Texas Association of School Boards Risk Management Fund v. Southwest Texas Junior College

ACCEPTED
NO. 15-25-00115-CV 15-25-00115-CV
FIFTEENTH COURT OF APPEALS
AUSTIN, TEXAS

In the 8/18/2025 1:00 PM
CHRISTOPHER A. PRINE

Fifteenth Court of Appeals FILED IN
CLERK

Austin, Texas
15th COURT OF APPEALS
AUSTIN, TEXAS
8/18/2025 2:04:46 PM
______________________________________________
CHRISTOPHER A. PRINE
Clerk
T EXAS A SSOCIATION OF S CHOOL B OARDS R ISK M ANAGEMENT F UND ,
Appellant,
v.
SOUTHWEST TEXAS JUNIOR COLLEGE,
Appellee .
______________________________________________

Appeal from the 83rd Judicial District Court
Val Verde County, Texas, No. 2023-0279-CIV
The Honorable Robert E. Cadena, Presiding Judge
__________________________________________________________________

REPLY BRIEF OF APPELLANT
__________________________________________________________________

Jack W. Higdon
Texas Bar No. 24007360
jack.higdon@blankrome.com
Barry Abrams
Texas Bar No. 00822700
barry.abrams@blankrome.com
Joshua A. Huber
Texas Bar No. 24065457
josh.huber@blankrome.com
BLANK ROME LLP
717 Texas Avenue, Suite 1400
Houston, Texas 77002-2727
(713) 228-6601
(713) 228-6605 - Fax

ORAL ARGUMENT REQUESTED
TABLE OF CONTENTS

Page

I. INTRODUCTION............................................................................. 1

II. ARGUMENT .................................................................................... 3

A. THE COLLEGE MISSTATES THE STANDARD OF REVIEW
APPLICABLE TO THE FUND’S JURISDICTIONAL CHALLENGE. ....... 3

B. THE COLLEGE CANNOT OVERCOME THE FUND’S IMMUNITY
THROUGH ARTFUL PLEADING .................................................... 5

C. THE TEXAS SUPREME COURT DISAPPROVED CITY OF MESQUITE
AND THE NOTION THAT COURTS NEED NOT “PARSE THE
PLEADINGS” TO DETERMINE THE SCOPE OF THE IMMUNITY
WAIVER UNDER THE ACT .......................................................... 7

D. THE ACT DOES NOT WAIVE THE FUND’S IMMUNITY FROM SUIT
AND LIABILITY BASED UPON THE COLLEGE’S EQUITABLE
THEORIES, WHICH IT ASSERTS OFFENSIVELY IN AN ATTEMPT
TO CREATE COVERAGE WHERE NONE EXISTS ............................ 9

1. The Express Terms of the Coverage Documents Do
Not Provide RCV Coverage for Unrepaired and
Unreplaced Losses ......................................................... 9

2. Unlike in Colorado and Greenville, the College Asserts
Waiver and Estoppel Offensively, Purportedly to
Create RCV Coverage Where None Exists .................. 12

3. Section 271.155 Does Not Grant an Immunity Waiver
for the College’s Equitable Theories ............................ 15

4. The College Did Not Meet its Evidentiary Burden. .... 19

E. THE ACT DOES NOT WAIVE THE FUND’S IMMUNITY FROM
THE COLLEGE’S CONSEQUENTIAL DAMAGES CLAIM ................. 21

III. PRAYER ......................................................................................... 25

i
TABLE OF AUTHORITIES

Page(s)

Cases

City of Corpus Christi v. Graham Construction Services, Inc.,
No. 13-19-00367-CV, 2020 Tex. App. LEXIS 4734 (Tex. App.—
Corpus Christi June 25, 2020, pet. denied).................................. 24, 25

City of Mesquite v. PKG Contracting, Inc.,
263 S.W.3d 444 (Tex. App.—Dallas 2008, pet. denied).................... 7, 8

City of San Antonio v. Wheelabrator Air Pollution Control, Inc.,
381 S.W.3d 597 (Tex. App.—San Antonio 2012, pet. denied) .............. 1

Cty. of Galveston v. Triple B Servs., LLP,
498 S.W.3d 176 (Tex. App.—Houston [1st Dist.] 2016, pet.
denied) ................................................................................................. 22

David J. Sacks, P.C. v. Haden,
266 S.W.3d 447 (Tex. 2008) ................................................................ 10

Ewing Constr. Co. v. Amerisure Ins. Co.,
420 S.W.3d 30 (Tex. 2014) .................................................................. 15

Farmers Tex. Cnty. Mut. Ins. Co. v. Wilkinson,
601 S.W.2d 520 (Tex. App.—Austin 1980, writ ref’d n.r.e.)............... 19

In re FirstMerit Bank, N.A.,
52 S.W.3d 749 (Tex. 2001) .................................................................. 21

Fitzhugh 25 Partners, L.P. v. KILN Syndicate KLN 501,
261 S.W.3d 861 (Tex. App.—Dallas 2008, pet. denied)................ 11, 14

Green Acres Baptist Church, Inc. v. Bhd. Mut. Ins. Co.,
No. 6:23-cv-566-JDK, 2025 U.S. Dist. LEXIS 126690 (E.D. Tex.
2025) .................................................................................................... 11

Green Intern., Inc. v. Solis,
951 S.W.2d 384 (Tex. 1997) ................................................................ 22

ii
Hidalgo Cnty. v. Dyer,
358 S.W.3d 698 (Tex. App.—Corpus Christi—Edinburg 2011,
no pet.)............................................................................................... 5, 6

Kan. City S. v. Port of Corpus Christi Auth.,
305 S.W.3d 296 (Tex. App.—Corpus Christi 2009, pet. denied) ........ 12

LeBlanc v. Lange,
365 S.W.3d 70 (Tex. App.—Houston [1st Dist.] 2011, no pet.) .......... 21

Matzen v. McLane,
659 S.W.3d 381 (Tex. 2021) .......................................................... 20, 21

McLennan Cnty. Water Control & Improvement Dist. #2 v. Geer,
No. 10-17-00399-CV, 2020 Tex. App. LEXIS 5663, 2020 WL
4218085 (Tex. App.—Waco July 22, 2020, no pet.) .............................. 5

Methodist Hosp. v. Addison,
574 S.W.3d 490 (Tex. App.—Houston [14th Dist.] 2019, no pet.)........ 6

Mission Consol. Indep. Sch. Dist. v. Garcia,
253 S.W.3d 653 (Tex. 2008) .................................................................. 9

Nat’l Fire Ins. Co. v. State & Cty. Mut. Fire Ins. Co.,
No. 01-11-00176-CV, 2012 Tex. App. LEXIS 7729 (Tex. App.—
Houston [1st Dist.] Aug. 30, 2012, no pet.) ........................................ 18

Nettles v. GTECH Corp.,
606 S.W.3d 726 (Tex. 2020) .................................................................. 5

Port Freeport v. RLB Contracting Inc.,
369 S.W.3d 581 (Tex. App.—Houston [1st Dist.] 2012, pet. denied) ... 7

Prairie View A&M Univ. v. Chatha,
381 S.W.3d 500 (Tex. 2012) ................................................................ 17

Prime Time Family Entertainment Center, Inc. v. Axis Insurance Co.,
630 S.W.3d 226 (Tex. App.—Eastland 2020, no pet.) .................... 7, 18

iii
Roma ISD v. Ewing Const. Co.,
No. 04-12-00035-CV, 2012 Tex. App. LEXIS 5968 (Tex. App.—
San Antonio July 25, 2012, pet. denied)............................................... 7

Rotating Servs. Indus. v. Harris,
245 S.W.3d 476 (Tex. App.—Houston [1st Dist.] 2007, pet. denied) . 18

Seureau v. ExxonMobil Corp.,
274 S.W.3d 206 (Tex. App.—Houston [14th Dist.] 2008, no pet.)...... 17

Sharyland Water Supply Corp. v. City of Alton,
354 S.W.3d 407 (Tex. 2011) ................................................................ 12

Shields Ltd. P'ship v. Bradberry,
526 S.W.3d 471 (Tex. 2017) .......................................................... 20, 21

Tex. Ass’n of Sch. Bds. Risk Mgmt. Fund v. Colo. Indep. Sch. Dist.,
660 S.W.3d 767 (Tex. App.—Eastland 2023, no pet.) .................. 13, 14

Tex. Ass'n of Sch. Bds. Risk Mgmt. Fund v. Greenville Indep. Sch.
Dist.,
No. 05-21-01012-CV, 2022 Tex. App. LEXIS 4952 (Tex. App.—
Dallas July 19, 2022, pet. denied) .............................................. passim

Tex. Dep’t of Parks & Wildlife v. Miranda,
133 S.W.3d 217 (Tex. 2004) .................................................. 4, 9, 20, 21

Texas Farmers Ins. Co. v. McGuire,
744 S.W.2d 601 (Tex.1988) ............................................................. 7, 18

Tooke v. City of Mexia,
197 S.W.3d 325 (Tex. 2006) ............................................................ 1, 17

Ulico Cas. Co. v. Allied Pilots Ass’n,
262 S.W.3d 773 (Tex. 2008) ...................................................... 7, 18, 19

Univ. of Tex. M.D. Anderson Cancer Ctr. v. McKenzie,
578 S.W.3d 506 (Tex. 2019) .............................................................. 5, 6

Washington National Insurance Co. v. Craddock,
109 S.W.2d 165 (Tex. 1937) ............................................................ 7, 18

iv
Worsdale v. City of Killeen,
578 S.W.3d 57 (Tex. 2019) .................................................................. 16

Zachry Constr. Corp. v. Port of Hous. Auth. of Harris Cty.,
449 S.W.3d 98 (Tex. 2014) .............................................................. 8, 16

Statutes

Tex. Gov’t Code § 311.034 ................................................................... 1, 17

Tex. Loc. Gov't Code
§ 271.151(2)(A) ...................................................................................... 1
§ 271.152 ..................................................................................... passim
§ 271.153 ....................................................................................... 12, 15
§ 271.153(a)(1)............................................................................. passim
§ 271.153(b)(1)..................................................................................... 22
§ 271.153(c) ........................................................................................... 1
§ 271.155 ........................................................................... 15, 16, 17, 19
§ 271.157 ............................................................................................. 17

Other Authorities

House Research Org., Bill Analysis,
Tex. H.B. 2039, 79th Leg., R.S. (2005) ............................................... 23

Senate Research Ctr., Bill Analysis,
Tex. H.B. 2039, 79th Leg., R.S. (2005) ............................................... 23

v
I.
INTRODUCTION 1/

Immunity waivers must be clear, unambiguous, and narrowly

construed in favor of retaining immunity. See TEX. GOV’T CODE § 311.034;

Tooke v. City of Mexia, 197 S.W.3d 325, 328-29 (Tex. 2006). Section

271.152 of the Act waives immunity for the limited and defined purpose

of adjudicating a claim for breach of written contracts that are executed

by local governmental entities and contain the essential terms of the

parties’ agreement. See TEX. LOC. GOV’T CODE §§ 271.151(2)(A), 271.152.

The waiver is further restricted to defined types of damages and a narrow

category of equitable relief for a specific type of contract that is not at

issue here. Id. § 271.153(c).

The Texas Legislature struck a policy balance in the Act. City of

San Antonio v. Wheelabrator Air Pollution Control, Inc., 381 S.W.3d 597,

602 (Tex. App.—San Antonio 2012, pet. denied). Immunity was waived

to allow a contracting party to hold a local governmental entity

accountable for its express contractual obligations, while still promoting

fiscal predictability by limiting a local governmental entity’s financial

1/ All capitalized terms in this Reply are given the same meaning as defined in the
Fund’s opening brief.

1
exposure to the “amounts due and owed” under the written terms of their

properly executed contracts. TEX. LOC. GOV’T CODE § 271.153(a)(1).

The College advocates for a far more expansive view of the Act that

would permit a breach of contract plaintiff to import immunity-barred

equitable theories like waiver and estoppel – or possibly even intentional

tort theories like fraud and bad faith – into a breach of contract claim

under the guise of what it characterizes as contract “defenses,” which

would expose local government entities to unbounded liability far beyond

that provided under the express, bargained-for terms in their properly

executed contracts.

This case well-illustrates the inherent flaw in such an expansive

interpretation. It would allow the College to create new and different self-

insurance coverage than what it (and other Fund members) expressly

agreed to provide one another. The College attempts to extend the

incorrect interpretation of the Act in the materially distinguishable

Colorado and Greenville cases (which misconstrued the Act to allow

equitable waiver and estoppel theories to be asserted against the Fund

in a purely defensive context), to allow the College to invoke equitable

theories offensively, thereby creating new and different RCV coverage,

2
and exposing the Fund and its other members to a financial risk that

they did not agree to share.

The College therefore does not merely seek to avoid its obligation to

comply with conditions precedent to recovery. It is attempting to avoid

its own performance obligations under the Coverage Documents to create

coverage where none exists. Today the College invokes equitable theories

to attempt to create coverage where none exists; tomorrow it and others

may resurrect intentional tort theories for the same purpose. Adopting

the College’s sweeping interpretation of the limited immunity waiver in

the Act would greatly expand its scope and eviscerate the Fund’s inherent

immunity from suit and immunity from unlimited liability.

For the reasons discussed in the Fund’s Brief and in this Reply, the

Court should reverse the trial court’s order denying the Fund’s

Jurisdictional Plea.

II.
ARGUMENT

A. THE COLLEGE MISSTATES THE STANDARD OF REVIEW APPLICABLE TO
THE FUND’S JURISDICTIONAL CHALLENGE.

The College repeatedly asserts that its pleading allegations alone

determine whether the Fund’s immunity has been waived. College Brief,

3
at 7, 12, 16, 17. But the College’s assertion is based upon a false premise:

the incorrect claim that the Fund “did not raise an evidentiary challenge

to the existence of jurisdictional facts . . . but instead challenge[s] the face

of the College’s Petition.” Id. at 16-17. That is incorrect. The Fund did

contest the sufficiency of the College’s jurisdictional allegations and the

Fund did submit a substantial evidentiary record that conclusively

negated them. 2/

When an immune government defendant contests a plaintiff’s

jurisdictional allegations and offers evidence to defeat them – as the

Fund did here – to avoid dismissal the plaintiff bears the burden to

adduce its own evidence creating a genuine fact issue with respect to the

challenged allegations. Tex. Dep’t of Parks & Wildlife v. Miranda, 133

S.W.3d 217, 227 (Tex. 2004). The Court’s appellate review therefore is

not confined to the face of the pleadings. Id. The Court must also consider

the evidentiary record and “review the evidence under a standard

2/ CR 39 (“The Fund contests the sufficiency of the College’s jurisdictional
allegations and has submitted evidence that under Texas law disproves
conclusively the possibility of allegations upon which jurisdiction might be
based.”), 60-110, 166-167 (“The Fund contests the sufficiency of the College’s
jurisdictional allegations. The Fund has submitted evidence that under Texas law
conclusively negates jurisdiction for the College’s extracontractual claims and
defenses.”), 187-435.

4
mirroring that of summary judgment,” to determine whether the College

met its burden to create a genuine fact issue concerning its jurisdictional

allegations. Nettles v. GTECH Corp., 606 S.W.3d 726, 734 (Tex. 2020).

B. THE COLLEGE CANNOT OVERCOME THE FUND’S IMMUNITY THROUGH
ARTFUL PLEADING.

A plaintiff may not expand a limited “[immunity] waiver

through artful pleading.” Univ. of Tex. M.D. Anderson Cancer Ctr. v.

McKenzie, 578 S.W.3d 506, 513 (Tex. 2019). To combat artful pleading,

Texas courts look to the substance of the plaintiff’s claims, not the labels

attached to the causes of action, to determine whether a plaintiff’s claims

are barred by immunity. Hidalgo Cnty. v. Dyer, 358 S.W.3d 698, 704

(Tex. App.—Corpus Christi—Edinburg 2011, no pet.); see also McLennan

Cnty. Water Control & Improvement Dist. #2 v. Geer, No. 10-17-00399-

CV, 2020 Tex. App. LEXIS 5663, 2020 WL 4218085, at *4 (Tex. App.—

Waco July 22, 2020, no pet.) (mem. op.) (concluding trial court erred in

denying defendant's plea to the jurisdiction because plaintiffs’

factual allegations encompass matters falling outside the limited waiver

of immunity in the Texas Tort Claims Act).

The College contends that it has not asserted a cause of action

against the Fund for waiver (or previously, for unconscionability, fraud,

5
and bad faith), but has instead merely asserted “factual allegations or

theories . . . to support its breach of contract claim.” See College Brief, at

21. 3/ But the “factual allegations or theories” in the College’s live

pleadings are what determine the extent to which its claims fall within

limited statutory immunity waiver, not the College’s recharacterization

its various equitable theories as component parts of a breach of contract

claim. McKenzie, 578 S.W.3d at 513; Dyer, 358 S.W.3d at 704.

The College cannot, through artful pleading, import immunity-

barred equitable theories such as waiver and estoppel (or immunity-

barred tort theories such as fraud and bad faith) 4/ into its breach of

3/ Here, the College takes liberty with the factual record when it states that the
College “has never sought ‘exemplary, and treble damages’” from the Fund. See
College Brief, at 21 (emphasis added). The College cites to its First Amended
Petition filed after the Fund filed its initial Jurisdictional Plea, but ignores its
Original Petition – the live pleading when the Fund filed its Jurisdictional Plea –
which expressly prayed for “treble/exemplary damages from and against
Defendants.” CR 25 (emphasis added).
4/ The College’s equitable theories remain a moving target. The College initially
asserted only waiver and unconscionability in its pleadings, see CR 12, 115, but it
has since dismissed with prejudice any unconscionability arguments (as well as
its various intentional tort theories) and does not address unconscionability in its
Brief, reflecting that it now has been abandoned. See Methodist Hosp. v. Addison,
574 S.W.3d 490, 509 (Tex. App.—Houston [14th Dist.] 2019, no pet.). See App. F.
The College did not plead estoppel in either its original or amended petition. See
CR 7-26, 111-123 (no mention of the words “estoppel” or “estopped”). Yet, the
College’s Brief discusses estoppel as if it did. See, e.g., College Brief, at 11, 14, 26
(“An example would be the College’s defense that [the Fund] is estopped from
asserting or has waived . . .”)(emphasis added). This reply will focus on the pleaded
waiver theory that the College has not dismissed with prejudice, but the Fund’s

6
contract claim to expand the limited scope of the immunity waiver in

Section 271.152 of the Act to create additional RCV coverage where none

exists under the express written terms of the parties’ agreement.5/

C. THE TEXAS SUPREME COURT DISAPPROVED CITY OF MESQUITE AND
THE NOTION THAT COURTS NEED NOT “PARSE THE PLEADINGS” TO
DETERMINE THE SCOPE OF THE IMMUNITY WAIVER UNDER THE ACT.

As discussed on pages 30-32 of the Fund’s Brief, the Texas Supreme

Court has expressly disapproved of City of Mesquite, and other cases that

adopted its rationale, 6/ which held that a court need not “parse further

the pleadings or contract to determine whether the legislature has

waived immunity,” as long as the contract being sued on “falls within the

provisions of section 271.152.” City of Mesquite v. PKG Contracting, Inc.,

arguments concerning the waiver doctrine apply equally to any purported estoppel
theory.
5/ As discussed infra at Section II.D.3, the Texas Supreme Court has long held that
the equitable doctrines of waiver and estoppel are not available to “create
insurance coverage when none exists by the terms of the policy.” Ulico Cas. Co. v.
Allied Pilots Ass’n, 262 S.W.3d 773, 780 (Tex. 2008); Texas Farmers Ins. Co. v.
McGuire, 744 S.W.2d 601, 602–03 (Tex.1988); Washington National Insurance Co.
v. Craddock, 109 S.W.2d 165, 166 (Tex. 1937); see also Prime Time Family
Entertainment Center, Inc. v. Axis Insurance Co., 630 S.W.3d 226, 232 (Tex.
App.—Eastland 2020, no pet.) (“the contractual coverage of an insurance policy
cannot be expanded by waiver or estoppel on the part of the insurer . . . The
manner in which [the insurer] adjusted the claim cannot create coverage by either
waiver or estoppel.”).
6/ See, e.g., Roma ISD v. Ewing Const. Co., No. 04-12-00035-CV, 2012 Tex. App.
LEXIS 5968, at *9 (Tex. App.—San Antonio July 25, 2012, pet. denied); Port
Freeport v. RLB Contracting Inc., 369 S.W.3d 581, 591 (Tex. App.—Houston [1st
Dist.] 2012, pet. denied); City of Mesquite, 263 S.W.3d at 448.

7
263 S.W.3d 444, 447 (Tex. App.—Dallas 2008, pet. denied); Zachry

Constr. Corp. v. Port of Hous. Auth. of Harris Cty., 449 S.W.3d 98, 110

n.54 (Tex. 2014).

Zachry disapproved City of Mesquite expressly. The Zachry court

did not end its inquiry after concluding that the government contract at

issue in that case was a contract subject to immunity waiver in the Act.

Zachry, 449 S.W.3d at 106 (“The contract between the Port and Zachry

qualifies.”). The Zachry court proceeded to do what the City of Mesquite

line of cases had incorrectly held was not required – it “parse[d] further”

the pleadings and contract to determine whether the damages and

remedies sought fell within the scope of those permitted under the other

limiting provisions in the Act. Id. at 108-110 (“The Act waives immunity

for contract claims that meet certain conditions: the existence of a specific

type of contract, a demand for certain kinds of damages, a state forum,

etc.”) (emphasis added).

The multi-level analysis the Texas Supreme Court endorsed in

Zachry is illustrated by the funnel graphic on page 20 of the Fund’s Brief.

The scope of the immunity waiver under the Act is limited to only certain

claims, certain damages and relief, but not others. See Zachry, 449

8
S.W.3d at 108-110.

The Act does not function as depicted by the College’s “umbrella”

graphic and “broadly waive governmental immunity” for all claims that

in any way relate to a government contract, such as waiver and estoppel.7/

See Miranda, 133 S.W.3d at 226–227; Mission Consol. Indep. Sch. Dist.

v. Garcia, 253 S.W.3d 653, 655 (Tex. 2008) (“We interpret statutory

waivers of immunity narrowly, as the Legislature's intent to waive

immunity must be clear and unambiguous.”)(emphasis added).

Accordingly, the Court must analyze the individual damage and

liability theories asserted by the College to determine whether they fall

within the scope of the statutory terms which define and limit narrow

immunity waiver in Section 271.152.

D. THE ACT DOES NOT WAIVE THE FUND’S IMMUNITY FROM SUIT AND
LIABILITY BASED UPON THE COLLEGE’S EQUITABLE THEORIES, WHICH
IT ASSERTS OFFENSIVELY IN AN ATTEMPT TO CREATE COVERAGE
WHERE NONE EXISTS.

1. The Express Terms of the Coverage Documents Do Not
Provide RCV Coverage for Unrepaired and Unreplaced
Losses.

Relying exclusively on the allegations in its pleadings, the College

7/ CR 445.

9
asserts that “there is no reasonable dispute” that the RCV damages it

seeks are “expressly made due and owed/owing under the [Coverage

Documents].” See College Brief, at 44-45. Not so. The Fund disputed the

College’s jurisdictional damages allegations below and offered evidence

that conclusively disproved them.

The proper analysis of the College’s RCV damages theory starts

with an examination of the plain and unambiguous language of the RCV

coverage terms in the Coverage Documents. See David J. Sacks, P.C. v.

Haden, 266 S.W.3d 447, 450 (Tex. 2008) (“An unambiguous contract will

be enforced as written.”). The Property Coverage Agreement expressly

limits RCV coverage to the lesser of three amounts – one of which is the

out-of-pocket expenses a member paid to actually and necessarily repair

or replace damaged property. 8/ Thus, unless the College incurred

unreimbursed, out of pocket expenses to actually and necessarily repair

or replace the College’s allegedly damaged property, no RCV coverage

exists under the express terms of the Coverage Documents.

“[C]ourts across the country that have considered the meaning of

the same or similar [RCV] language in a property insurance policy have

8/ CR 941, 1020.

10
universally held that such language requires repair or replacement of the

destroyed property before the insured is entitled to recover replacement

cost damages.” Fitzhugh 25 Partners, L.P. v. KILN Syndicate KLN 501,

261 S.W.3d 861, 863 (Tex. App.—Dallas 2008, pet. denied) (collecting

cases). “[T]he replacement of damaged property is an event that triggers

coverage . . . [and] [t]o allow an insured to recover replacement costs in

the absence of actual replacement would permit the insured to recover

for a loss he has not suffered.” Id. at 863-864 (emphasis added).

The College seeks to recover only RCV damages. See College Brief,

at 26 (“the College has sought to recover [RCV] benefits under the policy

as its measure of damages.”). However, the undisputed record establishes

that the College has neither repaired nor replaced any of the allegedly

damaged properties for which it now claims it is entitled to RCV

coverage. 9/ Accordingly, no RCV coverage is “due and owed/owing” under

9/ CR 189, 280. The College did not allege and it adduced no contrary evidence of any
timely repair or replacement of its allegedly damaged property that was not paid
by the Fund. The College’s repair estimates prepared by its retained expert, Jose
Alfredo Villalobos, are no evidence of actual out of pocket repair or replacement
losses that would trigger RCV coverage. See, e.g., Green Acres Baptist Church,
Inc. v. Bhd. Mut. Ins. Co., No. 6:23-cv-566-JDK, 2025 U.S. Dist. LEXIS 126690, at
*21-22 (E.D. Tex. 2025) (“Estimates for work to repair or replace property that
[plaintiff] has not yet repaired or replaced . . . are not competent evidence of the
replacement cost value allegedly owed to [plaintiff] under the policy.”).

11
the express terms of the Coverage Document. See, e.g., Sharyland Water

Supply Corp. v. City of Alton, 354 S.W.3d 407, 413 (Tex. 2011) (a request

for damages not recoverable under the contract is not an amount “due

and owing” for purposes of Section 271.153); Kan. City S. v. Port of

Corpus Christi Auth., 305 S.W.3d 296, 307 (Tex. App.—Corpus Christi

2009, pet. denied) (same).

2. Unlike in Colorado and Greenville, the College Asserts
Waiver and Estoppel Offensively, Purportedly to Create RCV
Coverage Where None Exists.

For the reasons just discussed, the College’s breach of contract

claim does not seek to enforce the express terms of the Coverage

Documents against the Fund – i.e., the only claim for which the

Legislature has narrowly waived the Fund’s immunity – because the

express terms of the Coverage Documents do not provide RCV coverage

for hypothetical repairs to, or the replacement of damaged property, that

have not actually and necessarily been made. 10/

The College instead attempts to utilize the equitable doctrines of

waiver and/or estoppel to create new and different RCV coverage for itself

that does not require the College to first suffer a “loss” by making (and

10/ CR 941, 1020.

12
paying for) actual repairs or replacement of damaged property. See

College Brief, at 26-27. It is that “equitably-created RCV coverage” that

the College sues to have the Fund pay.

In support of the College’s argument that the Act waived the Fund’s

immunity based upon “equitably-created coverage” theories, the College,

as it did below, relies primarily on two sister court opinions in Colorado

and Greenville. See College Brief, at 22-27. But Colorado and Greenville

are materially distinguishable from this case. Unlike in Colorado and

Greenville, the College asserts its equitable theories offensively in an

attempt to create coverage where none otherwise exists, not simply as

defenses to the satisfaction of a condition precedent asserted by the Fund.

The Colorado court emphasized that its decision turned on

“constru[ing] the context in which these [equitable] theories have been

asserted.” Tex. Ass’n of Sch. Bds. Risk Mgmt. Fund v. Colo. Indep. Sch.

Dist., 660 S.W.3d 767, 769 (Tex. App.—Eastland 2023, no pet.). And,

because the school district in that case invoked the equitable doctrines of

waiver and estoppel in its amended pleadings solely “in response to the

defense of an unfulfilled condition precedent raised by the Fund,” the

court held that they were “raised in a defensive context [and] fall within

13
the Act’s waiver of immunity.” Id. (emphasis in original); see also Tex.

Ass'n of Sch. Bds. Risk Mgmt. Fund v. Greenville Indep. Sch. Dist., No.

05-21-01012-CV, 2022 Tex. App. LEXIS 4952, at *8 (Tex. App.—Dallas

July 19, 2022, pet. denied) (“Greenville’s defensive theories benefit from

the same waiver of immunity.”) (emphasis added).

Here, the College first raised its waiver theory in its Original

Petition, not in response to any defense that the College had failed to

satisfy a condition precedent.11/ In addition, contrary to its

mischaracterization throughout the College’s Brief, the RCV coverage

terms are not “conditions precedent” to recovery under the Coverage

Documents. See College Brief, at 23, 27. Repair and replacement are

coverage terms that define the scope of RCV coverage provided to the

College and the Fund’s other governmental members. See Fitzhugh 25

Partners, L.P., 261 S.W.3d at 863 (“It is the act of replacing the property

that causes the insured to suffer an additional loss for which he

purchased additional [RCV] coverage.”). As a breach of contract plaintiff,

the College has the threshold burden to prove that it has suffered a loss

for which RCV coverage exists under the Coverage Documents – i.e.,

11/ CR 12.

14
unreimbursed, out-of-pocket expenses to actually repair or replace

damaged property. Ewing Constr. Co. v. Amerisure Ins. Co., 420 S.W.3d

30, 33 (Tex. 2014).

The context in which this case arises therefore is materially

different from the circumstances in Colorado/Greenville, and the College

has not addressed those material distinctions

Accordingly, even if Section 271.155 were construed to expand

Section 271.152’s immunity waiver to include other subordinate

equitable defenses that the Texas Legislature chose not to include in

Section 271.153 of the Act – which for the reasons discussed in the Fund’s

Brief and the following subsection, it should not – the College has not

asserted its equitable theories in a purely defensive manner as did the

plaintiffs in Colorado and Greenville, and the Fund remains immune

from the College’s attempt to assert those theories offensively, to create

RCV coverage that does not exist under the contract.

3. Section 271.155 Does Not Grant an Immunity Waiver for the
College’s Equitable Theories.

As discussed in the Fund’s Brief, the purpose of Section 271.155 is

to ensure that the Act only waives a defendant governmental entity’s

immunity and not any of its other defenses or damage limitations.

15
Zachry, 449 S.W.3d at 107 (“Section 271.155 preserves defenses other

than immunity.”). The title of Section 271.155 is “No Waiver of Other

Defenses” (emphasis added), indicating that it refers to other defenses of

the party whose immunity is being waived by the Act. That section

therefore only applies in circumstances where a party that has sued a

local government contends that the Act has also waived the defendant

local government’s contractual defenses or damage limitations—its other

defenses—in addition to its immunity. For example, it would be

nonsensical to interpret Section 271.155 as preserving a plaintiff’s right

to enforce a “limitation on damages.” Worsdale v. City of Killeen, 578

S.W.3d 57, 73 (Tex. 2019) (observing that statutes should be construed to

avoid “glaringly absurd” results).

That is the only reasonable interpretation of Section 271.155 and it

is consistent with Zachry’s holding that Section 271.155 is a “limitation .

. . on the waiver of immunity” in Section 271.152. Zachry, 449 S.W.3d at

108 (emphasis added). The Colorado and Greenville courts’

interpretation of Section 271.155, which the College advocates for here,

results in a significant and unlimited expansion of the immunity waiver

in Section 271.152. Under that reading of the statute, the Act would no

16
longer provide only a limited waiver of immunity to adjudicate contract

disputes based upon the express terms of a written government contract.

Instead, local governments would be exposed to open-ended liability

based upon non-existent contract terms and liability based upon

otherwise immunity-barred equitable and/or intentional tort theories,12/

as long as a plaintiff characterized them as contract “defenses.” Such a

construction does not comport with the plain meaning of the statute or

the legal requirement to narrowly construe waivers of immunity. See

TEX. GOV’T CODE § 311.034; Tooke, 197 S.W.3d at 328–29.

The College’s claim that Section 271.155 waives the Fund’s

immunity based upon equitable theories also is wrong for another reason.

By its terms, Section 271.155 preserves only “a defense or limitation on

damages available to a party to a contract . . .” (emphasis added). As a

matter of law, neither waiver nor estoppel (to the extent it was pled) are

12/ See Prairie View A&M Univ. v. Chatha, 381 S.W.3d 500, 515 (Tex. 2012)(applying
equitable defenses to governmental entities “invades the domain of the
Legislature and cuts against the very nature of sovereign immunity.”); Seureau v.
ExxonMobil Corp., 274 S.W.3d 206, 219 (Tex. App.—Houston [14th Dist.] 2008, no
pet.) (“[T]he Legislature has not waived immunity with respect to the intentional
tort of fraud”); TEX. LOC. GOV’T CODE § 271.157 (“This subchapter does not waive
sovereign immunity to suit for a cause of action for a negligent or intentional
tort.”).

17
“available” to the College to create RCV coverage where it does not exist.

More than 85 years ago, the Texas Supreme Court held in

Washington National Insurance Co. v. Craddock that an insured cannot

use the waiver doctrine to create coverage in an insurance contract. 109

S.W.2d at 166. The rule has since expanded to include the estoppel

doctrine, and has repeatedly been reaffirmed by the Texas Supreme

Court and various intermediate appellate courts. See, e.g., Ulico Cas. Co.,

262 S.W.3d at 780 (“[W]aiver and estoppel cannot create a new and

different contract with respect to risks covered by the policy.”) (emphasis

omitted); McGuire, 744 S.W.2d at 602–03 (“The doctrine of estoppel

cannot be used to create insurance coverage when none exists by the

terms of the policy”); Nat’l Fire Ins. Co. v. State & Cty. Mut. Fire Ins. Co.,

No. 01-11-00176-CV, 2012 Tex. App. LEXIS 7729, at *15 (Tex. App.—

Houston [1st Dist.] Aug. 30, 2012, no pet.) (same); Prime Time Family

Entertainment Center, Inc., 630 S.W.3d at 232 (“[T]he contractual

coverage of an insurance policy cannot be expanded by waiver or estoppel

on the part of the insurer . . . The manner in which [the insurer] adjusted

the claim cannot create coverage by either waiver or estoppel.”); Rotating

Servs. Indus. v. Harris, 245 S.W.3d 476, 487-488 (Tex. App.—Houston

18
[1st Dist.] 2007, pet. denied)(“Settled Texas law precludes a party from

invoking estoppel to create insurance coverage where none exists under

the terms of the policy.”); Farmers Tex. Cnty. Mut. Ins. Co. v. Wilkinson,

601 S.W.2d 520 (Tex. App.—Austin 1980, writ ref’d n.r.e.), abrogated by

Ulico Cas. Co., 262 S.W.3d 773 (“It is well established that, whereas the

doctrines of waiver and estoppel may operate to avoid conditions that

would cause a forfeiture of an insurance policy, they will not operate to

change, re-write or enlarge the risks covered by the policy.”).

Accordingly, even if the College had asserted its equitable theories

in a purely defensive context as did the school district plaintiffs in

Colorado and Greenville, which it did not do, waiver and estoppel are not

“available to [the College]” to create RCV coverage that does not exist

under the express terms of the Coverage Documents – such as coverage

for hypothetical repairs that have not been made. Section 271.155

therefore does not expand Section 271.152’s limited waiver of immunity

to include liability based upon the College’s equitable theories.

4. The College Did Not Meet its Evidentiary Burden.

A plaintiff must affirmatively demonstrate that a claim is viable in

order to establish that immunity does not apply or has been waived. See,

19
e.g., Matzen v. McLane, 659 S.W.3d 381, 389 (Tex. 2021). Conclusory

pleading allegations are insufficient where, as here, the Fund has

contested the jurisdictional allegations and offered evidence to defeat

them. Miranda, 133 S.W.3d at 227.

The College did not adduce any jurisdictional evidence regarding

its waiver or now-dismissed unconscionability theory, and it does not

direct the Court to any jurisdictional evidence in its Brief. The College

instead concedes that it supported its arguments against the Fund’s

jurisdictional challenge “by simply citing to the College’s First Amended

Petition.” See College Brief, at 48. The College’s pleadings are not

evidence, and they do not create a genuine fact issue regarding:

• The effect of the enforceable “no waiver” provision in the
underlying contract, which permits waiver of a contractual
right or obligation “only when expressly waived in writing by
the waiving party,” and forecloses any implied waiver based
upon mere “act or omission.” 13/ See Shields Ltd. P'ship v.
Bradberry, 526 S.W.3d 471, 481 (Tex. 2017) (“[A]s a general
proposition, nonwaiver provisions are binding and
enforceable.”);

• The absence of any written waiver by the Fund of its rights
under the Coverage Documents;

• The fact that the Fund’s conduct was entirely consistent with
the contract’s waiver restrictions and the RCV coverage
terms, including its approval of four written extensions of
13/ CR 176, 195.

20
RCV coverage repair deadline. 14/ Id. at 474 (waiver of a non-
waiver clause requires, at a minimum, conduct that is
inconsistent with its terms);

• The lack of any “shocking” circumstances surrounding the
negotiation of the underlying contract between the Fund and
the various governmental entity members who created the
Fund. LeBlanc v. Lange, 365 S.W.3d 70, 88 (Tex. App.—
Houston [1st Dist.] 2011, no pet.) (“[T]he circumstances
surrounding the negotiations must be shocking” to warrant a
finding of procedural unconscionability.); 15/ and

• The absence of any contract terms that are “so one-sided that
it is unconscionable under the circumstances existing when
the parties made the contract.” In re FirstMerit Bank, N.A.,
52 S.W.3d 749, 757 (Tex. 2001).

Accordingly, even if the College was permitted to assert its

equitable theories against the Fund, which it cannot do, the College did

not satisfy its evidentiary burden to create a genuine fact issue about

whether it has viable equitable theories that could effect a waiver of the

Fund’s immunity. Matzen, 659 S.W.3d at 389; Miranda, 133 S.W.3d at

227.

E. THE ACT DOES NOT WAIVE THE FUND’S IMMUNITY FROM THE
COLLEGE’S CONSEQUENTIAL DAMAGES CLAIM.

The only consequential damages for which a waiver of immunity

14/ CR 189, 941.
15/ The College has dismissed with prejudice any argument that the circumstances
surrounding the parties contract were unconscionable, or involved fraud, bad
faith, misrepresentations, or other intentionally tortious conduct. See App. F.

21
exists under the Act is for “any amount owed as compensation for the

increased cost to perform the work as a direct result of owner-caused

delays or acceleration.” TEX. LOC. GOV’T CODE §§ 271.153(a)(1), (b)(1)

(emphasis added).

According to the College, because the term “owner-caused delays”

is not defined in the Act, that term does not necessarily mean the owner

of property, and the Fund therefore could be held liable for delay damages

as “the owner of TASB’s risk management programs, including property

coverage.” See College Brief, at 39. But the plain and ordinary meaning

of the statutory text does not support the College’s position, as the term

“owner-caused delays” plainly refers to “delay damages” in the

construction context.

“‘Delay damages’ is a term of art in the construction industry . . . .”

Green Intern., Inc. v. Solis, 951 S.W.2d 384, 393 (Tex. 1997) (Gonzalez,

J., dissenting). It refers to construction damages “‘arising out of delayed

completion, suspension, acceleration or disrupted performance’; these

damages compensate the contracting party that is injured when a project

takes longer than the construction contract specified.” Cty. of Galveston

v. Triple B Servs., LLP, 498 S.W.3d 176, 181 (Tex. App.—Houston [1st

22
Dist.] 2016, pet. denied) (citing Phillip J. Bruner & Patrick J. O'Connor,

5 Construction Law § 15:29 (2002)). When the Legislature authorized a

recovery of damages for the “increased cost to perform the work as a

direct result of owner-caused delays or acceleration,” it did so in the

context of a contractor plaintiff who had been hired to perform work on

property owned by a local governmental entity.

That construction of the statute is consistent with the Act’s

legislative history, which emphasizes the Act’s importance to

construction contractors. See also House Research Org., Bill Analysis,

Tex. H.B. 2039, 79th Leg., R.S. (2005) (explaining that proponents of

Section 271.152 had argued that it would “bring fairness to business

relationships between contractors and local government entities,” avoid

“a fundamentally unfair situation that denie[d] redress . . . to a contractor

who completed a project for a city that refused to pay,” and address the

concerns of contractors who “do not bid for local government contracts.”);

Senate Research Ctr., Bill Analysis, Tex. H.B. 2039, 79th Leg., R.S.

(2005).

By its plain terms, Section 271.153(a)(1), does not apply here

because the College – not the Fund – is the “owner” of the relevant

23
properties and it did not allege or adduce any jurisdictional evidence that

it had incurred increased costs to perform work as a direct result of its

own “owner-caused delays or acceleration.”

The College’s characterization of City of Corpus Christi v. Graham

Construction Services, Inc. as having “rejected a similar argument” is

wrong. See College Brief, at 39. In Graham Construction Services, Inc.,

the City of Corpus Christi (the “City”) was sued for delay damages

under Section 271.153(a)(1) by a construction contractor who had been

hired to build a waste treatment plant for the City. See No. 13-19-00367-

CV, 2020 Tex. App. LEXIS 4734, at *2-4 (Tex. App.—Corpus Christi June

25, 2020, pet. denied). The City argued that its immunity was not waived

under Section 271.153(a)(1) because the alleged construction delays were

caused by the City’s independent contractor, Carollo, and not the City-

owner itself. Id. at *7. The Graham Construction court found a

jurisdictional fact issue existed that allowed the claim to go forward

because the construction contract identified Carollo as the “Owner’s

Representative.” Id. Thus, whether caused directly by the City-owner, or

by its City’s designated owner-representative, the alleged delays were

caused by the owner of the property being constructed.

24
Graham Construction does not stand for the proposition that a

waiver of immunity exists for delay damages under Section 271.153(a)(1)

in the non-construction context, simply because the plaintiff asserts that

the government defendant “owns” something.

III.
PRAYER

The Fund respectfully requests that this Court reverse the trial

court’s orders denying the Jurisdictional Plea and granting the College’s

MSJ on jurisdictional grounds, and grant the Fund such other and

further relief, whether legal or equitable, to which it may show itself to

be justly and equitably entitled.

Respectfully submitted,

By: /s/ Jack W. Higdon
Jack W. Higdon
jack.higdon@blankrome.com
State Bar No. 24007360
Barry Abrams
barry.abrams@blankrome.com
State Bar No. 00822700
Joshua A. Huber
josh.huber@blankrome.com
State Bar No. 24065457
BLANK ROME LLP
717 Texas Avenue, Suite 1400
Houston, Texas 77002-2727
(713) 228-6601

25
(713) 228-6605 (Fax)
ATTORNEYS FOR APPELLANT, TEXAS
ASSOCIATION OF SCHOOL BOARDS
RISK MANAGEMENT FUND

CERTIFICATE OF COMPLIANCE

Pursuant to TEX. R. APP. P. 9.4(i)(3), I certify that this reply brief
complies with the type-volume restrictions of TEX. R. APP. P. 9.4(e),
(i)(2)(C). Exclusive of the portions exempted by Rule 9.4(i)(1), this reply
brief contains 4,575 words. I further certify that based on a word count
run in Microsoft Word, the aggregate of all briefs filed by Appellant does
not exceed 27,000 words and is 12,510 words (excluding items exempted
under TEX. R. APP. P. 9.4(i)(1)).

/s/ Jack W. Higdon
Jack W. Higdon

26
CERTIFICATE OF SERVICE

I certify pursuant to TEX. R. APP. P. 9.5(b)(1) that a true and correct
copy of the foregoing and/or attached instrument was electronically
served on counsel for all parties on August 18, 2025, through the Fourth
District Court of Appeals’ electronic filing manager, as indicated below:

Via Electronic Service:
Preston J. Dugas III
pdugas@dcclawfirm.com
Vincent P. Circelli
vcircelli@dcclawfirm.com
Andrew D. Spadoni
aspadoni@dcclawfirm.com
Sarah Arroyo
sarroyo@dcclawfirm.com
DUGAS & CIRCELLI, PLLC
4800 Bryant Irvin Ct.,
Fort Worth, Texas 76107

Jack W. Higdon
Jack W. Higdon

27
Automated Certificate of eService
This automated certificate of service was created by the efiling system.
The filer served this document via email generated by the efiling system
on the date and to the persons listed below. The rules governing
certificates of service have not changed. Filers must still provide a
certificate of service that complies with all applicable rules.

Penny Johnson on behalf of Jack Higdon
Bar No. 24007360
pljohnson@blankrome.com
Envelope ID: 104505283
Filing Code Description: Brief Requesting Oral Argument
Filing Description: Reply Brief of Appellant
Status as of 8/18/2025 2:17 PM CST

Case Contacts

Name BarNumber Email TimestampSubmitted Status

Gregory Moore 24055999 greg.moore@blankrome.com 8/18/2025 2:04:46 PM SENT

Jack Higdon 24007360 JHigdon@BlankRome.com 8/18/2025 2:04:46 PM SENT

Preston Dugas III pdugas@dcclawfirm.com 8/18/2025 2:04:46 PM SENT

Christopher Caudill 24104717 christopher.caudill@blankrome.com 8/18/2025 2:04:46 PM SENT

Jennifer Saenz jsaenz@dcclawfirm.com 8/18/2025 2:04:46 PM SENT

Amy Easley aeasley@dcclawfirm.com 8/18/2025 2:04:46 PM SENT

Andrew Spadoni aspadoni@dcclawfirm.com 8/18/2025 2:04:46 PM SENT

Vincent PCircelli vcircelli@dcclawfirm.com 8/18/2025 2:04:46 PM SENT

Sarah Arroyo sarroyo@dcclawfirm.com 8/18/2025 2:04:46 PM SENT

Associated Case Party: Texas Association of School Boards Risk Management Fund

Name BarNumber Email TimestampSubmitted Status

Joshua Huber 24065457 jhuber@blankrome.com 8/18/2025 2:04:46 PM SENT

Barry Abrams 822700 barry.abrams@blankrome.com 8/18/2025 2:04:46 PM SENT

Jack Higdon jack.higdon@blankrome.com 8/18/2025 2:04:46 PM SENT

Yvette Manzano yvette.manzano@blankrome.com 8/18/2025 2:04:46 PM SENT

Joshua Huber josh.huber@blankrome.com 8/18/2025 2:04:46 PM SENT

Penny Johnson penny.johnson@blankrome.com 8/18/2025 2:04:46 PM SENT

Liniuse Umunna Liniuse.Umunna@blankrome.com 8/18/2025 2:04:46 PM SENT

Christopher W.Caudill Christopher.Caudill@BlankRome.com 8/18/2025 2:04:46 PM SENT

Gregory J.Moore Greg.Moore@BlankRome.com 8/18/2025 2:04:46 PM SENT

Noorhan Chahal noorhan.chahal@blankrome.com 8/18/2025 2:04:46 PM SENT