In 2014, Texas Southern University (TSU) executed a contract with Pepper-Lawson/Horizon International Group (PLH) on a project to construct student housing. The contract required completion by August 31, 2015, subject to justified time extensions and equitable price adjustments for certain types of delays. PLH did not complete the project until February 2016, and then invoiced TSU for $7 million, $3.3 million due under the contract and plus $3.7 million for “additional direct costs” PLH had allegedly incurred due to “excusable delays.”
TSU refused to pay, and PLH sued. Both the facts and the interplay of contracts provisions involve multiple complexities. The issue on appeal was whether sovereign immunity barred the suit.
Although PLH’s pleadings expressly invoked the immunity waiver in Section 114.003 of the Texas Civil Practice and Remedies Code, TSU made a jurisdictional argument, asserting Section 114.003 was inapplicable because PLH failed to plead a claim covered by the waiver provision. TSU claimed that (1) PLH failed to plead facts showing “breach of an express provision of the contract”; (2) PLH failed to point to a contractual provision expressly allowing recovery of damages for owner-caused delays or attorney’s fees; and that remaining claims were moot. As a result, PLH was not entitled to enhanced interest or attorney’s fees.
The trial court rejected TSU’s arguments, but the Texas court of appeals, reversed on an interlocutory appeal. In Pepper Lawson Horizon International Group LLC v. Texas Southern University, the Supreme Court of Texas, without hearing or oral argument, found that the court of appeals erred. The issue was not whether the contract unambiguously established a waiver of sovereign immunity but whether the statute did so. PLH had adequately alleged that it did, and it adequately alleged a breach of contract entitling it to damages. Plaintiffs need not prove their case on a jurisdictional challenge. They only have to make allegations sufficient to establish jurisdiction.
The case was remanded to proceed to the merits.
