City of the Colony, Texas AND City of Frisco, Texas AND North Texas Municipal Water District v. North Texas Municipal Water District and City of Frisco, Texas AND City of the Colony, Texas

COURT OF APPEALS
SECOND DISTRICT OF TEXAS
FORT WORTH

NO. 2-07-128-CV

CITY OF THE COLONY, TEXAS APPELLANT
V.

NORTH TEXAS MUNICIPAL WATER APPELLEES
DISTRICT AND CITY OF FRISCO,
TEXAS

AND

CITY OF FRISCO, TEXAS APPELLANT

V.

CITY OF THE COLONY, TEXAS APPELLEE

AND

NORTH TEXAS MUNICIPAL WATER APPELLANT
DISTRICT
V.

CITY OF THE COLONY, TEXAS APPELLEE

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FROM THE 362ND DISTRICT COURT OF DENTON COUNTY

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OPINION
 ------------

I. INTRODUCTION

City of The Colony, Texas, entered into a tri-party contract (the

“Contract”) in 1998 with City of Frisco, Texas, and North Texas Municipal

Water District (“the District”) for, among other things, the construction and

operation of a regional wastewater system for the purpose of providing a

facility to treat wastewater from both cities. The Colony made contractually

required payments to the District for a number of years. But ultimately, it never

delivered any of its wastewater to the District for treatment, it ceased making

payments to the District, and it sued the District and Frisco for breach of

contract, for a declaratory judgment that no contract was formed, and

alternatively, for rescission of the Contract.

With the exception of one of The Colony’s contract claims, the trial court

granted the District’s first amended motion for summary judgment on The

Colony’s causes of action. With the exception of the amount of damages and

attorneys’ fees to be awarded Frisco, the trial court granted Frisco’s motion for

summary judgment on The Colony’s causes of action and on Frisco’s breach of

contract counterclaim. The remaining claims or outstanding issues went to

trial. In addition to findings regarding attorneys’ fees, a jury subsequently

found that the District had materially breached the Contract for failing to have

2
adequate capacity but that the breach was excused because The Colony had

previously failed to comply with a material obligation of the Contract and that

The Colony owed $0.00 to Frisco for The Colony’s failure to comply with the

Contract. The Colony, the District, and Frisco each filed a notice of appeal.

In three issues, The Colony argues that the trial court erred by granting

Frisco’s motion for summary judgment and the District’s motion for summary

judgment and that certain subsequent trial court rulings based upon the

summary judgment rulings caused the rendition of an improper judgment. In

two issues, Frisco argues that the evidence is legally and factually insufficient

to support the jury’s findings that The Colony owed Frisco $0.00 for The

Colony’s failure to comply with the Contract and that Frisco was entitled to

$0.00 for Frisco’s appellate attorneys’ fees. And in three issues, the District

argues that the trial court erred by overruling its motion to disregard the jury’s

finding that it materially breached the Contract and that the evidence is legally

and factually insufficient to support the jury’s findings that the District breached

the Contract and that the District was entitled to $0.00 for attorneys’ fees. As

to The Colony’s appeal, we will affirm. As to Frisco’s appeal, we will affirm in

part and reverse and render in part. As to the District’s appeal, we will affirm.

II. F ACTUAL AND P ROCEDURAL B ACKGROUND AND C ONTRACT E XCERPTS

3
 Lanny Lambert served as The Colony’s city manager from the summer of

1997 to October 2000. According to Lambert, The Colony’s mayor and city

council wanted to participate with the District in the creation of a regional

wastewater treatment system. At the time, The Colony treated its wastewater

at its Stewart Creek treatment plant, but the mayor and city council wanted to

join a regional system because they felt it was the most economically feasible

solution to The Colony’s increasing need for treatment capacity and because

the existing plant was aging, deteriorating, and had odor problems. According

to Lambert, “[O]ur goal at the time was to join the regional system. We hoped

to cut our costs and really to get out of the sewer treatment business, pump

all of our sewer to [the District] and get out of the business.” A reason for The

Colony’s increasing need for wastewater treatment capacity was due to the

growth that the city was experiencing from the Austin Ranch and Wynnewood

Peninsula developments. Lambert was thus tasked with the assignment of

negotiating an agreement with the District and Frisco. 1

1
… According to the contract subsequently executed by the parties, “the
District [was] currently operat[ing] a wastewater treatment plant, known as the
‘Stewart Creek West Plant’ [the plant the subject of the Contract] . . .[,] on
behalf of Frisco.” This is a separate plant from The Colony’s Stewart Creek
Plant.

4
 Lambert met numerous times with Carl Riehn, the District’s then

executive director; George Purefoy, Frisco’s city manager; and a District

engineer, among others, including representatives from The Colony. Through

his participation in the meetings, Lambert came to the understanding that The

Colony was “requesting to be allowed to participate” in the regional system but

that Frisco did not “particularly care or want [The Colony] to be involved” even

though it was “something [The Colony] wanted to do.” 2 Lambert was told

about a border dispute that had occurred earlier in history between The Colony

and Frisco.

The Colony, Frisco, and the District reached an agreement and executed

the nineteen-page Contract, entitled, “Stewart Creek West Regional

Wastewater System Contract,” on May 28, 1998.3

Relevant initial portions of the contract are as follows:

WHEREAS, there have been prepared for and filed with the District
the following: Report on a Proposed Regional Wastewater System
for the Cities of Frisco and The Colony . . . dated February, 1997,

2
… Antonio Johnston, The Colony’s assistant city manager since 2001,
agreed that Lambert “has the most knowledge and best understanding of the
negotiations before and leading up to and entry into the contract.”
3
… According to Lambert, “It was my understanding after much
discussion that [Purefoy] and [Frisco] concluded that if we [The Colony] paid
our fair share and we participated in the cost, that it would lower their costs
. . . .”

5
by Hunter Associates Texas, Ltd., Consulting Engineers, Dallas,
Texas (the “Engineering Report”); and

WHEREAS, the parties hereto wish to further implement the
Engineering Report and provide for the acquisition, construction,
improvement, operation and maintenance of a Regional Wastewater
System (the “System”) for the purpose of providing facilities to
adequately receive, transport, treat, and dispose of Wastewater;
and

....

WHEREAS, the Participants have deemed it necessary and desirable
to contract with the District to provide for the expansion of the
Plant and the acquisition, construction, improvement, operation and
maintenance of the System to achieve efficiencies of cost and
operation; and

....

WHEREAS, the parties hereto recognize these facts:

(a) That the District will use the payments to be received under this
Contract and similar contracts, if any, for the payment of Operation
and Maintenance Expense of the System and for the payment of
the principal of, redemption premium, if any, and interest on its
Bonds . . . .

....

(c) That the District will issue Bonds from time to time in the future to
acquire, construct, extend, enlarge, improve, and/or repair the
system.

Relevant definitions contained in the Contract are as follows:

“Annual Payment” means the amount of money estimated as
provided in Section 5.03 of this Contract to be paid to the District

6
 by Participants as their proportionate share of the Annual
Requirement.

“Annual Requirement” means the total amount of money required
for the District to pay all Operation and Maintenance Expense of
the System and to pay the principal of, and redemption premium,
if any, and interest on its Bonds . . . .

“District’s System,” “Regional System,” “Regional Wastewater
System,” or “System” means all of the District’s facilities acquired,
constructed, used, or operated by the District for receiving,
transporting, treating, and disposing of W astewater of and for
Participants, pursuant to this Contract (but excluding . . . any
facilities required to transport Wastewater to any Point of Entry of
the District’s System) . . . . Said terms shall include only those
facilities which are acquired, constructed, used, or operated by the
District to provide service to Participants pursuant to this Contract
....

“Participants” means Frisco, The Colony and all Additional
Participants.

“Point of Entry” means any point at which Wastewater enters the
property on which any Wastewater treatment plant operated by the
District is located . . . .

“Wastewater” means Sewage, Industrial Waste, Municipal Waste,
Recreational Waste, and Agricultrual Waste, as defined in the Code,
together with properly shredded garbage, and such infiltration
water that may be present. [Emphasis added.]

Section 2.01, under the heading “Providing of Facilities by the District,”

states in part as follows:

In order to provide services for receiving, transporting, treating, and
disposing of Wastewater for Participants, the District will use its
best efforts to design, acquire, construct, and complete the
System, as generally described in the Engineering Report . . ., and

7
 will operate and maintain the System, and from time to time
enlarge, improve, repair, replace, and/or extend the System to
provide service to the Participants. [Emphasis added.]

Relevant portions of the Contract under Article III, entitled “Discharge of

Wastewater and Metering,” provide as follows:

Section 3.01. DISCHARGE. In consideration of the payments to
be made under its respective contract with the District, each of the
Cities of The Colony and Frisco have and shall have the right to
discharge all of its Wastewater from its respective sewer system
into the District’s system, provided that such Wastewater meets
the requirements for quantity and quality as set forth in its
respective contracts with the District . . . .

Section 3.02. POINT OF ENTRY. Each Participant may discharge
all such Wastewater generated from such Participant’s sewer
system into the designated Point or Points of Entry for such
Participant, unless such Participant and the District mutually agree
that like service can be provided elsewhere in the System.

Section 3.03. CONVEYANCE TO POINT OF ENTRY. It shall be the
sole responsibility of each participant to transport, or cause to be
transported, at no cost to the other Participants, its Wastewater to
its Point or Points of Entry. [Emphasis added.]

Relevant portions of the Contract under Article V, entitled “Payments,”

are as follows:

Section 5.01. FINANCING. The District will issue its Bonds, in
amounts and at times as determined by the District, to provide the
System.

Section 5.02. ANNUAL REQUIREMENT. It is acknowledged and
agreed that payments to be made under this Contract will be the
only source available to the District to provide the Annual
Requirement; . . . .

8
Section 5.03. PAYMENTS BY CITY. (a) For services to be
rendered to each Participant by the District under this Contract and
other similar contracts, if any, each Participant has agreed to pay,
at the time and in the manner hereinafter provided, its
proportionate share of the Annual Requirement, which shall be
determined as hereafter described and shall constitute a
Participant’s Annual Payment or Adjusted Annual Payment. . . .

....

(d) Each Participant’s Annual Payment also shall be adjusted and
redetermined for the balance of any applicable Fiscal Year,
consistent with the provisions of this contract, and initially
based on estimated contributing flow, at any time during any
Fiscal Year if:

....

(v) It appears to the District that for any other reason it
will not receive the full amount of the Annual
R e q u ire m e n t unless such a d ju stm e n t and
redetermination are made.

....

(h) . . . Recognizing the fact that the Participants urgently
require the facilities and services covered by this Contract,
and that such facilities and services are necessary for actual
use and for stand-by purposes; and further recognizing that
the District will use the payments received from the
Participants hereunder to pay, secure, and finance the
issuance of its Bonds, it is hereby agreed that the
Participants shall be obligated unconditionally, and without
offset or counterclaim, to make the payments designated as
the “Bond Service Component” of the Annual Requirement,
in the manner provided in this Contract, regardless of
whether or not the District actually provides such facilities
and services, or whether or not any Participant actually

9
 receives or uses such facilities and services, and regardless
of the validity or performance of the other parts of this or
any other contract . . . . Each Participant further agrees that
it shall be obligated to make the payments designated as the
“Operation and Maintenance Component” of the Annual
Requirement . . . .

(i) . . . Each Participant agrees that it will make such payments
to the District on or before the twentieth (20 th) day of each
month of such Fiscal Year. If any Participant shall dispute
the Annual Budget, and proceed as provided in Article VII,
such Participant nevertheless promptly shall make the
payment or payments determined by the District . . . .
[Emphasis added.]

Relevant portions of the Contract under Article VIII, entitled “The

System,” are as follows:

Section 8.01. INITIAL FACILITIES OF THE SYSTEM. (a) The
System shall initially consist of the Plant.

(b) . . . . [T]he District and the Participants agree that this
Contract shall constitute an operating agreement with
respect to the Plant . . . . [Emphasis added.]

Section 11.01 of the Contract provides that the Contract shall become

effective as of the date of its execution.

The Contract thus demonstrates that The Colony, Frisco, and the District

entered into an agreement for the District to operate the Stewart Creek West

Plant (the “plant”) for the purpose of treating The Colony’s and Frisco’s

wastewater, which they were required to transport at their sole responsibility

and discharge to the designated point of entry, in exchange for The Colony’s

10
and Frisco’s annual payments to the District. The Contract further required the

District to use The Colony’s and Frisco’s annual payments to repay the principal

and interest on the bonds issued to finance the agreed plant expansion and to

pay for the system’s operation and maintenance expenses.

Absent from the Contract—and at the heart of the underlying litigation—is

a specific recitation of how The Colony and Frisco were to transport their

wastewater to the point of entry, which is located at the plant and is within

Frisco’s borders. Because the point of entry is located at the plant and because

the plant is wholly within Frisco’s borders, pipelines running from portions of

The Colony would necessarily have to run through Frisco. According to

Lambert, although there were “discussions” in the latter part of the meetings

that he attended leading up to the execution of the Contract concerning how

The Colony planned to transport its wastewater to the point of entry, this was

a “secondary issue” at the time; “[t]he purchase of capacity was the major

victory.” The actual negotiations between The Colony and Frisco regarding the

means by which The Colony was to transport its wastewater to the point of

entry were to be conducted at some point after the Contract’s execution, and

the final agreements concerning the same would be documented in another

written contract. Lambert thus did not begin those negotiations before leaving

The Colony, but he understood that it was the District’s obligation to build,

11
maintain, and operate the plant and that The Colony was responsible for

transporting its wastewater to the point of entry.

At the time of the Contract’s execution, the only “access” that The

Colony had to the plant—in terms of transporting its wastewater thereto

(excluding the “ludicrous” option of transporting wastewater by truck)—was via

an old pipeline that ran between The Colony’s Stewart Creek Plant and the

plant. Lambert, however, “never really spent any time researching that option,”

and he did not “remember why it was there or what it was for.” Therefore, at

the time of the Contract’s execution and with the exception of the old pipeline

that Lambert had not anticipated utilizing for transporting The Colony’s

wastewater to the plant, The Colony had not physically built the infrastructure

or pipelines necessary to transport wastewater to the plant. Based on the

discussions that he had before the Contract was executed, Lambert thought

The Colony was going to attempt to implement the 1997 report prepared by

Hunter Associates Texas, Ltd. and referenced at the beginning of the Contract,

otherwise referred to as the “red book.” The “red book” proposed plans for

transporting The Colony’s wastewater in part by laying pipelines from

Wynnewood Peninsula and Austin Ranch to the plant.

During Lambert’s tenure as city manager, which ended in the fall of 2000,

The Colony did not need the capacity that it had purchased from the District.

12
John Dillard, The Colony’s mayor and former city councilman, reasoned that

“[w]hen we entered into the Contract, we had no need of their services at that

time”; instead, “we had entered into an agreement to pay them for future

services.” Johnston shared Dillard’s recollection, agreeing that The Colony

acquired capacity in the plant in 1998 for future use. Lambert therefore

anticipated there being a period of time, possibly until 2003 or 2004, in which

The Colony made contractual payments but had none of its wastewater treated

at the plant.

After execution of the Contract, the District sold $7,125,000 in bonds

that it utilized to fund the plant expansion. It completed the expansion

sometime in January 2001. The expansion increased the plant’s wastewater

treatment capacity from 1.5 million gallons per day to a total capacity of 5

million gallons per day.

The Colony made its first payment under the Contract on or about March

1, 1999. After Lambert left his position as city manager of The Colony, he

became a consultant for The Colony for six months. Within three months of

Lambert’s departure from The Colony, he instructed Johnston that he (The

Colony) needed to “get the system going” and “initiate the infrastructure into

the ground.” Johnston understood Lambert’s instruction to mean that The

Colony was “to begin routing wastewater to the Stewart Creek West plant.”

13
In furtherance of Lambert’s instructions, between February and June 2001,

Johnston contacted the District; met with the Billingsley Corporation, who

developed the Austin Ranch property; contacted an individual with Matthews

Southwest, the developers of Wynnewood Peninsula; met with The Tomlin

Property, who owned the portion of Wynnewood Peninsula inside Frisco; and

contacted Frisco. Johnston also introduced Dale Cheatham—The Colony’s city

manager as of August 1, 2001—to Jim Parks, the District’s Executive Director.

The Colony had a number of meetings with the District regarding wastewater

transportation thereafter.

Notwithstanding the “red book,” The Colony eventually hired the

engineering firm of Freese and Nichols, Inc. to prepare a report setting forth

various alternatives for routing wastewater to the plant. Johnston informed

James Baddaker, a Freese and Nichols engineer, about a few “issues” that

existed between The Colony and Frisco, and Baddaker gained an understanding

“that there may have been impediments to The Colony utilizing or sharing

facilities with Frisco in order to get their wastewater flow to the point of

delivery at the North Texas plant.” The “issues” and “impediments” that

Baddaker learned of concerned an unresolved territorial dispute between The

Colony and Frisco in which Frisco apparently claimed that The Colony had

wrongfully annexed two pieces of land in the 1980s referred to as the

14
“lightning bolt” and the “finger.” According to Cheatham, although The

Colony’s actions “have subsequently been validated by the State, and they are

legal now,” Frisco was “upset” about it and had asked for the land back. With

this considered, the Freese and Nichols report, which is dated August 8, 2003,

concluded that there were several options for treating The Colony’s

wastewater, and it evaluated a number of scenarios that The Colony could have

implemented to transport its wastewater to the plant—some of which involved

Frisco’s cooperation and some which did not.4 The report also included

“timelines,” one of which projected that it would take 684 days to complete a

system capable of transporting 1.1 million gallons of wastewater per day from

The Colony’s treatment plant to the plant.

The Colony ultimately “more or less” adopted an alternative plan of

“Scenario 1,” which involved transporting 1.1 million gallons of wastewater per

day to be treated by the District. Freese and Nichols completed the surveying

on the project but were told by The Colony thereafter to stop work. The

Colony did not undertake steps to follow any of the other scenarios set forth

4
… For instance, under “Scenario Number 1,” the first few alternatives
called for use of existing Frisco easements or utilities. But Alternate 3 assumed
that Frisco did not permit use of its pipelines, and it provided for a scenario
whereby The Colony would be required to obtain its own easements through
the process of condemnation.

15
in the report, some of which provided plans for diverting wastewater from

Austin Ranch and Wynnewood Peninsula to the plant, and it never constructed

wastewater lines that would enable it to transport its wastewater to the plant.

Instead, it awarded a contract sometime in January 2005 to modify its own

wastewater treatment plant at a cost of between $12 and $13 million. The

Colony never sent any of its wastewater to the plant for treatment by the

District, but the District never denied The Colony its right to access capacity in

the plant.

The Colony paid approximately $800,000 to the District from 1999 to

2004 and then ceased making payments under the Contract. Frisco thereafter

became responsible for The Colony’s share of the payments. Frisco paid

$642,863.98 of The Colony’s payments due under the Contract.

The Colony filed suit in June 2004. It claimed in part the following in its

third amended petition: “In 2002, the Environmental Protection Agency and

Texas Commission on Environmental Quality advised Plaintiff that its current

wastewater treatment was inadequate, and gave The Colony a twenty-four

month deadline for coming into compliance with all applicable regulations”;

“Frisco refused to grant access easements or otherwise cooperate unless The

Colony would also convey part of its territory to” Frisco; the District advised

The Colony that “it could not treat The Colony’s wastewater” at the plant; the

16
District “offered The Colony an opportunity to participate in a newly expanding

region at an additional cost of approximately $170,000,000, of which [The

Colony] would pay its proportionate share”; “both Defendants attempted to

negotiate new terms that were materially different from those in the original

agreement”; and “[b]oth defendants were unready, unwilling, and unable to

abide by the terms of the original agreement.”

The Colony sought a declaration that no contract was formed because (1)

there was no meeting of the minds regarding a material feature of the Contract,

(2) the promise of the District was illusory and created no mutuality of

obligation, (3) the terms of the Contract were vague, ambiguous, and not

sufficient to bind either defendant, (4) the Contract violates state law, and (5)

the Contract violates public policy. The Colony further sought a declaration

that it was entitled to the quasi-contractual remedy of unjust enrichment.

Alternatively, “in the event [the] court [found] that a valid contract was

formed,” The Colony sought a declaration that it was entitled to rescind the

Contract because (1) there was a failure of consideration, (2) there was a

mutual mistake of material fact, (3) the opposing parties expressed an intent

not to perform their obligations, (4) there was a unilateral mistake by The

Colony, and (5) one or more of the defendants have been unjustly enriched. In

addition to asserting a promissory estoppel claim and a request for attorneys’

17
fees, The Colony sought a declaration that its liability under the Contract had

been released and extinguished by the defendants’ failure to perform in addition

to a “writ of mandamus” “[u]pon the issuance of declaratory relief.” The

Colony’s first supplemental petition further alleged a claim for breach of

contract against both Frisco and the District. According to Cheatham, The

Colony wants the money it paid under the Contract back, and it wants to be

removed from the Contract.

Frisco moved for summary judgment on both traditional and no evidence

grounds on all of The Colony’s claims, and it moved for summary judgment on

its breach of contract counterclaim. The District moved for summary judgment

on traditional grounds on all of The Colony’s claims, but it asserted no evidence

grounds for summary judgment on only some of The Colony’s claims.5 With a

5
… We thus do not construe the District’s motion as moving for summary
judgement on no evidence grounds on all of The Colony’s claims. Unlike
Frisco’s motion, which combined its traditional and no evidence grounds for
summary judgment on each of The Colony’s claims and specifically articulated
that there is no evidence to support the challenged element or claim, the
District’s motion is separated into “Traditional” and “No Evidence” sections, it
primarily cites rule of civil procedure 166a(c) throughout its “Traditional Motion
for Summary Judgment” section, and the “No Evidence Motion for Summary
Judgment” section specifically articulates nine grounds in which the District
claims there is no evidence in support thereof. Consequently, pursuant to the
applicable standard of review, we will consider these nine grounds under the
no evidence standard, but we will consider the other grounds for summary
judgment under the traditional standard.

18
few exceptions, discussed below, the trial court granted Frisco’s and the

District’s motions for summary judgment. This appeal followed the trial.

III. M OTIONS FOR S UMMARY J UDGMENT

In its first and second issues, The Colony challenges the trial court’s grant

of summary judgment in favor of Frisco and the District on The Colony’s claims

and in favor of Frisco on Frisco’s breach of contract counterclaim.

A. Standards of Review

The no evidence summary judgment standard of review provides that,

after an adequate time for discovery, the party without the burden of proof

may, without presenting evidence, move for summary judgment on the ground

that there is no evidence to support an essential element of the nonmovant’s

claim or defense. Tex. R. Civ. P. 166a(i). The motion must specifically state

the elements for which there is no evidence. Id.; Johnson v. Brewer &

Pritchard, P.C., 73 S.W.3d 193, 207 (Tex. 2002). The trial court must grant

the motion unless the nonmovant produces summary judgment evidence that

raises a genuine issue of material fact. See Tex. R. Civ. P. 166a(i) & cmt.; Sw.

Elec. Power Co. v. Grant, 73 S.W.3d 211, 215 (Tex. 2002).

When reviewing a no evidence summary judgment, we examine the entire

record in the light most favorable to the nonmovant, indulging every reasonable

inference and resolving any doubts against the motion. Sudan v. Sudan, 199

19
S.W.3d 291, 292 (Tex. 2006). If the nonmovant brings forward more than a

scintilla of probative evidence that raises a genuine issue of material fact, then

a no evidence summary judgment is not proper. Moore v. K Mart Corp., 981

S.W.2d 266, 269 (Tex. App.—San Antonio 1998, pet. denied).

Under the traditional motion for summary judgment standard of review,

the issue on appeal is whether the movant met the summary judgment burden

by establishing that no genuine issue of material fact exists and that the

movant is entitled to judgment as a matter of law. Tex. R. Civ. P. 166a(c); Sw.

Elec. Power Co. v. Grant, 73 S.W.3d 211, 215 (Tex. 2002); City of Houston

v. Clear Creek Basin Auth., 589 S.W.2d 671, 678 (Tex. 1979). The burden of

proof is on the movant, and all doubts about the existence of a genuine issue

of material fact are resolved against the movant. Sw. Elec. Power Co., 73

S.W.3d at 215.

When reviewing a summary judgment, we take as true all evidence

favorable to the nonmovant, and we indulge every reasonable inference and

resolve any doubts in the nonmovant’s favor. Valence Operating Co. v.

Dorsett, 164 S.W.3d 656, 661 (Tex. 2005). The summary judgment will be

affirmed only if the record establishes that the movant has conclusively proved

all essential elements of the movant’s cause of action or defense as a matter

of law. Clear Creek Basin, 589 S.W.2d at 678.

20
 A defendant who conclusively negates at least one essential element of

a cause of action is entitled to summary judgment on that claim. IHS Cedars

Treatment Ctr. of DeSoto, Tex., Inc. v. Mason, 143 S.W .3d 794, 798 (Tex.

2004). Once the defendant produces sufficient evidence to establish the right

to summary judgment, the burden shifts to the plaintiff to come forward with

competent controverting evidence raising a genuine issue of material fact with

regard to the element challenged by the defendant. Centeq Realty, Inc. v.

Siegler, 899 S.W.2d 195, 197 (Tex. 1995).

A defendant is entitled to summary judgment on an affirmative defense

if the defendant conclusively proves all the elements of the affirmative defense.

Rhone-Poulenc, Inc. v. Steel, 997 S.W.2d 217, 223 (Tex. 1999); see Tex. R.

Civ. P. 166a(b), (c). To accomplish this, the defendant-movant must present

summary judgment evidence that establishes each element of the affirmative

defense as a matter of law. Ryland Group, Inc. v. Hood, 924 S.W.2d 120, 121

(Tex. 1996).

A plaintiff is entitled to summary judgment on a cause of action if it

conclusively proves all essential elements of the claim. See Tex. R. Civ. P.

166a(a), (c); MMP, Ltd. v. Jones, 710 S.W.2d 59, 60 (Tex. 1986).

When a party moves for summary judgment under both rules 166a(c) and

166a(i), we will first review the trial court’s judgment under the standards of

21
rule 166a(i). Ford Motor Co. v. Ridgway, 135 S.W.3d 598, 600 (Tex. 2004).6

B. Declaration—No Contract Formed Claims

The Colony sought a declaration that no contract was formed because

there was no meeting of the minds, the terms of the Contract are vague and

ambiguous, the promises involved in the Contract are illusory and created no

mutuality of obligation, the Contract violates the Texas Government Code, and

the Contract violates public policy.

1. Meeting of the Minds

Frisco and the District moved for summary judgment on The Colony’s

claim seeking a declaration that no contract was formed because there was no

meeting of the minds. The District sought a summary judgment on this claim

on traditional grounds only.

6
… The Colony submitted the same summary judgment evidence in
response to both Frisco’s and the District’s motions for summary judgment,
with the exception of an “expert report,” an administrative memorandum
published by the District, the deposition of James Parks, Johnston’s 2006
deposition, District responses to The Colony’s requests for admission,
correspondence between Purefoy and Cheatham, and a letter from Frisco’s
mayor to Parks. The Colony’s summary judgment evidence consists of
Johnston’s 2005 deposition, Cheatham’s deposition, Dillard’s deposition,
Lambert’s deposition, Baddaker’s deposition, Randel Dobbs’s deposition, the
personal notes of Dobbs, an administrative memorandum published by the
District, the Contract, and the “red book.”

22
 Parties enter into a binding contract when the following elements exist:

an offer; an acceptance in strict compliance with the terms of the offer; a

meeting of the minds; each party’s consent to the terms; and execution and

delivery of the contract with the intent that it be mutual and binding. Copeland

v. Alsobrook, 3 S.W.3d 598, 604 (Tex. App.—San Antonio 1999, pet. denied).

“Meeting of the minds” describes the mutual understanding and assent to the

agreement regarding the subject matter and the essential terms of the contract.

Weynand v. Weynand, 990 S.W.2d 843, 846 (Tex. App.—Dallas 1999, pet.

denied). Mutual assent, concerning material, essential terms, is a prerequisite

to formation of a binding, enforceable contract. T.O. Stanley Boot Co., Inc. v.

Bank of El Paso, 847 S.W.2d 218, 221 (Tex. 1992). Parties, however, may

agree to the material terms of a contract but leave other matters open for later

negotiation; it is only when an essential term is left open for future negotiation

that no binding contract exists. Kelly v. Rio Grande Computerland Group, 128

S.W.3d 759, 766 (Tex. App.—El Paso 2004, no pet.); Komet v. Graves, 40

S.W.3d 596, 602 (Tex. App.—San Antonio 2001, no pet.). The determination

of whether there is a meeting of the minds, and thus offer and acceptance, is

based upon objective standards of what the parties said and did and not on

their subjective state of mind. Copeland, 3 S.W.3d at 604.

23
 a. Frisco

The Colony’s sole argument that it raised a genuine issue of material fact

on its meeting of the minds claim is that “the parties left the issue of access to

the plant open for future negotiation.” It contends that the Contract did not set

forth where the pipelines would be located, the size of the pipelines, or the

timing of the pipeline installation. The Colony thus argues that a fact issue

exists on this claim because there was no meeting of the minds regarding how

the parties were to transport their wastewater to the plant.

The Contract indeed does not set forth any details of how The Colony

and Frisco are to transport their wastewater to the plant. Furthermore, Lambert

testified in his deposition that the parties agreed that the point of entry would

be at the plant itself but that the negotiations regarding how The Colony

intended to transport its wastewater to the point of entry was an issue that

was intended to be addressed after the Contract was executed. Although the

parties had discussions about “access” before the Contract’s execution,

Lambert expected the final agreements of how the pipelines were to be

constructed to be documented in another written contract.

Although this evidence is undisputed, none of it raises a genuine issue of

material fact that no contract was formed for failure to achieve a meeting of the

minds because the issue of how The Colony was to transport its wastewater

24
to the plant is neither an essential term of the Contract nor part of the

Contract’s subject matter; it is thus not a prerequisite for the Contract to be

binding and enforceable. This is so because the plain and unambiguous

language of the Contract demonstrates that the parties entered into an

agreement for the District to provide access to the plant and to treat The

Colony’s and Frisco’s wastewater in exchange for annual payments. The

purpose of the Contract is accordingly treatment—not transportation—of

wastewater. Consistent with this purpose, the Contract deliberately does not

account for the means by which wastewater is transported to the point of entry

because that is beyond the Contract’s scope. Section 3.03 of the Contract

specifically provides that it is the “sole responsibility” of The Colony and Frisco

to transport their wastewater to the point of entry. The definitions of

“District’s System,” “Regional System,” “Regional Wastewater System,” or

“System” additionally specifically exclude from their meaning “any facilities

required to transport wastewater to any Point of Entry of the District’s

System.” Moreover, Lambert testified that transportation of wastewater was

a “secondary issue” at the time of the Contract’s execution and that the

purchase of capacity was the “major victory.” The Colony subjectively reads

more into the Contract than what is there, which is contrary to the objective

standard by which we are to view this meeting of the minds issue. See id.

25
Because the issue of wastewater transportation is not an essential or material

term of the Contract, the parties were free to, as they clearly did, leave this

issue open for future negotiation. See Kelly, 128 S.W.3d at 766. Accordingly,

we hold that The Colony failed to raise a genuine issue of material fact in

response to Frisco’s challenge to The Colony’s claim seeking a declaration that

no contract was formed because there was no meeting of the minds and that

the trial court did not err by granting Frisco’s motion for summary judgment on

this ground. See Tex. R. Civ. P. 166a(i). We overrule this part of The Colony’s

first issue.

b. The District

We reach the same conclusion regarding the District’s motion for

summary judgment on this ground. The District submitted as summary

judgment evidence the Contract, Parks’s affidavit, and the deposition testimony

of Lambert and Cheatham, among other things. As stated above, the Contract

shows that the parties entered into an agreement for the District to provide

wastewater treatment for The Colony and Frisco, and the Contract specifically

places the responsibility of transporting the wastewater to the point of entry on

Frisco and The Colony. Parks affirmed that “[t]he District did not enter into an

agreement with The Colony to construct its wastewater transmission lines” and

that “[n]o District funds were available for the construction of the Colony’s

26
wastewater transportation lines because the Contract expressly placed the

obligation for transporting The Colony’s wastewater upon The Colony.”

Consequently, “[h]ow the Colony was to transport its wastewater was outside

of the scope of the agreement[,] and no provision was made under the terms

of the Contract for [the District] to transport or provide for the transportation

of[] The Colony’s wastewater.” Lambert testified that it was his understanding

that The Colony was responsible for transporting its wastewater to the plant

and that the negotiations between The Colony and Frisco regarding the

utilization of existing pipelines and easements would be conducted later. And

although Cheatham thought the District had some obligation to make Frisco

give The Colony access to its lines, he agreed that, pursuant to section 3.03

of the Contract, it was The Colony’s responsibility to get its wastewater to the

plant.

The District having met its summary judgment burden, The Colony relies

on the same evidence and argument as it does in the portion of its brief

addressing Frisco’s motion for summary judgment on this ground. Because

there is no evidence that wastewater transportation is an essential or material

term of the Contract, we hold that The Colony failed to raise a genuine issue

of material fact in response to the District’s challenge to The Colony’s claim

seeking a declaration that no contract was formed because there was no

27
meeting of the minds. See Tex. R. Civ. P. 166a(c). Accordingly, the trial court

did not err by granting the District’s motion for summary judgment on this

ground, and we overrule this part of The Colony’s second issue.

2. Vague and Ambiguous

Frisco and the District moved for summary judgment on The Colony’s

claim seeking a declaration that no contract was formed because the terms of

the agreement are vague and ambiguous. The District sought summary

judgment on this claim on traditional grounds only.

Our primary concern when construing a written contract is to ascertain

the true intentions of the parties as expressed in the instrument. Coker v.

Coker, 650 S.W.2d 391, 393 (Tex. 1983); Heil Co. v. Polar Corp., 191 S.W.3d

805, 810 (Tex. App.—Fort Worth 2006, pet. denied). This is achieved by

examining and considering the entire writing in an effort to harmonize and give

effect to all provisions of the contract so that none will be rendered

meaningless. Coker, 650 S.W.2d at 393. We presume that the parties to the

contract intend every clause to have some effect. Heritage Res., Inc. v.

Nations Bank, 939 S.W.2d 118, 121 (Tex. 1996); XCO Prod. Co. v. Jamison,

194 S.W.3d 622, 627 (Tex. App.—Houston [14th Dist.] 2006, pet. denied).

We give terms their plain, ordinary, and generally accepted meaning unless the

contract shows the parties used them in a technical or different sense.

28
Heritage Res., 939 S.W.2d at 121. When we have the choice of construing a

contract as valid or as void, we construe it in such a way as to make it valid.

Mays v. Pierce, 154 Tex. 487, 494, 281 S.W.2d 79, 82 (1955).

A contract that can be given a definite or certain legal meaning is

unambiguous as a matter of law. J.M. Davidson, Inc. v. Webster, 128 S.W.3d

223, 229 (Tex. 2003). Lack of clarity does not create an ambiguity, and a

contract is not ambiguous simply because the parties advance conflicting

interpretations. Universal Health Servs., Inc. v. Renaissance Women’s Group,

P.A., 121 S.W.3d 742, 746 (Tex. 2003); Columbia Gas Transmission Corp. v.

New Ulm Gas, Ltd., 940 S.W.2d 587, 589 (Tex. 1996). Rather, a contract is

ambiguous when its meaning is uncertain or is reasonably susceptible to more

than one meaning. Coker, 650 S.W.2d at 393.

In the event that two provisions of a contract arguably conflict, courts

apply rules of construction to harmonize the provisions. Ogden v. Dickinson

State Bank, 662 S.W.2d 330, 332 (Tex. 1983). A specific provision controls

over a general provision. Forbau v. Aetna Life Ins. Co., 876 S.W.2d 132,

133–34 (Tex. 1994). Where the meaning of a contract is unambiguous, a

party’s construction is immaterial. 718 Assocs. Ltd. v. Sunwest N.O.P., Inc.,

1 S.W.3d 355, 360 (Tex. App.—Waco 1999, pet. denied). Regarding recitals

in a contract, “[a]s a general rule, recitals . . . will not control the operative

29
clauses thereof unless the latter are ambiguous . . . .” Gardner v. Smith, 168

S.W.2d 278, 280 (Tex. Civ. App.—Beaumont 1942, no writ). “[W]here the

recitals are broader than the contract stipulations, the former will not extend

the latter.” Id.

a. Frisco

The Colony argues that it raised a genuine issue of material fact that the

Contract is vague and ambiguous because the Contract is “susceptible to

multiple interpretations by differing experienced professionals” and because

“the parties entered into the agreement with differing interpretations regarding

their respective rights and obligations.” Thus, multiple interpretations is the

basis of The Colony’s arguments.

The Colony relies in part on Johnston’s deposition testimony in which he

explains the basis of his opinion that the District breached the Contract. One

reason that he thought the District breached the Contract was that he

interpreted the Contract as requiring the District to work with The Colony in

setting up pipelines by which to transport The Colony’s wastewater to the

plant. The basis of Johnston’s interpretation is the “red book,” which is

mentioned at the beginning of the agreement pursuant to a “Whereas”

statement that the “red book” has been “prepared for and filed with the

District” and that “the parties hereto wish to further implement the” “red book”

30
and “provide for the acquisition, construction, improvement, operation and

maintenance of a Regional Wastewater System (the “System”) for the purpose

of providing facilities to adequately receive, transport, treat, and dispose of

Wastewater.” [Emphasis added.]

The Colony also relies on the deposition testimony of Cheatham to raise

a fact issue. In construing section 2.01, which provides that the District “will

use its best efforts to design, acquire, construct, and complete the System” in

order to “provide services for receiving, transporting, treating, and disposing”

of wastewater, Cheatham testified that he thought the District had not

complied with the “best efforts” language because the pipelines set forth in the

“red book” had not been constructed yet. [Emphasis added.] According to

Cheatham, the District had a responsibility to ensure that the pipelines would

be constructed by requiring Frisco to give The Colony access to its existing

pipelines and easements.

The Colony further relies on Dillard’s deposition testimony in which he

elaborated on his interpretation of the Contract and on his opinions regarding

the District’s failures to comply with the Contract. Dillard opined that the

District failed to comply with the initial portion of the Contract stating that

there has been a report prepared (the “red book”); that the parties wished to

implement the report; and that they would provide for the acquisition,

31
construction, improvement, operation, and maintenance of the System in order

to provide facilities to adequately receive, transport, treat, and dispose of

wastewater. From the first page alone, Dilliard interpreted the Contract to

require the District to “basically acquire what’s necessary for us [The Colony]

to link up with their plant to become part of the regional wastewater treatment

plant, to include easements, the pipes, the pumping station, and anything else

necessary for us to receive services for the present and the future.”

Dillard also opined that the portion of the Contract stating that the District

would issue bonds from time to time in the future to acquire, construct, extend,

enlarge, improve, “and/or” repair the system imposes an obligation on the

District to acquire easements and construct the pipelines to facilitate The

Colony’s transportation of its wastewater to the plant. According to Dillard, the

District is supposed “to design it, they are to acquire and construct.” The

Colony, on the other hand, is obligated to “deliver the effluent from our plant.

Our responsibility is merely to provide the effluent. They are to provide the

design, acquisition[,] and construction.” Dillard opined that the District “did not

produce the hardware for their plant hookup.”

The Colony thus contends that there is a fact issue concerning its vague

and ambiguous claim based on the multiple interpretations of the portions of the

Contracts relating to (1) implementation of the “red book” for, among other

32
things, the purpose of transporting wastewater, (2) the issuance of bonds to

acquire and construct the System, and (3) the best efforts that the District is

to use to provide services for, among other things, the transportation of

wastewater. None of this evidence, however, raises a genuine issue of material

fact that the Contract is vague and ambiguous because each of the

interpretations conflict with the well established rules of contract construction

set forth above.

The interpretations ignore the requirement that we ascertain the true

intent of the parties by examining and considering the entire Contract to give

effect to all of the Contract’s provisions. See Coker, 650 S.W.2d at 393. The

Colony’s reliance on the portions of the Contract that they claim raise a fact

issue regarding multiple interpretations rests entirely upon a reading and

interpretation of those parts of the Contract in isolation. Although there are

initial portions of the Contract that generally refer to implementation of the “red

book” for the purpose of transporting wastewater, the issuance of bonds to

acquire and construct the System, and the best efforts that the District is to

use to provide services for the transportation of wastewater, an examination

of the entire Contract demonstrates that it specifically addresses the issue of

transportation when it (1) clarifies that The Colony and Frisco are solely

responsible for transporting their wastewater to the point of entry, (2) excludes

33
facilities required to transport wastewater from the definition of “System,” (3)

includes only those facilities that are acquired, constructed, used, or operated

by the District to provide wastewater treatment services in the definition of

“System,” and (4) defines the “System” as consisting of the “Plant” and

nothing else. These are specific provisions addressing the matter of

wastewater transportation, and they accordingly control over the general,

isolated statements referring to “transportation” that The Colony relies on. See

Forbau, 876 S.W.2d at 133–34.

The Colony’s interpretations of the Contract are likewise adverse to the

presumption that the parties intended every clause of the Contract to have

some effect and additionally result in the rendering meaningless of significant

parts of the Contract specifically addressing wastewater transportation. See

Heritage Res., Inc., 939 S.W.2d at 121. Thus, it is only when we examine the

entire Contract and give effect to all of its provisions that the true intent of the

parties regarding wastewater transportation is clearly revealed: the District

promised to treat—not transport—The Colony’s and Frisco’s wastewater in

exchange for annual payments.

Moreover, The Colony cannot raise a fact issue regarding the Contract’s

alleged ambiguity simply by advancing the conflicting interpretations of its city

officials; the Contract is ambiguous only if it is “reasonably susceptible” to

34
more than one meaning. See Coker, 650 S.W.2d at 393. None of the

interpretations advanced by The Colony are “reasonable” because they

unquestionably conflict with fundamental rules of contract construction.

Consequently, the Contract is not reasonably susceptible to any of the

interpretations proposed by The Colony. Indeed, conversely, our analysis

shows that the Contract is unambiguous as a matter of law because it can be

given a definite or certain legal meaning. See id.

We hold that The Colony failed to raise a genuine issue of material fact

in response to Frisco’s challenge to The Colony’s claim seeking a declaration

that no contract was formed because the terms of the agreement are vague and

ambiguous and that the trial court did not err by granting Frisco’s motion for

summary judgment on this ground. See Tex. R. Civ. P. 166a(i). Accordingly,

we overrule this part of The Colony’s first issue.

b. The District

The Colony relies on the same evidence and argument as it does in the

portion of its brief addressing Frisco’s motion for summary judgment on this

ground. We thus reach the same conclusion regarding the District’s motion for

summary judgment on this ground. We hold that The Colony failed to raise a

genuine issue of material fact in response to the District’s challenge to The

Colony’s claim seeking a declaration that no contract was formed because the

35
terms of the agreement are vague and ambiguous and that the trial court did

not err by granting the District’s motion for summary judgment on this ground.

See Tex. R. Civ. P. 166a(c). W e overrule this part of The Colony’s second

issue.

3. Illusory and Mutuality of Obligation

Frisco and the District moved for summary judgment on The Colony’s

claim seeking a declaration that no contract was formed because the promises

involved in the Contract were illusory and created no mutuality of obligation.

Both Frisco and the District moved for summary judgment on no evidence

grounds.

A bilateral contract is one in which there are mutual promises between

two parties to the contract, each being both a promisor and a promisee.

Hutchings v. Slemons, 141 Tex. 448, 174 S.W.2d 487, 489 (1943). A

bilateral contract must be based upon a valid consideration, in other words,

mutuality of obligation. Fed. Sign v. Tex. S. Univ., 951 S.W.2d 401, 409 (Tex.

1997). Consideration may consist of either benefits or detriments to the

contracting parties—it may consist of some right, interest, profit, or benefit that

accrues to one party, or alternatively, of some forbearance, loss, or

responsibility that is undertaken or incurred by the other party. In re C&H News

Co., 133 S.W.3d 642, 647 (Tex. App.—Corpus Christi 2003, orig. proceeding).

36
The existence of a written contract presumes consideration for its execution.

Doncaster v. Hernaiz, 161 S.W.3d 594, 603 (Tex. App.—San Antonio 2005,

no pet.).

A contract that lacks mutuality of obligation is illusory and void and thus

unenforceable. Tex. S. Univ. v. State Street Bank & Trust Co., 212 S.W.3d

893, 914 (Tex. App.— Houston [1st Dist.] 2007, pet. denied). An illusory

promise of performance invalidates a bilateral contract. Light v. Centel Cellular

Co. of Tex., 883 S.W.2d 642, 645 (Tex. 1994). A promise is illusory when it

fails to bind the promisor who retains the option of discontinuing performance.

Id.; D.R. Horton, Inc. v. Brooks, 207 S.W.3d 862, 867 (Tex. App.—Houston

[14th Dist.] 2006, no pet.).

a. Frisco

The Colony argues that its summary judgment evidence establishes that

“Frisco did not consider itself to be bound by any of the provisions in the

contract.” The only argument that The Colony advances to support this broad

contention is that Frisco did not cooperate with The Colony in allowing access

to its pipelines or easements. Specifically, The Colony is referring to summary

judgment evidence regarding the ongoing, municipal dispute between itself and

Frisco over the land known as the “lightning bolt” and the “finger.”

37
 The Colony’s evidence shows that it annexed the disputed land some

time in the 1980s, that a portion of the land was in Frisco’s extraterritorial

jurisdiction, that Frisco “didn’t like” what The Colony had done, and that Frisco

wants the land back. During his deposition, Cheatham discussed an October

23, 2002 letter addressed to Frisco’s mayor in which The Colony’s mayor

indicated that she had received a “proposed boundary adjustment agreement”

from Purefoy that requested The Colony to relinquish the “lightning bolt,” the

“finger,” and possibly some additional land. The following exchange then

occurred:

[The District’s attorney]: All right. And so it’s your understanding
that, at least at this point in time, the proposition proposal by the
City of Frisco in October of 2002 was that you give up this
1499.462 acres, and in exchange the City of The Colony would be
granted access to Frisco’s sewer lines and easements to get to the
Stewart Creek West facility?

[Cheatham]: Based on this, that would appear to be the case.

Johnston’s deposition testimony reflected Cheatham’s deposition

testimony. He opined that the annexation dispute served as the basis for

Frisco’s “refusal” to allow The Colony access to its easements and that Frisco

would have given The Colony access to its existing lines if the Colony had

relinquished its claim to the disputed land.

38
 The Colony also submitted a few emails between Cheatham and Purefoy

in which they discuss the annexation issue. Purefoy indicated in one email that

Frisco wanted the “annexation issue” to be resolved before “moving forward

on the sewer line issue.”

None of this evidence concerning the boundary dispute between Frisco

and The Colony raises a genuine issue of material fact regarding The Colony’s

claim that Frisco’s obligations under the Contract were illusory or lacking

mutuality of obligation because the issue of and the circumstances surrounding

The Colony’s negotiations with Frisco for pipelines or easement access are

distinct from and beyond the scope of Frisco’s obligations under the Contract.

We look to the Contract first. It outlines Frisco’s obligations, which

include, but are not limited to, Frisco’s right to discharge wastewater into the

System in consideration for payments to the District, Frisco’s agreement to limit

discharge into the System that complies with quality requirements that the

District may establish, and Frisco’s agreement to make payments to the District

“for services to be rendered to each Participant.” As we have already

discussed, the Contract makes clear that transportation of wastewater to the

plant is the sole responsibility of Frisco and The Colony. Other than this, the

Contract does not set forth any terms and conditions regarding The Colony’s

or Frisco’s transportation of wastewater to the point of entry. Consequently,

39
the terms set forth within the four corners of the Contract impose no

wastewater transportation obligations on Frisco in which Frisco retains the

option of performing or not performing those obligations. See Light, 883

S.W.2d at 645.

The “set forth within the four corners of the Contract” language

immediately above is significant because The Colony’s argument centers on

facts surrounding an issue that is beyond Frisco’s obligations under the

Contract. According to Lambert, whom Johnston agreed “has the most

knowledge and best understanding of the negotiations before and leading up to

and entry into the contract,” the major victory for The Colony was the capacity

that it acquired in the plant. There were discussions in the latter part of the

meetings leading up to the execution of the Contract regarding wastewater

transportation, but Lambert described this as a “secondary issue.” The actual

negotiations between The Colony and Frisco regarding wastewater

transportation to the point of entry were to be conducted at some point after

the Contract’s execution, and the final agreements concerning the same would

be documented in another written contract. Lambert’s testimony is thus not

inconsistent with the terms of the Contract.

As Lambert contemplated, The Colony and Frisco negotiated the issue of

wastewater transportation after the Contract had been executed, which was

40
also after The Colony had made payments to the District pursuant to the terms

of the Contract.7 The summary judgment evidence shows that it is only at this

point—after the Contract had been executed—that the border dispute between

The Colony and Frisco over the “lightning bolt” and the “finger” became an

issue in the context of this case.

The summary judgment evidence thus demonstrates that the

circumstances surrounding the post-Contract wastewater negotiations between

The Colony and Frisco are mutually exclusive of Frisco’s general obligations

under the Contract. Frisco’s obligations under the Contract are not rendered

illusory simply because The Colony and Frisco never reached an agreement on

the wastewater transportation issue. See id. And nothing in the Contract

addresses or limits Frisco’s post-Contract ability to negotiate issues not

addressed in the Contract. At least one individual associated with The Colony

seems to have recognized that the border dispute and the failed negotiations

between The Colony and Frisco concerning the issue of wastewater

transportation are matters beyond the scope of the Contract. Lambert testified:

[The District’s attorney]: But as far as making that final jump from
Austin Ranch and Wynnewood Peninsula across the City of Frisco

7
… According to Cheatham and Johnston, The Colony would have had
access to Frisco’s pipelines or easements had it agreed to Frisco’s terms, but
it chose not to make a deal.

41
 to the Stewart West plant, you didn’t start those negotiations
before you left, correct?

[Lambert]: To my eternal shame, no, I did not start those
negotiations before I left.

We hold that The Colony failed to raise a genuine issue of material fact

in response to Frisco’s challenge to The Colony’s claim seeking a declaration

that no contract was formed because the promises involved in the Contract

were illusory and created no mutuality of obligation and that the trial court did

not err by granting Frisco’s motion for summary judgment on this ground. See

Tex. R. Civ. P. 166a(i). We overrule this part of The Colony’s first issue.

b. The District

As for the District, The Colony’s specific argument seems to be that the

District was not bound by its obligation to treat The Colony’s wastewater

because the District did not have the capacity to accept The Colony’s

wastewater. According to The Colony, “No benefit is gained by Plaintiff

transporting its wastewater to a plant that does not have capacity to treat it.”

The Colony directs us to summary judgment evidence that it contends shows

that the District did not have the capacity to treat its wastewater. Assuming

without deciding that this evidence shows that the District did not have the

capacity to treat its wastewater, it nonetheless does not raise a genuine issue

of material fact in support of The Colony’s illusory or mutuality of obligation

42
claim because it is evidence of a possible breach of contract, not of an illusory

obligation.

The Contract sets forth the District’s obligations, including that the

District will issue bonds to provide for the System; that the District will use its

best efforts to design, acquire, construct, and complete the System; and that

the District will operate and maintain the System to provide service to The

Colony and Frisco. Cheatham agreed at his deposition that to the best of his

knowledge, the District has been willing to provide wastewater treatment for

The Colony and that this in turn provided value to The Colony. Lambert

testified to the same, opining that the signing of the Contract gave The Colony

value, i.e., capacity in the plant.

The Contract thus bound the District to provide capacity to The Colony

for wastewater treatment in exchange for payments. This obligation is not

illusory because the District may not choose to disavow or ignore it at its

option. See Brooks, 207 S.W.3d at 867. Nor are the District’s capacity and

treatment obligations illusory if the District fails to abide by those obligations.

That is a set of circumstances more appropriately addressed in a breach of

contract context because it concerns an alleged failure by the District to abide

by the terms of the Contract. We hold that The Colony failed to raise a genuine

issue of material fact in response to the District’s challenge to The Colony’s

43
claim seeking a declaration that no contract was formed because the promises

involved in the Contract were illusory and created no mutuality of obligation and

that the trial court did not err by granting the District’s motion for summary

judgment on this ground. See Tex. R. Civ. P. 166a(i). We overrule this part of

The Colony’s second issue.

4. State Law Violation

Frisco and the District moved for summary judgment on The Colony’s

claim seeking a declaration that the Contract violates the government code.

Both Frisco and the District moved for summary judgment on no evidence

grounds.

Chapter 791 of the government code covers interlocal cooperation

contracts. Tex. Gov’t Code Ann. §§ 791.001–.033 (Vernon 2004 & Supp.

2008). The purpose of the chapter is to increase the efficiency and

effectiveness of local governments by authorizing them to contract with one

another and with agencies of the state. Id. § 791.001. The chapter expressly

allows for contracts between a municipality and a district or river authority for

wastewater treatment facilities. Id. § 791.026(a)(1).

The Colony alleged in its third amended original petition that the Contract

is null and void for failure to comply with government code sections

791.011(d)(2) and 791.011(e). Section 791.011(d)(2) provides that an

44
interlocal contract must “state the purpose, terms, rights, and duties of the

contracting parties.” Id. § 791.011(d)(2). Section 791.011(e) provides that

“[a]n interlocal contractual payment must be in an amount that fairly

compensates the performing party for the services or functions performed under

the Contract.” Id. § 791.011(e).

The Colony’s sole argument under section 791.011(d)(2) is that it

“introduced summary judgment evidence to raise a genuine fact issue regarding

meeting of the minds” and that “[i]f there is an outstanding fact issue about

meeting of the minds, it follows that there must also be a genuine factual

dispute as to whether the agreement sufficiently stated the rights and duties of

the contracting parties.” We determined above that The Colony failed to raise

a genuine issue of material fact on its meeting of the minds claim. Because The

Colony failed to raise a genuine issue of material fact on that claim, its

government code section 791.011(d)(2) claim must fail as well. The Colony

does not rely on any additional evidence or submit any other argument in its

brief challenging the trial court’s grant of summary judgment in favor of the

District on this ground.

As for The Colony’s section 791.011(e) claim, it contends that a genuine

issue of material fact issue exists regarding fair compensation because it made

payments under the Contract but never had any of its wastewater treated by

45
the District. It directs us to summary judgment evidence showing that it made

contractual payments to the District and that Freese and Nichols performed a

survey in furtherance of a routing plan.

It has long been recognized that when statutory language is clear and

unambiguous, a statute should be given its plain meaning. Employers Cas. Co.

v. Dyess, 957 S.W.2d 884, 889 (Tex. App.—Amarillo 1997, writ denied).

Section 791.011(e)’s purpose is apparent. It requires that payments under an

interlocal contract fairly compensate the performing party. Id. In this case,

section 5.03 of the Contract, “Payments by City,” provides, “For services to

be rendered to each Participant by the District under this Contract . . ., each

Participant has agreed to pay . . . its proportionate share of the Annual

Requirement . . . .” As applied, section 791.011(e) requires that The Colony’s

and Frisco’s payments to the District be in an amount that fairly compensates

the District for the services it performs under the Contract. The Colony’s

argument relying on section 791.011(e) is thus misplaced because The Colony

is the party that made the payments under the Contract to the District; the

District did not make payments to The Colony. The plain language of section

791.011(e) does not support The Colony’s argument, nor does The Colony

provide any support for its interpretation of the statute requiring that the

services provided by the payee (the District) be fair to the payor (The Colony).

46
The Colony does not rely on any additional evidence or submit any other

argument in its brief challenging the trial court’s grant of summary judgment in

favor of the District on this ground.

We hold that The Colony failed to raise a genuine issue of material fact

in response to both Frisco’s and the District’s challenges to The Colony’s claim

seeking a declaration that the Contract violates the government code and that

the trial court did not err by granting Frisco’s and the District’s motions for

summary judgment on this ground. See Tex. R. Civ. P. 166a(i). Accordingly,

we overrule this part of The Colony’s first and second issues.

5. Violation of Public Policy

Frisco and the District moved for summary judgment on The Colony’s

claim seeking a declaration that the Contract was never formed because it

violates public policy. The District sought a summary judgment on this claim

on traditional grounds only.

Parties have the right to contract as they see fit as long as their

agreement does not violate the law or public policy. In re Prudential Ins. Co.

of Am., 148 S.W.3d 124, 129 (Tex. 2004) (orig. proceeding). Public policy

can be a vague and uncertain term, and it is up to the power of the lawmaking

body to define. Tex. Commerce Bank, N.A., v. Grizzle, 96 S.W.3d 240, 250

(Tex. 2002). Texas’s public policy is thus embodied in its constitution,

47
statutes, and judicial decisions. Id.; Classic Century, Inc. v. Deer Creek Estates,

Inc., No. 02-06-00104-CV, 2008 WL 3540194, at *5 (Tex. App.—Fort Worth

Aug. 14, 2008, no pet. h.) (mem. op.). The appropriate test when considering

whether a contract violates public policy “is whether the tendency of the

agreement is injurious to the public good, not whether its application in a

particular case results in actual injury.” Jankowiak v. Allstate Prop. & Cas. Ins.

Co., 201 S.W.3d 200, 210 (Tex. App.—Houston [14th Dist.] 2006, no pet.).

Without clear legislative intent to prohibit agreements, and absent any claim of

fraud, duress, accident, mistake, or failure or inadequacy of consideration,

Texas courts generally decline to declare contractual agreements void on public

policy grounds. Fairfield Ins. Co. v. Stephens Martin Paving, LP, 246 S.W.3d

653, 664 (Tex. 2008).

a. Frisco

The Colony argues that it was ordered in 2002 or 2003 by the Texas

Commission on Environmental Quality (“TCEQ”) to bring its wastewater

treatment facilities into compliance with effluent and capacity regulations, that

“Frisco’s conduct resulted in The Colony having to pay millions of taxpayer

dollars to expand and improve its aging treatment plant to the detriment of the

general public,” and, therefore, that the Contract “violate[s] public policy

governing the careful spending of public resources.” The Colony submitted

48
summary judgment evidence regarding the TCEQ orders to revise its

wastewater treatment facilities, the general details behind The Colony’s

decision to become involved with the District, and, among other things, the

circumstances surrounding The Colony’s decision to begin the process of

preparing for transportation of its wastewater to the plant. The Colony’s

evidence does not raise a genuine issue of material fact that the Contract is

void for violating public policy.

The Contract sets forth a scheme by which The Colony and Frisco pay

the District to accept and treat their wastewater. As addressed in the

preceding section, the government code expressly allows for this particular type

of contract. See Tex. Gov’t Code Ann. § 791.026(a)(1) (“A municipality,

district, or river authority of this state may contract with another municipality,

district, or river authority of this state to obtain or provide part or all of” “water

supply or wastewater treatment facilities.”). Contrary to The Colony’s

argument, the government code reflects a public policy that permits the

execution of this particular type of agreement. That The Colony ultimately

spent between $12 and $13 million to upgrade its own treatment plant does

not render the Contract violative of public policy. We hold that The Colony

failed to raise a genuine issue of material fact in response to Frisco’s challenge

to The Colony’s claim seeking a declaration that the Contract was never formed

49
because it violates public policy and that the trial court did not err by granting

Frisco’s motion for summary judgment on this ground. See Tex. R. Civ. P.

166a(i). Accordingly, we overrule this part of The Colony’s first issue.

b. The District

The District submitted the Contract into evidence and met its summary

judgment burden. The Colony does not rely on any additional evidence or

submit any other argument in its brief challenging the trial court’s grant of

summary judgment in favor of the District on this ground. We hold that The

Colony failed to raise a genuine issue of material fact in response to the

District’s challenge to The Colony’s claim seeking a declaration that the

Contract was never formed because it violates public policy and that the trial

court did not err by granting the District’s motion for summary judgment on this

ground. See Tex. R. Civ. P. 166a(c). Accordingly, we overrule this part of The

Colony’s second issue.

C. Declaration—Unjust Enrichment

Frisco and the District moved for summary judgment on The Colony’s

claim seeking a declaration that “it is entitled to the quasi-contractual remedy

of unjust enrichment.” Both Frisco and the District moved for summary

judgment on no evidence grounds.

50
 Unjust enrichment is an equitable principle holding that one who receives

benefits unjustly should make restitution for those benefits. Villarreal v. Grant

Geophysical, Inc., 136 S.W.3d 265, 270 (Tex. App.—San Antonio 2004, pet.

denied). Unjust enrichment occurs when the person sought to be charged has

wrongfully secured a benefit or has passively received one which it would be

unconscionable to retain. Id. Thus, a party may recover under the theory of

unjust enrichment when one person has obtained a benefit from another by

fraud, duress, or the other taking of an undue advantage. Heldenfeld Bros., Inc.

v. City of Corpus Christi, 832 S.W.2d 39, 41 (Tex. 1992).

Generally speaking, however, when a valid, express contract covers the

subject matter of the parties’ dispute, there can be no recovery under a quasi-

contract theory, such as unjust enrichment. Fortune Prod. Co. v. Conoco, Inc.,

52 S.W.3d 671, 684 (Tex. 2000); DeClaire v. G&B Mcintosh Family Ltd.

P’ship, 260 S.W.3d 34, 49 (Tex. App.—Houston [1st Dist.] 2008, no pet. h.).

This is because parties should be bound by their express agreements, and when

a valid agreement already addresses the matter, recovery under an equitable

theory is generally inconsistent with the express terms of the agreement.

Conoco, 52 S.W.3d at 684; see also Edwards v. Mid-Continent Office Distribs.,

L.P., 252 S.W.3d 833, 837 (Tex. App.—Dallas 2008, pet. denied) (“The

doctrine of unjust enrichment applies the principles of restitution to disputes

51
that are not governed by a contract between the parties.”). An exception to

this rule is when overpayment was made under a valid contract. Sw. Elec.

Power Co. v. Burlington N. R.R. Co., 966 S.W.2d 467, 469–70 (Tex. 1998).

Here, The Colony directs us to summary judgment evidence that

Johnston, Cheatham, and Dillard thought that the outcome of the Contract was

“exceedingly unfair to The Colony” because “The Colony never had a single

drop of wastewater treated.” Notwithstanding this evidence, the remedy of

unjust enrichment is not available to The Colony because there is a valid,

express contract governing the dispute, and recovery under this equitable

doctrine would be inconsistent with the express terms of the Contract. See

Fortune Prod. Co., 52 S.W.3d at 684. The Colony does not argue—nor does

the summary judgment evidence demonstrate—that it overpaid under the

Contract, only that it never had any of its wastewater treated despite making

payments under the Contract. W e hold that The Colony failed to raise a

genuine issue of material fact in response to both Frisco’s and the District’s

challenges to The Colony’s request for a declaration that it is entitled to the

remedy of unjust enrichment and that the trial court did not err by granting

Frisco’s and the District’s motions for summary judgment on this ground. See

Tex. R. Civ. P. 166a(i). Accordingly, we overrule this part of The Colony’s first

and second issues.

52
 D. Declaration—Equitable Remedy of Rescission

The Colony alternatively sought a declaration that it is entitled to rescind

the Contract because of a failure of consideration, a mutual mistake of fact, a

unilateral mistake of fact, repudiation of the Contract by Frisco and the District,

or the unjust enrichment of Frisco or the District.

Rescission is an equitable remedy that seeks to set aside an otherwise

legal contract due to fraud, mistake, or for some other reason when it is

necessary to avoid unjust enrichment of the non complaining party to the

contract, so that the parties thereto may be restored, insofar as is possible, to

the status or position they were in prior to execution of the contract. Isaacs v.

Bishop, 249 S.W.3d 100, 109 (Tex. App.—Texarkana 2008, pet. denied);

Martin v. Cadle Co., 133 S.W.3d 897, 903 (Tex. App.—Dallas 2004, pet.

denied); Barker v. Roelke, 105 S.W.3d 75, 84 (Tex. App.—Eastland 2003, pet.

denied). Rescission is thus an “undoing” of the contract and generally used as

a substitute for monetary damages when such damages would not be adequate.

Isaacs, 249 S.W.3d at 109; Am. Apparel Prods., Inc. v. Brabs, Inc., 880

S.W.2d 267, 270 (Tex. App.—Houston [14th Dist] 1994, no writ).

1. Frisco’s Ratification Affirmative Defense

Before addressing The Colony’s issues complaining of the trial court’s

grant of summary judgment in favor of Frisco and the District on The Colony’s

53
rescission theories, we must first determine whether the trial court properly

granted Frisco summary judgment on its ratification affirmative defense. If the

trial court properly granted Frisco summary judgement on its ratification

affirmative defense, we need not consider whether the trial court properly

granted Frisco summary judgment on each of The Colony’s rescission theories

because The Colony’s ratification of the Contract would have precluded it from

subsequently avoiding the Contract under the equitable remedy of rescission.

See Isaacs, 249 S.W.3d at 110 n.9 (stating that once a party ratifies a

contract, it may not later withdraw its ratification and seek to avoid the

contract); Barker, 105 S.W.3d at 84 (same).

Ratification is the adoption or confirmation, by one with knowledge of all

material facts, of a prior act which did not then legally bind that person and

which that person had the right to repudiate. EOG Res., Inc. v. Wall, 160

S.W.3d 130, 138 (Tex. App.—Tyler 2005, no pet.); Vessels v. Anschutz Corp.,

823 S.W.2d 762, 764 (Tex. App.—Texarkana 1992, writ denied); see also

Miller v. Kennedy & Minshew, Prof’l. Corp., 142 S.W.3d 325, 342 (Tex.

App.—Fort Worth 2003, pet. denied) (stating that a person ratifies an

unauthorized act if, by word or conduct, with knowledge of all material facts,

he confirms or recognizes the act as valid). In other words, if a party by its

conduct recognizes a contract as valid, having knowledge of all relevant facts,

54
it ratifies the contract. Barrand, Inc. v. Whataburger, Inc., 214 S.W.3d 122,

146 (Tex. App.—Corpus Christi 2006, pet. denied); Barker, 105 S.W.3d at 84.

Whether a party has ratified a contract may be determined as a matter of law

if the evidence is not controverted or is incontrovertible. Barrand, Inc., 214

S.W.3d at 146.

We determined above that the trial court did not err by granting Frisco

summary judgment on The Colony’s claim seeking a declaration that no

contract was formed. The enforceable Contract legally bound the parties to

perform their respective obligations set forth therein. Consequently, there is no

evidence that The Colony ratified an agreement that it was not legally bound

to comply with and that it had a right to repudiate. See Wall, 160 S.W.3d at

138; Vessels, 823 S.W.2d at 764. Frisco argues that The Colony ratified the

Contract by making contractual payments, but The Colony’s summary judgment

evidence shows that it discontinued contractual payments around the time that

it learned of issues relating to the alleged lack of plant capacity.

We hold that Frisco did not prove its ratification defense as a matter of

law and that the trial court erred by granting Frisco summary judgment on this

affirmative defense. See Hood, 924 S.W.2d at 121 (requiring movant to

present summary judgment evidence that establishes each element of its

affirmative defense as a matter of law). Because Frisco was not entitled to

55
summary judgment on its ratification affirmative defense as a matter of law, we

will consider whether the trial court erred by granting Frisco summary judgment

on the rescission theories pleaded by The Colony. See Isaacs, 249 S.W.3d at

110 n.9.8

2. Failure of Consideration

Frisco and the District moved for summary judgment on The Colony’s

claim seeking a declaration that it is entitled to rescind the Contract due to a

failure of consideration. Both Frisco and the District moved for summary

judgment on no evidence grounds.

Above, we discussed that “lack of consideration” refers to a contract that

lacks mutuality of obligation. Fed. Sign, 951 S.W.2d at 409. Failure of

consideration, however, occurs when, due to a supervening cause after an

agreement is reached, the promised performance fails. U.S. Bank, N.A. v.

Prestige Ford Garland Ltd. P’ship, 170 S.W.3d 272, 279 (Tex. App.— Dallas

2005, no pet.). The distinction between the two is that lack of consideration

exists, if at all, immediately after the execution of the contract while failure of

consideration arises because of subsequent events. Belew v. Rector, 202

S.W.3d 849, 854 n.4 (Tex. App.—Eastland 2006, no pet.). Thus, failure of

8
… We, of course, must also determine whether the trial court erred by
granting the District summary judgment on The Colony’s rescission theories.

56
consideration may result as a consequence of one party’s failure to perform its

obligations under the agreement, resulting in the other party’s failure to receive

the consideration set forth in the agreement. U.S. Bank, N.A., 170 S.W.3d at

279.

a. Frisco

The Colony devotes three sentences in support of its argument that it

raised a genuine issue of material fact on its failure of consideration issue. It

states, “It is uncontroverted that The Colony never had any wastewater treated

at the Plant,” “It is uncontroverted that The Colony entered into the agreement

for the purpose of obtaining wastewater treatment,” and “It is uncontroverted

that Frisco refused to allow access to the Plant and [the District] refused to

force the issue.” Thus, the “supervening cause” that The Colony claims caused

a post-Contract failure of consideration is Frisco’s “refusal” to give The Colony

access to its easements or pipelines. This is no evidence of a failure of

consideration.

Initially, the summary judgment evidence demonstrates that The Colony

and Frisco unsuccessfully negotiated the wastewater transportation issue

before The Colony filed suit. Johnston testified as follows:

[Johnston]: Well, what happened is they requested the finger and
gave the finger, and then they requested the finger and the
lightning bolt, and then they requested the finger, the lightning bolt

57
 and it was like a fan area. An then at that point, we didn’t know
where it stood.

[The District’s attorney]: So, ultimately, you never agreed - - the
City of The Colony never agreed to give all of that land in exchange
for access, correct?

[Johnston]: We were willing to. We had been given instructions
to give them that land.

[The District’s attorney]: By whom?

[Johnston]: By the council.

[The District’s attorney]: But you were still attempting to negotiate
a deal with the City of Frisco whereby you didn’t have to part with
that land to get the access as of June 3, 2004?

[Johnston]: Yes.

[The District’s attorney]: And then you went ahead and filed suit
shortly thereafter on June 8, 2004, correct?

[Johnston]: Yes.

[The District’s attorney]: Which was five days later?

[Johnston]: Five days later.

Thus, The Colony’s statement that Frisco “refused” to allow The Colony access

to its pipelines or easements must be considered in light of the relevant

summary judgment evidence.

As our analyses above demonstrate, the Contract does not set forth any

obligations regarding The Colony’s or Frisco’s transportation of wastewater to

58
the point of entry. This was an issue to be addressed after the Contract was

executed and in a separate agreement. Frisco also does not have an obligation

under the Contract to give The Colony access to its pipelines or easements, nor

does the Contract limit Frisco’s ability to bargain for something in exchange for

giving The Colony access to its pipelines or easements (in this case the

“lightning bolt” and “finger”).

Equity also does not favor The Colony. Cheatham testified about his

remarks in an email opining that The Colony did not make adequate

preparations for wastewater transportation in the Contract. He testified:

[The District’s attorney]: I’m going to hand you what’s been
marked Deposition Exhibit No. 9. Can you identify that document?

[Cheatham]: It is an e-mail from me to the city council dated
November 19th, 2002.

[The District’s attorney]: And you agree that this is the e-mail that
you sent to city council at that time, a true and correct copy?

[Cheatham]: I - - I believe that to be the case.

[The District’s attorney]: If I could please have you look at the last
paragraph on page 1. Read that aloud.

[Cheatham]: As indicated above we have an agreement with Frisco
and North Texas Municipal Water District on the Stewart Creek
plant. Unfortunately, when we entered into the agreement, we
didn’t make adequate - -

THE REPORTER: Sir, could you slow down for me, please, when
you’re reading?

59
 [Cheatham]: Unfortunately, when we entered into the agreement,
we didn’t make adequate preparations for getting lines to the plant.
[Emphasis added.]

The Colony’s summary judgment evidence does not support its equitable

contention that it should be able to “undo” the Contract because it—not

Frisco—is the party ultimately responsible for not making “adequate

preparations for getting [its] lines to the plant.”

We hold that The Colony failed to raise a genuine issue of material fact

in response to Frisco’s challenge to The Colony’s request for a declaration that

it is entitled to rescind the Contract for failure of consideration and that the trial

court did not err by granting Frisco’s motion for summary judgment on this

ground. See Tex. R. Civ. P. 166a(i). Accordingly, we overrule this part of The

Colony’s first issue.

b. The District

Turning to the District’s motion for summary judgment, The Colony

argues that it raised a genuine issue of material fact that the District’s

consideration failed because the capacity that The Colony had purchased did

not exist when “enforcement was sought.” Whether the District had sufficient

capacity at the plant to treat The Colony’s wastewater, however, is an issue

that survived summary judgment and went to trial. The trial court’s order

granting the District’s motion for summary judgment states, “The Colony’s

60
cause of action that [the District] breached its obligation to provide wastewater

treatment services to The Colony at the ‘Point of Entry’ to the District’s System

is hereby retained for trial.” It continues, “The Court finds this to be the sole

genuine issue of material fact regarding any cause of action pleaded by The

Colony against [the District] which remains to be determined by the jury.”

There was even a jury question on the capacity issue. Question number one

of the trial court’s jury charge asked whether the District materially breached

the Contract by, among other things, “failing to have adequate capacity,” and

the jury answered, “Yes.” Jury question number three asked what sum of

money, if any, would fairly and reasonably compensate The Colony for its

damages that were caused by the District’s failure to comply with the Contract.

Although The Colony labels its argument as a “failure of consideration” instead

of a “breach of contract,” its argument is the same: the District failed to meet

its obligation to provide capacity to The Colony as required by the Contract.

Because the trial court did not grant the District summary judgment on this

issue, which is an issue that was ultimately submitted to the jury, it is not

appropriate for us to determine in the summary judgment context whether a

genuine issue of material fact exists thereon.

61
 3. Mutual Mistake of Fact

Frisco and the District moved for summary judgment on The Colony’s

claim seeking a declaration that it is entitled to rescind the Contract due to a

mutual mistake of fact. The District sought summary judgment on this claim

on traditional grounds only.

A mutual mistake of fact occurs when the parties to an agreement have

a common intention, but their written agreement erroneously reflects that

intention due to a mistake by both parties in writing the agreement. Newsom

v. Starkey, 541 S.W.2d 468, 472 (Tex. Civ. App.—Dallas 1976, writ ref’d

n.r.e.). The elements of mutual mistake are thus (1) a mistake of fact, (2) held

mutually by the parties, and (3) which materially affects the agreed-upon

exchange. Barker, 105 S.W.3d 75 at 84. The doctrine of mutual mistake must

not routinely be available to avoid the results of an unhappy bargain. Williams

v. Glash, 789 S.W.2d 261, 265 (Tex. 1990). Parties should be able to rely on

the finality of freely bargained agreements. Id.

a. Frisco

The Colony argues that it raised a genuine issue of material fact regarding

mutual mistake because it interpreted the Contract to require the District to

ensure access to the plant, but the other parties “appeared to have a different

understanding of the [C]ontract.” The Colony directs us to Johnston’s

62
deposition testimony in which he explained that he thought the District was

supposed to work with The Colony in “send[ing] the lines” to the plant; to

Cheatham’s deposition testimony in which he opined that the District did not

comply with the portion of the Contract requiring the District to use its best

efforts to acquire, construct, and complete the System; and to Dillard’s

deposition testimony in which he opined that the District had an obligation

under the Contract to obtain easements and construct pipelines.

Although The Colony submitted evidence demonstrating its own thoughts

about the parties’ various responsibilities under the Contract, it has offered no

evidence that Frisco likewise suffered from a mistake of fact regarding any of

those responsibilities. The Colony thus produced no evidence to support the

mutual mistake element requiring that both parties be mistaken about a

common intention. See Barker, 105 S.W.3d at 84.

Moreover, an error in predicting a future fact known to be uncertain is not

the kind of mistake that will relieve a party from a contract. Id. The Colony

left the issue of wastewater transportation to be decided at some point after

the parties executed the Contract, but it did not anticipate having to negotiate

the “lightning bolt” and “finger” with Frisco for pipeline or easement access.

According to Johnston, “The Colony management did not see that coming.”

Equity does not favor The Colony for its lack of foresight.

63
 We hold that The Colony failed to raise a genuine issue of material fact

in response to Frisco’s challenge to The Colony’s request for a declaration that

it is entitled to rescind the Contract because of a mutual mistake of fact and

that the trial court did not err by granting Frisco’s motion for summary

judgment on this ground. See Tex. R. Civ. P. 166a(i). Accordingly, we overrule

this part of The Colony’s first issue.

b. The District

The District submitted Parks’s affidavit in addition to the Contract (which

provides that The Colony is responsible for transporting its wastewater to the

point of entry). According to Parks, the District “did not enter into an

agreement with The Colony to construct its wastewater transmission lines.”

Moreover, “[n]o District funds were available for the construction of [T]he

Colony’s wastewater transportation lines because the Contract expressly placed

the obligation for transporting The Colony’s wastewater upon The Colony.”

The Colony relies on the same evidence and argument as it does in the portion

of its brief addressing Frisco’s motion for summary judgment on this ground.

We therefore reach the same conclusion regarding the District’s motion for

summary judgment on this ground—The Colony produced no evidence to

support the mutual mistake element requiring that both parties be mistaken

about a common intention. See Barker, 105 S.W.3d at 84. We hold that The

64
Colony failed to raise a genuine issue of material fact in response to the

District’s challenge to The Colony’s request for a declaration that it is entitled

to rescind the Contract because of a mutual mistake of fact and that the trial

court did not err by granting the District’s motion for summary judgment on this

ground. See Tex. R. Civ. P. 166a(c). Accordingly, we overrule this part of The

Colony’s second issue.

4. Unilateral Mistake of Fact

Frisco and the District moved for summary judgment on The Colony’s

claim seeking a declaration that it is entitled to rescind the Contract due to a

unilateral mistake of fact. The District sought summary judgment on this claim

on traditional grounds only.

A plaintiff must show the following in order to be entitled to equitable

relief on the grounds of unilateral mistake: (1) the mistake is of so great a

consequence that to enforce the contract as made would be unconscionable;

(2) the mistake relates to a material feature of the contract; (3) the mistake

must have been made regardless of the exercise of ordinary care; and (4) the

parties can be placed in status quo in the equity sense; i.e., rescission must not

result in prejudice to the other party except for the loss of his bargain. James

T. Taylor & Son, Inc. v. Arlington ISD, 160 Tex. 617, 335 S.W.2d 371, 373

65
(1960); N. Natural Gas Co. v. Chisos Joint Venture I, 142 S.W.3d 447, 456

(Tex. App.—El Paso 2004, no pet.).

The Colony argues that it raised a fact issue as to whether Frisco’s

conduct was unconscionable and that the evidence was undisputed that The

Colony paid over $12 million to upgrade its own treatment plant. Although it

directs us to Johnston’s testimony in which he opines that the expenditure of

$878,000 under the Contract was not a “good expenditure” and to Cheatham’s

testimony in which he discusses amounts paid by The Colony under the

Contract, The Colony’s expenditure of between $12 and $13 million to modify

its plant, and other miscellaneous issues, The Colony does not set forth any

argument or discussion regarding any evidence of how the mistake was made

despite the exercise of ordinary care or whether the parties can be placed in the

status quo from an equitable standpoint (prejudice). See James T. Taylor &

Son, Inc., 335 S.W.2d at 373. Because The Colony failed to raise a genuine

issue of material fact in support of two essential elements of its unilateral

mistake theory, we hold that The Colony failed to raise a genuine issue of

material fact in response to Frisco’s challenge to The Colony’s request for a

declaration that it is entitled to rescind the Contract because of a unilateral

mistake of fact and that the trial court did not err by granting Frisco’s motion

66
for summary judgment on this ground. See Tex. R. Civ. P. 166a(i).

Accordingly, we overrule this part of The Colony’s first issue.

The District challenged the unilateral mistake element requiring that

rescission not result in prejudice to the other party except for the loss of his or

its bargain. Johnston testified that The Colony wants the return of the

approximately $878,000 that it paid to the District even though he admitted

that the District had utilized all money paid to it to maintain the plant.

According to Parks, however, because the plant was expanded for use by The

Colony and Frisco, the sole source of funds to repay the bond debt and to pay

for the operation and maintenance of the System comes from funds generated

under the Contract from The Colony and Frisco. Thus, the District “cannot

utilize funds from other projects to fund construction or operating costs” of the

plant and, consequently, would not—in the equity sense—be returned to the

status quo if the Contract is rescinded.

The District having met its summary judgment burden under the

challenged element of prejudice resulting from rescission, The Colony relies on

the same evidence and argument as it does in the portion of its brief addressing

Frisco’s motion for summary judgment on the ground of unilateral mistake. The

Colony thus does not set forth any argument or discussion regarding any

evidence that rescission would not result in prejudice to the District. See

67
James T. Taylor & Son, Inc., 335 S.W.2d at 373. We hold that The Colony

failed to raise a genuine issue of material fact in response to the District’s

challenge to The Colony’s request for a declaration that it is entitled to rescind

the Contract because of a unilateral mistake of fact and that the trial court did

not err by granting the District’s motion for summary judgment on this ground.

See Tex. R. Civ. P. 166a(c). Accordingly, we overrule this part of The Colony’s

second issue.

5. Repudiation

Frisco and the District moved for summary judgment on The Colony’s

claim seeking a declaration that it is entitled to rescind the Contract because

Frisco and the District repudiated—or expressed an intent not to perform their

respective obligations under—the Contract. Both Frisco and the District moved

for summary judgment on no evidence grounds.

Repudiation consists of words or actions by a contracting party that

indicate he is not going to perform his contract in the future. Jenkins v.

Jenkins, 991 S.W.2d 440, 447 (Tex. App.—Fort W orth 1999, pet. denied);

Group Life & Health Ins. Co. v. Turner, 620 S.W.2d 670, 673 (Tex. Civ.

App.—Dallas 1981, no writ). It is conduct that shows a fixed intention to

abandon, renounce, and refuse to perform the contract. Jenkins, 991 S.W.2d

at 447. In order for a statement to be deemed repudiation, “a party’s language

68
must be sufficiently positive to be reasonably interpreted to mean that the party

will not or cannot perform.” El Paso Natural Gas Co. v. Lea Partners, L.P., No.

08-01-00310-CV, 2003 WL 21940729, at *5 (Tex. App.—El Paso Aug. 14,

2003, pet. denied) (mem. op.) (citing Restatement (Second) of Contracts § 250

cmt. b (1979)).

The Colony argues only that it raised a genuine issue of material fact that

Frisco repudiated the Contract because “Frisco simply would not allow [The

Colony] access to the Plant without [The Colony’s] entering into a disannexation

and boundary adjustment agreement.” Frisco’s desire to negotiate for The

Colony’s disannexation of the real property known as the “lightning bolt” and

the “finger,” however, does not raise a genuine issue of material fact that Frisco

demonstrated by words or actions either an intent not to perform or an inability

to perform its obligations under the Contract. We have reviewed all of The

Colony’s summary judgment evidence in response to Frisco’s motion for

summary judgment. None of it raises a genuine issue of material fact that Frisco

showed a fixed intention to abandon, renounce, and refuse to perform any of its

obligations under the Contract. See Jenkins, 991 S.W.2d at 447. We hold that

The Colony failed to raise a genuine issue of material fact in response to Frisco’s

challenge to The Colony’s request for a declaration that it is entitled to rescind

the Contract because of Frisco’s repudiation of the Contract and that the trial

69
court did not err by granting Frisco’s motion for summary judgment on this

ground. See Tex. R. Civ. P. 166a(i). Accordingly, we overrule this part of The

Colony’s first issue.

In terms of the District, The Colony relies on the same evidence and

argument as it does in the portion of its brief addressing Frisco’s motion for

summary judgment on this ground. We hold that The Colony failed to raise a

genuine issue of material fact in response to the District’s challenge to The

Colony’s request for a declaration that it is entitled to rescind the Contract

because of the District’s repudiation of the Contract and that the trial court did

not err by granting the District’s motion for summary judgment on this ground.

See id. Accordingly, we overrule this part of The Colony’s second issue.

In addition to The Colony’s claim seeking a declaration that it is entitled

to rescind the Contract because of Frisco’s and the District’s alleged repudiation

of the Contract, The Colony alleged in its third amended original petition that it

was seeking “a declaration that its liability to the Defendants under the contract,

if any, has been released and extinguished by the Defendants’ failure to

perform.” To the extent that there is any distinction between this repudiation

claim and the repudiation claim that we analyzed in the context of rescission

immediately above, and to the extent The Colony seeks to appeal the trial

court’s grant of summary judgment on this claim, The Colony waived any

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complaint regarding this rescission claim because it failed to set forth any

argument or analysis of this matter in its brief. See Tex. R. App. P. 38.1(h).

6. Unjust Enrichment

In addition to the unjust enrichment claim addressed above, The Colony

alleged that it was entitled to rescind the Contract in order to avoid the unjust

enrichment of Frisco or the District. Frisco and the District successfully moved

for summary judgment on this ground.

With the exception that The Colony made this unjust enrichment claim in

the context of its rescission allegations, we decipher no distinction between this

unjust enrichment claim and The Colony’s other unjust enrichment claim

analyzed above. Nor does The Colony argue that there is a difference between

the two. Applying the unjust enrichment principles articulated above, we hold

that The Colony failed to raise a genuine issue of material fact in response to

Frisco’s and the District’s challenges to The Colony’s request for a declaration

that it its entitled to rescind the Contract due to the unjust enrichment of Frisco

or the District and that the trial court did not err by granting Frisco’s and the

District’s motions for summary judgment on this ground. Accordingly, we

overrule this part of The Colony’s first and second issues. The trial court did not

71
err by granting Frisco and the District summary judgment on The Colony’s claims

seeking a declaration that it is entitled to rescind the Contract. 9

E. Promissory Estoppel

Frisco and the District successfully moved for summary judgment on The

Colony’s claim that it is “entitled to relief pursuant to a cause of action for

promissory estoppel against Defendants.” The Colony sets forth zero argument

or evidence in its brief challenging the trial court’s grant of summary judgment

in favor of Frisco and the District on this ground. Thus, to the extent The

Colony intends to challenge this portion of the trial court’s orders granting Frisco

and the District summary judgment on this ground, its complaint is waived. See

Tex. R. App. P. 38.1(h). We overrule this part of The Colony’s first and second

issues.

F. Breach of Contract

The essential elements of a breach of contract claim are the existence of

a valid contract, performance or tendered performance by the plaintiff, breach

of the contract by the defendant, and damages sustained as a result of the

breach. See Valero Mktg. & Supply Co. v. Kalama Int’l, 51 S.W.3d 345, 351

9
… Thus, although we held above that the trial court erred by granting
Frisco summary judgment on its ratification affirmative defense, Frisco was
nonetheless entitled to summary judgment on The Colony’s rescission claims.

72
(Tex. App.—Houston [1st Dist.] 2001, no pet.). The normal measure of

damages in a breach of contract case is the benefit of the bargain, the purpose

of which is to restore the injured party to the economic position it would have

been in had the contract been performed. Mays v. Pierce, 203 S.W.3d 564,

577 (Tex. App.—Houston [14th Dist.] 2006, pet. denied).

1. The Colony’s Claims

The Colony sued both Frisco and the District for breach of contract. The

trial court granted Frisco’s motion for summary judgment on The Colony’s

breach of contract claim, and with the exception of “The Colony’s cause of

action that [the District] breached its obligation to provide wastewater treatment

services to The Colony at the ‘Point of Entry’ to the District’s System,” the trial

court granted the District’s motion for summary judgment on The Colony’s

breach of contract claim.

a. Frisco

The Colony does not set forth any argument or evidence in its brief

challenging the trial court’s grant of summary judgment in favor of Frisco on The

Colony’s breach of contract claim. To the extent The Colony intends to

challenge this portion of the trial court’s order granting Frisco summary

judgment on The Colony’s breach of contract claim, its complaint is waived.

See Tex. R. App. P. 38.1(h). We overrule this part of The Colony’s first issue.

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 b. The District

In its no evidence motion for summary judgment challenging The Colony’s

breach of contract claim, the District specifically challenged the element

requiring The Colony to prove that the District breached the Contract. The

Colony argues that its summary judgment evidence raised a genuine issue of

material fact that the District breached the Contract in the following two ways:

(1) the District breached the Contract for failing to use its best efforts to design,

acquire, and construct the System and (2) the District breached the Contract for

failure to use its best efforts to implement the “red book.” The Colony’s

argument is centered on section 2.01 of the Contract, which states, “In order

to provide services for receiving, transporting, treating, and disposing of

Wastewater for Participants, the District will use its best efforts to design,

acquire, construct, and complete the System, as generally described in the [‘red

book’] . . . .”

The Colony submitted Dillard’s deposition testimony in which he opined

that the District failed to comply with section 2.01 of the Contract because

there are no pipelines or right-of-ways for The Colony to transport its

wastewater to the plant. Dillard opined that the Contract required the District

to design, acquire, and construct the means for transporting The Colony’s

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wastewater to the plant and that The Colony was responsible only for delivering

its effluent.

Cheatham opined in his deposition testimony that the District had not

complied with the “best efforts” language because the pipelines set forth in the

“red book” had not been constructed. He reasoned in part as follows:

[The District’s attorney]: So specifically, if you can tell, what did,
in your opinion, the North Texas Municipal Water District not do
regarding acquire, construct and complete the system as generally
described in the engineering report?

[Cheatham]: Well, to the best of my knowledge, line C, line D, line
B have not been constructed and installed. . . .

[The District’s attorney]: So by not constructing or installing line B,
C and D, that’s the basis for your opinion that North Texas
Municipal Water District has not done the acquiring, constructing
and completing the system as generally described in the engineering
report?

[Cheatham]: The basis of my opinion is that they have not
completed the requirements based on the fact that these lines have
not been installed.

Johnston testified that he thought the District breached the Contract

because it failed to work with The Colony in sending pipelines to the plant, it

demonstrated a lack of cooperation with The Colony, and it was incompetent.

He relied on the “red book” for his opinion that the District was supposed to

assist The Colony in setting up the wastewater lines.

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 The Colony argues that the District failed to use its best efforts “to

implement the concepts contained in the [‘red book’].” It contends that the

District could have allowed The Colony to construct its own pipelines had the

District acquired title to existing right-of-way and easement facilities, that the

District was “unwilling to take action contrary to Frisco’s interests” because

“Frisco sits on [the District’s] Board of Directors and is a large customer,” and

that Lisa McCurley, a specialist in wastewater discharge permits, concluded that

“permit capacity applications should have been submitted about five years in

advance of the anticipated tie-in date” and that the District had consequently

failed to employ an adequate permit strategy because it “had not entered the

permitting process” as of October 2006.

Utilizing the same rules on contract construction detailed above, The

Colony did not raise a genuine issue of material fact that the District breached

the Contract for failing to use its best efforts to design, acquire, and construct

the System or to implement the “red book” because a fair reading of the entire

Contract— not just parts of it read in isolation—does not support any of the

contentions relied upon by The Colony to raise a fact issue. Specifically, the

Contract defines “System” as “all of the District’s facilities acquired,

constructed, used, or operated by the District for receiving, transporting,

treating, and disposing of Wastewater of and for Participants.” Although it uses

76
the word “transporting,” the remainder of the very same sentence

unambiguously clarifies that the definition “exclud[es] any facilities . . . required

to transport Wastewater to any Point of Entry of the District’s System.” This

means that any time the term “System” is used in the Contract, unless

otherwise indicated, the term is not meant to include facilities required to

transport wastewater.

The definition of “System” is further limited in the second full sentence of

the definition to those facilities “which are acquired, constructed, used, or

operated by the District to provide service to Participants pursuant to this

Contract.” [Emphasis added.] Consistent with this provision, nowhere does the

Contract require or provide that the District is to operate facilities used to

transport wastewater.

Further limiting the meaning and scope of the term “System” is section

8.01 of the Contract, which provides that “[t]he System shall initially consist of

the Plant.” [Emphasis added.] The Contract provides that the term “Plant”

refers to the “Stewart Creek West Plant,” which “the District currently

operates.” There is no evidence to indicate that the term “Plant” has taken on

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any additional meaning since the execution of the Contract to include pipelines

for wastewater transportation.10

As for the “red book,” although the initial portion of the Contract generally

states that “the parties hereto wish to further implement the [‘red book’],” the

Contract goes on to specifically clarify how the parties—notwithstanding the

“red book”—intended to treat the issue of wastewater transportation as part of

its “implementation” of the “red book.” Section 3.03 expressly provides that

it is the sole responsibility of The Colony and Frisco to transport, or cause to be

transported, its wastewater to the point of entry. The Contract does not

expressly incorporate the “red book,” nor is the “red book” attached to the

Contract as an exhibit.11

The Colony’s arguments that the District failed to use its best efforts to

design, acquire, and construct the “System” and to implement the “red book”

are contrary to long-established rules of contract construction requiring that we

10
… Although the System “initially” consists of the plant, section 2.01
provides that the District “shall have the right to provide single plants,
multiplants, or combine two or more plants, and to use or discontinue the use
of any facility of the System as the District deems necessary.”
11
… There are two exhibits to the Contract. Exhibit “A” is designated,
“Points of Entry,” and Exhibit “B” is designated, “All wastewater treatment
facilities, structures, apparatus, equipment, and devices located on the
following described property as of the date of the Contract.”

78
ascertain the true intent of the parties by examining and considering the entire

Contract to give effect to all of the Contract’s provisions, that we presume the

parties to the Contract intended every clause to have some effect, and that a

specific provision controls over a general provision. See Coker, 650 S.W.2d at

393; Heritage Res., Inc., 939 S.W.2d at 121. The Colony’s evidence relating

to the District’s failure to assist with the acquisition of easements or to

construct or assist with the construction of pipelines is thus based upon an

improperly broad—and ultimately unreasonable—interpretation, or assumption,

of the relevant portions of the Contract. For these reasons, its arguments must

fail.

We hold that The Colony failed to raise a genuine issue of material fact in

response to the District’s challenge to The Colony’s breach of contract claim and

that the trial court did not err by granting the District’s motion for summary

judgment on this ground. See Tex. R. Civ. P. 166a(i). Accordingly, we overrule

this part of The Colony’s second issue.

2. Frisco’s Counterclaim

With the exception of damages, the trial court granted Frisco’s motion for

summary judgment on Frisco’s breach of contract counterclaim. The Colony

challenges the trial court’s grant of summary judgment in favor of Frisco on the

breach of contract counterclaim.

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 The Contract is signed by the District’s President, Board of Directors,

Frisco’s mayor, The Colony’s mayor, and three witnesses. Section 11.01 of the

Contract provides that it “shall become effective as of the date of execution

hereof.” The Contract is dated May 28, 1998. Section 11.02 provides that the

Contract “shall continue in force from the effective date hereof at least until all

bonds . . . shall have been paid in full; and shall also remain in force thereafter

throughout the useful life of the System.”

The Contract is clear on the parties’ respective obligations. It provides

that “[i]n consideration of the payments to be made under its respective contract

with the District,” The Colony and Frisco shall have the right to discharge

wastewater into the System. Regarding financing, the Contract provides that

the District will issue bonds to provide for the system. Section 5.03 of the

Contract states that “[f]or services to be rendered to each Participant by the

District under this Contract . . ., each Participant has agreed to pay, at the time

and in the manner hereinafter provided, its proportionate share of the Annual

Requirement . . . .” Section 5.02 provides that the Annual Requirement shall

not be less than an amount sufficient to pay the “Operation and Maintenance

Component” and the “Bond Service Component,” which includes in part the

redemption premium, if any, and interest on, the bonds issued to fund the

expansion of the plant. Section 5.03(h) provides that The Colony and Frisco are

80
“obligated unconditionally” to make the “Bond Service Component” payment

“regardless of whether or not the District actually provides such facilities and

services, or whether or not any Participant actually receives or uses such

facilities and services . . . .” Payments made by The Colony and Frisco to the

District are the “only source available to the District to provide the Annual

Requirement.” [Emphasis added.] Sections 5.03(d) and 5.03(d)(v) provide that

“[e]ach Participant’s Annual Payment also shall be adjusted and redetermined for

the balance of any applicable Fiscal Year, consistent with the provisions of this

contract, . . . at any time during any Fiscal Year if” “[i]t appears to the District

that for any other reason it will not receive the full amount of the Annual

Requirement unless such adjustment or redetermination are made.”

Johnston agreed it was The Colony’s understanding that the District was

going to issue bonds to finance the construction of the plant. He also agreed

that it was The Colony’s understanding that it was The Colony’s and Frisco’s

obligation to repay the principal and interest on the bonds and the maintenance

and operation of the facility. Johnston additionally testified about the

percentages of capacity that were allocated to The Colony at the plant between

1999 and 2003–2004. He agreed that The Colony understood that it would still

have to pay its percentage share if it did not access the plant.

81
 The Colony eventually quit making payments to the District even though

its payments under the Contract are “unconditional.” Parks opined that The

Colony had breached the Contract because it failed to continue making

payments and that The Colony owes money for its share of the payments

required under the Contract. Under the tri-party Contract, The Colony and Frisco

are the only two participants. The Colony’s and Frisco’s payments are thus the

only source of money available to pay the bond debt and the operation and

maintenance of the plant. If a participating city failed to make a payment under

the Contract, in this case The Colony, then the other participant, in this case

Frisco, had to make up the difference. With the exception of damages, we hold

that Frisco met its initial summary judgment burden to show that The Colony

materially breached the Contract. See Kalama Int’l, 51 S.W.3d 345, 351

(setting forth elements of breach of contract claim).

The Colony argues that the trial court erred by granting Frisco’s motion for

summary judgment on its counterclaim for the following reason: “The Colony

submitted extensive summary judgment evidence that raised factual disputes

regarding the parties’ respective obligations and rights. Because the facts were

disputed, the trial court erroneously granted summary judgment . . . .” It goes

on to state a number of breach of contract rules and that its mayor and assistant

city manager “understood that The Colony would bear the cost of transporting

82
wastewater, and The Colony was always prepared to pay those costs.” It

continues, “The impediments were access to the plant . . . and capacity at the

plant . . . .” The Colony thus relies on the other arguments and evidence

addressed above to demonstrate the existence of a fact issue.

Having reviewed all of The Colony’s evidence, we hold that The Colony

failed to raise a genuine issue of material fact in response to Frisco’s motion for

summary judgment on its breach of contract counterclaim and that the trial court

did not err by granting Frisco’s motion for summary judgment on its breach of

contract counterclaim. See Tex. R. Civ. P. 166a(a), (c); Jones, 710 S.W.2d at

60. We overrule the remainder of The Colony’s first issue.

IV. A DDITIONAL E RRORS AND H ARM

In its third issue, The Colony argues that the trial court’s rulings on the

summary judgments taken together with three other erroneous trial court rulings

caused the rendition of an improper judgment. See Tex. R. App. P. 44.1(a)(1).

The errors that The Colony complains of relate to the trial court’s refusal to

grant trial amendments, jury charge error, and denial of The Colony’s post trial

motion to enter judgment rescinding the Contract.

A. Trial Amendments

The Colony filed its motion for leave to file trial amendments on November

20, 2006, the final day of trial. It requested leave pursuant to rule of civil

83
procedure 67 to file its second supplemental petition as a trial amendment,

arguing that it had produced unobjected-to evidence at trial in support of the

following legal theories: excuse of breach due to prior material breach by the

District, novation, offer of new terms, waiver of nonpayment, failure of

consideration, estoppel, ratification, and failure to mitigate damages. The Colony

further requested leave pursuant to rule of civil procedure 66 to file its third

supplemental petition as a trial amendment, requesting that the trial court vacate

its prior summary judgment orders and reasserting legal theories that were

disposed of on summary judgment and asserting other theories brought up

outside the presence of the jury. The trial court denied The Colony’s motion for

leave to file the trial amendments.

Rule 67 provides in part, “When issues not raised by the pleadings are

tried by express or implied consent of the parties, they shall be treated in all

respects as if they had been raised in the pleadings.” Tex. R. Civ. P. 67. The

rule of implied consent is only intended to apply to exceptional circumstances

where it clearly appears from the record that the parties tried the unpleaded

issue by consent. White v. Sullins, 917 S.W.2d 158, 160 (Tex.

App.—Beaumont 1996, writ denied). To decide whether an issue was tried by

consent, we review the record “not for evidence of the issue, but rather for

evidence of trial of the issue.” Case Corp. v. Hi-Class Bus. Sys. of Am., Inc.,

84
184 S.W.3d 760, 771 (Tex. App.—Dallas 2005, pet. denied). A party’s

unpleaded issue may be deemed tried by consent when evidence on the issue

is developed under circumstances indicating both parties understood the issue

was in the case, and the other party failed to make an appropriate complaint.

Id. However, trial by consent is inapplicable when evidence relevant to an

unpleaded matter is also relevant to a pleaded issue; in that case, admission of

the evidence would not be calculated to elicit an objection, and its admission

ordinarily would not demonstrate a “clear intent” on the part of all parties to try

the unpleaded issue. Id. The trial court has great discretion in deciding whether

to permit a trial amendment. See Hardin v. Hardin, 597 S.W.2d 347, 349–50

(Tex. 1980).

Here, the record does not indicate that both parties understood that the

legal theories of excuse of breach due to prior material breach, novation, offer

of new terms, waiver of nonpayment, failure of consideration, estoppel,

ratification, and failure to mitigate damages were to be tried. Rather, Frisco or

the District asserted repeated objections to The Colony’s attempt to elicit

testimony regarding issues previously resolved by the trial court’s summary

judgment orders or other irrelevant issues. Moreover, to the extent there is any

evidence of the above theories, that evidence is also relevant to the contractual

matters actually at issue in the trial. The record does not demonstrate the

85
parties tried the above theories by consent. See Case Corp., 184 S.W.3d at

771. Accordingly, we hold that the trial court did not abuse its discretion by

denying this part of The Colony’s motion for leave to file trial amendments.

Rule 66 governs amendments during trial. Tex. R. Civ. P. 66. Under rule

66, a trial court is required to freely grant the request unless the opposing party

presents evidence of surprise or prejudice or the amendment asserts a new

cause of action or defense, and thus is prejudicial on its face. State Bar of Tex.

v. Kilpatrick, 874 S.W.2d 656, 658 (Tex.), cert. denied, 512 U.S. 1236 (1994).

An amendment is prejudicial on its face if it asserts a new substantive matter

that reshapes the nature of the trial itself, the opposing party could not have

anticipated the amendment in light of the prior development of the case, and the

opposing party’s presentation of the case would be detrimentally affected.

Dunnagan v. Watson, 204 S.W.3d 30, 38 (Tex. App.—Fort Worth 2005, pet.

denied).

The Colony’s third amended supplemental petition alleged that Frisco and

the District committed statutory fraud and negligent misrepresentation; that

Frisco “intentionally interfered with the District’s and Plaintiff’s attempts to

perform under the contract, which interference was a proximate cause of

Plaintiff’s actual damage”; that Frisco’s “city manager acted with apparent

authority in interfering with the District’s and Plaintiff’s attempts to perform

86
under the [C]ontract”; that Frisco and the District engaged in a joint enterprise

to prevent The Colony from gaining access to the wastewater treatment plant;

and that Frisco and the District engaged in a civil conspiracy. None of these

new causes of action were pleaded in The Colony’s third amended petition, and,

consequently, none of the theories were at issue when the trial court ruled on

Frisco’s and the District’s motions for summary judgment. The issues remaining

to be resolved at trial were clear, and Frisco’s and the District’s presentation of

their cases would have been detrimentally affected had the trial court granted

the amendment because the new theories would have reshaped the nature of

the trial. See Dunnagan, 204 S.W.3d at 38. We hold that the trial court did not

abuse its discretion by denying this part of The Colony’s motion for leave to file

trial amendments. And we hold that the trial court’s ruling denying The

Colony’s motion for leave to file trial amendments did not prevent The Colony

from properly presenting its case to this court. See Tex. R. App. P. 44.1(a)(2)

(stating that no judgment may be reversed on appeal on the ground that the trial

court made an error of law unless the court of appeals concludes that the error

complained of probably prevented the appellant from properly presenting the

case to the court of appeals). To the extent The Colony intends to raise any

other arguments under this issue that we have not addressed immediately

above, they are waived. See Tex. R. App. P. 38.1(h) (stating that appellate brief

87
must contain a clear and concise argument for the contentions made with

appropriate citations to authorities and the record). We overrule this part of The

Colony’s third issue.

B. Jury Charge

The Colony argues that the trial court’s rulings on the summary judgments

and trial amendments “had an improper adverse effect on the ensuing jury

charge.” It specifically complains of the trial court’s refusal to submit a question

asking whether The Colony’s breach, if any, was excused.

A party is entitled to a jury question, instruction, or definition that is raised

by the pleadings and evidence. Tex. R. Civ. P. 278; Union Pac. R.R. Co. v.

Williams, 85 S.W.3d 162, 166 (Tex. 2002). This is a substantive,

nondiscretionary directive to trial courts, requiring them to submit requested

questions to the jury if the pleadings and any evidence support them. Elbaor v.

Smith, 845 S.W.2d 240, 243 (Tex. 1992).

The trial court has broad discretion in submitting jury questions so long as

the questions submitted fairly place the disputed issues before the jury. TXI

Transp. Co. v. Hughes, 224 S.W.3d 870, 900 (Tex. App.—Fort Worth 2007,

pet. granted). This broad discretion is subject only to the limitation that

controlling issues of fact must be submitted to the jury. Id.; see also Tex. R.

Civ. P. 278. Rule 277 also affords the trial court considerable discretion in

88
deciding what instructions are necessary and proper. State Farm Lloyds v.

Nicolau, 951 S.W.2d 444, 451–52 (Tex. 1997). Indeed, a trial court is afforded

even more discretion when submitting instructions than when submitting

questions. Wal-Mart Stores, Inc. v. Middleton, 982 S.W.2d 468, 470 (Tex.

App.—San Antonio 1998, pet. denied).

The standard of review for error in the jury charge is abuse of discretion,

which occurs only when the trial court acts arbitrarily, unreasonably, or without

reference to guiding rules or principles. In re V.L.K., 24 S.W.3d 338, 341 (Tex.

2000); Aquamarine Operators, Inc. v. Downer, 701 S.W.2d 238, 241–42 (Tex.

1985), cert. denied, 476 U.S. 1159 (1986).

The Colony argues that the pleadings and evidence raised a fact issue

regarding whether The Colony’s breach of the Contract might have been

excused, but the contention that a party to a contract is excused from

performance because of a prior material breach by the other contracting party

is an affirmative defense that must be affirmatively pleaded or it is waived. See

Compass Bank v. MFP Fin. Servs., 152 S.W.3d 844, 852 (Tex. App.—Dallas

2005, pet. denied); RE/MAX of Tex., Inc. v. Katar Corp., 961 S.W.2d 324, 327

(Tex. App.—Houston [1st Dist.] 1997, pet. denied); see also Hassell Constr.

Co., Inc. v. Stature Commercial Co. Inc., 162 S.W.3d 664, 667 (Tex.

App.—Houston [14th Dist.] 2005, no pet.). The Colony never pleaded that it

89
was discharged or excused from performing under the Contract because of a

prior material breach by either Frisco or the District, nor do we find that such an

affirmative defense was tried by consent. Thus, the Colony’s live pleadings do

not support a jury question on the defense of excuse. See Williams, 85 S.W.3d

at 166.

Moreover, as Frisco points out, the trial court had already granted Frisco

summary judgment on its counterclaim that The Colony breached the Contract.

The only issue to be determined at trial—besides whether the District breached

the Contract—was damages for the breach. Whether The Colony’s breach was

excused was beyond the scope of the issues at trial.

We hold that the trial court did not abuse its discretion by refusing to

submit a question asking whether The Colony’s breach, if any, was excused.

We further hold that the trial court’s ruling refusing to submit a jury question on

excuse did not prevent The Colony from properly presenting its case to this

court. See Tex. R. App. P. 44.1(a)(2). We overrule this part of The Colony’s

third issue.

C. Entry of Judgment

The Colony also complains of the trial court’s judgment, particularly the

portion of it stating that the Contract “is a valid, unambiguous and enforceable

agreement.” Citing “the jury findings, supporting pleadings and evidence, and

90
public policy arguments,” The Colony contends that the trial court erred by

refusing The Colony’s request to enter judgment rescinding the Contract.

The trial court granted Frisco’s and the District’s motions for summary

judgment on The Colony’s claims for rescission. The trial court also granted in

part the District’s request for a declaration when it ordered in its summary

judgment order granting the District’s motion that the Contract “is a valid,

unambiguous, enforceable agreement.” We overrule this part of The Colony’s

third issue, and we overrule the remainder of The Colony’s third issue insofar as

it complains of cumulative error that prevented it from properly presenting part

of its case to this court.

V. F RISCO’S A PPEAL AND THE D ISTRICT’S A PPEAL

In two issues, Frisco argues in its appeal that the evidence is legally and

factually insufficient to support the jury’s findings awarding Frisco $0.00 for

both The Colony’s failure to comply with the Contract and for Frisco’s attorneys’

fees on appeal.

In three issues, the District argues in its appeal that the trial court erred

by overruling its motion to disregard the jury’s finding that the District materially

breached the Contract and that the evidence is legally and factually insufficient

to support the jury’s findings (1) that the District materially breached the

91
Contract by failing to have adequate capacity and (2) awarding the District

$0.00 for attorneys’ fees.

A. Standards of Review

1. Legal Sufficiency

We may sustain a legal sufficiency challenge only when (1) the record

discloses a complete absence of evidence of a vital fact, (2) the court is barred

by rules of law or of evidence from giving weight to the only evidence offered

to prove a vital fact, (3) the evidence offered to prove a vital fact is no more

than a mere scintilla, or (4) the evidence establishes conclusively the opposite

of a vital fact. Uniroyal Goodrich Tire Co. v. Martinez, 977 S.W.2d 328, 334

(Tex. 1998), cert. denied, 526 U.S. 1040 (1999); Robert W . Calvert, “No

Evidence” and “Insufficient Evidence” Points of Error, 38 Tex. L. R ev. 361,

362–63 (1960). In determining whether there is legally sufficient evidence to

support the finding under review, we must consider evidence favorable to the

finding if a reasonable factfinder could and disregard evidence contrary to the

finding unless a reasonable factfinder could not. City of Keller v. Wilson, 168

S.W.3d 802, 807, 827 (Tex. 2005).

Anything more than a scintilla of evidence is legally sufficient to support

the finding. Cont’l Coffee Prods. Co. v. Cazarez, 937 S.W.2d 444, 450 (Tex.

1996); Leitch v. Hornsby, 935 S.W.2d 114, 118 (Tex. 1996). More than a

92
scintilla of evidence exists if the evidence furnishes some reasonable basis for

differing conclusions by reasonable minds about the existence of a vital fact.

Rocor Int’l, Inc. v. Nat’l Union Fire Ins. Co., 77 S.W.3d 253, 262 (Tex. 2002).

If a party is attacking the legal sufficiency of an adverse finding on an

issue on which the party had the burden of proof, the party must demonstrate

on appeal that the evidence establishes, as a matter of law, all vital facts in

support of the issue. Dow Chem. Co. v. Francis, 46 S.W.3d 237, 241 (Tex.

2001); Sterner v. Marathon Oil Co., 767 S.W.2d 686, 690 (Tex. 1989). We

first examine the record for evidence that supports the finding, while

disregarding evidence to the contrary when reasonable to do so. Dow Chem.

Co., 46 S.W.3d at 241; see also City of Keller, 168 S.W.3d at 827. If there is

no evidence to support the finding, we will then examine the entire record to

determine if the contrary proposition is established as a matter of law. Dow

Chem Co., 46 S.W.3d at 241; Sterner, 767 S.W.2d at 690.

“When a court of appeals disturbs the judgment of a lower tribunal, merely

saying that the court has reviewed all the evidence and reaching a conclusion

contrary to that of the trier of fact is not enough. Instead, the court should

explain, with specificity, why it has substituted its judgment for that of the trial

court.” Citizens Nat’l Bank in Waxahachie v. Scott, 195 S.W.3d 94, 96 (Tex.

2006). When we sustain a legal sufficiency issue, it is our duty to render

93
judgment for the appellant because that is the judgment the trial court should

have rendered. See Tex. R. App. P. 43.3; Vista Chevrolet, Inc. v. Lewis, 709

S.W.2d 176, 176 (Tex. 1986).

2. Factual Sufficiency

An assertion that the evidence is factually insufficient to support a fact

finding means that the evidence supporting the finding is so weak or the

evidence to the contrary is so overwhelming that the answer should be set aside

and a new trial ordered. Garza v. Alviar, 395 S.W.2d 821, 823 (Tex. 1965).

We are required to consider all of the evidence in the case in making this

determination, not just the evidence that supports the finding. Mar. Overseas

Corp. v. Ellis, 971 S.W.2d 402, 406–07 (Tex.), cert. denied, 525 U.S. 1017

(1998).

When reviewing an issue asserting that a finding is “against the great

weight and preponderance” of the evidence, we must consider and weigh all of

the evidence and set aside the finding only if the evidence is so weak or the

finding is so contrary to the great weight and preponderance of the evidence as

to be clearly wrong and unjust. Dow Chem. Co. v. Francis, 46 S.W .3d 237,

242 (Tex. 2001); In re King’s Estate, 150 Tex. 662, 244 S.W.2d 660, 661

(1951).

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 B. Frisco’s Challenge to the Jury’s Finding of $0.00 Damages

Frisco argues that it established as a matter of law that it was damaged

in the amount of $642,863.98 for The Colony’s breach of the Contract. Frisco

had the burden of proof on this issue at trial.

The jury has discretion to award damages within the range of evidence

presented at trial. Dunnagan, 204 S.W.3d at 47. A jury may not, however,

arbitrarily assess an amount neither authorized nor supported by the evidence

presented at trial. Id.

There is no evidence that Frisco’s damages for The Colony’s failure to

comply with the Contract are $0.00. We now examine the record to determine

if a particular value of Frisco’s damages was established as a matter of law.

See Dow Chem Co., 46 S.W.3d at 241; Sterner, 767 S.W.2d at 690; see also

Kitchen v. Frusher, 181 S.W.3d 467, 473 (Tex. App.—Fort Worth 2005, no

pet.).

Judd Sanderson is the District’s director of finance. He testified that the

District issued approximately $7 million in bonds in 1998 to fund the expansion

and construction of the plant. The issuance of the bonds, which are to be

repaid over twenty years, thus created debt. Under the terms of the Contract,

The Colony and Frisco are required to make debt service payments that repay

the bond obligations. There are no other sources of funds that the District has

95
to repay the bonds issued to finance the plant’s expansion because The Colony

and Frisco are the only two participants under the Contract.

Sanderson testified that The Colony quit making payments to the District

under the Contract around October 2002. Cheatham acknowledged that The

Colony did not make contractual payments for the fiscal years 2004, 2005,

2006, and 2007.12 Frisco funded The Colony’s share of the payments

thereafter. Through November 16, 2006, Frisco had paid $642,863.98 on The

Colony’s behalf. The trial court admitted into evidence checks reflecting Frisco’s

payments to the District.

The Colony cross-examined Sanderson about an $11,000 underpayment

by The Colony in 2002 that Frisco ended up “picking up” for The Colony.

Sanderson testified that he did not personally contact someone at The Colony

to discuss the underpayment but that someone at the District did. The Colony

also questioned Sanderson whether notice was given to The Colony about the

remaining underpayments under the Contract, and he concluded that notice was

sent to The Colony when it stopped making payments. The Colony’s cross-

examination of Sanderson thus focused only on the issue of notice.

12
… Cheatham testified that it “may be true” that The Colony did not
make contractual payments for the fiscal years 2002 and 2003.

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 The Colony contends that the damages evidence is disputed and

controverted because “Frisco refused to grant easements for pipeline

construction or permission to tap into existing pipelines to the Plant,” “The

Colony was deprived of the entire benefit of the agreement,” “The Colony’s

expert witness testified that [the District] had failed to provide adequate

capacity to treat its wastewater,” “Frisco refused to cooperate and impliedly

instructed [the District] not to cooperate either,” and The Colony was “forced

to spend over twelve million dollars in upgrading and expanding its existing

treatment plant.” The Colony also directs us to Purefoy’s testimony in which

he acknowledged that “the jurors should review the documents ‘to determine

whether or not the City of The Colony owes you any money’” and “conceded

on the stand that the jury may need to review every one of the invoices and

determine how the payments should be allocated.” But the trial court’s order

granting Frisco’s motion for summary judgment on its counterclaim makes clear

that the sole issue held over for trial on the counterclaim was damages and

attorneys’ fees. This evidence either re-asserts issues and evidence relevant to

matters resolved by the trial court’s grant of summary judgment on The Colony’s

claims (pipeline and easement issues, consideration, “refusal” to cooperate) or

points out evidence relevant only to The Colony’s claim that the District

breached the Contract (i.e., lack of capacity and $12 to $13 million spent on its

97
own treatment plant). None of it is evidence controverting or disputing

Sanderson’s testimony that Frisco paid $642,863.98 under the Contract on

behalf of The Colony.

By its reliance on the evidence above, The Colony seems to be arguing

that it should not have to pay monies owed under the Contract because of the

actions of Frisco and the District. It thus contends that we “should presume

that the jurors reasonably believed that The Colony’s obligation to perform was

excused due to a prior material breach of the contract.” The Colony argues that

a reasonable juror could conclude “that The Colony was deprived of the entire

benefit it reasonably expected under the agreement,” “that The Colony was

never compensated for that deprivation,” and “that neither Frisco nor [the

District] was deprived of any benefits they anticipated under the [C]ontract.”

As mentioned above, the contention that a party to a contract is excused from

performance because of a prior material breach by the other contracting party

is an affirmative defense that must be affirmatively pleaded. Compass Bank,

152 S.W.3d at 852. The Colony never pleaded that it was discharged or

excused from performing under the Contract because of a prior material breach

by either Frisco or the District, nor do we find that such an affirmative defense

was tried by consent.

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 We have examined the entire record. Sanderson’s testimony was clear,

direct, and uncontroverted. The jury’s $0.00 damages finding was arbitrary.

We hold that Frisco established as a matter of law that it was damaged in the

amount of $642,863.98 for The Colony’s failure to comply with the Contract.

The evidence is thus legally insufficient to support the jury’s finding awarding

$0.00 for The Colony’s failure to comply with the Contract. See Dow Chem

Co., 46 S.W.3d at 241; Sterner, 767 S.W.2d at 690; see also Howell Pipeline

Tex., Inc. v. ExxonMobile Pipeline Co., No. 14-02-00387-CV, 2003 WL

22436919, at *2 (Tex. App.—Houston [14th Dist.] 2003, pet. denied) (“While

it is generally within the province of jurors to set damages, they cannot ignore

the undisputed facts and arbitrarily deny any recovery.”). Accordingly, we

sustain Frisco’s first issue.

C. District’s Challenge to Breach-Capacity Finding

In its second issue, the District argues that the evidence is legally and

factually insufficient to support the jury’s finding to question one, part (B) that

the District materially breached the Contract by failing to have adequate

capacity.13 The Colony had the burden of proof on this issue at trial.

13
… The District does not argue that the trial court erred by submitting
question one, part (B).

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 Parks testified that the plant had a capacity of 1.5 million gallons per day

when the Contract was executed in May 1998. Prior to the Contract’s

execution, the District had filed for a permit to expand the plant’s capacity to

five million gallons per day. The plant was subsequently expanded to a capacity

of five million gallons per day sometime in 2001 at a cost of approximately $7

million. The Colony did not have a wastewater pipeline that connected to the

plant when the Contract was executed.

The Colony was “having trouble” with its wastewater treatment plant

sometime in 2003, and they were “looking at options, multiple options” to

address these issues. The Colony and the District had meetings in 2003

regarding wastewater transportation and flow numbers.

Frisco’s average flow at the plant in 2003 was between 3.1 and 3.3

million gallons per day. Parks sent a letter to Cheatham in April 2003, stating

that they had met on April 3, 2003, “to discuss future wastewater service to

The Colony.” Parks indicated in the letter that The Colony’s flow to the plant

would have to be staged because there was insufficient capacity at the plant “to

suddenly shut down The Colony’s wastewater treatment plant and transport all

of that flow to the Stewart Creek West Regional Plant.”

An August 2003 administrative memorandum prepared by Parks stated

that at the time, The Colony’s treatment plant had a flow of 2.3 million gallons

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per day. According to Parks, “If The Colony’s treatment plant was closed and

all of the flow was transferred to the Stewart Creek West Regional WWTP [the

plant], it would put the regional plant over its capacity.” Parks stated that The

Colony had commissioned an engineering study that recommended The Colony

construct facilities to transfer a portion of flow to the plant, and “[w]hen there

is adequate treatment capacity at the [plant], The Colony plans to close [its]

treatment plant and transfer all” of its wastewater flow to the plant. [Emphasis

added.] A September 2003 District administrative memorandum states that The

Colony has “asked [the District] to consider treating all The Colony’s flow at the

Stewart Creek West Plant.”

The Contract also requires the District to give notice when it has the

capability to receive wastewater in the System. Parks did not recall the

District’s sending notice to The Colony that it had the capability to receive

wastewater at the point of entry.

Parks testified about the “75/90" rule, which provides “that when you

reach 75 percent of the capacity of a plant, you need to begin considering

expansion of the plant or ways to reduce flow to that plant.” According to

Parks, the plant was at 75 percent capacity in 2003, 2004, and 2005. He

testified that the District was contemplating an expansion of the plant in 2003,

which would take between two and three years to complete, but the decision

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was made to not expand the plant. Parks agreed, however, that the plant would

have to be expanded if The Colony was going to transfer all of its wastewater

(2.1 or 2.3 million gallons per day) to the plant.

Dobbs, a District planning officer, testified that he had numerous meetings

with The Colony, that The Colony sent him several different flow numbers

between 2001 and 2004, and that The Colony expressed its desire to connect

to the plant.

The District argues that the evidence is insufficient to support the jury’s

finding regarding insufficient capacity because it was impossible for The Colony

to transport all of its wastewater to the plant at once. According to the District,

because it would take time for The Colony to make preparations for the

transportation of its wastewater to the plant, the District would have had time

itself to make preparations for treating The Colony’s flows. The District directs

us to the portion of the Contract that allows the District to use other facilities

to treat wastewater and evidence that the District was constructing the Panther

Creek wastewater treatment facility, which was supposed to be “online”

sometime in 2007 or 2008 and would have reduced the capacity being used at

the plant.

Applying the applicable standards of review, we hold that the evidence is

legally and factually sufficient to support the jury’s finding to question one, part

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(B) that the District materially breached the contract for failing to have adequate

capacity. See Martinez, 977 S.W.2d at 334; Garza, 395 S.W.2d at 823. We

overrule the District’s second issue.

D. Immaterial Finding

In its first issue, the District argues that the trial court erred by overruling

its motion to disregard jury findings and for judgment notwithstanding the

verdict. Specifically, it argues that the jury’s finding to question one, part (B)

that the District breached the Contract for failing to have adequate capacity was

rendered immaterial by its finding in question two that the District’s breach was

excused by The Colony’s previous material breach of the Contract.

A trial court may disregard a jury’s answer to a question in the charge only

when the answer has no support in evidence or the question is immaterial. Tex.

R. Civ. P. 301; Spencer v. Eagle Star Ins. Co. of Am., 876 S.W.2d 154, 157

(Tex. 1994). A jury question is immaterial when it should not have been

submitted, it calls for a finding beyond the province of the jury, such as a

question of law, or when it was properly submitted but has been rendered

immaterial by other findings. Se. Pipeline Co. v. Tichacek, 997 S.W.2d 166,

172 (Tex. 1999). The District relies on the third ground.

The District’s sole argument is based on an analogization between the

facts of this case and those in Hooker v. Nguyen, No. 14-04-00238-CV, 2005

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WL 2675018, at *8–11 (Tex. App.—Houston [14th Dist.] 2005, pet. denied)

(mem. op.). In that “difficult and convoluted” case, Hooker contracted with

Nguyen for Nguyen to perform construction work on a salon. Id. at *1. Both

parties eventually sued each other for breach of contract, among other things.

Id. at *3. The jury found in part that both Hooker and Nguyen failed to comply

with the agreement. Id. The judgment awarded Nguyen actual and exemplary

damages and found that Hooker failed to make prompt payment and that the

failure to make prompt payment was unexcused. Id.

Hooker argued in part on appeal that the jury’s finding that he failed to

comply with the contract should have been disregarded as immaterial because

he “proved conclusively that Nguyen failed to comply with the contract before

Hooker refused to make the final payment that would have been due under the

contract,” which excused Hooker’s performance. Id. at *8. Relying on the

“well-settled principle in Texas law that when a party to a bilateral contract

commits a material breach of that contract, the other party is discharged or

excused from further performance,” the court agreed with Hooker and held that

the trial court should have disregarded the jury’s answers to the questions

regarding Hooker’s breach because the evidence demonstrated that Nguyen

committed a material breach as a matter of law, and Hooker was thereafter

discharged from his duties under the contract. Id. at *8–11; see also Mustang

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Pipeline Co., Inc. v. Driver Pipeline Co., Inc., 134 S.W.3d 195, 196 (Tex. 2004)

(discussing “well-settled principle”).

Hooker is distinguishable from the facts of this case because the trial court

declared and ordered in its final judgment “that the Stewart Creek West Regional

Wastewater System Contract entered into May 28, 1998 by and between

Plaintiff City of The Colony, Defendant NTMWD and Defendant City of Frisco

is a valid, unambiguous[,] and enforceable agreement.” This is a declaration

rendered at the District’s insistence. 14 In one of its other briefs, the District,

consistent with this portion of the judgment, argues the following:

It should be noted that the Contract has not been terminated by the
District; rather, the Stewart Creek West Plant remains available for
use by the Colony. Under the terms of the Contract, the Colony
continues to owe monthly payments to the [District] for its share of
the expenses associated with the Plant expansion.

The District further argued:

[T]here is ample authority for the proposition that in a breach of
contract suit such as the case at bar, the plaintiff (or in this case,
counter-plaintiff) may either “terminate” the contract and sue the
defendant for the present value of all future payments owed by the
breaching defendant, or as was done in this case, continue to treat
the contract as ongoing (not terminated) and sue for any later

14
… The trial court’s order granting the District’s motion for summary
judgment orders that the Contract “is a valid, unambiguous, enforceable
agreement.” The Colony did not challenge this part of the trial court’s order in
this appeal.

105
 breaches if and when that becomes necessary. . . . [The District]
has chosen this route, which is its right.

Unlike in Hooker, in which the appellate court determined that Hooker was

discharged from his duties under the contract after Nguyen’s material breach,

the District has expressly taken the position, according to “its right,” that the

Contract is ongoing, which—following its argument—means that its obligation

under the Contract to provide wastewater treatment to The Colony has not been

discharged. See Hooker, 2005 WL 2675018, at *10. The District’s reliance on

Hooker is misplaced because of this fundamental factual distinction. The District

asserts no other argument in support of this issue. To the extent the District

argues that the jury’s finding to question one, part (B) was rendered immaterial

by the jury’s finding to question two, we hold that the trial court did not err by

denying the District’s motion to disregard jury findings and for judgment

notwithstanding the verdict. See Tichacek, 997 S.W.2d at 172. Accordingly,

we overrule the District’s first issue.

E. Attorneys’ Fees

1. Frisco’s Appellate Attorneys’ Fees

In its second issue, Frisco argues that it established as a matter of law

during the trial that its necessary and reasonable appellate attorneys’ fees

totaled $70,000.00.

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 The record demonstrates that Frisco requested the award of attorneys’

fees under the Uniform Declaratory Judgment Act (“UDJA”). See Tex. Civ.

Prac. & Rem. Code Ann. § 37.009 (Vernon 2008). Although the jury awarded

Frisco reasonable and necessary attorneys’ fees for preparation of trial in the

amount of $83,200.00, it awarded Frisco reasonable and necessary attorneys’

fees in the amount of $0.00 for an appeal to the court of appeals, for making

or responding to a “petition for writ review to the Supreme Court of Texas,” and

if a petition for review is granted by the supreme court. Frisco challenged the

$0.00 appellate attorneys’ fees award in both its motion for judgment

notwithstanding the verdict and its motion for new trial. 15 Frisco affirmed at the

hearing on its motion for judgment notwithstanding the verdict that it had

sought to recover attorneys’ fees pursuant to section 37.009.

Section 37.009 provides that “[i]n any proceeding under this chapter, the

court may award costs and reasonable and necessary attorney’s fees as are

equitable and just.” Id. It imposes four limitations on the trial court’s discretion:

the fees awarded must be reasonable and necessary, which are matters of fact,

and they must be equitable and just, which are matters of law. Bocquet v.

15
… The trial court overruled the motion for judgment notwithstanding the
verdict in its final judgment. The motion for new trial was overruled by
operation of law. See Tex. R. Civ. P. 329b(c).

107
Herring, 972 S.W.2d 19, 21 (Tex. 1998); Hunt v. Baldwin, 68 S.W.3d 117, 135

(Tex. App.—Houston [14th Dist.] 2001, no pet.); Hansen v. Academy Corp.,

961 S.W.2d 329, 333 (Tex. App.—Houston [1st Dist.] 1997, writ. denied).

The award of attorneys’ fees under the UDJA is not dependent upon a

finding that the party prevailed. Barshop v. Medina County Underground Water

Conservation Dist., 925 S.W.2d 618, 637 (Tex. 1996). Although the trial court

may submit a question to the jury on the amount of reasonable and necessary

attorneys’ fees, it retains the authority to award or deny attorney’s fees.

Hansen, 961 S.W.2d at 333–34.

The determination to award attorneys’ fees is thus solely within the sound

discretion of the trial court. Hunt, 68 S.W.3d at 135. We can reverse the trial

court’s decision only if the complaining party shows a clear abuse of discretion.

Oake v. Collin County, 692 S.W.2d 454, 455 (Tex. 1985).

In reviewing a fee award under the UDJA, we must determine whether the

trial court abused its discretion by awarding fees when there was insufficient

evidence that the fees were reasonable and necessary or when the award was

inequitable or unjust. Bocquet, 972 S.W.2d at 21. Conversely, in reviewing a

trial court’s decision to not award attorneys’ fees, we must examine whether

the complaining party established not only that the fees sought are reasonable

and necessary, but also that the award is equitable and just. Abraxas Petroleum

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Corp. v. Hornburg, 20 S.W.3d 741, 763 (Tex. App.—El Paso 2000, no pet.);

Trien v. Equity Real Estate, Inc., No. 08-99-00464-CV, 2001 WL 1383115, at

*5–6 (Tex. App.—El Paso Nov. 8, 2001, no pet.) (not designated for

publication); see also Tex. Civ. Prac. & Rem. Code Ann. § 37.009.

Frisco argues that it proved $70,000.00 in reasonable and necessary

appellate attorneys’ fees as a matter of law, but it does not set forth any

argument or analysis in its briefing that an award of $0.00 for appellate

attorneys’ fees is inequitable or unjust.16 See Karen Corp. v. Burlington N. &

Santa Fe Ry. Co., 107 S.W.3d 118, 126–27 (Tex. App.—Fort Worth 2003, pet.

denied) (considering sufficiency of evidence and justness of attorneys’ fees

awarded under section 37.009); Heritage Res., Inc. v. Hill, 104 S.W.3d 612,

619–22 (Tex. App.—El Paso 2003, no pet.) (same). This is an issue addressed

16
… Frisco’s sole argument in its opening brief is that the evidence at trial
conclusively established that its necessary and reasonable attorneys’ fees on
appeal total $70,000.00. It argues for the first time in its reply brief that “the
trial court erred when the court awarded Frisco all of its trial fees but then
completely denied Frisco’s appellate fees.” To the extent this argument has
any bearing on this issue, the argument has not been preserved for appellate
review. See Gray v. Woodville Health Care Ctr., 225 S.W.3d 613, 620 (Tex.
App.—El Paso 2006, pet. denied) (reasoning that issue raised for the first time
in reply brief not preserved for appeal); Howell v. Tex. Workers’ Comp.
Comm’n, 143 S.W.3d 416, 439 (Tex. App.—Austin 2004, pet. denied)
(reasoning that the rules of appellate procedure do not allow an appellant to
include in a reply brief a new issue not raised in its original brief); see also Tex.
R. App. P. 38.3.

109
to the trial court’s sole discretion. Considering the record, the trial court may

have concluded that it would not have been equitable or just to award Frisco any

reasonable and necessary appellate attorneys’ fees, as it is permitted to do. See

Bocquet, 972 S.W.2d at 21 (“Unreasonable fees cannot be awarded, even if the

court believed them just, but the court may conclude that it is not equitable or

just to award even reasonable and necessary fees.”). Consequently, Frisco has

failed to demonstrate that the trial court clearly abused its discretion by not

awarding Frisco appellate attorneys’ fees. See Hunt, 68 S.W.3d at 136;

Abraxas, 20 S.W.3d at 763; Hansen, 961 S.W.2d at 333–34; Trien, 2001 WL

1383115, at *6. We overrule Frisco’s second issue.

2. District’s Attorneys’ Fees

In its third issue, the District argues that the evidence at trial conclusively

established as a matter of law that its reasonable attorneys’ fees totaled the

following: $130,000.00 through trial; $15,000.00 on appeal; $7,500.00 for

making or responding to a petition for review to the supreme court; and

$2,500.00 if a petition for review is granted by the supreme court. It contends

that it is entitled to recover its fees under both section 37.009 and 38.001 of

the civil practice and remedies code.

The District asserted two counterclaims against The Colony in its first

amended answer and original counterclaim, one for breach of contract and one

110
for a declaration that the Contract is valid and enforceable and that The Colony

is required to continue making payments to the District. It sought attorneys’

fees under civil practice and remedies code sections 37.009 and 38.001. The

jury awarded the District $0.00 for its reasonable and necessary attorneys’ fees.

The District challenged the jury’s findings in its motion for judgment

notwithstanding the verdict and motion for new trial.

Applying the same standards articulated above relevant to an analysis of

section 37.009 attorneys’ fees, we address the District’s argument that it is

entitled to recover attorneys’ fees under section 37.009 first. The District

states that “the trial court erred” by overruling its motion for judgment

notwithstanding the verdict and motion for new trial and that the trial court’s

decision to not award attorneys’ fees is “manifestly unjust.” The District thus

challenges the trial court’s decision to not award attorneys’ fees. Liberally

construing the District’s brief, as we must, the only argument that the District

makes that comes close to contending that the award of $0.00 for attorneys’

fees is inequitable or unjust is the District’s argument that the evidence

established that the District was entitled to attorneys’ fees as a matter of law.

See Tex. R. App. P. 38.9. But the award of $0.00 for attorneys’ fees is not

inequitable or unjust solely because the evidence established that the District

was entitled to attorneys’ fees as a matter of law (assuming without deciding

111
that is the case). As with Frisco, the trial court may have concluded that in light

of the record, it would not have been equitable or just to award even reasonable

and necessary attorneys’ fees. See Bocquet, 972 S.W.2d at 21. The District

sets forth no other argument or evidence that the award of $0.00 for attorneys’

fees is inequitable or unjust. Nor is there anything in the record to show that

the trial court abused its discretion by not awarding attorneys’ fees to the

District. Consequently, the District failed to demonstrate that the trial court

clearly abused its discretion by not awarding it attorneys’ fees pursuant to civil

practice and remedies code section 37.009. See Hunt, 68 S.W.3d at 136;

Abraxas, 20 S.W.3d at 763; Hansen, 961 S.W.2d at 333–34; Trien, 2001 WL

1383115, at *6. We overrule this part of the District’s third issue.

Section 38.001 of the civil practice and remedies code permits the

recovery of attorneys’ fees if the claim is for an oral or written contract. Tex.

Civ. Prac. & Rem. Code Ann. § 38.001(8). To recover attorneys’ fees under

section 38.001, a party must both prevail on a claim for which attorneys’ fees

are recoverable and recover damages. Green Intern., Inc. v. Solis, 951 S.W.2d

384, 390 (Tex. 1997).

Here, as alluded to above, the District asserted a counterclaim for breach

of contract and a counterclaim under the UDJA seeking two declarations: (1)

“the Contract between the District and The Colony is valid and enforceable” and

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(2) “The Colony is required to pay the payments to the District for the remaining

term of the Contract.” The trial court’s summary judgment order grants the

District summary judgment on all but one of The Colony’s causes of action and

(only) orders that the Contract is a “valid, unambiguous, enforceable

agreement.” The order does not specifically state that it was granting the

District’s motion for summary judgment on its breach of contract counterclaim

or the District’s request for a declaration that The Colony is in material breach

of its obligations to make payments to the District under the Contract. The

order provides at its conclusion “that to the extent not specifically granted

herein, Defendant NTMW D’s First Amended Traditional Motion for Summary

Judgment and No-Evidence Motion for Summary Judgment is DENIED.”

The final judgment does not award the District any damages for The

Colony’s breach of the Contract. We hold that the District is not entitled to

attorneys’ fees under section 38.001. See Solis, 951 S.W.2d at 390. We

overrule the remainder of the District’s third issue.

VI. C ONCLUSION

Having overruled The Colony’s three issues, we affirm the trial court’s

judgment as to The Colony’s appeal. Having overruled the District’s three

issues, we affirm the trial court’s judgment as to the District’s appeal. Having

sustained Frisco’s first issue, we render judgment awarding Frisco $642,863.98

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for The Colony’s failure to comply with the Contract; we affirm the remainder

of the trial court’s judgment.

DIXON W. HOLMAN
JUSTICE

PANEL: LIVINGSTON, HOLMAN, and GARDNER, JJ.

DELIVERED: November 26, 2008

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