Untitled Texas Attorney General Opinion ( 2004 )

ATTORNEYGENERAL OF TEXAS
GREG ABBOTT
September 8,2004
,The Honorable David R. Austin Opinion No. GA-0247
Ector County Auditor
1010 East Eighth Street, Room 520 Re: Whether a county auditor may approve
Odessa, Texas 79761 a claim for payment on a contract that was
not awarded in compliance with the County
Purchasing Act (RQ-0195GA)
Dear Mr. Austin:
You ask whether a county auditor may approve a claim for payment on a contract that was
not awarded in compliance with the County Purchasing Act, Local Government Code chapter 262,
subchapter C. You also ask several related questions about such a contract’s legal effect and the
county’s authority to make payments under such a contract.’
I. Background
A. Legal Framework
Your questions involve an Ector County contract for a third-party administrator to
administer the county’s self-insured medical benefits plan. See Request Letter, supra note 1, at 1.
Section 157.002 of the Local Government Code provides that a “commissioners court by rule may
provide for medical care and hospitalization and may provide for compensation, accident, hospital,
and disability insurance” for, among others, county employees, retirees, and their dependents. TEX.
LOC. GOV’T CODE ANN. 3 157.002(a) (Vernon 1999). In a county that adopts rules under section
157.002, the commissioners court may require health plan participants to contribute toward the
payment of the plan and may establish the “Hospital and Insurance Fund-County Employees” to
“pay for the medical care or hospitalization or the insurance.” Id. 5 157.003(a).
Section 157.003 provides that “[cllaims shall be paid from the fund in the same manner as
provided by law for the payment of other claims of the county.” Id. 5 157.003(d). Chapter 113 of
the Local Government Code establishes procedures for paying county claims. Section 113.064(a)
requires that
[i]n a county that has the office of county auditor, each claim,
bill, and account against the county must be tiled in sufficient time
‘See Letter from Honorable David R. Austin, Ector County Auditor, to Honorable Greg Abbott, Texas Attorney
General (Mar. 12,2004) (on tile with the Opinion Committee, also available athttp://~.oag.state.tx.us) [hereinafier
Request Letter].
The Honorable David R. Austin - Page 2 (GA-0247)
for the auditor to examine and approve it before the meeting of the
commissioners court. A claim, bill, or account may not be allowed
or paid until it has been examined and approved by the auditor.
Id. 5 113.064(a). Section 113.065 provides that “[tlhe county auditor may not audit or approve a
claim unless the claim was incurred as provided by law.” Id. § 113.065.
The County Purchasing Act generally requires counties to make certain purchases using
competitive bidding. Section 262.023(a) of the Local Government Code provides that
[blefore a county may purchase one or more items under a
contract that will require an expenditure exceeding $25,000, the
commissioners court of the county must:
(1) comply with the competitive bidding or competitive
proposal procedures prescribed by this subchapter;
(2) use the reverse auction procedure, as defined by Section
2155.062(d), Government Code, for purchasing; or
(3) comply with a method described by Subchapter H, Chapter
271.
Id. 4 262.023(a) (Vernon Supp. 2004); see also id. $5 271.111-,121 (Local Government Code,
chapter 271, subchapter H). In the Act, the term “item” means “any service, equipment, good, or
other tangible or intangible personal property, including insurance and high technology items.” Id.
5 262.022(5) (Vernon 1999). In applyingsection262,023(a), “all separate, sequential, or component
purchases of items ordered or purchased, with the intent of avoiding the requirements of this
subchapter, from the same supplier by the same county officer, department, or institution are, treated
as if they are part of a single purchase and of a single contract.” Id. 5 262.023(a) (Vernon Supp.
2004). A contract for the purchase of a personal or professional service is exempt from the section
262.023 competitive bidding requirement ifthe commissioners court by order grants the exemption.
See id. 5 262,024(a)(4).
Among other things, the Act requires that notice of a proposed purchase
be published at least once a week in a newspaper of general
circulation in the county, with the first day of publication occurring
before the 14th day before the date of the bid opening. If there is no
newspaper of general circulation in the county, the notice must be
posted in a prominent place in the courthouse for 14 days before the
date of the bid opening.
Id. 5 262.025(a). The notice must include detailed information about the proposed purchase. See
id. § 262.025(b).
The Honorable David R. Austin - Page 3 (GA-0247)
Sections 262.0295 and 262.030 of the Local Government Code authorize a county to use
alternate competitive procedures in certain limited circumstances. Under section 262.0295, upon
a finding by the commissioners court that it is impractical to prepare detailed specifications for an
item to support the award of a purchase contract, the county official who makes purchases for the
county may use a multistep competitive proposal procedure, soliciting quotations through a request
for proposals. See id. 5 262,0295(a)(l)-(2), (b) (V emon 1999); see also id. 5 262.0295(a)(3) (“This
section applies only to a county with a population of 125,000 or more.“). Section 262.030 permits
counties to use a competitive proposal procedure, soliciting quotations through a request for
proposals, to purchase, among other things, insurance and high technology items. See id. 5 262.030
(Vernon Supp. 2004).
Sections 262.0295 and 262.030 both require the county to provide notice. See id.
35 262.0295(b) (Vernon 1999) (“Public notice for the request for proposals must be made in the
same manner as provided in the competitive bidding procedure, except that the notice may include
a general description of the item to be purchased, instead of the specifications describing the item
or a statement of where the specifications may be obtained, and may request the submission of
unpriced proposals.“), 262.030(b) (Vernon Supp. 2004) (“Public notice for the request for proposals
must be made in the same manner as provided in the competitive bidding procedure.“).
Section 262.033 provides that “[a]ny property tax paying citizen of the county may enjoin
performance under a contract made by a county in violation of this subchapter.” Id. § 262.033
(Vernon 1999). In addition, a county officer or employee who violates the Act is subject to criminal
prosecution and removal from office.’
B. Factual Background
You inform us that in 1983 Ector County established a self-insured medical benefits
plan for its employees, retirees, and their dependents, as authorized by section 157.002 ofthe Local
Government Code. See Request Letter, supra note 1, at 1; see also TEX. Lot. GOV'T CODE ANN.
$9 157.002-.003 (Vernon 1999), supra. Historically, the county has obtained the services ofathird-
party administrator (“TPA”) to administer the plan and has followed the County Purchasing Act to
award the TPA contract. See Request Letter, supra note 1, at 1,
Your questions involve a TPA contract that Ector County entered into in the fall of 2003.
In September 2003, the Ector County Commissioners Court rescinded the TPA contract that was
then in effect for a one-year term, and it awarded a new contract to another TPA, effective October
‘Under section 262.034(a)-(b), a county officer OI employee who “intentionally or knowingly makes or
authorizes separate, sequential, or component purchases to avoid” section 262.023’s competitive bidding requirements,
OI intentionally or knowingly violates section 262.023 by other conduct, commits a Class B misdemeanor. &~TEx. LOC.
Gov'r CODE ANN. 5 262.034(a)-(b) (V anon 1999). Under section 262.034(c), a county officer or employee who
intentionally OTknowingly violates the Act, other than by conduct described by section 262.034(a) or (b), commits a
Class C misdemeanor. See id. 5 262.034. “The final conviction of a county officer or employee for an offense under
Section 262.034(a) OI (b) results in the immediate removal from off& OI employment ofthat person.” Id. 5 262.035(a).
The removed ofticer or employee is ineligible for four years after the date of final conviction for public office and for
county employment or compensation. See id. 5 262.035(b).
The Honorable David R. Austin - Page 4 (GA-0247)
1,2003. As county auditor, you determined that the commissioners court had not complied with the
County Purchasing Act’s competitive bidding requirements in procuring the new TPA contract and
asked the county attorney for an opinion. See id. at 1-2. While waiting for the county attorney’s
opinion, the county made payments to the new TPA for services provided under the contract. See
id. at 2. The county attorney concluded that the county had failed to comply with the County
Purchasing Act’s notice requirements in procuring the new TPA contract but also stated that the
contract “‘is in effect and the County is under obligation to perform under the contract.“’ Id.
II. Analvsis
You ask nine questions about the TPA contract. We understand that there is some dispute
regarding the county auditor and the county attorney’s conclusion that the county did not comply
with the County Purchasing Act in awarding the contract. For example, an attorney for the TPA
contends that the TPA provides professional services and that the commissioners court was therefore
authorized to exempt the contract from competitive bidding.’ A county commissioner, on the other
hand, asserts that the county solicited proposals for the contract pursuant to a procedure permitted
by section 262.030 of the Local Government Code! Your questions ask us to assume that the TPA
contract was not awarded in compliance with the County Purchasing Act. We do not examine that
assumption.
A. Local Government Code, Section 113.065
First you ask, “[alssuming the contract was not competitively procured,” whether
the county auditor may legally approve a claim for payment to the TPA for services rendered under
the contract under Local Government Code, section 113.065. See id. at 3.
Claims paid from a county’s hospital and insurance fund must be paid in the “same manner
as provided by law for the payment of other claims of the county.” TEX. Lot. GOV’T CODE ANN.
5 157.003(d) (Vernon 1999). Chapter 113 of the Local Government Code expressly provides that
a claim, bill, or account may not be allowed or paid until it has been examined and approved by the
county auditor. See id. § 113.064(a). Section 113.065 provides that “[tlhe county auditor may not
audit or approve a claim unless the claim was incurred as provided by law.” Id. 5 113.065.
“The language ofthese statutes is mandatory. They impose on the auditor the responsibility,
before approving a claim, to determine whether it strictly complies with the law governing county
‘See Brief from Eric J. Nathan, Weener & Nathan, L.L.P., at 2 (May 28, 2004) (on file with the Opinion
Committee); see dso TEX. LOC. GoV’T CODE ANN. 8 262,024(a)(4) (V anon Supp. 2004); Tex. Att’y Gen. Op. Nos.
DM-418 (1996) at 9-13, JM-1038 (1989) at 2 (considering whether a contract for services of a third party administrator
is exempt from competitive bidding laws as a contract for professional services).
‘See Letter from Honorable Barbara Graff, Ector County Commissioner, to Nancy Fuller, Chair, Opinion
Committee, Office of the Attorney General (May 26,2004) (on file with the Opinion Committee); see also TEX. LOC.
GOV’T CODE ANN. $ 262.030 (Vernon Supp. 2004) (p ermitting counties to use a competitive proposal procedure,
soliciting quotations through a request for proposals, to purchase, among other things, insurance and high technology
items).
The Honorable David R. Austin - Page 5 (GA-0247)
finances.” Smith v. McCoy, 533 S.W.2d 457, 459 (Tex. Civ. App.-Dallas 1976, writ dism’d)
(addressing the statutory predecessors to Local Government Code sections 113.064-,065, former
articles 1660 and 1661); see nlso Criderv. Cox, 960 S.W.2d 703,706 (Tex. App.-Tyler 1997, writ
denied) (“A claim against the county may not be approved by the Auditor unless it was incurred in
accordance with the law.“) (citing Local Government Code section 113.065). Although no court has
addressed the issue, a number of attorney general opinions have concluded that a county auditor may
not approve a claim for a contract that was not awarded in compliance with a competitive bidding
law, see Tex. Att’y Gen. Op. Nos. V-285 (1947), O-770 (1939), or similar law limiting county
purchasing authority, see Tex. Att’y Gen. Op. Nos. JC-0266 (2000) (a county auditor may not
approve a claim for payment under a contract made in violation of the Professional Services
Procurement Act) (citing Local Government Code section 113.065), H-1237 (1978) (“The
commissioners court is not authorized to order payment of a claim under a contract made in violation
of article 1580 [requiring county purchases to be made by purchasing agent], and the auditor is
prohibited from paying such a claim.“).
In answer to your question, if a county auditor determines that a contract was awarded in
violation of the County Purchasing Act, section 113.065 of the Local Government Code prohibits
the auditor from approving the claim. A claim may not be approved by the commissioners court or
paid by the county without the auditor’s approval5 See Crider, 960 S.W.2d at 706 (the county
auditor’s approval of a claim is a requisite to the commissioners court’s approval; without county
auditor approval, the commissioners court’s approval of a claim is void).
B. The Contract’s Legal Effect
You ask several questions about the TPA contract’s legal effect. We begin with your
question asking whether “a contract that does not comply with the [County] Purchasing Act [is] void
or voidable?” Request Letter, supra note 1, at 3 (question 5). As you point out, Local Government
Code chapter 271, subchapter B establishes competitive bidding requirements for certain public
works contracts. ~TEx. Lot. GOV’TCODE ANN. @ 271.021.,030 (Vernon 1999 & Supp. 2004).
Section 271.028 of the Local Government Code expressly provides that “[a] contract awarded in
violation of this subchapter is void.” Id. 5 271.028 (Vernon 1999). Similarly, chapter 252 of the
Local Government Code, governing municipal purchasing, contains a provision stating that a
contract “made without compliance with this chapter” is “void and performance of the contract
may be enjoined” by a municipal taxpayer. See id. 5 252.061. By contrast, the County
Purchasing Act provides that “[a]ny property tax paying citizen of the county may enjoin
performance under a contract made by a county in violation of this subchapter,” id. 5 262.033, but
does not contain a provision stating that a contract awarded in violation of its requirements is void.
The legislature adopted the statutory predecessor to the County Purchasing Act, former article
2368a.5, in 1985. See Act ofMay27, 1985, 69th Leg., R.S., ch. 641, 1985 Tex. Gen. Laws 2377,
‘Given our answer to your first question, we do not answer your second question. See Request Letter, supra
note 1, at 3 (“If the answer to #I is ‘yes,’ are there judicial rulings or statlltory authority other than Local Government
Code, Section 113.065 providing for County Auditor approval for either the past 01 the future payment of services?“).
The Honorable David R. Austin - Page 6 (GA-0247)
2377-85. Prior to 1985, various statutes governed county purchasing, many of which applied to
counties, municipalities, and other political subdivisions. For example, the statutory predecessor to
the municipal purchasing provisions, former article 2368a, now chapter 252 of the Local
Government Code, applied to both cities and counties. See, e.g., Corbin v. CoNin County Comm ‘rs
Court, 651 S.W.2d 55,56 (Tex. App.-Dallas 1984, no writ) (addressing whether a county awarded
a contract in compliance with former article 2368a). Article 2368a, section 2(d) provided:
Any and all contracts or agreements hereafter made by any
county or city in this state, without complying with the terms of this
section, shall be void and shall not be enforceable in any court of this
state and the performance of same and the payment of any money
thereunder may be enjoined by any property taxpaying citizen of such
county or city.
See Bond and Warrant Law of 193 1, Act of May 21,193 1,42d Leg., R.S., ch. 163,193 1 Tex. Gen.
Laws 269, 270-71, as amended by Act of May 30, 1981, 67th Leg., R.S., ch. 505, 5 2, 1981 Tex.
Gen. Laws 2164, 2164-65. Statutes that predated article 2368a, former articles 2368 and 2268b,
contained similar provisions. SeeLimestone County v. Knox, 234 SW. 13 1 (Tex. Civ. App.-Dallas
192 1, no writ) (addressing similar language in former article 22681, and concluding that a contract
was void because the commissioners court awarded it without complying with statutory
requirements). A contract that is void under the terms of such a statute is a nullity:
The commissioners’ court being without power or authority to
make the contract in the first instance without compliance with the
terms of the statute, the contract was void and could not be vitalized
and made binding and enforceable by ratification or otherwise.
[A] contract which the law denounces as void is necessarily
no contract whatever and the acts of the parties in an effort to create
one in no wise bring about a change of their legal status. A void
contract is a mere nullity, and is obligatory on neither party to it. “It
requires no disaffinnance to avoid it and cannot be validated by
ratification.”
Id. at 134.
In 1985, the legislature adopted the County Purchasing Act, amended article 2368a and other
laws applicable to counties and other entities to remove counties from their scope, and repealed
many inconsistent countypurchasingprovisions. See Act ofMay27,1985,69th Leg., R.S., ch. 641,
35 1 (enacting County Purchasing Act), 2-4, 8 (amending other laws to delete counties), 11
(repealing county purchasing laws), 1985 Tex. Gen. Laws 2377,2377-84.
Although the County Purchasing Act, unlike Local Government Code sections 252.061 and
271.028 and provisions in former laws applicable to county purchasing, does not contain language
stating that a contract awarded in violation of its provisions is void, no judicial or attorney general
opinion since 1985 has addressed this change’s potential significance. The 1985 legislative history
The Honorable David R. Austin - Page 7 (GA-0247)
does not discuss the change.6 However, the legislature’s omission of language in the County
Purchasing Act making contracts void is significant and must be given effect. See City of Houston
Y. Clear Creek Basin Auth., 589 S.W.2d 671, 681 (Tex. 1979) (“It is apparent that in amending the
statute, the legislature intended some change in the existing law, and this court will endeavor to
effect the change.“); Am, Sur. Co. 0fN.Y. v. Axtell, 36 S.W.2d 715,719 (Tex. 1931) (the legislature
is presumed to have intended some change to existing law when enacting an amendment and effect
must be given to the amendment); see also TEX. GOV’T CODE ANN. 5 3 11.023(4) (Vernon 1998) (in
construing a statute, a court may consider “former statutory provisions, including laws on the same
or similar subjects”). As a result, we conclude that contracts awarded in violation of the County
Purchasing Act are not void ab initio but rather may be declared void by a court.
Under section 262.033 of the Local Government Code, “[a]ny tax paying citizen may enjoin
performance under a contract made by a county in violation of’ the County Purchasing Act. TEX.
Lot. GOV’T CODE ANN. $ 262.033 (Vernon 1999). In addition, in some cases an unsuccessful
bidder may bring a declaratoryjudgment action seeking to have a contract declared void on the basis
that the county failed to award it according to the County Purchasing Act’s procedures. See, e.g.,
Securtec, Inc. Y. County of Gregg, 106 S.W.3d 803 (Tex. App.-Texarkana 2003, pet. denied)
(concluding that an unsuccessful bidder could bring a declaratory judgment action requesting the
court to declare a contract void because the county did not comply with the County Purchasing Act).
We stress, however, that the County Purchasing Act’s enforcement provisions do not modify
a county auditor’s duty under section 113.065 of the Local Government Code to refuse to approve
a claim that was not incurred in compliance with law. Section 113.065’s charge that “[tlhe county
auditor may not audit or approve a claim unless the claim was incurred as provided by law,” TEX.
LOC. GOV’T CODE ANN. 5 113.065 (Vernon 1999), remains in effect. Under section 113.065, a
county auditor need not obtain a court order declaring the contract void for noncompliance with the
County Purchasing Act to exercise the duty to withhold approval of a claim. See Smith, 533 S.W.2d
at 459 (acountyauditorwho acted to deny claims under the statutorypredecessor to section 113.065
“was acting within his official discretion to deny the claims and to require that their validity be
established in a court of law”). Moreover, a county auditor’s decision to approve or disapprove a
claim is a discretionary as opposed to a ministerial act. Id.; see also Crider, 960 S.W.2d at 706-07.
A court will require a county auditor to approve a claim only if the auditor has abused his or her
discretion. See Crider, 960 S.W.2d at 706-07 (mandamus will lie to force a county auditor to
approve a claim only “to correct a clear abuse of discretion when there is no adequate remedy by
ordinary appeal”). If a party cannot establish that the auditor abused his or her discretion, “the
remedy. is a suit against the countyto establish the [claim’s] validity.” Smith, 533 S.W.2d at 461.
6S~~H~~~~C~~~.~~C~~~A~~~~,B~~~A~~~~~~~,Tex. S.B. 807,69thLeg.,R.S. (1985);Hous~S~~~~
GROUP, BILL ANALYSIS, Tex. S.B. 807, 69th Leg., R.S. (May 14, 1985); HOUSE COMM. ON COLJNTYAFFAIRS, BILL
ANALYSIS, Tex. C.S.S.B. 807, 69th Leg., R.S. (1985); Hearings on Tex. S.E. 807 Before rhe Senate Comm. on
InfergovernmenralRe[ntions, 69thLeg., R.S. (Mar. 26,1985) (tapes available &Senate StaffServices Office); Hearings
on Tu. S.B. 807 Before the Senate Comm. on Intergovernmental Relations, 69th Leg., R.S. (Apr. 2, 1985) (tapes
available at Senate Staff Services Offke); Debate on Ta. S.B. 807 on the Floor ofthe Senate, 69th Leg., R.S. (Apr. 11,
1985) (tapes available at Senate Staff Services Office); Debate on Tex. S.B. 807 on fhe No& of the House, 69th Leg.,
R.S. (May 15, 1985) (tapes available at House Video/Audio Dep’t).
The Honorable David R. Austin - Page 8 (GA-0247)
C. The Commissioners Court’s Authority to Provide a Basis for Contract
Payments
You ask several questions about a commissioners court’s authority to provide a basis
for a county auditor to approve contract payments even though the claim was not “incurred as
provided by law.” TEX. Lot. GOV’T CODE ANN. 5 113.065 (Vernon 1999).
You ask about the commissioners court’s authority to ratify the contract: “[Wlhat action, if
any, could be taken by the County in order for the County Auditor to lawfully approve a claim for
payment to [the TPA] for future services under the contract? For example, could the Court in some
way ratify a contract that did not comply with competitive bidding statutes?” Request Letter, supra
note 1, at 3 (question 4). In a related question you ask whether the fact that a contract that does not
comply with the County Purchasing Act is voidable rather than void affects the commissioners
court’s authority to ratify it. See id. (question 5) (“Is a contract that does not comply with the
Purchasing Act void or voidable, and does the determination make a difference in whether or not a
contract can be ratified?“).
A commissioners court lacks authority to ratify a contract expressly made void by law, such
as a competitive bidding law providing that a contract made in violation of its terms is void. See,
e.g., Wyatt Metal & Boiler Worh v. Fannin County, 111 S.W.2d 787, 790 (Tex. Civ.
App.-Texarkana 1937, writ dism’d) (“These purchases having been made in violation of the
provisions of the articles requiring competitive bids, the [commissioners court] was without
authority to ratify same, for this would grant them a power to do something indirectly they could not
do directly.“); Limestone County, 234 S.W. at 134 (a commissioners court could not ratify a contract
awarded in violation of competitive bidding requirements).
But authority to ratify does not depend on the contract being void rather than voidable. The
authority to ratify is premised on the authority to enter into the contract in the first place. See
Stratton v. Liberty County, 582 S.W.2d 252,254 (Tex. Civ. App.-Beaumont 1979, writ ref d n.r.e.)
(“That which the Commissioners’ Court could authorize in the first instance could be ratified by it
at a subsequent date.“); Angelina County v. Kent, 374 S.W.2d 313,317 (Tex. Civ. App.-Beaumont
1963, no writ) (“what the Commissioners Court could approve in the first instance, it may ratify”);
Cameron Countyv. Fox, 61 S.W.2d 483,487 (Tex. Comm’n App. 1933, holding approved) (“What
the commissioners’ court could have authorized in the beginning, that court could subsequently
ratify.“). Conversely, a commissioners court may not subsequently ratify a contract that it lacked
authority to make. See JaCkv. State, 694 S.W.2d 391,397 (Tex. App.-San Antonio 1985, writ ref d
n.r.e.) (“Ratification may not be used to justify the making of an illegal contract, A contract which
is made in violation of a statute is illegal and void and therefore not subject to ratification.“); Tex.
Att’y Gen. Op. Nos. JM-1027 (1989) at 8 (“[The purchase] camrotbe ‘ratified’ bythe commissioners
court since the commissioners court cannot bind the county by ratification of a contract the court
itself had no authority to make in the first place.“), H-1237 (1978) at 1 (“The authority of the
commissioners court to regulate county fiscal matters has been circumscribed by article 1580, and
since the court was powerless to make the contract initially, it was equally powerless to ratify it.“).
The Honorable David R. Austin - Page 9 (GA-0247)
A commissioners court’s authority is limited to those powers conferred either expressly or
by necessary implication from the constitution and laws of this state. See Guynes v. Galveston
County, 861 S.W.2d 861, 863 (Tex. 1993) (citing Canales Y. Laughlin, 214 S.W.2d 451,453 (Tex.
1948)); Tex. Att’y Gen. Op. Nos. GA-0158 (2004) at 4, GA-0085 (2003) at 2; see also TEX. CONST.
art. V, 5 18(b). When the County Purchasing Act governs the commissioners court’s authority to
enter into a contract, the commissioners court lacks authority to enter into a contract outside its
provisions. Because it lacks authority to enter into a contract in violation of the County Purchasing
Act in the first place, a commissioners court lacks authority to subsequently ratify such a contract.
It is immaterial to the authority to ratify that the County Purchasing Act does not provide that a
contract awarded in violation of its requirements is void.
You also ask about the commissioners court’s authorityto make “quantum meruit”payments
on the contract: “[Wlhat action, if any, could be taken by the County, in order for the County Auditor
to audit and lawfully approve a claim for payment [to the TPA] for services already rendered? For
example, could the Court approve payment in quantum meruit?” Request Letter, supra note 1,
at 3 (question 3). In a similar question you ask, “If the only legal vehicle for payment is a claim in
quantum meruit, could the court suffer the continuing provision of services while making periodic
‘quantum meruit’ settlement payments?” Id. at 4 (question 9).
Quantum meruit is a legal doctrine pursuant to which a court may order a party to pay for
benefits received despite the absence of an enforceable contract. See Heldenfek Bros., Inc. Y. City
of Corpus Christi, 832 S.W.2d 39, 41 (Tex. 1992) (“Quantum meruit is an equitable theory of
recovery which is based on an implied agreement to pay for benefits received.“). A plaintiff must
establish the following to recover under the doctrine of quantum meruit: (1) valuable services or
materials were furnished, (2) for the person or entity sought to be charged, (3) which were accepted,
used, and enjoyed by the person or entity sought to be charged, and (4) under such circumstances as
reasonably notified the person or entity sought to be charged that the plaintiff, in performing services
or furnishing properties, expected to be paid by the person or entity to be charged. Id.
Under chapter 113 of the Local Government Code, a commissioners court may not pay a
claim until it has been examined and approved by the county auditor, see TEX’. Lot. GOV’T CODE
ANN. $5 113.064-,065 (Vernon 1999), and “[tlhe county auditor may not audit or approve a claim
unless the claim was incurred as provided by law, ” id. § 113.065. Neither chapter 113 nor the
County Purchasing Act authorizes a commissioners court to approve quantum meruit payments on
a contract that was not awarded in compliance with the County Purchasing Act to provide a basis
for the county auditor to approve claims on the contract. In the event a county auditor rejects a claim
for payment for noncompliance with the County Purchasing Act, the claimant could tile a legal
action to recover damages in quantum meruit. Seegenerally Base-Seal, Inc. v. Jefferson County, 901
S.W.2d 783 (Tex. App.-Beaumont 1995, writ denied) (discussing the recovery available in a
quantum meruit action brought by a company whose claims for payment by a county were rejected
for noncompliance with the County Purchasing Act). A court may order a county to make quantum
meruit payments in such a legal action. In that case, the court’s order would provide a basis for the
county auditor to determine that the claim “was incurred as provided by law.” TEX. Lot. GOV’T
CODE ANN. 5 113.065 (Vernon 1999). See generally Wyatt Metal &Boiler Works, 111 S.W.2d at
The Honorable David R. Austin - Page 10 (GA-0247)
790-91 (“Under the record [establishing that contract was void and commissioners court lacked
authority to ratify it], plaintiff was relegated to a suit against the county upon an implied contract for
the reasonable value of the benefits which Famrin County received from the use of these culverts.“).
D. Questions Premised on Void Contract
Finally, you premise several questions on the conclusion that a contract made in
violation of the County Purchasing Act is void:
Ifthe contract is void, should the County take action to bid the
services as provided under Local Government Code, Chapter 262 and
would this limit or increase potential liability to the County?
If the contract is void, can the County enter into a month-to-
month contract with [the TPA] for TPA services until such time as a
vendor can be awarded the TPA services under Local Government
Code, Chapter 262 or would a month-to-month contract create a
continuing violation?
If the contract is void, ratification is not an option and the
Purchasing Act does not provide for a month-to-month contract, are
there other legal avenues available to the County in order to continue
the activities of the Plan as it pertains to plan and claims
administration?
Request Letter, sup-a note 1, at 3-4 (questions 6-8). Given our conclusion that the contract is not
void ab initio, and because we understand that the county has made monthly payments on the
contract, which terminates on September 30,2004, we do not answer these questions. Should you
decide to disapprove future contract payment claims under section 113.065 ofthe Local Government
Code, we suggest that you seek the county attorney’s advice with respect to the county’s options to
obtain TPA services and the county’s legal position in any potential litigation.
The Honorable David R. Austin - Page 11 (GA-0247)
SUMMARY
If the county auditor determines that the county awarded a
contract without complying with the County Purchasing Act, section
113.065 of the Local Government Code prohibits the auditor from
approving a claim for payment on the contract. Such a contract is not
void ab initio but may be voided by a court. The fact that the County
Purchasing Act does not provide that a contract made in violation of
its terms is void does not affect a county auditor’s duty under section
113.065 of the Local Government Code to disapprove a claim for
payment on a contract awarded without complying with the County
Purchasing Act. A commissioners court lacks authority to ratify such
a contract or to approve quantum meruit contract payments for such
a contract.
G ABBOTT
ey General of Texas
BARRY R. MCBEE
First Assistant Attorney General
DON R. WILLETT
Deputy Attorney General for Legal Counsel
NANCY S. FULLER “’
Chair, Opinion Committee
Mary R. Crouter
Assistant Attorney General, Opinion Committee