City of El Paso v. High Ridge Construction, Inc
In City of El Paso v. High Ridge Construction, Inc., 442 S.W.3d 660 (Tex. App.--El Paso 2014, pet. filed), the El Paso Court addressed a contract that required a contractor to weatherize private homes in a program funded by the federal government and administered by the City of El Paso. Id. at 663, 669.
After the City refused to pay for the materials and services provided by the contractor to various homeowners, the contractor sued. Id. at 664.
In its suit against the City, the contractor alleged that section 271.151 of the Local Government Code waived the City's immunity from suit. Id.
After it was sued, the City of El Paso filed a plea to the jurisdiction, claiming that it was immune from being sued by the contractor for nonpayment because it was not the recipient of the weatherization services. Id. at 664-65, 669.
After the trial court denied the City's plea, the City filed an interlocutory appeal. After examining whether High Ridge's claim involved the delivery of goods or services to the City, the El Paso Court explained that "the weatherization services provided by High Ridge to private residential properties did not provide a direct benefit to the City." Id. at 669-70.
The El Paso Court concluded that the services that High Ridge provided were "not the type of service contemplated by Section 271.152." Id. at 670.
However, after rejecting the argument that the weatherization services were provided to the City, the El Paso Court then examined whether other provisions in the contract required that High Ridge provide goods or services to the City, even though those other services had not formed the basis of the claims High Ridge was making in its suit. Id.
Looking to the indemnity provision in the contract, the El Paso Court observed that High Ridge was required to indemnify the City against claims under the contract if such claims arose "out of High Ridge's activities under the contract." Id.
Looking to the warranty provision of the contract, the El Paso Court noted that High Ridge was required "to provide a one year warranty to the client and to the City for all weatherization work that High Ridge completed." Id.
Based on the contract's warranty and indemnity provisions, provisions that were not the subject of High Ridge's claimed breach, the El Paso Court concluded: "The warranty and indemnity provisions certainly operate as a direct benefit to the City." Id.