3Ds passage of an = accompanying=20 motion that constituted Athe last step needed = to=20 complete the written contract between the parties.@  = Id. =20 AThe City=3Ds contention that the = signatures of the mayor and the city controller are required = arguably=20 conflates the issue of whether the contract is binding under the = charter=20 B a question that goes = to the=20 merits of the case B with the issue of = whether it=20 was properly executed on the City=3Ds behalf.@  = Id. =20

Clear = Channel=3Ds =  holding applies=20 with equal force here based on the combination of (1) the contract = documents; and (2) the passage of Council Motion 2005-0636 = approving the=20 PTC contract.  Taken together, these documents and actions=20 Aconstitute a written = contract=20 as that term is used in section 271.151.@  Id. at = 447. =20 The trial court properly overruled the City=3Ds plea to the=20 jurisdiction.  Id.

Under the = circumstances here=20 B and in conformity = with=20 Clear Channel B the contract between = the City=20 and PTC was Aproperly = executed@ notwithstanding the = absence of=20 the mayor=3Ds and city=20 controller=3Ds signatures.  = Therefore,=20 section 271.152 waives the City=3Ds immunity from suit = on=20 PTC=3Ds beach of contract=20 claim.

The City=3Ds appellate challenge = is=20 overruled with respect to PTC=3Ds claim for breach of = contract.

Lost = Profits

The City next = contends that the=20 trial court erred in denying its plea to the jurisdiction because = it is=20 immune from suit for consequential damages flowing from a breach = of=20 contract, including lost profits.

Section  271.153 = of the=20 Local Governmental Code establishes limits on an award in a breach = of=20 contract action:

(a) The total amount of money awarded in = an=20 adjudication brought against a local governmental entity for = breach of a=20 contract subject to this subchapter is limited to the=20 following:

(1) the balance due and owed by the = local=20 governmental entity under the contract as it may have been = amended,=20 including any amount owed as compensation for the increased cost = to=20 perform the work as a direct result of owner-caused delays or=20 acceleration;

(2) the amount owed for change orders or = additional work the contractor is directed to perform by a local=20 governmental entity in connection with the contract; and =

(3) interest as allowed by = law.

(b) Damages awarded in an adjudication = brought=20 against a local governmental entity arising under a contract = subject to=20 this subchapter may not include:

(1) consequential damages, except as = expressly=20 allowed under Subsection (a)(1);

(2) exemplary damages; or

(3) damages for unabsorbed home office=20 overhead. 

 

Tex. Loc. = Gov=3Dt Code Ann. = ' 271.153 (Vernon = 2005). =20 PTC seeks $75,000 for fuel already delivered as authorized by = section=20 271.153(a).  PTC also seeks lost profits of $189,000 for = failure to=20 purchase diesel fuel and $138,000 for failure to purchase = gasoline, for a=20 total of $327,000 in lost profits. 

Section 271.153(b) = prohibits=20 consequential damages except those specifically allowed in = subsection=20 (a)(1).  See Tex. Loc. Gov=3Dt Code Ann. = ' 271.153(a) (Vernon=20 2005).  Lost profits are consequential damages under = 271.153. =20 Tooke, 197 S.W.3d at 346.  Because lost profits are = not=20 specifically allowed in section 271.153(a)(1), they are foreclosed = by=20 section 271.153(b)(1).  Id. 

PTC argues that we = should=20 disregard Tooke, stating:

Tooke is=20 not sound authority on this issue.  In one conclusory = paragraph, the=20 Tooke court makes a sweeping generalization that Texas law = provides=20 that all lost profits are consequential damages.  = Based upon=20 this faulty premise, Tooke erroneously concludes that = Section=20 271.153 excludes all lost profits from recovery.[3]

 

We decline = PTC=3Ds invitation to = disregard=20 Tooke.  The Texas Supreme Court clearly stated that=20 Alost profits . . . = are=20 consequential damages excluded from recovery@ under section = 271.153. =20 PTC argues that the Texas Supreme Court should have held that = profits=20 under a contract (as opposed to A[p]rofits lost on = other=20 contracts or relationships resulting from the breach@) are  more = properly=20 categorized as direct damages.  Whatever the merits of=20 PTC=3Ds proposed = distinction between=20 species of lost profits,  Tooke=3Ds plain language = forecloses=20 that distinction.  Tooke is binding and we will follow = it.[4] =

The City=3Ds appellate challenge = is=20 sustained as to the portion of PTC=3Ds claim relating to = lost=20 profits. 

Quantum=20 Meruit

The City argues that = the trial=20 court erred in denying its plea to the jurisdiction because it is = immune=20 from suit on PTC=3Ds quantum meruit=20 claim. 

While section 271.152 = of the=20 Local Government Code waives immunity from suit for breach of = contract,=20 this section does not apply to claims in quantum meruit.=20  City of Houston v. Swinerton Builders, Inc., 233 = S.W.3d 4,=20 12-13 (Tex. App.CHouston [1st Dist.] = 2007, no=20 pet.) (section 271.152 waives sovereign immunity only for breach = of=20 contract and Alists no other = claims, either=20 in law or in equity;@ therefore, Section = 271.152=20 does not apply to claims for quantum meruit); see also H = & H=20 Sand and Gravel, Inc. v. City of Corpus Christi, No. = 13-06-00677-CV,=20 2007 WL 3293628, at *3 (Tex. App.CCorpus Christi Nov. = 8, 2007,=20 pet. denied) (claims in equity, including waiver by acceptance of = material=20 and benefit and detrimental reliance are not encompassed by = section=20 271.152=3Ds limited = waiver). =20

The City=3Ds appellate challenge = is=20 sustained as to PTC=3Ds quantum = meruit=20 claim.

 

 

Attorney=3Ds = Fees

The City contends = that the=20 trial court erred in denying its plea to the jurisdiction because = it is=20 immune from suit for attorney=3Ds fees in connection = with its=20 breach of contract claim.  Section 271.159 governs the award = of=20 attorney=3Ds fees for claims = allowed under=20 section 271.152 and states:

Attorney=3Ds fees incurred by a local governmental = entity or=20 any other party in the adjudication of a claim by or against a = local=20 governmental entity shall not be awarded to any party in the = adjudication=20 unless the local governmental entity has entered into a = written=20 agreement that expressly authorizes the prevailing party = in the=20 adjudication to recover its reasonable and necessary = attorney=3Ds fees by specific reference to = this=20 section.

 

Tex. Loc. = Gov=3Dt Code Ann. = ' 271.159 (Vernon = 2005)=20 (emphasis added).  Section 271.159=3Ds effective date is = September=20 1, 2005.  PTC=3Ds contract was = approved in June=20 2005, and PTC began delivery of fuel under that contract in July=20 2005.  Therefore, section 271.159 establishes no waiver of = immunity=20 from suit unless that section applies retroactively.

 The statute = addresses=20 retroactivity as follows:

Sections 271.152, 271.153, and 271.154, = Local=20 Government Code, as added by this Act, apply to a claim that = arises under=20 a contract executed before the effective date [Sept. 1, 2005] of = this Act=20 only if sovereign immunity has not been waived with respect to the = claim=20 before the effective date of this Act. A claim that arises under a = contract executed before the effective date of this Act and with = respect=20 to which sovereign immunity has been waived is governed by the law = in=20 effect on the date the contract was executed, and the former law = is=20 continued in effect for that purpose.

 

Act of May 23, 2005, = 79th Leg.,=20 R.S., ch. 604, ' 2, 2005 Tex. Gen. = Laws 1548,=20 1549; see also Tooke, 197 S.W.3d at 329 n.7. =

In contrast to = section 271.152,=20 section 271.159 governing attorney=3Ds fees is omitted = from the list=20 of retroactive provisions.[5] =20 Because section 271.159 does not apply retroactively, this = provision=20 cannot establish the necessary waiver of immunity from suit with = regard to=20 PTC=3Ds claim for=20 attorney=3Ds fees.[6] =

The City=3Ds appellate challenge = is=20 sustained as to PTC=3Ds claim for=20 attorney=3Ds fees.

Conversion

The City contends = that the=20 trial court erred in denying its plea to the jurisdiction because = it is=20 immune from suit on PTC=3Ds intentional tort = claim for=20 conversion.[7] =20 PTC=3Ds First Amended = Petition=20 alleges that the City Ahas improperly, and = without=20 authorization, retained possession and control over diesel fuel = belonging=20 to PTC.@  PTC also = alleges that=20 the City intentionally induced PTC to deliver diesel fuel and then = refused=20 to pay for it, resulting in conversion.    =

The fuel purchases at = issue=20 here are a governmental function for the reasons discussed above = in=20 connection with PTC=3Ds contract = claim.  Because=20 the fuel purchases are a governmental function, immunity applies = unless=20 waived by statute.  See Ethio Express Shuttle Serv., Inc., = 164=20 S.W.3d at 754 n.4 & 756-57.  The Texas Tort Claims Act = does not=20 waive immunity for intentional torts.  See Tex. Civ.=20 Prac.& Rem. Code Ann. ' 101.057 (Vernon = 2006). =20 Therefore, immunity applies.

The City=3Ds appellate challenge = is=20 sustained with respect to PTC=3Ds conversion=20 claim.

Conclusion

The trial = court=3Ds judgment is = affirmed in part=20 and reversed in part.  We remand this case for proceedings = consistent=20 with this opinion. 

 

 

 

/s/       =20 William J. Boyce

Justice

 

Judgment rendered and = Opinion=20 filed July 3, 2008.

Panel consists of = Chief Justice=20 Hedges and Justices Fowler and Boyce.


[1]          =20 The PTC contract was approved on June 29, 2005.  Section=20 271.152=3Ds effective date is September 1, = 2005. =20 Section 271.152 was intended to have retroactive effect in all = cases in=20 which waiver of  immunity was not already effected through an = existing waiver.  See Tooke, 197 S.W.3d at 329 = n.7. =20 Therefore, section 271.152 applies to PTC=3Ds contract claim.

[2]          =20 This second contention is not substantively different from the=20 first.  It is premised upon the contention that a contract = not signed=20 by the mayor and countersigned by the controller is not = constitutionally=20 or statutorily sound, and thus no valid statutory or = constitutional waiver=20 of immunity from suit exists for unsigned = contracts.

[3]          =20 The emphasis is PTC=3Ds.

[4]          =20 Like section 271.152, section 271.153 also was intended to apply=20 retroactively in all cases in which waiver of  immunity was = not=20 already effected through an existing waiver of immunity.  = See=20 Tooke, 197 S.W.3d at 329 n.7.  Therefore, section 271.153 = applies=20 retroactively to the PTC contract approved on June 29,=20 2005.

[5]          =20 In City of Houston v. Allco, Inc., 238 S.W.3d 849, 854-55 = (Tex.=20 App.CHouston [1st Dist.] 2007, pet. denied), = the court=20 noted the invocation of 271.152 to waive the City=3Ds immunity from suit, and noted that the = request=20 for attorney=3Ds fees failed to reference 271.159 as=20 required.  The contract predated section 271.152 by 10 = years. =20 The court did not address retroactivity because Allco did not = incur the=20 attorney=3Ds fee expense in the prosecution of its = claim of=20 breach; instead those fees stemmed from fighting the = City=3Ds restraining order.  Recovery for = those=20 attorney=3Ds fees was allowed for in the contract.=20

[6]          =20 Section 38.001=20 of the Civil Practice & Remedies Code does not authorize an = award of=20 attorney=3Ds fees against a=20 municipality.  See = Tex.=20 A&M Univ. B Kingsville v. Lawson, 127 S.W.3d 866, 874 (Tex. = App.CAustin 2004, pet. denied); Base-Seal, = Inc. v.=20 Jefferson County, 901 S.W.2d 783, 787 (Tex. App.CBeaumont 1995, writ denied);  = State v.=20 Bodisch, 775 S.W.2d 73, 75-76 (Tex. App.CAustin 1989, writ denied). =

[7]          =20 PTC also alleged that the City=3Ds use of the fuel without paying for it=20 constituted a taking.  The trial court granted the = City=3Ds plea to the jurisdiction on the taking = claim,=20 and PTC has not challenged that ruling on=20 appeal.

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