Fourth Court of Appeals
San Antonio, Texas
OPINION
No. 04-15-00075-CV
SAN ANTONIO HOUSING AUTHORITY,
Appellant
v.
SERENTO APARTMENTS, LLC,
Appellee
From the 45th Judicial District Court, Bexar County, Texas
Trial Court No. 2014-CI-16503
Honorable Stephani A. Walsh, Judge Presiding
Opinion by: Karen Angelini, Justice
Sitting: Karen Angelini, Justice
Patricia O. Alvarez, Justice
Luz Elena D. Chapa, Justice
Delivered and Filed: September 30, 2015
REVERSED AND RENDERED
Appellant San Antonio Housing Authority (“SAHA”) appeals the trial court’s denial of its
plea to the jurisdiction based on governmental immunity. Because we conclude the trial court erred
in denying SAHA’s plea to the jurisdiction, we reverse the trial court’s order and render judgment
dismissing the cause for lack of jurisdiction.
04-15-00075-CV
BACKGROUND
In October 2014, Appellee Serento Apartments, LLC (“Serento”) sued SAHA for breach
of contract. The petition states that a copy of the contract was attached; however, no copy was ever
filed, and it is therefore not part of the appellate record.
Serento’s original petition alleged that Serento and SAHA entered into a written federal
Housing Assistance Program contract (“the contract”) under the Section 8 Moderate Rehabilitation
Program, which provides rental assistance for low-income families. The Housing Assistance
Program is overseen by the U.S. Department of Housing and Urban Development (“HUD”), but
administered locally by SAHA. Under the Section 8 Moderate Rehabilitation Program, SAHA
would refer to Serento eligible families from its waiting list, and Serento would screen and select
from those eligible families. The selected family and Serento would then enter into a separate and
legally binding apartment lease contract. SAHA would pay a sliding scale portion of the family’s
monthly rent directly to Serento.
Serento further alleged that the contract was renewable each year for a one-year period,
and under the contract, Serento was prevented from terminating the tenancy of any Section 8
Moderate Rehabilitation tenant on the basis that the current dwelling lease had expired. Pursuant
to the contract, Serento was allowed to terminate the lease of a Section 8 Moderate Rehabilitation
tenant only for serious or repeated violations of the lease; violation of federal, state, or local laws;
or other good cause.
The contract, according to Serento’s petition, required SAHA to notify Serento sixty days
prior to the expiration of the contract that assisted families would be issued Housing Choice
Vouchers. These families could either remain in their current Section 8 Moderate Rehabilitation
unit or relocate to a unit of their choice on the private rental market if the owner agreed to rent the
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unit to the family under the Housing Choice Voucher Program. Serento alleged that SAHA
materially breached this specific term of the contract.
According to Serento’s petition, under the contract, SAHA could refuse to renew an
expiring contract if SAHA or HUD determined that Serento had engaged in material adverse
financial or managerial actions or omissions, which was defined as materially failing to maintain
the property according to housing quality standards after receipt of notice and a reasonable
opportunity to cure. Serento alleged that SAHA materially breached the contract by failing to
afford Serento a reasonable time period in which to make repairs in a good and workmanlike
manner in accordance with local and state regulations.
Serento further alleged that it received notice from SAHA of nonrenewal of the contract
and SAHA’s stated purpose of nonrenewal that specific repairs were needed. According to Serento,
SAHA breached the contract by failing to give Serento a reasonable opportunity to cure the specific
repairs identified by SAHA. SAHA “began to forward Notice[s] of Abatement of HAP Contract”
to Serento’s tenants, “alleging as its basis that ‘all repairs had not been completed.’” The notice
instructed Serento’s tenants to report to SAHA’s office within ten days to obtain referrals to new
units. Serento’s tenants “were further informed they could submit new paperwork for their current
unit once [Serento] complied with unit quality standards.” For example, SAHA conducted
inspections of several units on September 1, 2010, and subsequently conducted a required follow-
up inspection “barely a month later on October 8, 2010.” Serento alleged that because “of the
extensive work that needed to be done, materials ordered and received, and work permits obtained,
[SAHA] failed to afford [Serento] a reasonable time to make these extensive and time consuming
repairs.” Serento alleged that it had provided proof to SAHA “of its good-faith intent to
substantially complete the repairs as quickly as possible.”
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According to Serento’s petition, it asked SAHA for an extension “as the parties had
previously discussed and agreed to,” but less than two weeks later, Serento “discovered that
[SAHA] was actively encouraging all tenants to breach their individual and separate lease
agreements with [Serento], by moving out of [Serento]’s apartment complex by the end of the
month.” Serento alleged that SAHA threatened to cancel the tenants’ vouchers if they did not
move. Serento alleged that in doing so, SAHA breached the HAP contract. As a result of SAHA’s
actions, Serento alleged it incurred damages in excess of $300,000.
In response to these allegations contained in Serento’s petition, SAHA filed a plea to the
jurisdiction claiming governmental immunity. According to SAHA, as a public housing authority,
it is a local governmental entity that is immune from suit except to the extent immunity has been
clearly and specifically waived by the Texas Legislature. Serento then filed an amended petition
that did not allege any new facts but added a paragraph stating that “[t]he Court ha[d] jurisdiction
over this breach of contract suit because the Texas Legislature waived Defendant’s immunity form
[sic] suit when it enacted Texas Local Government Code [§] 271.152.” 1 At the hearing on SAHA’s
plea to the jurisdiction, no evidence was introduced; counsel for both parties merely argued the
merits of their respective positions to the trial court. 2 The trial court denied SAHA’s plea to the
jurisdiction, and this interlocutory appeal followed.
PLEA TO THE JURISDICTION
A plea to the jurisdiction challenges the trial court’s subject matter jurisdiction to hear the
case. Bland Indep. Sch. Dist. v. Blue, 34 S.W.3d 547, 554 (Tex. 2000). The party suing the
1
Although the amended petition again claimed a copy of the contract between the parties was attached as Exhibit A,
no copy was ever filed.
2
We note that in its appellee’s brief, Serento requests that this court take judicial notice “of the guidebook propagated
by the U.S. Department of Housing and Urban Development.” We decline to do so and will only consider what was
properly before the trial court. In its appellee’s brief, Serento also points to language in a standard HUD contract. No
such HUD contract was introduced in evidence at trial and is not part of the appellate record. Therefore we will not
consider it on appeal.
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governmental entity bears the burden of affirmatively showing that the trial court has jurisdiction
to hear the cause. Tex. Dep’t of Criminal Justice v. Miller, 51 S.W.3d 583, 587 (Tex. 2001). In
deciding a plea to the jurisdiction, a court may not weigh the merits of the plaintiff’s claims, but
should consider only the plaintiff’s pleadings and the evidence pertinent to the jurisdictional
inquiry. Cnty. of Cameron v. Brown, 80 S.W.3d 549, 555 (Tex. 2002); Harris Cnty. Hous. Auth.
v. Rankin, 414 S.W.3d 198, 201 (Tex. App.—Houston [1st Dist.] 2013, pet. denied).
On appeal, we review whether a trial court has subject matter jurisdiction de novo. Tex.
Natural Res. Conservation Comm’n v. IT-Davy, 74 S.W.3d 849, 855 (Tex. 2002). We give no
deference to the trial court’s decisions regarding legal issues, and we take the allegations in the
petition as true and construe them in favor of the pleader. 3 Harris Cnty., 414 S.W.3d at 201.
Governmental immunity protects political subdivisions of the state from liability and
lawsuits unless the state consents. Tooke v. City of Mexia, 197 S.W.3d 325, 332 (Tex. 2006).
Governmental immunity has two components—immunity from liability and immunity from suit.
Id. A unit of state government is immune from suit and liability unless the state consents. Tex.
Dep’t of Transp. v. Jones, 8 S.W.3d 636, 638 (Tex. 1999). A governmental entity that enters into
a contract waives immunity from liability and voluntarily binds itself to the contractual terms, but
the entity does not thereby waive immunity from suit. Tooke, 197 S.W.3d at 332. As a public
housing authority organized pursuant to the constitution and laws of the State of Texas, SAHA is
a local governmental entity entitled to immunity from suit in the performance of its governmental
functions unless the State of Texas waived such immunity. See id.
3
As noted previously, in this case no evidence of jurisdictional facts was introduced at the hearing, and the contract
at issue is not part of the appellate record. Thus, we consider whether the trial court erred in denying SAHA’s plea to
the jurisdiction by looking only at Serento’s amended petition.
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In its amended petition, Serento alleged that section 271.152 of the Texas Local
Government Code waives immunity in this case. Section 271.152 provides the following:
A local governmental entity that is authorized by statute or the constitution to enter
into a contract and that enters into a contract subject to this subchapter waives
sovereign immunity to suit for the purpose of adjudicating a claim for breach of the
contract, subject to the terms and conditions of this subchapter.
TEX. LOC. GOV’T CODE § 271.152 (West 2005). “Contract subject to this subchapter” is “a written
contract stating the essential terms of the agreement for providing goods or services to the local
governmental entity that is properly executed on behalf of the local governmental entity.” Id.
§ 271.151(2)(A) (West Supp. 2014) (emphasis added). SAHA argues that section 271.152 is not
applicable because pursuant to its contract with Serento, no goods or services were provided to
SAHA.
As noted, Serento had the burden in the trial court to show that SAHA’s governmental
immunity had been waived. See Miller, 51 S.W.3d at 587. Because no evidence was introduced at
the hearing and the actual contract was not filed, we must look at the facts alleged in its amended
petition to determine whether Serento met its burden. Serento’s amended petition alleged that
SAHA was the local administrator for HUD’s HAP program, and the contract entered into between
SAHA and Serento was for the purpose of providing rental assistance for low-income families.
Serento’s amended petition further alleged that pursuant to the contract, SAHA referred eligible
families to Serento. For those families who were selected by Serento, Serento and the family would
enter into a separate agreement. SAHA would then pay a sliding scale portion of the family’s
monthly rent directly to Serento. Serento argues in its brief that these facts allege services provided
to SAHA from Serento: providing low-income housing and maintaining the housing in compliance
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with SAHA’s requirements. 4 According to Serento, “[t]he short truth is that [Serento] provides a
service of providing and operating low-income housing so that SAHA does not have to build more
housing courts.” In response, SAHA argues that the central purpose of the contract was to facilitate
federal funds to a private entity on behalf of low-income families and that SAHA, in its
governmental function and capacity, was merely a conduit of federal funds. Thus, SAHA argues
no goods or services were provided directly to SAHA, and there is no waiver of governmental
immunity under section 271.152.
In support, SAHA cites the First Court of Appeals decision in East Houston Estate
Apartments, LLC v. City of Houston, 294 S.W.3d 723 (Tex. App.—Houston [1st Dist.] 2009, no
pet.). In that case, East Houston Apartments entered into a loan agreement with the City of Houston
so that East Houston Apartments could rehabilitate a 130-unit apartment complex. Id. at 726.
Funding for the City’s loan to East Houston Apartments was provided to the City
pursuant to a HOME Investment Partnership Agreement (“HOME Agreement”)
between the City and the United States of America, acting by and through its
Department of Housing and Urban Development, for federal funding of a HOME
Investment Partnerships Program under the National Affordable Houston Act of
1990, as amended (“HOME Program”).
Id. East Houston Apartments sued the City for breach of contract, alleging that the City had
wrongfully failed to release to it all of the funds allocated by the loan agreements. Id. at 728. In
response to the lawsuit, the City filed a plea to the jurisdiction based on governmental immunity.
Id.
4
Serento also claims in its brief that it provided the service of “if necessary” “evict[ing] tenants if they do not conform
with the rules of [SAHA].” In its amended petition, however, Serento did not allege that it evicted tenants if they did
not comply with SAHA’s rules. Instead, Serento’s amended petition alleged that it was “entitled to terminate the lease
of a Mod Rehab tenant, either at the time of renewal or anytime during the one-year renewal period, only for serious
or repeated violation of the lease, violation of applicable Federal, State, or Local laws, or other good cause.” It appears
that in its brief, Serento is referencing a provision in the separate lease agreement between Serento and the low-
income families. SAHA was not a party to this separate leasing agreement; thus, this separate leasing agreement cannot
be a basis for SAHA waiving immunity from suit pursuant to section 271.152.
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On appeal, the First Court of Appeals considered whether the loan agreement constituted
a contract that would waive governmental immunity under section 271.152. Id. at 734. East
Houston Apartments argued that it provided to the City the service of rehabilitating the apartment
complex, and because the terms of the loan agreement restricted the amount of rent it could charge
for a portion of its units for a period of years, it also provided low-income housing for City
residents. Id. The First Court of Appeals rejected this argument, concluding that these services
were not the type of service “envisioned by section 271.152.” Id. at 736. According to the court,
while it was clear that the “City would benefit in a general way from having East Houston’s
apartment units refurbished and from the availability of more housing for low-income families,
nothing in the contract obligated East Houston to provide any municipal service directly to the
City.” Id. “The central purpose of the agreement between the City and East Houston was to
facilitate a loan of money from the City’s portion of federal funds and from private funds to a
private entity for the purpose of renovating East Houston’s empty apartment building.” Id. “The
City was thus a conduit of federal funds and a facilitator of the project, but no services were
provided directly to the City.” Id.
The First Court of Appeals further reasoned that the plain meaning of section 271.152
supported its conclusion that section 271.152 did not apply to contracts, like the one at issue, “in
which the benefit that the City would receive is an indirect, attenuated one.” Id. The court
explained that section 271.152 “is clearly limited as to which contracts fall under the waiver of
immunity from suit.” Id. “If every contract that confers some attenuated benefit on a governmental
entity constitutes a contract for a ‘service,’ the limitation of contracts covered by section 271.152
to ‘contract for goods or services provided to the entity’ loses all meaning.” Id. The court explained
that “[n]othing in the statute nor in its legislative history supports such an interpretation.” Id. The
court reasoned that “[h]ad the legislature intended to waive immunity from liability for every
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contract participated in by the State, it could have done so.” The court thus concluded that it “must
interpret the limitation as having some meaning.” Id.
We find this reasoning by the First Court of Appeals and its analysis of section 271.152
persuasive. Like the First Court of Appeals, we interpret section 271.152 to not waive
governmental immunity if the contract at issue merely confers some attenuated benefit on a
governmental entity. We conclude the services provided to SAHA under the contract as alleged
by Serento’s petition was indirect and attenuated. As in East Houston, SAHA was merely the
conduit of federal funds and did not directly receive the benefit of services provided by Serento.
We therefore hold that Serento did not meet its burden of showing that SAHA had waived its
governmental immunity pursuant to section 271.152.
Finally, in its brief, Serento moves for sanctions against SAHA, arguing that “[i]t should
be considered unconscionable that [SAHA] would file a plea to the jurisdiction, and an
interlocutory appeal without even examining the contract which is the main issue of the case.”
Having concluded that SAHA’s plea to the jurisdiction should have been granted, we deny
Serento’s motion for sanctions.
CONCLUSION
Because Serento did not meet its burden of showing a waiver of governmental immunity,
we reverse the order of the trial court and render judgment dismissing the cause for lack of subject-
matter jurisdiction.
Karen Angelini, Justice
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