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NUMBER 13-03-520-CV
COURT OF APPEALS
THIRTEENTH DISTRICT OF TEXAS
CORPUS CHRISTI B EDINBURG
TURNER CONSTRUCTION COMPANY OF TEXAS, Appellant,
v.
PHARR-SAN JUAN- ALAMO INDEPENDENT
SCHOOL DISTRICT AND ITS BOARD OF TRUSTEES, Appellees.
On appeal from the 93rd District Court
of Hidalgo County, Texas.
M E M O R A N D U M O P I N I O N
Before Chief Justice Valdez and Justices Hinojosa and Yanez
Opinion by Chief Justice Valdez
Appellant, Turner Construction Company of Texas, seeks reversal of the summary judgment granted to appellees, the PharrBSan JuanBAlamo Independent School District and its Board of Trustees (the AISD@). We reverse the decision of the trial court and remand.
I. Facts and Procedural History
A. The Contract
In September 1995, Turner, a construction company, contracted with the ISD to build a high school. The contract stipulated that the ISD would provide Turner with contract documents necessary to build the school. The ISD entered into a separate contract with an architect to design those documents, including the heating, ventilating, and air conditioning system (AHVAC@). Per terms of the contract, Turner was not liable to the ISD or the architect for Adamage resulting from errors, inconsistencies or omissions in the Contract Documents unless [Turner] recognized such error, inconsistency or omission and knowingly failed to report it to the Architect.@
B. The Mold
Turner substantially completed the school according to the architect=s plans in September 1997. Both Turner and the ISD now allege that the architect created a flawed HVAC design resulting in the accumulation of mold, mildew, and moisture inside the school. Turner alleges that the ISD was notified of the problem as early as the fall of 1997, but rejected the advice of its own engineers to perform remediation because it was too expensive.
During the 1999-2000 school year, students of the ISD began to complain of health problems because of the mold. In 2000, the ISD hired an environmental consultant to inspect the school. The consultant reported finding mold inside the HVAC system and conducted remediation. Beginning in May 2000, students and employees of the ISD began bringing personal injury suits from exposure to mold.
C. The ISDBTurner Lawsuit (C-1038-00-B)
The ISD filed suit against Turner and other contractors on May 29, 2001 in cause no. C-1038-00-B. The ISD accused Turner of breach of contract, breach of fiduciary duty, breach of duty of good faith and fair dealing, and negligence with regard to execution of its duties under its contract to build the school. All parties settled, and on June 4, 2001, the court entered a take-nothing judgment against the ISD and discharged all defendants from any claim brought by the ISD. The court further ordered that all cross-actions and third-party actions previously filed in cause no. C-1038-00-B were barred. The settlement was under seal, but has since been revealed in part. Its contents are not disputed by the parties. It reads:
The parties to this Agreement acknowledge and confirm that by agreement and operation of law, this Agreement and settlement shall have no impact upon or relationship to the personal injury claims that have been asserted or may be asserted based in whole or in part upon the existence of mold, mildew, bacteria or fungi in the Project (the APersonal Injury Claims@). The parties further agree that they will not seek to introduce evidence of this Agreement as evidence of any admission, declaration against self interest or measure of proportionate responsibility in any pending or subsequently filed causes of action for such alleged personal injuries by any party not a party to this Agreement. The rights of any party to this Agreement to assert any defense, third party claim, indemnity claim, contribution claim, cross actions and/or any other cause of action against each other in connection with, in defense of or relating to the Personal Injury Claims shall not be and are not hereby waived, released, amended or altered by this agreement.
D. The Personal Injury Suits
On May 5, 2000, a number of plaintiffs filed tort claims against the architect, Turner, and others in cause no. C-779-00-B. These plaintiffs alleged that negligent construction and installation had created the mold problem, which resulted in their illness. Hundreds more plaintiffs and plaintiffs-interveners joined the suit throughout August and September, 2001. On August 3, 2000, five plaintiffs filed similar claims against Turner in cause no. C-1365-00-G. The two causes were eventually combined.
E. Turner=s Joinder
On June 29, 2001, Turner filed a joinder of responsible third parties in cause nos. C-779-00-B and C-1365-00-G, casting itself as a third-party plaintiff and seeking to hold the ISD liable as a responsible third party under sections 33.003 and 33.004 of the Texas Civil Practice and Remedies Code. See Tex. Civ. Prac. & Rem. Code Ann. '' 33.003-004 (Vernon 2005). On September 22, 2002, Turner amended the joinder, suing the ISD as a responsible third party and as a third-party defendant for breach of contract.
Turner claimed the ISD=s breach of contract with regard to the HVAC system exposed Turner to the personal injury suits. It requested unspecified direct and consequential damages, as well as attorney=s fees. The ISD answered with a general denial.
F. Summary Judgment Motions
On January 13, 2003, the ISD filed its first amended motion for summary judgment and no evidence motion for summary judgment. In that motion, the ISD asserted its entitlement to summary judgment under Texas Rules of Civil Procedure 166a(c) and 166a(j),[1] arguing (1) the affirmative defenses of sovereign immunity, res judicata, compulsory counterclaim, and statute of limitations; and (2) no evidence that the ISD=s sovereign immunity was waived. The ISD attached the previous pleadings filed in the first lawsuit, the contract documents and the certificate of substantial completion.
On April 24, 2003, the court entered its order granting the ISD=s motion for summary judgment. The order does not state on which grounds the motion was granted, nor does it specify whether the grounds related to the general motion, the no-evidence motion, or both. On August 20, 2003, the court severed the ISD=s summary judgment against Turner from the remaining claims in the suit and entered final judgment against Turner. Turner now appeals, claiming that the ISD was not entitled to summary judgment on any ground.
II. Standard of Review
The function of a summary judgment is to eliminate patently unmeritorious claims and defenses, not to deprive litigants of the right to a jury trial. Alaniz v. Hoyt, 105 S.W.3d 330, 344 (Tex. App.BCorpus Christi 2003, no pet.). We review the evidence "in the light most favorable to the nonmovant, disregarding all contrary evidence and inferences." KPMG Peat Marwick v. Harrison County Hous. Fin. Corp., 988 S.W.2d 746, 748 (Tex. 1999); Branton v. Wood, 100 S.W.3d 645, 646 (Tex. App.BCorpus Christi 2003, no pet.). In a traditional motion for summary judgment, the movant bears the burden of showing both no genuine issue of material fact and entitlement to judgment as a matter of law. Hoyt, 105 S.W.3d at 345. We affirm a trial court's ruling on a summary judgment motion if any theory advanced in the motion is meritorious. State Farm Fire & Cas. Co. v. S.S., 858 S.W.2d 374, 380 (Tex. 1993); Boren v. Bullen, 972 S.W.2d 863, 865 (Tex. App.BCorpus Christi 1998, no pet.). We review a traditional motion for summary judgment de novo to determine whether a party established its right to prevail as a matter of law. Nixon v. Mr. Property Mgmt. Co., Inc., 690 S.W.2d 546, 548‑49 (Tex. 1985); Ortega v. City Nat'l Bank, 97 S.W.3d 765, 771 (Tex. App.BCorpus Christi 2003, no pet.) (op. on reh'g). When the trial court does not specify the grounds it relied on in granting the motion, we uphold it on any valid ground asserted by the movant. See Bradley v. State ex rel. White, 990 S.W.2d 245, 247 (Tex. 1999).
In conjunction with and as a part of its traditional motion, the ISD also asserted that there was no evidence of several elements of Turner=s claim against it. See Tex. R. App. P. 166a(i). Turner claims that the ISD=s no-evidence motion for summary judgment was improper because (1) it did not identify or challenge a specific element of any claim, and (2) a no-evidence motion for summary judgment cannot be based on affirmative defenses upon which the defendant bears the burden of proof.
When a no evidence motion for summary judgment does not specifically state which elements lack evidence, the motion should be treated as a motion for a traditional summary judgment. Amouri v. Southwest Toyota, Inc., 20 S.W.3d 165, 168 (Tex. App.BTexarkana 2000, pet. denied); Weaver v. Highlands Ins. Co., 4 S.W.3d 826, 829 n.2 (Tex. App.BHouston [1st Dist.] 1999, no pet.).
A party should not file a no evidence motion for summary judgment based on an affirmative defense that it has the burden to prove at trial. See Thomas v. Omar Invs., Inc., 156 S.W.3d 681, 684 (Tex. App.BDallas 2005, no pet.).
We have reviewed the ISD=s no evidence claims and conclude that the school district raised the no evidence claim in support of its own asserted affirmative defense of sovereign immunity. See Amouri, 20 S.W.3d at 168. This is improper as a matter of law. See Thomas, 156 S.W.3d at 684; Nowak v. DAS Inv. Corp., 110 S.W.3d 677, 680 (Tex. App.BHouston [14th Dist.] 2003, no pet.). Thus, we will treat the ISD=s motion as a traditional motion only.
III. Sovereign Immunity
A. Overview of the Law
Sovereign immunity, unless waived, protects the State of Texas, its agencies and its officials from lawsuits for damages absent legislative consent to sue. See Fed. Sign v. Tex. S. Univ., 951 S.W.2d 401, 405 (Tex. 1997); Griffin v. Hawn, 341 S.W.2d 151,152‑53 (Tex. 1960). An independent school district is considered an agency of the state and thus enjoys the State=s sovereign immunity. See Barr v. Bernhard, 562 S.W.2d 844, 846 (Tex. 1978); Cox v. Galena Park Ind. Sch. Dist., 895 S.W.2d 745, 748 (Tex. App.BCorpus Christi 1994, no writ). The courts have extended governmental immunity of a school district to its board of trustees. See Bates v. Dallas Indep. Sch. Dist., 952 S.W.2d 543, 551 (Tex. App.BDallas 1997, writ denied); see also Tex. Educ. Code Ann. ' 22.0511(a) (Vernon Supp. 2004-05).
Sovereign immunity embraces two principles: (1) immunity from suit, and (2) immunity from liability. See Fed. Sign, 951 S.W.2d at 405; Mo. Pac. R.R. Co. v. Brownsville Navigation Dist., 453 S.W.2d 812, 813 (Tex. 1970).
Immunity from suit bars a suit against the State unless the State expressly gives its consent to the suit. See Fed. Sign, 951 S.W.2d at 405; Univ. of Tex.‑Pan Am. v. De Los Santos, 997 S.W.2d 817, 821 (Tex. App.BCorpus Christi 1999, no pet.). In other words, although the claim asserted may be one in which the State acknowledges liability, the rule precludes a remedy until the legislature consents to suit. See Fed. Sign, 951 S.W.2d at 405. A party suing the State must allege consent to suit either by reference to statute or express legislative permission. See Mo. Pac. R.R., 453 S.W.2d at 814. The State must consent "by clear and unambiguous language" to suit by statute or by legislative resolution. See Fed. Sign, 951 S.W.2d at 405; see also Gen. Servs. Comm'n v. Little‑Tex Insulation Co., 39 S.W.3d 591, 594 (Tex. 2001); Univ. of Tex. Med. Branch v. York, 871 S.W.2d 175, 177 (Tex. 1994).
Immunity from liability protects the State from judgments even if the legislature has expressly given consent to the suit. See Fed. Sign, 951 S.W.2d at 405; De Los Santos, 997 S.W.2d at 821. In other words, even if the legislature authorizes suit against the State, the question remains whether the claim is one for which the State acknowledges liability. See Fed. Sign, 951 S.W.2d at 405. The State neither creates nor admits liability by granting permission to be sued. See id. ("[a] resolution granting permission to sue does not waive to any extent immunity from liability."). However, when the State contracts, the State is liable on contracts made for its benefit as if it were a private person; thus, the State waives immunity from liability when it contracts with private citizens or companies. See id. at 405‑06. Nevertheless, a private citizen must have legislative consent to sue the State on a breach of contract claim; the act of contracting alone does not waive the State's immunity from suit. See id. at 408.
The Texas Legislature has expressly waived a public school district=s immunity from suit for purposes of adjudicating a claim for breach of contract against the public school district. See Tex. Loc. Gov=t Code Ann. '' 271.151 - 152 (Vernon 2005) (waiving public school district=s immunity to suit for contracts for the provision of goods or services to the district); Tex. Educ. Code Ann. ' 11.151(a) (Vernon Supp. 2004-05) ("The trustees of an independent school district constitute a body corporate and in the name of the district may . . . sue and be sued . . . ."); see also Welch v. Coca‑Cola Enters., 36 S.W.3d 532, 538 (Tex. App.BTyler 2000, no pet.); Dillard v. Austin Indep. Sch. Dist., 806 S.W.2d 589, 594 (Tex. App.BAustin 1991, writ denied).
The legislature has also expressly limited the waiver of a public school district=s immunity in tort cases to special circumstances. See Tex. Civ. Prac. & Rem. Code Ann. ' 101.021 (Vernon 2005); Tex. Loc. Gov=t Code Ann. ' 271.157 (Vernon 2005) (AThis subchapter does not waive sovereign immunity to suit for a cause of action for a negligent or intentional tort.@); see also City of Alton v. Sharyland Water Supply Corp., 145 S.W.3d 673, 679 (Tex. App.BCorpus Christi 2004, no pet.). Section 101.021 of the civil practice and remedies code, for example, waives immunity of governmental entities for Apersonal injury . . . so caused by a condition or use of . . . real property.@ Tex. Civ. Prac. & Rem. Code Ann. ' 101.021(2); see Brown v. Tex. DOT, 80 S.W.3d 594, 597 (Tex. App.BCorpus Christi 2000), aff=d, 80 S.W.3d 549 (Tex. 2002).
B. Sounding in Tort or Contract
Turner asserts that its claims against the ISD arise from its contract with the ISD regarding the construction of the school, while the ISD claims that Turner=s claims are actually claims of negligence and not of breach of contract.
The original plaintiffs sued Turner alleging tort claims of personal injuries arising from exposure to mold and other airborne substances inside the school building. They claimed their injuries were caused by the HVAC system through (1) failure to properly design, construct, maintain, monitor and repair it; (2) failure to detect its defects; and (3) failure to mitigate or prevent the growth of mold caused by the design. Turner=s amended joinder alleged that the ISD Ahas breached its contract and implied warranties with Turner in numerous ways.@
The Texas Supreme Court recently noted that A[c]laims must be brought on the contract . . . if liability arises solely from the contract or must be determined by reference to it. On the other hand, claims can be brought in tort (and in court) if liability arises from general obligations imposed by law.@ In re Weekley Homes, L.P., No.04-0119, 2005 Tex. LEXIS 817, at *10-11 (Tex. Oct. 28, 2005) (orig. proceeding); see also Dewitt County Elec. Coop., Inc. v. Parks, 1 S.W.3d 96, 105 (Tex. 1995) (Aif the defendant's conduct . . . would give rise to liability independent of the fact that a contract exists between the parties, the plaintiff's claim may also sound in tort. Conversely, if the defendant's conduct . . . would give rise to liability only because it breaches the parties' agreement, the plaintiff's claim ordinarily sounds only in contract.@).
The ISD states in its motion for summary judgment, AObvious in the case at bar, Turner seeks to impose liability against [the ISD] for tort claims made against Turner by Plaintiffs and Intervenors. The damages sought are not the economic loss to the subject of the contract and thus this case sounds in tort.@ As evidence, the ISD attached a copy of the contract between Turner and the ISD.
We disagree with the ISD=s assertion. Turner initially stated in its answer to the first-party plaintiffs that ATurner alleges and affirmatively pleads that the sole proximate cause of the injuries, if any, suffered by the [plaintiffs] was the [ISD=s] breach of its contractual duty and its implied and express warranties to Turner in providing . . . Turner with flawed plans and specifications.@ Turner relies on contractual provisions in sections 2.4 (AThe Construction Manager shall not be required to provide professional services which constitute the practice of architecture or engineering@), 3.1 (AThe Owner shall provide full information in a timely manner . . . the Construction Manager shall be entitled to rely upon the accuracy of any such information, reports, surveys, drawings and tests [furnished by the Owner]@), and 3.3 (AThe Owner shall retain an Architect to provide the Basic Services, including normal structural, mechanical, and electrical engineering services . . .@). Throughout its pleadings, Turner asserts that the ISD=s failure to perform as required by the contract is the cause of the injuries alleged and relies exclusively on the terms of the contract itself to assert this claim.
The ISD, in fact, recognizes Turner=s reliance on the contract in its motion for summary judgment:
Essentially the claim [brought by Turner] is under Paragraph 3.3 >Architect= of the Contract which states that the owner shall retain an architect to provide the basic services. . . The gravamen of the third-party joinder against [the ISD] alleges a failing to retain a competent architect to provide basic services . . . failing to provide plans and specs sufficient and instead providing plans and specs which were flawed, inaccurate and did not produce their intended result, failing to fulfill its contractual obligation to Turner to remedy the effects of the design defects . . . .
Despite appearing to recognize the source of Turner=s claims in its own motion for summary judgment, the ISD nonetheless argues Athese allegations are obviously claims of negligence and not claims for breach of the contract.@ We disagree; absent the contractual relationship between the ISD and Turner, there would be no relationship or obligations among these parties and thus, no liability. See Bass v. City of Dallas, 34 S.W.3d 1, 9 (Tex. App.BAmarillo 2000, no pet.) (AIf the defendant=s conduct . . . would give rise to liability independent of the fact that a contract exists between the parties, the plaintiff=s claims may also sound in tort.@). Therefore, we conclude, Turner=s claims against the ISD arise through the parties= contractual relationship, not out of tort law, and thus are the type of claims for which the ISD=s sovereign immunity has been waived. See Tex. Loc. Gov=t Code Ann. ' 271.152.
Furthermore, although we consider Turner=s argument that its claims arise under contract law to be more compelling, we note that regardless of whether this claim arises from contract or tort law, the ISD=s sovereign immunity should be waived, given that Turner expressly complains about the Acondition or use@ of Areal property@ causing personal injury. See Tex. Civ. Prac. & Rem. Code Ann. ' 101.021(2). The trial court could not have properly granted summary judgment in favor of the ISD on this ground.
IV. Expenditures of Governmental Funds
The ISD asserts as an affirmative defense that Ato the extent that Turner seeks to impose an indemnity obligation on [the ISD], the giving of indemnity by a school district may amount to making a gift of public funds or lending of public credit for private purposes contrary to restrictions found in the Texas Constitution.@ See Tex. Const. art. III ' 51 ("the Legislature shall have no power to make any grant or authorize the making of any grant of public moneys to any individual, association of individuals, municipal or other corporations whatsoever"). With exceptions not here applicable, "the Legislature shall have no power to authorize any county, city, town or other political corporation or subdivision of the State to lend its credit or to grant public money or thing of value in aid of, or to an individual, association or corporation whatsoever." Id. at ' 52. Turner argues that its suit for damages does not violate the policy against the gratuitous application of public funds because (1) reimbursement for the damages would be compensatory rather than gratuitous, and (2) governmental entities that have caused losses may constitutionally provide compensation for them.
We agree with Turner. We cannot find a single Texas case that has held that a governmental entity cannot constitutionally indemnify or provide compensation for losses it has caused through a breach of contract due to the restriction against the expenditure of governmental funds. Instead, we have found cases that hold to the contrary. See, e.g., Tex. DOT v. Able, 35 S.W.3d 608, 618 (Tex. 2000) (concluding that DOT waived immunity and had to pay damages to plaintiff as found by jury); City of Dallas v. Redbird Dev. Corp., 143 S.W.3d 375, 389 (Tex. App.BDallas 2004, no pet.) (upholding $3 million verdict against city for breach of contract claim); Alamo Cmty. College Dist. v. Browning Constr. Co., 131 S.W.3d 146, 167 (Tex. App.BSan Antonio 2004, pet. filed ) (upholding jury verdict against college district for breach of contract claim).
Thus, the ISD has failed to establish that it is entitled as a matter of law to summary judgment on this ground, and the trial court could not have properly granted summary judgment in favor of the ISD based on the Aillegal expenditure of governmental funds.@
V. Compulsory Counterclaims and Res Judicata
The ISD asserts as its third and fourth grounds for summary judgment that the doctrines of compulsory counterclaims and res judicata bar Turner=s suit, given the prior suit and settlement agreement already reached between these parties. In support of this claim, the ISD attached pleadings and documents from the prior suit.
Res judicata prevents parties from relitigating a cause of action that has been finally adjudicated by a competent tribunal. Ingersoll‑Rand Co. v. Valero Energy Corp., 997 S.W.2d 203, 206 (Tex. 1999). The doctrine also precludes claims or defenses that, through diligence, should have been litigated in the prior suit but were not. See id. at 206-07. Res judicata, however, does not bar a former defendant who asserted no affirmative claim for relief in an earlier action from stating a claim in a later action that could have been filed as a cross‑claim or counterclaim in the earlier action, unless the claim was compulsory in the earlier action. Id. at 207. A counterclaim is considered to be compulsory only if (1) it is within the jurisdiction of the court, (2) it is not at the time of filing the answer the subject of a pending action, (3) the claim is mature and owned by the defendant at the time of filing the answer, (4) it arose out of the same transaction or occurrence that is the subject matter of the opposing party's claim, (5) it is against an opposing party in the same capacity, and (6) it does not require the presence of third parties over whom the court cannot acquire jurisdiction. See id.; see also Tex. R. Civ. P. 97(a). A claim is mature when it has accrued, i.e., when the party=s liability becomes fixed and certain. See Ingersoll-Rand, 997 S.W.2d at 207-08.
Here, the ISD alleges that Turner=s claims for breach of contract by the ISD were compulsory counterclaims in the suit the ISD filed against Turner, and therefore had to be litigated in that suit or not at all. Thus, according to the ISD, the settlement agreement signed by the parties and enforced by the trial court is res judicata of the breach of contract claims Turner is asserting now. In the settlement agreement signed by the parties in that initial suit, however, the parties themselves agreed that any other claims they could assert against each other would not be considered waived by their settlement:
The rights of any party to this Agreement to assert any defense, third party claim, indemnity claim, contribution claim, cross actions and/or any other cause of action against each other in connection with, in defense of or relating to the Personal Injury Claims shall not be and are not hereby waived, released, amended or altered by this agreement.
This settlement agreement became binding on the parties when executed in conjunction with the trial court=s rendering of a final, take-nothing judgment for both parties. See Compania Financiara Libano v. Simmons, 53 S.W.3d 365, 367 (Tex. 2001) (per curiam) (discussing application of res judicata to a settlement agreement that ended prior litigation).
Furthermore, and more importantly, the claims involved in the Personal Injury Plaintiffs v. Turner suit do not fulfill the requirements of being compulsory counterclaims for the ISD v. Turner suit because this first set of claims was not yet mature at the time of the ISD v. Turner suit, and also because these claims involved third parties over whom the court in the ISD v. Turner suit could not have properly exercised jurisdiction.
To review the chronology of the events establishing this, we see that the first set of Personal Injury Plaintiffs v. Turner claims in cause no. C-779-00-B were filed on May 5, 2000. Then additional Personal Injury Plaintiffs v. Turner claims in cause no. C-1365-00-G were filed on August 3, 2000, and later were combined with the first cause number.
While these suits were pending, the ISD v. Turner suit, cause no. C-1038-00-B, was filed on May 29, 2001. The ISD v. Turner suit was then settled on June 4, 2001.
On June 29, 2001, Turner filed a motion to join the ISD in the Personal Injury Plaintiffs v. Turner claims in cause no. C-779-00-B. Then, on September 25, 2001, over 1200 new plaintiffs intervened in cause no. C-779-00-B, asserting personal injury claims against Turner. On September 11, 2002, Turner filed its breach of contract cross-claim against the ISD in cause no. C-779-00-B. On August 29, 2003, almost 1000 new plaintiffs again intervened in cause no. C-779-00-B, asserting personal injury claims against Turner.
The ISD=s potential liability to Turner for breach of contract relates directly to Turner=s liability to the personal injury plaintiffs; neither of these liabilities are fixed and certain as the underlying claim by the personal injury plaintiffs against Turner remains pending. Thus, the claims asserted by Turner against the ISD were not mature at the time of the ISD v. Turner suit in cause no. C-1038-00-B (May 29, 2001). See Ingersoll-Rand, 997 S.W.2d at 207-08. Also, Turner first brought the ISD into the Personal Injury Plaintiffs v. Turner suit on June 29, 2001. However, after this date, over 2000 new plaintiffs intervened and also asserted personal injury claims against Turner. Therefore, the Personal Injury Plaintiffs v. Turner claim involved third parties over whom the court in the ISD v. Turner case could not properly assert jurisdiction because these additional plaintiffs were still unknown at the time when a counterclaim in cause no. C-1038-00-B would have been asserted. Id. at 207; see Strawder v. Thomas, 846 S.W.2d 51, 61 (Tex. App.BCorpus Christi 1992, no writ).
Therefore, the trial court could not have properly rendered summary judgment in favor of the ISD on these grounds.
VI. Statute of Limitations
As its fifth ground for summary judgment, the ISD asserts an affirmative defense of limitations, arguing that Turner=s claim was not brought within either the two-year statute of limitations period allowed for tort claims or the four-year period for breach of contract claims. See Tex. Civ. Prac. & Rem. Code Ann. '' 16.003, 16.051 (Vernon 2005). In support of this defense, the ISD states that the certificate of substantial completion of the construction contract between the parties was signed and effective on August 11, 1997, and that because all the duties allegedly violated by the ISD are related to construction of the school, any and all breaches must have occurred before the date of the certificate. The ISD attaches the signed certificate of substantial completion in support of this claim. The limitations period, as the ISD argues, would have expired on August 11, 1999, for all tort claims and August 11, 2002, for all contract claims. Turner first filed its motion for joinder asserting claims against the ISD on September 11, 2002, a date after both alleged limitations periods had expired.
A defendant moving for summary judgment on the affirmative defense of limitations has the burden to establish conclusively that defense as a matter of law. KPMG Peat Marwick v. Harrison County Hous. Fin. Corp., 988 S.W.2d 746, 748 (Tex. 1999). In this regard, the defendant must conclusively prove when the cause of action accrued. Id. On appeal, the movant still bears the burden of showing that there is no genuine issue of material fact and that the movant is entitled to judgment as a matter of law. Rhone‑Poulenc, Inc. v. Steel, 997 S.W.2d 217, 223 (Tex. 1999).
Turner claims its suit is not barred by the statute of limitations because the ISD=s summary judgment evidence failed to establish when the claims accrued and limitations began to run. We agree; the ISD=s evidence does not conclusively prove when the cause of action accrued. See KPMG Peat Marwick, 988 S.W.2d at 748. Turner=s allegations in the joinder were that the ISD not only failed to initially provide Turner with adequate architectural contract documents, but then additionally failed to Afulfill its contractual obligation to Turner to remedy the effects of the design defects which had been created by its own agent(s), thereby causing injury to Turner,@ Afailed to satisfy its obligation to follow the advice of its . . . architect and engineer in order to remediate the effects of the said design defects,@ and failed to Acause the architect to provide additional services to correct the problems with the design of the HVAC system in violation of . . . the Standard Form Agreement.@
The ISD insists that all claims had to accrue by the date of substantial completion, as the contractual relationship between the parties expired on that date. However, as described by Turner above, the alleged failures to conform to the contractual obligations were not confined to the period of time prior to the September 1997 issuance of the certification of substantial completion. Instead, the ISD=s alleged failure to provide adequate architectural and design documents created ongoing failures to conform to the contract, given the ISD=s failure to recognize and remedy the problems. See, e.g., Alamo Comm. College Dist. v. Browning Constr. Co., 131 S.W.3d 146, 165 (Tex. App.BSan Antonio 2004, pet. filed) (finding evidence of breach of contract by college district for failing to correct design errors previously made by its architect). Turner=s claim against the ISD is premised on its assertions that the ISD had an ongoing obligation to correct or otherwise remediate design defects in the HVAC system that arose at the onset of the contract due to the faulty designs provided by the ISD, and that the ISD, once it knew or should have known about the design defects in the system, was in breach of this continuing obligation until it attempted to remediate the HVAC design defects following the 1999-2000 school year. A continuing breach of contract, including failure to make necessary repairs to correct the breach, is not barred by the statute of limitations simply because the original breach occurred outside the statute. See Salais v. Martinez, 603 S.W.2d 296, 297 (Tex. Civ. App.BEl Paso 1980, no writ) (recognizing failure to repair under construction contract as a continuing breach); Kaiser v. Northwest Shopping Ctr., Inc., 587 S.W.2d 454, 457 (Tex. Civ. App.BDallas 1979, writ ref'd n.r.e.) ("The general rule is that in the event of a material breach of contract, the promisee may treat the breach as total and sue for all foreseeable future damages, or, if the promisor has not repudiated the contract, the promisee may elect to treat the breach as partial and bring successive suits for continued or successive breaches."); McCreless Properties, Ltd. v. F.W. Woolworth Co., 533 S.W.2d 863, 867 (Tex. App.BSan Antonio 1976, writ ref'd n.r.e.) (finding party failed to make further repairs to continuing breach so that action was not barred by four‑year statute of limitations). As this Court has held, ALimitations begins to run on a continuing contract at the earlier of the following: (1) when the work (under the contract) is compete; (2) when the contract is terminated in accordance with its terms; or (3) when the contract is anticipatorily repudiated . . . .@ City of Corpus Christi, 126 S.W.3d 712, 725 (Tex. App.BCorpus Christi 2004, pet. dismissed) (citing Hubble v. Lone Star Contracting Corp., 883 S.W.2d 379, 382 (Tex. App.BFort Worth 1994, writ denied). Here, the first prong applies: the statute of limitations began to run Awhen the work [was] complete.@ Id. However, the claims asserted by Turner, and the defenses raised by the ISD, turn entirely on when the obligations of the ISD to Turner were actually considered to be Acomplete.@ As this itself is the source of the dispute between the parties, we cannot conclude it has been resolved for the purposes of summary judgment. See KPMG Peat Marwick, 988 S.W.2d at 748.
Furthermore, the ISD itself contracted for the possibility of ongoing obligations between the parties that could potentially arise after the date of substantial completion: AAs to acts or failures to act occurring after the [date of substantial completion], any applicable Statute of Limitations shall commence to run . . . not later than . . the date of actual commission of any other act or failure to perform any duty or obligation . . . , whichever occurs last@ (emphasis added). Having explicitly agreed to the contrary, the ISD may not now insist that the date of substantial completion ended all potential causes of action.
Given that the ISD=s response to the allegations raised by Turner=s cause of action does not conclusively establish when the cause of action accrued, coupled with Turner=s evidence that breaches by the ISD were ongoing until mid-2000, we are not prepared to hold that the ISD met its burden of showing that it was entitled to judgment as a matter of law. See id. To the extent the order granting summary judgment in favor of the ISD was based on a statute of limitations, the trial court committed error.
VII. Conclusion
We have found that the ISD was not entitled to summary judgment as a matter of law on any of the grounds asserted in its motion for summary judgment. See Lone Star Gas Co. v. EFP Corp., 92 S.W.3d 417, 418-19 (Tex. 2001). We reverse the judgment of the trial court and remand to the trial court for further proceedings.
Rogelio Valdez,
Chief Justice
Memorandum Opinion delivered and filed
this 16th day of March, 2006.
[1]Because there is no rule 166a(j), we assume the ISD meant 166a(i). See Tex. R. Civ. P. 166a(i).