ERO International LLP claims that Mission CISD owes it a considerable sum of money for work done on the renovation of Mission High School.  When ERO filed suit to collect the dough, the district filed a Plea to the Jurisdiction, asking the court to dismiss the case without looking into the merits of the situation. The district’s position was that it had governmental immunity from this claim, and, therefore, the court lacked jurisdiction.

Now I know that the readers of this blog are public school people. But let’s pause for a moment to think about this from the contractor’s perspective.  Was there a contract between the parties?  Yes.  Was there a dispute over how much was owed under the contract?  Yes. Isn’t that exactly the type of dispute that we take to court?  Yes. So how can it be that the court does not even have the power to weigh in on this?  Can school districts sign contracts with contractors and then ignore them?

The answer to that last question is No.  Districts have to comply with contracts and can be hauled into court for failing to pay what is owed.  But in order to get past the “governmental immunity” enjoyed by school districts the contract has to be in full compliance with Chapter 271 of the Local Government Code.  That Chapter includes the following:

Adjudication procedures, including requirements for serving notices….before bringing a suit…. that are stated in the contract….or that are established by the local governmental entity and expressly incorporated into the contract or incorporated by reference are enforceable except to the extent those procedures conflict with the terms of this subchapter.  Texas Local Government Code 271.154. 

In other words, a school board can adopt a policy that requires certain “adjudication procedures” that must be accomplished before a contractor can file suit.  It can incorporate that policy into the contract.  If it does those two things, the “adjudication procedures” are “enforceable.” 

That’s exactly what happened here. Mission ISD adopted Policy CJ Local, which required a disgruntled contractor to file an “administrative complaint” within 90 days of when the contractor believed that the district had breached the contract.  ERO sent the district a bill and said it was due within 30 days.  The district did not pay it.  That was the alleged breach.  Thus the 90-day timeline began to run when the bill became past due.  However, ERO did not file its “administrative complaint” until almost a year later. 

So the district argued that it still had immunity from this suit: the contractor did not comply with the policy, which was incorporated into the contract.  Toss this case out, Your Honor.

That’s what the appellate court did. 

We need to add that the case may get a rehearing, or go to the Texas Supreme Court.  In this opinion, this court noted that other Texas appellate courts have not viewed the “adjudication procedures” in the same light.  They have not viewed them as a basis to grant a Plea to the Jurisdiction. That kind of disagreement among our Courts of Appeal frequently produces a Supreme Court decision.  So we will keep an eye on this one. 

In the meantime, you want to take a look at the local policy adopted by Mission CISD and ask your school attorney about adopting such a policy and incorporating it into contracts.  The lawyers at Walsh Gallegos are ready to help you with that.

The case is Mission CISD v. ERO International LLP, decided by the Court of Appeals for Corpus Christi-Edinburg on March 14, 2019. We found it at 2019 WL 1187018.  You can find Mission CISD’s policy CJ Local on the district’s website: www.mcisd.net.   

DAWG BONE: GET CREATIVE WITH YOUR CONTRACTS!

The Dawg retires to the Dawg House for the weekend, but will bark again come Monday.