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H.B. No. 2039
AN ACT
relating to the adjudication of claims arising under written
contracts with local governmental entities.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Chapter 271, Local Government Code, is amended
by adding Subchapter I to read as follows:
SUBCHAPTER I. ADJUDICATION OF CLAIMS ARISING UNDER WRITTEN
CONTRACTS WITH LOCAL GOVERNMENTAL ENTITIES
Sec. 271.151. DEFINITIONS. In this subchapter:
(1) "Adjudication" of a claim means the bringing of a
civil suit and prosecution to final judgment in county or state
court and includes the bringing of an authorized arbitration
proceeding and prosecution to final resolution in accordance with
any mandatory procedures established in the contract subject to
this subchapter for the arbitration proceedings.
(2) "Contract subject to this subchapter" means 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.
(3) "Local governmental entity" means a political
subdivision of this state, other than a county or a unit of state
government, as that term is defined by Section 2260.001, Government
Code, including a:
(A) municipality;
(B) public school district and junior college
district; and
(C) special-purpose district or authority,
including any levee improvement district, drainage district,
irrigation district, water improvement district, water control and
improvement district, water control and preservation district,
freshwater supply district, navigation district, conservation and
reclamation district, soil conservation district, communication
district, public health district, emergency service organization,
and river authority.
Sec. 271.152. WAIVER OF IMMUNITY TO SUIT FOR CERTAIN
CLAIMS. 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.
Sec. 271.153. LIMITATIONS ON ADJUDICATION AWARDS. (a) The
total amount of money awarded in an adjudication brought against a
local governmental entity for breach of a contract subject to this
subchapter is limited to the following:
(1) the balance due and owed by the local governmental
entity under the contract as it may have been amended, including any
amount owed as compensation for the increased cost to perform the
work as a direct result of owner-caused delays or acceleration;
(2) the amount owed for change orders or additional
work the contractor is directed to perform by a local governmental
entity in connection with the contract; and
(3) interest as allowed by law.
(b) Damages awarded in an adjudication brought against a
local governmental entity arising under a contract subject to this
subchapter may not include:
(1) consequential damages, except as expressly
allowed under Subsection (a)(1);
(2) exemplary damages; or
(3) damages for unabsorbed home office overhead.
Sec. 271.154. CONTRACTUAL ADJUDICATION PROCEDURES
ENFORCEABLE. Adjudication procedures, including requirements for
serving notices or engaging in alternative dispute resolution
proceedings before bringing a suit or an arbitration proceeding,
that are stated in the contract subject to this subchapter or that
are established by the local governmental entity and expressly
incorporated into the contract or incorporated by reference are
enforceable except to the extent those procedures conflict with the
terms of this subchapter.
Sec. 271.155. NO WAIVER OF OTHER DEFENSES. This subchapter
does not waive a defense or a limitation on damages available to a
party to a contract, other than a bar against suit based on
sovereign immunity.
Sec. 271.156. NO WAIVER OF IMMUNITY TO SUIT IN FEDERAL
COURT. This subchapter does not waive sovereign immunity to suit in
federal court.
Sec. 271.157. NO WAIVER OF IMMUNITY TO SUIT FOR TORT
LIABILITY. This subchapter does not waive sovereign immunity to
suit for a cause of action for a negligent or intentional tort.
Sec. 271.158. NO GRANT OF IMMUNITY TO SUIT. Nothing in this
subchapter shall constitute a grant of immunity to suit to a local
governmental entity.
Sec. 271.159. NO RECOVERY OF ATTORNEY'S FEES. Attorney's
fees incurred by a local governmental entity or any other party in
the adjudication of a claim by or against a local governmental
entity shall not be awarded to any party in the adjudication unless
the local governmental entity has entered into a written agreement
that expressly authorizes the prevailing party in the adjudication
to recover its reasonable and necessary attorney's fees by specific
reference to this section.
Sec. 271.160. JOINT ENTERPRISE. A contract entered into by
a local government entity is not a joint enterprise for liability
purposes.
SECTION 2. Sections 271.152, 271.153, and 271.154, Local
Government Code, as added by this Act, apply to a claim that arises
under a contract executed before the effective date of this Act only
if sovereign immunity has not been waived with respect to the claim
before the effective date of this Act. A claim that arises under a
contract executed before the effective date of this Act and with
respect to which sovereign immunity has been waived is governed by
the law in effect on the date the contract was executed, and the
former law is continued in effect for that purpose.
SECTION 3. This Act takes effect September 1, 2005.
______________________________ ______________________________
President of the Senate Speaker of the House
I certify that H.B. No. 2039 was passed by the House on April
21, 2005, by a non-record vote; and that the House concurred in
Senate amendments to H.B. No. 2039 on May 23, 2005, by a non-record
vote.
______________________________
Chief Clerk of the House
I certify that H.B. No. 2039 was passed by the Senate, with
amendments, on May 20, 2005, by the following vote: Yeas 31, Nays
0.
______________________________
Secretary of the Senate
APPROVED: __________________
Date
__________________
Governor