TXU Energy Retail Company L.L.C. v. Fort Bend Independent School District ( 2015 )


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  •                                                                                    ACCEPTED
    05-14-01515-CV
    FIFTH COURT OF APPEALS
    DALLAS, TEXAS
    2/16/2015 4:01:51 PM
    LISA MATZ
    CLERK
    NO. 05-14-01515-CV
    FILED IN
    5th COURT OF APPEALS
    IN THE COURT OF APPEALS                 DALLAS, TEXAS
    FOR THE FIFTH DISTRICT OF TEXAS        2/17/2015 8:48:00 AM
    LISA MATZ
    Clerk
    TXU Energy Retail Company L.L.C.
    Appellant
    v.
    Fort Bend Independent School District
    Appellee.
    On Appeal from the 116th District Court of Dallas County, Texas
    Trial Court Cause No. DC-13-14961, the Honorable Tonya Parker Presiding
    REPLY BRIEF FOR APPELLANT
    Michael K. Hurst
    mhurst@ghjhlaw.com
    State Bar No. 10316310
    A. Shonn Brown
    sbrown@ghjhlaw.com
    State Bar No. 24007164
    John Franklin Guild
    jguild@ghjhlaw.com
    State Bar No. 24041022
    Gruber Hurst Johansen Hail Shank LLP
    1445 Ross Avenue, Suite 2500
    Dallas, Texas 75202
    Telephone No. (214) 855-6800
    Facsimile No. (214) 855-6808
    ATTORNEYS FOR APPELLANT
    TABLE OF CONTENTS
    TABLE OF CONTENTS..................................................................................... ii
    INDEX OF AUTHORITIES .............................................................................. iii
    ARGUMENT ........................................................................................................1
    A.        Fort Bend Continues To Ignore The Fact That The Blend And
    Extend Provision Was Itself Competitively Bid. ....................................... 2
    B.        Fort Bend’s Waiver Of Immunity Could Not Be More Explicit. .......... 9
    1. TXU Did Not Waive Its Argument Based On The Express
    Representations And Warranties Contained In The Original
    2010 Agreement. ............................................................................12
    2. Fort Bend’s Arguments On The Merits Of TXU’s Claim are
    Not Responsive To The Jurisdictional Question; But Even If
    The Court Were To Consider The Merits Of TXU’S Claim,
    Reversal Is Required. .....................................................................14
    3. TXU’s Claims Based On The Express Terms Of The Original
    2010 Agreement Are Not “Quasi-Contractual.” ............................17
    C.        The Texas Supreme Court Has Not Completely Foreclosed The
    Possibility Of Waiver Of Governmental Immunity By Conduct,
    And This Court Has Never Directly Addressed A Situation As
    Extreme As The Facts Presented Here. ...................................................... 18
    D.        TXU Preserved Its Promissory Estoppel Claim Through Its
    Argument Relating to Waiver By Conduct. .............................................. 20
    PRAYER .............................................................................................................22
    CERTIFICATE OF COMPLIANCE WITH RULE 9.4.....................................22
    CERTIFICATE OF SERVICE ...........................................................................23
    ii
    INDEX OF AUTHORITIES
    Cases
    Bland Indep. Sch. Dist. v. Blue, 
    34 S.W.3d 547
    (Tex. 2000) ......................... 5, 7, 14
    City of Denton v. Mun. Admin. Servcs, 
    59 S.W.3d 764
    (Tex. App.—
    Fort Worth 2001, no pet. h) ....................................................................................8
    City of Freeport v. Briarwood Holdings, L.L.C., No. 01- 11-01108-CV,
    
    2013 WL 1136576
    (Tex. App.—Houston [1st Dist.] Mar. 19,
    2013, no pet.) ........................................................................................................18
    Daniels Building & Constr. v. Silsbee Indep. Sch. Dist., 
    990 S.W.2d 947
     (Tex. App.—Beaumont 1999, pet. dism’d) ............................................................8
    Dugan v. Compass Bank, 
    129 S.W.3d 579
    (Tex. App.—Dallas 2003, no pet.) ......13
    FPL Energy, LLC v. TXU Portfolio Mgmt. Co., L.P., 
    426 S.W.3d 59
     (Tex. 2014) (emphasis added) ..............................................................................10
    GADV, Inc. v. Beaumont Indep. Sch. Dist., Civil Act. No. 1:11-CV-187,
    2011 U.S. Dist. 60983 (E.D. Tex. 2011) ................................................................8
    Gentilello v. Univ. of Texas Sw. Health Sys., 05-13-00149-CV, 
    2014 WL 1225160
    (Tex. App.—Dallas Mar. 24, 2014), review denied
    (Oct. 3, 2014) ........................................................................................... 18, 19, 20
    Gym-N-I Playgrounds, Inc. v. Snider, 
    220 S.W.3d 905
    (Tex. 2007) ......................11
    In re Hays Cnty. Sheriff’s Dep’t, No. 03-12-00343-CV, 
    2012 WL 6554815
      (Tex. App.—Austin Dec. 12, 2012) (orig. proceeding) (mem. op.)
    (Pemberton J., concurring) ...................................................................................18
    Kaufman County v. Combs, 
    393 S.W.3d 336
    (Tex. App.—Dallas 2012,
    pet. denied) ...........................................................................................................19
    La Marque Indep. Sch. Dist. v. Healthy Res. Enterp., Inc., 
    357 S.W.3d 761
      (Tex. App.—Houston [14th Dist.] 2011, no pet. h) ...............................................5
    iii
    Mitsuba Texas, Inc. v. Brownsville Indep. Sch. Dist., Cause No. 05-97-01271-CV,
    
    2000 WL 122348
    (Tex. App.—Dallas 2000, no pet. h) .........................................8
    Richmond Printing v. Port of Houston Auth., 
    996 S.W.2d 220
    (Tex. App.—
    Houston [14th Dist.] 1999, no pet. h) ...............................................................7, 10
    Sci. Spectrum, Inc. v. Martinez, 
    941 S.W.2d 910
    (Tex. 1997) ................................14
    Sharyland Water Supply Corp. v. City of Alton, 
    354 S.W.3d 407
      (Tex. 2011) .................................................................................................... 18, 19
    Texas S. Univ. v. State St. Bank & Trust Co., 
    212 S.W.3d 893
      (Tex. App.—Houston [1st Dist.] 2007, pet. denied) ............................................19
    United States v. Walker, Civ. Act. No. 1:11-CR-67, 
    2011 WL 6181468
     (E.D. Tex. 2011) .....................................................................................................7
    Walker v. Cotter Properties, Inc., 
    181 S.W.3d 895
    (Tex. App.—Dallas 2006,
    no pet.) ..................................................................................................................17
    Statutes
    TEX. EDUC. CODE ANN § 44.0351(c) .........................................................................3
    TEX. EDUC. CODE ANN § 44.0352 ..............................................................................3
    TEX. EDUC. CODE ANN. § 44.031(b)(9) ......................................................................3
    TEX. R. APP. P. 33.1(a)(1) ........................................................................................13
    iv
    ARGUMENT
    Rather than attempting to explain why governmental immunity should bar
    TXU’s claims for $3,169,046.38 resulting from Fort Bend’s choice to disregard its
    contractual obligations under the undisputed facts and circumstances in this case,
    Fort Bend simply ignores the case-specific facts at hand and focuses on broad
    generalizations. The facts at hand are: (1) Fort Bend competitively procured an
    electricity contract through a request for proposal that expressly requested blend
    and extend availability and received multiple competing bids proposing blend and
    extend availability, meaning that the competitive bidding statute was satisfied; and
    (2) even if the 2011 Contract Extension implementing the blend and extend
    provision in the original 2010 Agreement were void (it is not), Fort Bend
    unambiguously assumed liability for damages caused to TXU by Fort Bend’s
    avoidance of the 2011 Contract Extension and expressly waived governmental
    immunity in a written contract that everyone agrees was competitively bid, i.e. the
    original 2010 Agreement.
    Notably, Fort Bend does not directly address either of these facts in the body
    of its brief, instead relegating both issues to non-substantive footnotes. Fort Bend
    spends the majority of its brief discussing general standards that are not contested
    and cases involving contracts that did not involve any competitive bidding process.
    1
    Fort Bend’s avoidance of the contested issues on appeal is telling—it has no
    substantive response.
    A.    Fort Bend Continues To Ignore The Fact That The Blend And Extend
    Provision Was Itself Competitively Bid.
    Fort Bend’s request for governmental immunity relies entirely on its
    argument that the 2011 Contract Extension is void. According to Fort Bend, the
    2011 Contract Extension is void because it was not subject to a second separate
    and independent competitive bidding process following the competitive bidding
    process resulting in the original 2010 Agreement. Appellee’s Br. at 14-19. But
    nowhere does Fort Bend cite authority for its argument that the 2010 competitive
    bidding process was insufficient under the facts in this case.
    It is undisputed that in May 2010, Fort Bend issued a request for
    qualifications seeking competitive bids for the supply of electricity. (Appx. 2(A-
    2), CR 391-410)      Fort Bend stated “each company will be evaluated on the
    following criteria…Blend and extend availability….” (Appx. 2(A-2) at 6, CR 396)
    TXU, like all the other top bidders, included a sample blend and extend provision
    in its proposal, as requested by Fort Bend. (Appx. 2(A) ¶ 5, CR 364; RR 58:24-
    59:17; Appx. 2(A-2) at 6, CR 396; Appx. 2(A-4), CR 412) The 2011 Contract
    Extension was simply the implementation of the parties’ intent when they included
    blend and extend availability in the original 2010 Agreement, which was exercised
    2
    during the period set forth in the request for qualification. (Appx. 2(A) ¶ 9, CR
    364; Appx. 2(A-5), CR 413)
    In an effort to avoid discussing the undisputed fact that the blend and extend
    provision was competitively bid, Fort Bend falsely suggests that it is TXU that
    seeks to ignore the factors Fort Bend disclosed to potential competitors.
    Appellee’s Br. at 18. But only Fort Bend ignores its explicit request for “blend and
    extend availability” in its request for qualifications. Indeed, rather than addressing
    the issue, Fort Bend boldly, and without citation to any authority, claims in a
    footnote that “[i]t is immaterial that the District requested blend and extend
    availability” in its request for qualifications. Appellee’s Br. at 19, n.8; (Appx.
    2(A-2) at 6, CR 396)
    This simply cannot be so. As Fort Bend itself asserts, the specifications
    published by Fort Bend, including the specification for blend and extend
    availability, provided a list “that interested bidders can tailor their bids to.”
    Appellee’s Br. at 18. Not only did Fort Bend give everyone an equal footing to
    compete for a blended and extended duration beyond the original term, but once it
    did, Fort Bend was required by the Texas Education Code to consider the
    availability of a blend and extend provision in ranking the proposals. See TEX.
    EDUC. CODE ANN. § 44.031(b)(9) (“district shall consider: …(9) any other relevant
    factors specifically listed in the request for bids or proposals.”); see also 
    id. § 3
    44.0351(c) (directing school districts to consider other factors in selection criteria
    beyond pricing when using a competitive bid); § 44.0352 (directing school districts
    to consider other factors in the selection criteria beyond pricing when using
    competitive sealed proposals).
    Fort Bend’s unbelievable claim that TXU’s competitors were unaware that
    the 2010 competitive bidding process might result in a contract with blend and
    extend availability is entirely unsupported by the record. See Appellee’s Br. at 18-
    19. Not only did TXU offer blend and extend availability during the bidding
    process, as directed by Fort Bend, but so did the second and third rated bidders.
    (See RR 58:24-59:17; Appx. 2(A-2) at 6, CR 396; Appx. 2(A-4), CR 412 (noting
    that “[t]he top three [bidders] provided adequate provision per the district
    RFQ….”) It is undisputed that there was in fact competition for the contract,
    including for a blended and extended term. The first time anyone disputed the
    validity of the competitively bid blend and extend provision was after energy
    prices dropped and Fort Bend decided to shop for a better deal. (See Appx. 2(A) at
    ¶ 23, CR 367).
    Indeed, the only record citation to support Fort Bend’s claim that other
    bidders were misled by Fort Bend’s request for qualification is to the self-serving
    hearsay statement of one of Fort Bend’s employees that some unidentified
    competitors asked in 2012 when the next competitive bidding period for electricity
    4
    would begin.1 See 
    id. At best,
    Fort Bend’s proffered evidence suggests that
    competitors were inquiring as to whether Fort Bend had exercised the blend and
    extend provision it requested of all bidders in 2010. Not only does the evidence
    not support the inference that Fort Bend attributes to it, but at least two of those
    very same competitors had themselves proposed blend and extend provisions,
    meaning that there is at least fact question precluding the grant of summary
    judgment and Fort Bend’s plea to the jurisdiction. See Bland Indep. Sch. Dist. v.
    Blue, 
    34 S.W.3d 547
    , 555 (Tex. 2000) (“If a fact issue exists, the Court should
    deny the plea.”); La Marque Indep. Sch. Dist. v. Healthy Res. Enterp., Inc., 
    357 S.W.3d 761
    , 763 (Tex. App.—Houston [14th Dist.] 2011, no pet. h).
    Fort Bend also mischaracterizes TXU’s theory of this case by suggesting
    that TXU has argued that any contract may be extended for any period of time after
    it is originally awarded, a characterization that is premised on Fort Bend’s
    assertion that the criteria it listed in the request for qualification is immaterial. See
    Appellee’s Br. at 19 (“The upshot of TXU’s argument is that once a school district
    competitively bids a contract, the parties are free to ‘blend and extend’ the contract
    in perpetuity without ever engaging in further competitive bidding.”) and n.8 (“It is
    1
    Fort Bend falsely asserts that “[t]he evidence is undisputed that … TXU’s competitors
    believed that they would be able to compete to provide FBISD’s electricity services after the
    expiration of the two year period.” Appellee’s Br. at 18-19. This assertion by Fort Bend is in
    fact disputed, and as discussed above, the evidence cited by Fort Bend does not even begin to
    support the premise, let alone conclusively establish the fact asserted.
    5
    immaterial that the District requested blend and extend availability” in the request
    for qualification during competitive bidding.). TXU has never made such an
    extreme argument.
    Instead, TXU’s argument is much narrower. The question is whether the
    2010 competitive bidding process, which expressly stated that blend and extend
    availability was requested, put all bidders on notice that the contract that would be
    awarded might contain a blend and extend provision. Because it did provide such
    notice, all potential competitors were on the same footing to offer Fort Bend the
    flexibility it desired. Blend and extend was exercised during the term of the
    contract specifically contemplated by the request for qualification. There is no
    suggestion that anyone believes that such a contract could be blended in
    “perpetuity.”
    And there is no dispute that the bidders and Fort Bend understood what
    “blend and extend” would mean in the context of an agreement to supply
    electricity. The term “blend and extend” was so commonly understood in the
    electricity industry that Fort Bend knew to request “[b]lend and extend arability” in
    its request for qualification, and all the top bidders were able to offer such
    availability based solely on the four words “[b]lend and extend availability” in the
    request for qualifications. (Appx. 2(A-2) at p.6, CR 192; RR 58:24-59:17; Appx.
    2(A-2) at 6, CR 396; Appx. 2(A-4), CR 412)
    6
    To avoid addressing the undisputed facts discussed above, Fort Bend
    misrepresents TXU’s position in a second way by asserting that the issue raised by
    TXU is whether the 2011 Contract Extension is technically a distinct contract from
    the original 2010 Agreement for any purpose, and then responding to that
    argument. See Appellee’s Br. at 14-17. But the question is not whether the 2011
    Contract Extension is a distinct contract for any purpose; the relevant question is
    whether the 2010 competitive bidding process provided competitors notice and
    opportunity to bid for the blended and extended term. It is undisputed not only that
    competitors had such notice, but that the top competitors directly competed on the
    blend and extend provision itself.
    The cases cited by Fort Bend are off-point, distinguishable, and in many
    instances help TXU. While they address the validity of “entering into” an original
    contract awarded to a bidder, they provide no guidance for “extending” a contract
    that was competitively bid with public notice of the potential for extension. Many
    of Fort Bend’s cases concern contracts that are void ab initio because they were
    never competitively bid. See Richmond Printing v. Port of Houston Auth., 
    996 S.W.2d 220
    , 222 (Tex. App.—Houston [14th Dist.] 1999, no pet. h) (never a
    written contract and the Port Authority notified vendor of deficiency immediately
    after receiving the good and services); United States v. Walker, Civ. Act. No. 1:11-
    CR-67, 
    2011 WL 6181468
    , at *3-*4 (E.D. Tex. 2011) (contractor may have claim
    7
    for work performed in violation of competitive bidding statute and accepted by
    school district)); Mitsuba Texas, Inc. v. Brownsville Indep. Sch. Dist., Cause No.
    05-97-01271-CV, 
    2000 WL 122348
    , at *4-*5 (Tex. App.—Dallas 2000, no pet. h)
    (affirming summary judgment on breach of contract claim where there was no
    contract approved by board of trustees or competitive bidding but reversing as to
    quantum meruit and promissory estoppel claims because “A void contract can be
    enforceable with a school district as an implied contract for the reasonable value of
    the benefits received”); City of Denton v. Mun. Admin. Servcs, 
    59 S.W.3d 764
    , 772
    (Tex. App.—Fort Worth 2001, no pet. h) (reversing and remanded for trial on
    implied contract/quantum meruit despite holding that contract was void for
    containing an illegal contingency fee arrangement between a City and an auditor).
    Fort Bend’s other cases address a contract that is void because the
    competitive bidding process leading to the execution of the contract was not
    followed. See Daniels Building & Constr. v. Silsbee Indep. Sch. Dist., 
    990 S.W.2d 947
    , 949 (Tex. App.—Beaumont 1999, pet. dism’d) (contract void ab initio
    because ISD did not follow requirement for publishing the deadline to submit a
    sealed bid); GADV, Inc. v. Beaumont Indep. Sch. Dist., Civil Act. No. 1:11-CV-
    187, 2011 U.S. Dist. 60983 at * 15 (E.D. Tex. 2011) (non-chosen bidder could
    enjoin work project where district did not follow competitive bidding in awarding
    a contract to another bidder that was void ab initio, and the selected vendor could
    8
    sue the district for the value of work performed). None of the cases cited by Fort
    Bend is instructive on the discreet issue of whether the parties to a competitively
    bid contract can exercise a competitively bid provision for extension.
    Fort Bend’s unwillingness to address the specific issues raised in this appeal
    is telling. While the issue is novel,2 there is nothing in the competitive bidding
    statute or any of the authorities cited by Fort Bend that supports its position that a
    competitively-bid, industry-standard, blend and extend provision violates either the
    language or the spirit of the Texas Education Code. For that reason, the court
    should be reversed and this case should be remanded with instructions that Fort
    Bend is not entitled to sovereign immunity.
    B.       Fort Bend’s Waiver Of Immunity Could Not Be More Explicit.
    Even if the 2011 Contract Extension were void, the trial court should be
    reversed and TXU should be permitted to pursue its claims because Fort Bend
    waived governmental immunity and agreed to be liable for damages caused by the
    avoidance of the 2011 Contract Extension in the original 2010 Agreement, which
    everyone agrees is a valid and enforceable contract that continued to apply and
    formed “an integral part of the Agreement” after blended and extended. (See
    Appx. 2(A-8) at Sec. V, CR 423).
    2
    TXU concedes there is no authority directly considering the validity of a contract term that
    allows for extension when the original bidding process expressly discloses the district’s desire
    for such flexibility.
    9
    The original Agreement, which was executed in 2010, contained the blend
    and extend provision sought in Fort Bend’s request for qualifications and included
    in TXU’s proposal. (Appx. 2(A-1) at Trans. Conf. § IV, CR 381) The Original
    2010 Agreement also contained representations and warranties that Fort Bend was
    authorized to enter into the Agreement, and that the Agreement was a “valid and
    binding obligation of [Fort Bend], enforceable against it in accordance with its
    terms.” (Appx. 2(A-1) at Base Contract § 12.9, CR 373) Fort Bend represented to
    TXU that it “is authorized by statute or the constitution to enter into each
    Agreement ….” (Appx. 2(A-1) at Addendum § XII, CR 377) Fort Bend also
    agreed that if it “uses its inherent powers as a governmental entity … to
    circumvent the intent or terms and provisions of the Agreement, [Fort Bend] shall
    be responsible for the contract damages caused by such action.” (Appx. 2(A-1) at
    Addendum § VII, CR 376)
    As a result, Fort Bend’s reliance on Richmond Printing v. Port of Houston
    Auth., 
    996 S.W.2d 220
    (Tex. App.—Houston [14th Dist.] 1999, no pet.) and other
    cases holding that someone contracting with a school district has an independent
    responsibility to ensure compliance with competitive bidding laws is misplaced.
    “Freedom of contract allows parties to bargain for mutually agreeable terms and
    allocate risks as they see fit.” FPL Energy, LLC v. TXU Portfolio Mgmt. Co., L.P.,
    
    426 S.W.3d 59
    , 65 (Tex. 2014) (emphasis added) (quoting Gym-N-I Playgrounds,
    10
    Inc. v. Snider, 
    220 S.W.3d 905
    , 912 (Tex. 2007)).          Fort Bend unequivocally
    assumed any risk that the implementation of the blend and extend provision would
    later be found to be invalid and agreed to pay TXU any resulting damages. (Appx.
    2(A-1) at Addendum § VII, CR 376)              And Fort Bend’s own legal counsel
    concluded that the blend and extend provision and the 2011 Contract Extension
    were valid. (See, e.g., Appx. 2(A-5), CR 413)
    Notably, Fort Bend appears to concede that the Original 2010 Agreement
    was a valid and enforceable agreement that satisfied the requirements of Section
    44.031 of the Texas Education Code, and thus, satisfied the Legislature’s waiver of
    governmental immunity under Section 271.152 of the Texas Local Government
    Code. See, e.g., Appellee’s Brief at 13 (“Because the 2011 contract is void….”),
    Appellee’s Brief at 14-16 (arguing that the 2011 agreement is invalid because,
    according to Fort Bend, it is a separate agreement from the 2010 agreement). In a
    footnote, Fort Bend claims that TXU waived this argument. Appellee’s Br. at 19,
    n.9. Fort Bend also asserts that it did not breach the original 2010 Agreement and
    TXU did not suffer any damages as the result of Fort Bend’s breach. 
    Id. Finally, Fort
    Bend suggests that enforcing the express terms of the 2010 Agreement
    somehow results in “quasi-contractual liability on the District,” despite the fact that
    such claims are premised on the express terms of the 2010 Agreement. 
    Id. All these
    arguments lack any merit.
    11
    1.      TXU Did Not Waive Its Argument Based On The Express
    Representations And Warranties Contained In The Original 2010
    Agreement.
    Fort Bend’s first response to the undeniable conclusion that it waived
    governmental immunity and is liable to TXU pursuant to the original 2010
    Agreement is to argue that the issue was waived. Appellee’s Br. at 19, n.9. But
    the issue was directly presented to the trial court.
    In TXU’s response to the plea to jurisdiction, which was incorporated into
    its response to the motion for summary judgment, TXU argued:
     “The Supply of Electricity Contract [citing to the original 2010
    Agreement] contained representations and warranties that [Fort Bend]
    was authorized to enter into it, and that it is a ‘valid and binding
    obligation of [Fort Bend], enforceable against it in accordance with its
    terms.’” (Appx. 2 at 6, CR 337)
     “As part of the Supply of Electricity Contract [citing to the original
    2010 Agreement], [Fort Bend] represented in writing that it ‘is
    authorized by statute or the constitution to enter into each Agreement .
    . . .’” 
    Id.  “[Fort
    Bend] represented and warranted to that it was authorized to
    enter into the Supply of Electricity Contract, and that ‘each
    Agreement is a valid and binding obligation of [Fort Bend],
    12
    enforceable against it in accordance with its terms.’ [citing to the
    original 2010 Agreement] … It also represented and warranted that it
    ‘is authorized by statute or the constitution enter into each Agreement
    . . . .’… Finally, the parties agreed that [Fort Bend] could not use the
    competitive bidding laws as a sword to ‘circumvent the intent or terms
    and provisions of the Agreement[.]’” 
    Id. at 18,
    CR 349.
    Thus, the issue was presented to the trial court and may be properly considered on
    the merits by this Court. See TEX. R. APP. P. 33.1(a)(1) (noting that a party need
    only state the grounds for the ruling “with sufficient specificity to make the trial
    court aware of the complaint”); Dugan v. Compass Bank, 
    129 S.W.3d 579
    , 582
    (Tex. App.—Dallas 2003, no pet.) (holding that issue was preserved where “trial
    court had an opportunity to consider and rule on Appellants' claim, and the
    appellee has had the opportunity to oppose Appellants' request”).
    Indeed, there is very little else to say about the claim as Fort Bend appears to
    agree that the original 2010 Agreement is a valid and enforceable agreement,
    which is all is necessary to invoke the trial court’s jurisdiction.        See, e.g.,
    Appellee’s Brief at 13 (“Because the 2011 contract is void….”), Appellee’s Brief
    at 14-16 (arguing that the 2011 agreement is invalid because, according to Fort
    Bend, it is a separate agreement from the 2010 agreement). The remainder of Fort
    13
    Bend’s arguments goes to the merits and does not raise a jurisdictional issue, as
    discussed below.
    2.      Fort Bend’s Arguments On The Merits Of TXU’s Claim are Not
    Responsive To The Jurisdictional Question; But Even If The
    Court Were To Consider The Merits Of TXU’S Claim, Reversal
    Is Required.
    Fort Bend also argues the original 2010 Agreement was fully performed and
    that TXU suffered no damages from Fort Bend’s alleged breach. Appellee’s Br. at
    19, n.9. But these arguments go only to the merits and were not addressed by Fort
    Bend’s Plea to the Jurisdiction or Motion for Summary Judgment. Thus, reversal
    of the partial summary judgment and grant of the plea to the jurisdiction for a
    determination of the merits is required.3 See Bland Indep. Sch. Dist. v. Blue, 
    34 S.W.3d 547
    , 554 (Tex. 2000) (“A plea to the jurisdiction is a dilatory plea, the
    purpose of which is to defeat a cause of action without regard to whether the
    claims asserted have merit. The claims may form the context in which a dilatory
    plea is raised, but the plea should be decided without delving into the merits of the
    case.”); Sci. Spectrum, Inc. v. Martinez, 
    941 S.W.2d 910
    , 912 (Tex. 1997) (“A
    motion for summary judgment must itself expressly present the grounds upon
    which it is made, and must stand or fall on these grounds alone.”).
    3
    Alternatively, if the issue was not presented by TXU such that it can be considered by this
    Court, then it also could not have been the subject of the trial court’s partial summary judgment
    and grant of the plea to the jurisdiction and is currently at issue in the claim presented in TXU’s
    Second Amended Petition. (CR at 531, 538), see also Appellee’s Br. at 19, n.9.
    14
    But even if the Court were to reach those issues, reversal would clearly be
    required because there is no dispute that Fort Bend breached is representations and
    warranties to TXU in the original 2010 Agreement, and there is no dispute that
    TXU suffered damages as a result.
    The Original 2010 Agreement contained representations and warranties that
    Fort Bend was authorized to enter into the Agreement (including the blend and
    extend provision), and that the Agreement (including the blend and extend
    provision) was a “valid and binding obligation of [Fort Bend], enforceable against
    it in accordance with its terms.” (Appx. 2(A-1) at Base Contract § 12.9, CR 373)
    Fort Bend represented to TXU that it “is authorized by statute or the constitution to
    enter into each Agreement,” including the blend and extend provision. (Appx.
    2(A-1) at Addendum § XII, CR 377) Fort Bend also agreed that if it “uses its
    inherent powers as a governmental entity … to circumvent the intent or terms and
    provisions of the Agreement [including the blend and extend provision], [Fort
    Bend] shall be responsible for the contract damages caused by such action.”
    (Appx. 2(A-1) at Addendum § VII, CR 376) Moreover, it is undisputed that the
    parties’ intent was that Fort Bend would have the ability to exercise the blend and
    extend provision in the original 2010 Agreement, and that the 2011 Contract
    Extension was the implementation of the parties’ intent. (Appx. 2(A) ¶ 9, CR 364;
    Appx. 2(A-5), CR 413) Thus, by invoking governmental immunity and seeking to
    15
    avoid the 2011 Contract Extension, Fort Bend breached its warranty in the original
    2010 Agreement.
    TXU suffered substantial out of pocket damages as a result of Fort Bend’s
    Breach. As a result of the 2011 Contract Extension, TXU purchased electricity
    from the marketplace necessary to satisfy the term of the Agreement as blended
    and extended. (Appx. 2(A) ¶ 18, CR 366) TXU then performed its obligations
    under the Agreement as blended and extended, including providing Fort Bend
    electricity at the low fixed rate stated in the Contract Extension rather than the
    higher standard list price that Fort Bend would otherwise be obligated to pay TXU
    starting on May 31, 2012 under the original Agreement. (See Appx. 2(A) ¶¶ 19-
    20, CR 366; Appx. 2(A-1) Base Contract § 4.3, CR 369) TXU also provided Fort
    Bend the benefit of funds from its own proprietary program focused on
    implementing sustainable solutions covering the entire term of the Agreement as
    blended and extended. (CR 539 at ¶ 29)
    The out of pocket damages to TXU resulting from Fort Bend’s breach of the
    Agreement were $3,169,046.38, which includes the out of pocket losses resulting
    from having purchased electricity to perform the entire contract and cash paid
    directly to Fort Bend under a rebate program premised on Fort Bend’s performance
    of the entire term of the Agreement, as blended and extended. (See CR 530-31;
    Appx. 2(A) ¶¶ 18-20, CR 366; Appx. 2(A-11), CR 437-438) Fort Bend has not
    16
    even attempted to argue, let alone explain, how these damages are not the direct
    result of Fort Bend’s breach.
    3.     TXU’s Claims Based On The Express Terms Of The Original
    2010 Agreement Are Not “Quasi-Contractual.”
    Finally, Fort Bend makes the assertion that enforcement of the express terms
    of a written contract would “impose quasi-contractual liability.” No explanation is
    given for this baseless argument, which literally asserts that claim for breach of the
    express terms of an actual, written, and enforceable contract somehow is
    something other than a true contract claim. To be clear, this Court has already
    drawn the line between contract claims and quasi-contract claims, and TXU’s
    claim for breach contract clearly is a true contract claim because it is premised on
    the language of a written and executed instrument, not some implied theory of law.
    See Walker v. Cotter Properties, Inc., 
    181 S.W.3d 895
    , 900 (Tex. App.—Dallas
    2006, no pet.) (“A contract implied in law, or a quasi-contract, is distinguishable
    from a true contract because a quasi-contract is a legal fiction, an obligation
    imposed by law regardless of any actual agreement between the parties.”).
    Because TXU’s claim is premised on an actual, written contract that the
    parties do not dispute was competitively bid, it is not a quasi-contractual claim.
    17
    C.    The Texas Supreme Court Has Not Completely Foreclosed The
    Possibility Of Waiver Of Governmental Immunity By Conduct, And
    This Court Has Never Directly Addressed A Situation As Extreme As
    The Facts Presented Here.
    Fort Bend asserts that the Texas Supreme Court and this Court have held
    that a governmental entity cannot waive governmental immunity by conduct
    regardless of how egregious or extreme its conduct has been, citing Sharyland
    Water Supply Corp. v. City of Alton, 
    354 S.W.3d 407
    , 414 (Tex. 2011) and an
    unpublished memorandum opinion of this Court, Gentilello v. Univ. of Texas Sw.
    Health Sys., 05-13-00149-CV, 
    2014 WL 1225160
    , at *3 (Tex. App.—Dallas Mar.
    24, 2014), review denied (Oct. 3, 2014). Appellee’s Br. at 20-21.
    To begin, other courts of appeals have suggested that Sharyland did not
    definitively reject waiver-by-conduct under all circumstances.        See City of
    Freeport v. Briarwood Holdings, L.L.C., No. 01- 11-01108-CV, 
    2013 WL 1136576
    at *3-*4 (Tex. App.—Houston [1st Dist.] Mar. 19, 2013, no pet.) (mem.
    op.) (noting that the Court would not address the waiver by conduct theory because
    the governmental entity claiming immunity was not the same entity that had
    assured the plaintiff that the contract would be valid and enforceable); In re Hays
    Cnty. Sheriff’s Dep’t, No. 03-12-00343-CV, 
    2012 WL 6554815
    (Tex. App.—
    Austin Dec. 12, 2012) (orig. proceeding) (mem. op.) (Pemberton J., concurring)
    (“it remains that the supreme court, even while questioning the waiver-by-conduct
    concept, has nonetheless continued to hold open the possibility raised in Federal
    18
    Sign that some set of facts not yet seen could constitute governmental conduct that
    the high court deems to waive immunity.”). Even after Sharyland was decided,
    this Court continued to hold that “there may be rare situations involving
    ‘extraordinary factual circumstances’ where courts might recognize a waiver of
    immunity by conduct….” Kaufman County v. Combs, 
    393 S.W.3d 336
    , 345 (Tex.
    App.—Dallas 2012, pet. denied).
    Moreover, this Court’s unpublished opinion in Gentilello is distinguishable
    because UT Southwestern, a state entity, expressly reserved its defense of
    sovereign immunity in the settlement that was the subject of the lawsuit.
    Gentilello, 
    2014 WL 1225160
    , at *3. This Court rejected the plaintiff’s waiver
    argument because “we conclude the language in the settlement agreement is not a
    clear and unambiguous waiver of sovereign immunity in this case….” 
    Id. That is
    in direct contrast to the facts of this case and the authority cited by TXU.
    Instead, like the governmental entity in Texas S. Univ. v. State St. Bank &
    Trust Co., 
    212 S.W.3d 893
    , 908 (Tex. App.—Houston [1st Dist.] 2007, pet.
    denied), Fort Bend waived immunity through its conduct because it “lured [TXU
    into the original 2010 Agreement and 2011 Extension] with false promises that the
    contract would be valid and enforceable.”           The Original 2010 Agreement
    contained representations and warranties that Fort Bend was authorized to enter
    into the Agreement, and that the Agreement was a “valid and binding obligation of
    19
    [Fort Bend], enforceable against it in accordance with its terms.” (Appx. 2(A-1) at
    Base Contract § 12.9, CR 373) Fort Bend represented to TXU that it “is authorized
    by statute or the constitution to enter into each Agreement ….” (Appx. 2(A-1) at
    Addendum § XII, CR 377) Fort Bend also agreed that if it “uses its inherent
    powers as a governmental entity … to circumvent the intent or terms and
    provisions of the Agreement, [Fort Bend] shall be responsible for the contract
    damages caused by such action.” (Appx. 2(A-1) at Addendum § VII, CR 376)
    And Fort Bend told TXU that Fort Bend’s own legal counsel concluded that the
    blend and extend provision and the 2011 Contract Extension were valid. (See, e.g.,
    Appx. 2(A-5), CR 413)
    Nonetheless, this Court did state in Gentilello that “[w]e decline to establish
    a waiver-by-conduct exception to sovereign immunity for any cause of action,
    whether based on a breach of contract or not.” Gentilello, 
    2014 WL 1225160
    , at
    *4. To the extent that this holding in Gentilello bars all theories of waiver of
    governmental immunity through conduct, the holding in Gentilello is in conflict
    with other courts of appeals in Texas and TXU wishes to preserve its argument for
    consideration en banc or through a petition for review to the Texas Supreme Court.
    D.    TXU Preserved Its Promissory Estoppel Claim Through Its Argument
    Relating to Waiver By Conduct.
    Fort Bend also asserts that TXU waived reversal relating to TXU’s
    promissory estoppel claim by failing to discuss the claim for promissory estoppel
    20
    separate and apart from its discussion of Fort Bend’s waiver of governmental
    immunity by conduct. See Appellee’s Br. at 21-22. However, TXU expressly
    asserted that “Fort Bend Waived Governmental Immunity by its Conduct in
    Accepting Performance of the Agreement and Expressly Representing and
    Warrantying the Agreement’s Enforceability.”         TXU extensively briefed the
    representations made by Fort Bend relating to the enforceability of the Agreement
    and TXU’s reliance thereon.        See Appellant’s Br. at 17-20.     This is TXU’s
    promissory estoppel claim, and the terminology used by TXU simply referred to
    the issue in the narrow context of a waiver of governmental immunity, which is all
    that is at issue in this appeal.
    TXU agrees that its promissory estoppel claim rises or falls based on its
    waiver by conduct argument, as discussed above. But TXU’s waiver by conduct
    argument should result in the reversal of the trial court’s partial summary judgment
    and plea to the jurisdiction relating to TXU’s claim for promissory estoppel, as
    fully brief by TXU in its Appellant’s Brief at pages 17 to 20, and in this Reply.
    21
    PRAYER
    TXU respectfully prays that this Court reverse the trial court’s order granting
    Fort Bend’s Plea to the Jurisdiction and Motion for Summary Judgment, remand
    for further proceedings on TXU’s claims, and for such other relief to which it may
    be entitled.
    Respectfully submitted,
    John Franklin Guild
    Michael K. Hurst
    mhurst@ghjhlaw.com
    State Bar No. 10316310
    A. Shonn Brown
    sbrown@ghjhlaw.com
    State Bar No. 24007164
    John Franklin Guild
    jguild@ghjhlaw.com
    State Bar No. 24041022
    Gruber Hurst Johansen Hail Shank LLP
    1445 Ross Avenue, Suite 2500
    Dallas, Texas 75202
    Telephone No. (214) 855-6800
    Facsimile No. (214) 855-6808
    ATTORNEYS FOR APPELLANT
    CERTIFICATE OF COMPLIANCE WITH RULE 9.4
    I, John Franklin Guild, attorney for Petitioners certify that this document
    was generated by a computer using Microsoft Word 2010 which indicates that the
    word count of this document is 5083 per TEX. R. APP. P. 9.4 (i).
    John Franklin Guild
    John Franklin Guild
    22
    CERTIFICATE OF SERVICE
    The undersigned certifies that on this 16th day of February, 2015, a true and
    correct copy of the foregoing document has been sent by electronic service and by
    First Class Mail to the following counsel of record:
    ROGERS, MORRIS & GROVER, L.L.P.
    Richard A. Morris
    State Bar No. 14497750
    Jonathan G. Brush
    State Bar No. 24045576
    Stephanie E. Maher
    State Bar No. 24074637
    5718 Westhaimer Rd.
    Suite 1200
    Houston, TX 77057
    Telephone No. (713) 960-6037
    /s/ John Franklin Guild
    John Franklin Guild
    23