Catalina Development, Inc. v. County of El Paso
121 S.W.3d 704 | Texas Supreme Court | 2003
What This Case Means for Subcontractors
El Paso County solicited bids for land, accepted Catalina Development's $2.55 million bid, deposited earnest money, and sent deed documents—but then refused to sign and complete the sale. The Texas Supreme Court ruled that the county's actions during contract formation did not waive its sovereign immunity from lawsuits. This means government entities can back out of deals without facing damages, even after accepting bids and taking earnest money.
Key Takeaways
- •Never assume a government contract is final just because they accepted your bid and took your money. Government entities retain immunity until they formally execute and authorize the deal.
- •Get explicit written authorization from the highest decision-making body (like a commissioners court) before relying on a government contract. Partial performance or bid acceptance alone won't lock them in.
- •Include a clause requiring government approval at the highest level before you commit resources. Protect yourself by making final performance conditional on documented authorization.
Contract formation, by itself, is not sufficient to waive immunity from suit.
Frequently Asked Question
If a government agency accepts my bid and takes my earnest money, can they still back out without paying damages?
Yes, according to this Texas case. Government entities retain sovereign immunity even after accepting bids, depositing earnest money, and sending contract documents. Contract formation alone doesn't waive their immunity. Always require explicit final authorization from the government's highest authority before you commit significant resources.
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