HOUSTON – The 14th Court of Appeals agreed with a lower court's ruling that the city of Houston does not have governmental immunity in a case involving Tri-Stem LTD.
"We conclude that the trial court implicitly and correctly denied the city's assertion of governmental immunity because the city performed a proprietary function in entering into its contract with Tri-Stem," the opinion states, which was written by Justice Tracy Christopher.
The court also noted in its Nov. 29 opinion that it believed the 215th District Court of Harris County abused its discretion when it denied a motion for a continuance filed by Tri-Stem to allow for more time to obtain discovery and testimony via deposition.
"Therefore, without addressing the remainder of Tri-Stem’s appellate challenges, we reverse the trial court’s grant of summary judgment on the merits, and we remand the cause to the trial court for further proceedings consistent with this opinion," Christopher's decision states.
The Appellate Court's disposition of the governmental immunity issue and continuance issue rendered Tri-Stem’s remaining issues, which involved summary judgment, moot, according to the opinion.
Tri-Stem was contracted to audit Houston's utility bills and Tri-Stem was to receive 45 percent of whatever refunds the city received because of the audits for up to four years after the contract was terminated, the opinion states.
Tri-Stem discovered CenterPoint Energy Houston Electric allegedly owed the city money for streetlights and when CenterPoint refused to refund the city, a lawsuit was filed on behalf of the city by Beck Redden LLP. The city later negotiated a settlement with CenterPoint.
Tri-Stem claims it is entitled to $5.6 million but that it was not paid anything due to the litigation. It then sued the city.
The city argued it had governmental immunity and that its agreement with CenterPoint dealt with the general welfare of the public.
"This case is not about the city’s contract with CenterPoint; it is about the city’s contract with Tri-Stem," the opinion states.
The court concluded that Houston "performed a proprietary function in entering into its contract with Tri-Stem," the opinion states.
"Because governmental immunity does not apply to claims arising from a proprietary contract, the trial court did not err in implicitly denying the city’s assertion of governmental immunity," the opinion states.
Justices William J. Boyce, Christopher and Brett Busby presided over the appeal.
14th Court of Appeals case number 14-17-00545