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Southern Electrical Services Inc. v. City of Houston

Southern Electrical Services, as assignee of the Morganti Group Inc. sued the City of Houston for breach of contract and violation of the Prompt Payment Act. The trial court granted summary judgment in favor of the City. The alleged damages to SES -- increased labor costs -- were not a foreseeable consequence of the city's alleged breach of the contract because the contract did not allocate the risk of increased costs to the City. Because the breach of contract claim lacks merit, the Prompt Payment Act is inapplicable.The trial court's judgment is affirmed. Houston's 1st Court of Appeals, No. 01-10-00649-CV, 05-05-2011.

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OPINION

In this government contract dispute, Southern Electrical Services,as assignee of the Morganti Group, Inc., (SES) sued the City of Houston for breach of contract and violation of the Prompt Payment Act. The trial court granted summary judgment in favor of the City. SES appeals, contending that the trial court erred in granting the City’s summary judgment motion because: (1) a genuine issue of material fact exists as to whether the City is liable for breach of contract and interest owed under the Prompt Payment Act; (2) section 271.153 of the Texas Local Government Code does not bar SES’s damages; and (3) the City failed to establish any of its affirmative defenses as a matter of law. We hold that any contractual breach on the City’s part did not cause damages to SES, and SES’s interest claim under the Prompt Payment Act fails as a matter of law. We therefore affirm.

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