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Click here for the full text of this decision FACTS:Paula Construction Inc. entered into a contract with the city of Lytle on Oct. 14, 2002 to remove sludge material from two of the city’s wastewater treatment ponds. A dispute arose over the amount of sludge material to be removed, and Paula Construction filed suit against the city claiming it failed to pay for services rendered under the contract. The city of Lytle filed a plea to the jurisdiction arguing that it had not waived its immunity from suit for any cause of action allegedly arising out of the contract in question. The trial court agreed and dismissed Paula Construction’s suit against the city for lack of jurisdiction. Paula Construction appealed, arguing that the city’s assertion of immunity fails because the Local Government Code expressly waives sovereign immunity for a Type A municipality such as the city of Lytle under the Texas Supreme Court precedent of Missouri Pacific Railroad Co. v. Brownsville Navigation District, 453 S.W.2d 812 (Tex. 1970), or alternatively because Texas Local Government Code �271.152 applies retroactively to provide a limited waiver of immunity. HOLDING:Reversed and remanded. Texas municipalities exercising their governmental functions, the court stated, are protected from suit under the doctrine of sovereign immunity unless the Legislature affirmatively and unambiguously waives that immunity. Enacted in 2005, �271.152 waives immunity from suit for contract claims against most local governmental entities in certain circumstances. Section 271.152, the court found, states that a local governmental entity 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. The court found it undisputed that the contract at issue between Paula Construction and the city of Lytle was executed before Sept. 1, 2005, the effective date of the new statute. But, the court stated, �271.152 could have retroactive application to the case. OPINION:Speedlin, J.; Lopez , C.J., and Stone and Speedlin, J.J.

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