Chief Justice HECHT delivered the opinion of the Court, in which Justice GREEN, Justice GUZMAN, Justice DEVINE, and Justice BROWN joined.
The common law permits a contractor to recover damages for construction delays caused by the owner, but the parties are free to contract differently. A contractor may agree to excuse the owner from liability for delay damages, even when the owner is at fault. The contractor thereby assumes the risk of delay from, say, an owner's change of plans, even if the owner is negligent. But can a no-damages-for-delay provision shield the owner from liability for deliberately and wrongfully interfering with the contractor's work? Before this case, a majority of American jurisdictions — including Texas courts of appeals, courts in all but one jurisdiction to consider the issue, and five state legislatures — had answered no. We agree with this overwhelming view and also conclude that the answer is the same if the owner is a local governmental entity for which immunity from suit is waived by the Local Government Contract Claims Act.
Contractors are usually paid as work progresses and, in exchange for payment, must waive liens and claims related to the work paid for. But does such a general waiver release a claim the contractor has already asserted? Not, we think, unless the claim is specifically mentioned or the intent to do so is clear.
Our conclusions require us to reverse the judgment of the court of appeals
Petitioner, Zachry Construction Corporation, contracted to construct a wharf on the Bayport Ship Channel for respondent, the Port of Houston Authority of Harris County, Texas. The wharf would be a concrete deck supported by piers, extending out over the water. It would be used for loading and unloading ships carrying containerized goods and would be long enough — 1,660 feet — for two ships to dock stern to bow. It would be built in five sections, each 135 feet wide and 332 feet long. The channel was to be dredged to a
The contract made Zachry an independent contractor in sole charge of choosing the manner in which the work would be conducted. Specifically, Section 5.10 of the contract provided:
The provision benefitted the Port, insulating it from the liability to which it would be exposed were it exercising control over Zachary's work.
Zachry's plan was innovative. It would use soil dredged from the channel to construct an 8-foot-wide earthen berm starting from the shore at either end of the worksite, extending out toward the center of the channel, then running parallel to the shore, forming a long, flat U-shaped wall in the channel around the construction area. Zachry would install a refrigerated pipe system in the wall and down into the channel floor that would carry supercooled brine, freezing the wall to make it impenetrable to the water in the channel. Zachry would then remove the water from the area between the wall and the shore. In this way, Zachry could work "in the dry", using bulldozers and other land equipment for the excavation and revetment work. Another advantage to this freeze-wall approach was that it would lower diesel emissions and require fewer nitrous oxide credits under environmental laws, giving the Port more flexibility in other construction projects. Zachry believed this approach would make the work less expensive and allow it to be completed more quickly.
And time was of the essence to the Port. Work began in June 2004 and was to be completed in two years. But two sections of the wharf had to be completed within 20 months — by February 2006 — so that a ship from China could dock, delivering cranes to be used on the wharf. Zachry agreed to pay $20,000 per day as liquidated damages for missing the deadlines.
Nine months into the project, the Port realized that it would need two 1,000-foot berths to accommodate the ships it ultimately expected to service. A sixth 332-foot section would have to be added to the wharf. As a practical matter, only Zachry could perform the additional work, and Zachry and the Port began discussions on a change order. To complete the two sections of the wharf needed by February 2006, and to continue to work "in the dry", Zachry proposed to build another freeze-wall — a cutoff wall — though the middle of the project, perpendicular to the shoreline out to the existing wall, splitting the project into two parts. Zachry would finish the west end where the ship from China would dock, remove the wall barricading water from that area, then continue working on the east end "in the dry".
Two weeks later, the Port ordered Zachry to revise and resubmit its plans without the cutoff wall. The practical effect of the Port's order was to refuse to allow construction of the cutoff wall. Zachry protested that, under Section 5.10 of the contract, the Port had no right to determine the method and manner of the work, but the Port would not budge. Zachry's only option was to finish the westmost sections in time for the ship from China to dock, then remove the wall altogether and continue to work "in the wet", which would delay completion of the project and increase its cost.
In negotiating Change Order 4, the Port had promised not to impose liquidated damages for delay as long as the ship from China could dock when it arrived, though the Port had refused to put its promise in writing. Nevertheless, after the ship successfully docked, the Port began withholding liquidated damages from Zachry's payments. Eventually the Port desisted, but not until it had withheld $2.36 million. Zachry completed the project in January 2009, more than two-and-one-half years after the contract deadline.
In November 2006, several weeks after the Port refused to allow construction of the cutoff wall, Zachry sued. Zachry eventually claimed some $30 million in damages from delays caused by the Port. The Port countered that Section 5.07 of the contract precluded delay damages. That provision states:
Zachry argued, and the trial court ultimately agreed, that such a no-delay-damages provision could not be enforced if the Port's intentional misconduct caused the delay.
Zachry also sought recovery of the $2.36 million in delay damages withheld by the Port. The trial court held that the contract's liquidated damages provisions were invalid, and the Port has not challenged that ruling on appeal. But the Port responded that Zachry's claim to the liquidated damages was precluded by the releases it executed to obtain the periodic payments from which liquidated damages were withheld. The releases shared language stating:
After a three-month trial, the jury found that the Port breached the contract by rejecting Zachry's cutoff wall design, causing Zachry to incur $18,602,697 in delay damages.
Both the Port and Zachry appealed. The court of appeals held that the no-delay-damages
We granted Zachry's petition for review.
Zachry argues that the no-damages-for-delay provision of the contract (Section 5.07) is invalid. The Port disagrees but also argues that even if the provision has no effect, the contract is otherwise silent on the recovery of delay damages, and the Local Government Contract Claims Act ("the Act")
The issue has two parts. One is whether the Act's limitations on recovery help define and restrict the scope of the waiver of immunity. If not, those limitations have no role in determining a court's jurisdiction over a claim.
The Act waives immunity from contract suits for local governmental entities, such as the Port.
A "contract subject to this subchapter" includes "a written contract stating the essential terms of the agreement for providing goods or services to the local governmental entity that is properly executed on behalf of the local governmental entity".
The "terms and condition of this subchapter" referred to in Section 271.152 are found in the Act's other nine sections. Section 271.153 states:
Section 271.154 provides for enforcement of contractual adjudication procedures.
Whether the various provisions of the Act define the scope of the waiver of immunity depends on the statutory text. As a rule, a modifier like the last "subject to" phrase in Section 271.152 applies to the nearest reasonable referent.
The "subject to the terms and conditions" phrase in Section 271.152 incorporates the other provisions of the Act to define the scope of its waiver of immunity. The waiver does not extend to tort suits, suits in federal court, or allow recovery beyond that permitted by Section 271.153. But Section 271.152, as qualified by this "subject to" phrase also does not preclude other defenses or other contractual procedures, or confer immunity or suggest joint enterprise. The "subject to" phrase most reasonably refers to "waives", thus making the provisions of the Act limitations on the waiver of immunity. Section 271.152 must be read as follows: "A local governmental entity ... waives sovereign immunity to suit ... subject to the terms and conditions" of the Act.
We reached this result in Tooke v. City of Mexia
The text of Section 271.152 and our decision in Tooke ought to have settled the matter, but courts of appeals have read our decision in Kirby Lake Development, Ltd. v. Clear Lake City Water Authority
The Austin Court of Appeals has laid out the case for confining the scope of the Act's waiver to Section 271.152 in its opinion in City of San Antonio v. Lower Colorado River Authority.
By "substantial" claim we mean, as we held in Texas Department of Parks and Wildlife v. Miranda, that the claimant must plead facts with some evidentiary support that constitute a claim for which immunity is waived, not that the claimant will prevail.
We conclude that the Act does not waive immunity from suit on a claim for damages not recoverable under Section 271.153.
Under Section 271.153(a)(1), the "amount of money awarded ... for breach of contract" includes "the balance due and owed ... under the contract" as amended, "including any amount owed as compensation for the increased cost to perform the work as a direct result of owner-caused delays".
No such requirement can be found in the statute's text. The phrase, "balance due and owed/owing", is not defined in the Act, and the Legislature has not used it except in three other statutes waiving governmental immunity, where it is also undefined: the State Contract Claims Act,
Section 271.153(a)(1) does not require the "balance due and owed ... under the contract" to be ascertainable from the contract because, for one thing, this Section expressly includes "any amount owed as compensation ... for owner-caused delays", an amount which cannot be determined in advance, when the contract is executed. To "include" means "[t]o contain
Furthermore, Section 271.153(b) excludes from the "[d]amages awarded ... under a contract" consequential damages except as allowed in Subsection (a)(1). If the latter provision limited recovery to amounts stated in the contract, Subsection (b) would be surplusage: a claimant could recover all amounts stated in the contract, and all consequential damages stated in the contract. Read together, Subsections (a)(1) and (b) allow recovery of contract damages, including delay damages, but excluding other consequential damages. Nothing in the rest of Section 271.153 suggests that recoverable damages must be stated in the contract.
We conclude that the Local Government Contract Claims Act waives immunity for a contract claim for delay damages not expressly provided for in the contract.
We held in Green International, Inc. v. Solis that a contractor may generally agree to assume the risk of construction delays and not seek damages.
And we also noted
The jury found that Zachry's delay damages resulted from the Port's "arbitrary and capricious conduct, active interference, bad faith and/or fraud" as those terms were defined in the charge.
As a matter of textual interpretation, it is doubtful whether the rule of ejusdem generis would allow "other fault", following "negligence" and "breach of contract", to include the kind of deliberate, wrongful conduct the Port was found by the jury to have engaged in.
Regardless, the purpose of the second Ball exception is to preclude a party from insulating himself from liability for his own deliberate, wrongful conduct.
We have indicated that pre-injury waivers of future liability for gross negligence are void as against public policy.
Accordingly, we conclude that the no-damages-for-delay provision, Section 5.07 of the parties' contract, was unenforceable.
Several issues remain.
First: Zachry's contends that it is entitled to recover the $2.36 million that the Port withheld as liquidated damages for Zachry's failure to meet deadlines. For each progress payment, Zachry executed a document entitled "Affidavit and Partial Release of Lien", which contained the following language:
Zachry contends that the releases covered only liens. The Port counters that the releases covered all claims for payment. The trial court concluded that the release language was ambiguous on the issue and charged the jury to determine its effect. The jury failed to find that the release language covered Zachry's claims for liquidated damages withheld by the Port. The court of appeals held that the releases unambiguously covered Zachry's claim for liquidated damages and reversed.
Section 6.07 of the contract conditioned the Port's obligation to make progress payments on Zachry's execution of "waivers and releases of liens" providing "that all amounts due and payable" to Zachry and all subcontractors and suppliers "have been paid in full" and that Zachry "waives, releases and relinquishes any lien ..., security interest and claim for payment". The Port argues that the releases must be construed in light of this requirement because the contract and releases are related contracts and must be read together.
The release forms were captioned "Affidavit and Partial Release of Lien". In the form language, Zachry acknowledged "partial payment ... on all sums owing" on a specified invoice and stated that it had "no further claims against [the Port] for the portion of the Work completed and listed on" the invoice. The release plainly refers only to claims for work completed, not for
Second: The trial court did not award Zachry the entirety of the $2.36 million in withheld payments because the jury found that the Port was entitled to an offset of $970,000 as damages for Zachry's use of defective wharf fenders. Zachry contends that the evidence is legally insufficient to support the jury's finding.
To prove its claim for the offset, the Port submitted evidence that the wharf fenders, which protect vessels from damage during the mooring process, were supposed to last for 30 years but became corroded after only 90 days. The Port's expert witness testified that this occurred because the fenders were improperly sealed and, as a result, "the aluminum pores [] remain[ed] open [and] filled with sea water." A lab analysis and tests that a structural fabrication company conducted supported the expert's conclusion. Zachry contends that the evidence does not establish that it breached the contract because the sealing or coating on the fenders was "thinned" at 25% in accordance with the contract specifications, and if more thinning was required then the blame lies with the specifications and not with Zachry. Even if there were a breach of contract, Zachry argues that the evidence does not establish that the fenders were in fact defective or that the breach caused the damages that the jury awarded.
Viewing the evidence in the light most favorable to the verdict, we cannot agree that the evidence was legally insufficient to support the jury's verdict. Although Zachry submitted evidence that tended to contradict the Port's evidence, we conclude that there was "more than a mere scintilla" of evidence on which a reasonable jury could find that Zachry breached its obligation to provide fenders that were supposed to last 30 years by providing fenders that began corroding within 90 days, and that the Port sustained damages in the amount of $970,000 as a result, entitling it to an offset against the damages recovered by Zachry.
Third: The contract provided that "[i]f [Zachry] brings any claim against the Port Authority and [Zachry] does not prevail with respect to such claim, [Zachry] shall be liable for all attorney's fees incurred by the Port Authority as a result of such claim." The jury found that the Port incurred $10.5 million in attorney fees as a result of Zachry's claim for delay damages, plus additional fees on appeal. Separately, the jury found that the Port incurred $80,250 in attorney fees as a result of Zachry's claim to recover the payments that the Port withheld as liquidated damages, plus additional fees on appeal. In light of our holdings that Zachry prevails on both its claims for delay damages and to recover part of the withheld payments, we reverse the court of appeals' judgment awarding the Port attorney fees.
We hold that Zachry's claim for delay damages is not barred by immunity or by the no-damages-for-delay provision of the contract. We also hold that Zachry is entitled to recover the liquidated damages
Justice BOYD filed a dissenting opinion, in which Justice JOHNSON, Justice WILLETT, and Justice LEHRMANN joined.
Justice BOYD, joined by Justice JOHNSON, Justice WILLETT, and Justice LEHRMANN, dissenting in part.
Chapter 271 of the Texas Local Government Code waives a local governmental entity's immunity against suits for breach of written contracts for goods and services, but it does so only to allow contractors to recover "the balance due and owed by the local governmental entity under the contract." TEX. LOCAL GOV'T CODE § 271.153(a)(1) (emphases added). The Court holds that this waiver allows Zachry Construction Corporation to recover common law delay damages that are not part of "the balance due and owed ... under the contract" it entered into with the Port Authority of Houston. In fact, in this contract, Zachry expressly agreed that the Port Authority would never owe damages for costs that Zachry incurred due to any delay or hindrance. The Court invalidates this no-damages-for-delay clause for public policy reasons. But even after striking that clause, the contract does not provide for or in any way contemplate that the Port Authority would pay for Zachry's delay costs. Because delay costs are not part of "the balance due and owed by [the Port Authority] under [this] contract," I would hold that Chapter 271 does not waive the Port Authority's immunity against Zachry's claim for delay damages, and I would dismiss that claim for lack of jurisdiction. Because governmental immunity bars Zachry's claim for delay damages, I would not reach the issue of whether the no-damages-for-delay clause is void for public policy reasons. I therefore respectfully dissent in part.
As a local governmental entity, the Port Authority "enjoy[s] governmental immunity from suit, unless immunity is expressly waived." Kirby Lake Dev., Ltd. v. Clear Lake City Water Auth., 320 S.W.3d 829, 836 (Tex.2010). Governmental immunity
While most damages awards justly impose the financial consequences of a party's wrongdoing on the wrongdoer, a damages award against a governmental entity imposes the financial consequences on innocent third parties: taxpayers. Thus, although "[t]he doctrine of governmental immunity arose hundreds of years ago from the idea that `the king can do no wrong,'... it remains a fundamental principle of Texas law, intended `to shield the public from the costs and consequences of improvident actions of their governments.'" Lubbock Cnty. Water Control & Improvement Dist. v. Church & Akin, L.L.C., 442 S.W.3d 297, 300 (Tex.2014) (quoting Tooke, 197 S.W.3d at 331-32). In some circumstances, however, justice may demand that the government compensate innocent injured parties even though innocent taxpayers must pay the bill. The challenge is in deciding which circumstances justify a waiver of immunity to allow for such compensation.
Because this decision "requires balancing numerous policy considerations, we have consistently deferred to the Legislature, as the public's elected representative body, to decide whether and when to waive the government's immunity." Lubbock Cnty., 442 S.W.3d at 301. The Legislature may waive the government's immunity, and thereby "consent to suit[,] by statute or by legislative resolution." Fed. Sign v. Tex. S. Univ., 951 S.W.2d 401, 405 (Tex. 1997). The Legislature has declared that we cannot construe a statute to waive immunity "unless the waiver is effected by clear and unambiguous language." TEX. GOV'T CODE § 311.034; see also Tooke, 197 S.W.3d at 328-29 (agreeing that statutory waiver of immunity must be "by clear and unambiguous language"). If a statute seeks to waive immunity, it "must do so beyond doubt." Wichita Falls State Hosp., 106 S.W.3d at 697.
For the first 154 years of Texas' existence, parties who contracted with the government could not recover for the government's breach unless they first convinced the Legislature to pass a special resolution waiving immunity for their specific claim. See Fed. Sign, 951 S.W.2d at 408 (reaffirming previous holdings that "the State is immune from suit arising from breach of contract suits"); TEX. CIV. PRAC. & REM. CODE §§ 107.001-.005 (governing resolutions granting permission to sue the State). Not surprisingly, this often made it difficult for governmental entities to find qualified contractors who were willing to provide goods and services. In 1999, the Legislature enacted Chapter 2260 of the Texas Government Code, providing an administrative procedure through which parties to certain contracts with a State agency or department could recover damages for the agency's breach. See TEX. GOV'T CODE §§ 2260.001-.108. Chapter 2260 did not waive the State's immunity, id. § 2260.006, but instead provided an alternative administrative process through which the contractor could seek relief. See id. The statute provides this option only for parties to certain kinds of contracts, and it limits the administrative award to $250,000 unless the Legislature
Although Chapter 2260 provides a limited avenue of relief for those who contract with State agencies and departments,
As it had done in Chapter 2260, the Legislature strictly limited the immunity waivers in Chapters 262, 271, and 114, not only in terms of the types of contracts under which a party can sue, but also in terms of the types and amounts of damages the party can recover. See TEX. LOCAL GOV'T CODE §§ 262.007(b), (c), 271.153; TEX. CIV. PRAC. & REM.CODE § 114.004. Thus, the Legislature has only recently acted to waive immunity for contract claims, and each time it has done so, it has strictly limited the scope of that waiver. Respectful of the Legislature's prerogative to decide whether, when, and how to waive the State's immunity, and mindful of our obligation to find waivers only in "clear and unambiguous language" that leaves "no doubt," we must carefully and strictly construe and apply these statutory limitations. I dissent in this case because the Court's holding that Zachry's delay damages are recoverable under section 271.153 ignores the statute's limitations.
Section 271.153 is entitled "LIMITATIONS ON ADJUDICATION AWARDS." Id. § 271.153 (emphasis added).
Id. § 271.153(a) (stating that "total amount of money" recoverable "is limited to" these three categories of damages). Conversely, contractors cannot recover:
Id. § 271.153(b).
The Court holds that subsection (a)(1) authorizes Zachry to recover its delay damages. While I agree that delay damages can be part of "the balance due and owed by [a] local governmental entity under [some] contract[s]," I do not agree that they are part of "the balance due and owed by [the Port Authority] under [this] contract." To the contrary, this contract expressly provided that the Port Authority would have no liability for any delay damages. And while I agree that "the balance due and owed ... under the contract" can include "compensation for ... owner-caused delays," compensation for owner-caused delays are not part of the balance due and owed under this contract, which stated that the contractor "shall receive no financial compensation for delay or hindrance to the Work ... EVEN IF SUCH DELAY OR HINDRANCE RESULTS FROM, ARISES OUT OF OR IS DUE, IN WHOLE OR IN PART, TO THE NEGLIGENCE, BREACH OF THE CONTRACT OR OTHER FAULT OF THE PORT AUTHORITY."
Chapter 271 does not define or describe what constitutes "the balance due and owed ... under the contract." When a statute does not give words a specific definition or technical meaning, we use their common, ordinary meaning. City of Rockwall v. Hughes, 246 S.W.3d 621, 625-26 (Tex.2008). Typically, we look to dictionaries to determine the common meaning of words.
In the context of payment obligations, the term "balance" means "the difference between the debits and credits of (an account)." BLACK'S LAW DICTIONARY 170 (10th Ed.). The term "due" means (1) "payable; owing; constituting a debt," when used in relation to a "fact of indebtedness," or (2) "immediately enforceable," when used in relation to "the time of payment." Bryan A. Garner, A DICTIONARY OF MODERN LEGAL USAGE, 298-99 (2nd ed.); see also BLACK'S LAW DICTIONARY 609 (10th Ed.). The Dictionary of Modern Legal Usage notes that the second definition, "immediately enforceable," is "almost invariably the applicable one" today. DICTIONARY OF MODERN LEGAL USAGE at 299. And the term "owing" means "[t]hat is yet to be paid; owed; due." BLACK'S LAW DICTIONARY 1279 (10th Ed.); see also DICTIONARY OF MODERN LEGAL USAGE at 633 (noting that "owed" is the preferred modern usage, over "owing"). The difference between the terms "due" and "owed" is reflected in the fact that something can be owed but not yet due because the date for payment or the contingency on which payment is conditioned has not yet come to pass. See DICTIONARY OF MODERN LEGAL USAGE at 299. A "balance" that is both "due" and "owed" is thus an amount by which an account's debits exceed its credits that is yet to be paid and immediately enforceable. Stated another way, a balance due and owed is a mature debt. This understanding of the phrase is consistent with both the statutory context, which relates to recoverable monetary obligations under a contract, and with our prior use of the phrase "due and owed" or "due and owing," both in our construction of this statute and more generally.
Importantly, section 271.153 modifies the phrase "the balance due and owed" with the prepositional phrase "under the contract." TEX. LOCAL GOV'T CODE § 271.153(a)(1). Under the "rules of grammar," see TEX. GOV'T CODE § 311.011, a preposition (here, "under") imposes a relationship between its object (here, "the contract") and its antecedent (here, "the balance due and owed"). See, e.g., THE CHICAGO MANUAL OF STYLE § 5.173, at 248 (16th ed.); Bryan A. Garner, THE REDBOOK: A MANUAL ON LEGAL STYLE, 176 (2nd ed.). As a result, section 271.153(a)(1) does not allow recovery of all amounts that may be "due and owed by the local governmental entity," but instead limits the recovery to a due-and-owed balance that arises "under" the written contract for goods and services
The Court, by contrast, concludes that "[a] `balance due and owed ... under the contract' is simply the amount of damages for breach of contract payable and unpaid." Ante at 111. I do not agree that a "balance due and owed ... under a contract" includes all common law damages regardless of whether they are contemplated in the parties' contract. When a payment is not provided for under the contract, but instead arises under the common law, that payment may later be due and owed under the court's jud Aent, MMs not part of "the balance due and owed ... under the contract." See TEX. LOCAL GOV'T CODE § 271.153(a)(1) (emphasis added).
The Court's construction of the statute is contrary to the statute's language and its structure. First, the Court's construction separates the phrase "balance due and owed" from the phrase "under the contract," and then alternatively reads each of them out of the statute. On the one hand, the Court equates the phrase "the balance due and owed" with the phrase "damages... payable and unpaid," ante at 111, and by doing so ignores the statute's actual words. On the other hand, the Court treats the phrase "under the contract" as if it said "under a court's judgment," but does so only by relying on court opinions that address damages under a contract, not a "balance due and owed ... under a contract." Ante at 111 n. 62, 64. We must read the two phrases together, just as they appear in the statute, and the Court's alternatives for each simply are not equivalents. By equating "the balance due and owed ... under the contract" with "the amount of damages for breach of contract payable and unpaid," the Court shifts the focus from the mature debt that exists "under the contract" when suit is filed to prospective liability that a Court may impose in a breach of contract action.
Second, by holding that "a `balance due and owed ... under the contract' is simply the amount of damages for breach of contract payable and unpaid," the Court renders subsection (a)(1) a tautology. Under the Court's construction, the amount of damages that is recoverable for a breach of contract is "limit[ed]" to the amount of damages that is recoverable for a breach of contract. Under that construction, the amount of damages is not "limit[ed]" at all.
Third, the Court's construction of subsection (a)(1) renders subsection (a)(2) superfluous. Subsection (a)(2) expressly authorizes the recovery of "the amount owed
Finally, under the Court's construction of subsection (a)(1), the exception to the exclusion of consequential damages in subsection (b)(1) would completely swallow the rule. Subsection (b)(1) provides that recoverable damages may not include "consequential damages, except as expressly allowed under Subsection (a)(1)." Id. § 271.153(b)(1). As the Court notes, "[d]elay damages are consequential damages." Ante at 114 n. 71. If subsection (a)(1) authorizes the recovery of all common law damages for breach of contract, then consequential damages, which are recoverable for a breach of contract, are "expressly allowed under Subsection (a)(1)." And in that case, subsection (b)(1) would not exclude any consequential damages. See TEX. LOCAL GOV'T CODE § 271.153(a)(1), (b). In short, under the Court's construction, subsection (a), which says recoverable amounts are "limited" to those specified in subsections (a)(1) through (a)(4), does not in fact "limit" anything; and subsection (b), which says recoverable amounts "may not include" those listed in subsection (b)(1), does not in fact exclude anything.
In addition to the language of the statute, the Court's holding contradicts our precedent on this very point. We have addressed section 271.153(a)(1) in three prior decisions, and in each of them we have held, or at least indicated, that a "balance" is "due and owed ... under the contract" only if it is "stipulated," "provided for," or at least "contemplated" within the parties' written agreement. See Sharyland Water Supply Corp. v. City of Alton, 354 S.W.3d 407, 413 (Tex.2011) ("The kind of damages sought by Sharyland were not those provided for or contemplated in the Water Supply Agreement and are not a `balance due and owed' under that contract."); Kirby Lake, 320 S.W.3d at 840 (holding that the damages sought were part of the balance due and owed under the contract because "the Agreements do stipulate the amount of reimbursement owed upon approval of bond funds"); Tooke, 197 S.W.3d at 346 (holding that lost profits from additional work "are consequential damages excluded from recovery under the statute").
In Tooke, the Court held that the claimants could not recover after the City of Mexia prematurely terminated their service contract because they "claim[ed] only lost profits on additional work they should have been given," which "are consequential
Similarly, in Sharyland, the contractor, the Sharyland Water Supply Corporation, sought to recover its "increased cost to perform" its contractual duty to repair and maintain a water system, which allegedly resulted from the City of Alton's breach of its own contractual duties. 354 S.W.3d at 413. We held that section 271.153(a)(1) did not authorize Sharyland to recover its increased repair and maintenance costs because "[t]he kind of damages sought by Sharyland were not those provided for or contemplated in the Water Supply Agreement and are not a `balance due and owed' under that contract." Id.
In Kirby Lake, by contrast, we held that the damages the claimant sought were recoverable as "the balance due and owed... under the contract" because "the Agreements do stipulate the amount of reimbursement owed upon approval of bond funds." 320 S.W.3d at 840 (emphasis added). Consistent with the language of the statute and our precedent, I would hold that section 271.153 does not authorize Zachry to recover its delay damages because those damages are not provided for or contemplated in the parties' agreement,
Relying on the language at the end of section 271.153(a)(1), the Court asserts that "Section 272.153(a)(1) does not require the `balance due and owed ... under the contract' to be ascertainable from the contract because, for one thing, this Section expressly includes `any amount owed as compensation ... for owner-caused delays,' an amount which cannot be determined in advance, when the contract is executed." Ante at 111. To the extent the Court is arguing that the statute authorizes recovery of amounts that are not quantified in the contract or ascertainable at the time of contracting, I agree. Amounts need not be quantified in the contract or ascertainable at the time of contracting to be "due and owed ... under the contract." Delay costs, in particular, cannot be quantified at the time of contracting because the parties cannot predict the length of the delay or how the delay will impact the contractor's work. But parties can, and sometimes do, agree that the owner will compensate the contractor for owner-caused delays, and when they do, the delay costs are recoverable under the statute. Here, however, the parties did not agree that the Port Authority would compensate Zachry for owner-caused delays; instead, they expressly agreed that Zachry would receive "no financial compensation for delay or hindrance to the Work ... EVEN IF SUCH DELAY OR HINDRANCE" was owner-caused.
The Court misconstrues the language at the end subsection (a)(1) to independently authorize recovery of "any amount owed as compensation ... for owner-caused delays," even if that amount is not part of "the balance due and owed ... under the contract." Ante at 111. In doing so, the Court overlooks the key word that connects these two phrases: "including." The word "including" in this subsection does not expand the meaning of the words that come before it ("the balance due and owed"); rather, it limits the meaning of the words that come after it ("any [owner-caused delay damages]") to "include" only those owner-caused delay damages that are in fact "due and owed." See BLACK'S LAW DICTIONARY at 766 (defining "include" to mean "contain as part of something"). The Court thus reads subsection (a)(1) as authorizing recovery of the balance due and owed ... under the contract and (or plus) any delay damages, when in fact the statute authorizes recovery of "the balance due and owed ... under the contract ..., including any amount owed" as damages for owner-caused delays. TEX. LOCAL GOV'T CODE § 271.153(a)(1) (emphasis added).
For example, if a franchise agreement authorized a franchisee to operate "in any Texas city, including Athens," the agreement would permit operations in Athens, Texas, but not in Athens, Greece, or Athens, Georgia. The word "including" is not a synonym for the word "and." It does not expand the meaning of "any Texas city" to include Athens, Greece, or Athens, Georgia, merely because those cities are also named "Athens." Instead, it limits the scope of the reference to "Athens" to the "Texas city" by that name.
The language the Legislature used in its most recent statutory waiver of immunity for breach of contract suits further confirms this point. See TEX. CIV. PRAC. & REM.CODE § 114.004. In this statute, through which the Legislature waived immunity for certain contract claims against state agencies just last year, the Legislature used the same language it used in section 271.153, but added a final clause to further clarify that the amount recoverable "is limited to":
Id. § 114.004(a)(1) (emphasis added). While the Court contends that the inclusion of the emphasized language gives this statute a meaning that is different than the meaning of section 271.153(a)(1), which does not include the emphasized language, that contention is unsupportable within this context. The language of sections 114.004 and 271.153 (and, for that matter, 262.007) are in all material respects the same, demonstrating that the Legislature intended to follow a uniform approach in strictly limiting the scope of these statutory waivers of immunity. More importantly, by using the same "including" language that appears in section 271.153, section 114.004 confirms that both statutes only permit recovery of owner-caused delay damages that are "included" within "the balance due and owed ... under the contract." If anything, section 114.004(a)(1) narrows the scope of recoverable damages by requiring that the contract "expressly provide[] for" the payment of such compensation.
Parties to construction contracts often allocate unquantified costs between themselves, just as Zachry and the Port Authority did with delay costs. Zachry and the Port Authority allocated all of Zachry's delay-related expenses and losses to Zachry, even if the Port Authority was at fault for the delay. But parties to construction contracts sometimes choose a different allocation, obligating an owner to reimburse the contractor for some or all owner-caused delay costs. See, e.g., Mas-Tec N. Am., Inc. v. El Paso Field Servs., L.P., 317 S.W.3d 431, 452 (Tex.App.-Houston [1st Dist.] 2010) (involving construction contract in which owner agreed to compensate contractor for certain owner-caused delays) rev'd, 389 S.W.3d 802 (Tex.2012) (holding that contract allocated all risk of unknown obstructions in construction path to contractor); Shintech Inc. v. Group Constructors, Inc., 688 S.W.2d 144, 148 (Tex.App.-Houston [14th Dist.] 1985, no writ) (involving contract that allocated to the owner's account undue expenses incurred by the contractor as a result of owner-caused delays). If this contract had
I agree with the Court that Zachry's claim to recover installment payments that the Port Authority withheld as liquidated damages are recoverable under section 271.153 and that Zachry did not unambiguously release that claim, but I would hold that section 271.153 does not waive the Port Authority's immunity against Zachry's claim for delay damages. Based on the language and our prior constructions of the statute, I would hold that section 271.153 permits an award of delay damages only if those damages are provided for or contemplated in the agreement and are thus part of "the balance due and owed... under the contract." Because this contract did not provide for or contemplate the Port Authority's payment of Zachry's delay damages, I would hold that Zachry's delay damages are not part of "the balance due and owed ... under the contract"; section 271.153 therefore does not authorize an award of those damages in this case; and thus section 271.152 does not waive the Port Authority's immunity against Zachry's suit for such damages.
It should also be noted that the State Contract Claims Act was amended in 2005 (Act of May 27, 2005, 79th Leg., R.S., ch. 988, H.B. 1940, § 1, 2005 Tex. Gen. Laws 3292), the same year the Local Government Contract Claims Act was adopted (Act of May 23, 2005, 79th Leg., R.S., ch. 604, H.B.2039, § 1, 2005 Tex. Gen. Laws 1548), to provide for recovery of delay damages, but did so using the word "and" instead of "including". Supra note 59. Using the dissent's argument, one might contend that both statutes intended that delay damages be recoverable whether or not provided for by contract.
See TEX. LOCAL GOV'T CODE § 271.153. The Court's reading of section (a)(1) does not alter the scope of recoverable attorney's fees or interest, it simply expands the scope of authorized damages to include all recoverable damages. Therefore, it does not limit recoverable damages at all.
Sharyland, 354 S.W.3d at 413. We thus addressed all provisions of subsections (a)(1) and (a)(2), demonstrating that there was no possible basis on which any of them could have authorized the recovery of the repair and maintenance costs that Sharyland sought. See id. Sharyland did not argue that its damages were independently recoverable as "owner-caused delay damages," and we did not address the issue for which the Court now cites this language. See id. Instead, we simply explained that the damages Sharyland sought did not fit within any of the descriptions in subsection (a)(1) or (a)(2). See id. And, consistent with Tooke and Kirby Lake, we equated "the balance due and owed ... under the contract" with the amounts "provided for or contemplated" in the parties' agreement. See id. I address the issue of whether the "including" clause at the end of subsection (a)(1) authorizes delay damages that are not "due and owed ... under the contract" in the next section.