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Click here for the full text of this decision FACTS:Martin K. Eby Construction won a bid to construct a light-rail transit line for Dallas Area Rapid Transit. The bid solicitation sent out by DART stated that by responding the bid, the bidder agreed to exhaust its administrative remedies under DART’s procurement regulations or the disputes clause of any resulting contract. According to Transportation Code �452.106(a)(2)(C), DART was authorized to adopt and enforce procurement procedures, guidelines and rules covering the resolution of contract disputes. The procurement regulations similarly provided for an administrative dispute resolution process, and the disputes clause applied to “any dispute concerning a question of fact or law arising under or related to [the] contract.” The administrative regulations stated that they were to be applied to controversies between DART and a contractor and that the word “controversy” was to be interpreted broadly, encompassing “the full spectrum of disagreements from pricing of routine contract changes to claims of breach of contract.” Both the regulations and the disputes clause allowed for a specific level of judicial review. Eby’s construction project languished. Eby claimed the delays were the result of problems in the design contained in DART’s bid solicitation. Rather than go through DART’s administrative process, Eby filed suit in district court, alleging both breach of contract and misrepresentation. Eby prayed for rescission of the agreement and compensation in quantum meruit. The district court granted DART’s motion to dismiss. It held first, that the Eby could not bring its breach-of-contract claim without first exhausting administrative remedies, and second, that governmental immunity barred the tort claim of misrepresentation. HOLDING:Affirmed. The court finds that this is an issue of first impression in Texas: “whether a contractor can sue a regional transportation authority for breach of contract without first submitting its claim to the authority’s administrative process.” The court rejects Eby’s argument that because DART lacks immunity from the contract claim, then Eby has the right to sue without first exhausting administrative remedies. Eby adds that under DART’s enabling legislation, the agency “may sue and be sued.” The court agrees that DART waived its immunity from liability by contracting with Eby, but the court points out that DART still retains its immunity from suit on the contract unless it expressly waived that immunity. Furthermore, even if DART lacks governmental immunity, Eby would not be relieved of its obligation to exhaust administrative remedies. The court finds no support for the argument that a plaintiff must exhaust administrative remedies only if the governmental entity retains immunity. “On the contrary, since DART’s administrative process culminates in the opportunity for judicial review, it makes little sense to say that the process is enforceable only if DART is immune from suit in a court of law.” The court adds that while Eby relies on the “may sue and be sued” language in DART’s enabling legislation, it also ignores the fact that the very same legislation explicitly delegates to DART the power to adopt and enforce dispute-resolution procedures. The fact that Eby alleges what it calls a material breach does not change the situation, the court adds. Eby correctly states that when a party materially breaches a contract, the non-breaching party can cease performance and sue. But, the court points out that the cases establishing this general rule all involve appeals from a verdict against the breaching party. None address a motion to dismiss for failure to exhaust administrative remedies. “In sum, the Texas Legislature has delegated to DART the authority to adopt and to enforce administrative procedures for resolving disputes with its contractors, and Eby has agreed to submit its contractual disputes with DART to DART’s administrative process.” The court next turns to the misrepresentation claims. Parsing the language of the claim and comparing it to the claim for breach of contract, the court finds they are essentially the same. They both say that DART’s bid specifications contained material misrepresentation. Eby even seeks the same remedy for both. So, the trial court was incorrect for dismissing the misrepresentation claim as one sounding in tort. Nevertheless, the misrepresentation claim as alleged would fall within the definition of “controversy” covered by the administrative process. OPINION:King, Chief Judge; King, C.J., Benavides and Clement, JJ.

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