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Click here for the full text of this decision FACTS:Ray Ferguson Interests sued Harris County Sports and Convention Corp., a legislatively created entity, for breach of contract, breach of implied warranty, and negligence in relation to contract work performed as part of the construction of Reliant Stadium. Ferguson added claims against other defendants for fraud and civil conspiracy and against three HCSCC contractors for negligence. HCSCC filed a counterclaim for damages and attorneys’ fees for Ferguson’s alleged breach of contract. More than six months later, HCSCC filed a plea to the jurisdiction, which the trial court granted. The trial court dismissed Ferguson’s claims with prejudice. Ferguson appeals, arguing HCSCC waived its immunity from suit when it asserted a counterclaim for affirmative relief that arose out of and related to Ferguson’s claims. HOLDING:Reversed and remanded. HCSCC argues that its counterclaim was compulsory, not permissive, and thus did not waive immunity. The court rejects the argument, relying on Reata Construction Corp. v. City of Dallas, No. 02-1031, 2004 WL 726906 (Tex. Apr. 2, 2004). In Reata, the Supreme Court ruled that a city waived its governmental immunity from suit when it intervened in a lawsuit to assert claims for affirmative relief. The court finds Reata analogous. As in Reata, HCSCC asserted claims for affirmative relief. HCSCC’s counterclaim against Ferguson sought damages and attorneys’ fees. Although some counterclaims may not seek affirmative relief, HCSCC’s “clearly did.” Also as in Reata, HCSCC did not file its jurisdictional plea until after it had filed its original counterclaim � over six months afterwards. Finally, as in Reata, HCSCC’s counterclaim is “incident to, connected with, arises out of, or is germane to” the “matter in controversy” between HCSCC and Ferguson and to Ferguson’s claims. The court acknowledges that the principal difference between this case and Reata is that the governmental entity in Reata intervened to assert affirmative relief, whereas HCSCC counterclaimed to do so. The court concludes that this distinction does not warrant a different result under the circumstances. The court finds that even if the counterclaim was compulsory, the correct procedure would have been for HCSCC to first file its plea to the jurisdiction, not to file the plea after the counterclaim was filed. The assertion of its counterclaim for affirmative relief before securing a ruling on a plea to the jurisdiction was thus voluntary and constituted a waiver of its immunity from suit for Ferguson’s claims that were “germane to the matter in controversy.” HCSCC also argues that it’s against public policy to allow a waiver of governmental immunity. HCSCC’s policy arguments presume that the counterclaim was compulsory and that HCSCC would thus have to assert the claim in this suit or be forever barred. But, the court holds, HCSCC’s position allows it to assert its own claims while still shielding itself behind an immunity that would otherwise be unavailable in analogous circumstances. “This cannot be the law.” OPINION:Taft, J.; Taft, Jennings and Bland, JJ.

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