The Texas Supreme Court has reversed a Dallas Court of Appeals decision throwing out a trial court order dismissing a Rule 91a motion to dismiss a subcontractor’s fraud claim against a contractor hired by DART to provide certain transit services.
MV Transportation, Inc. v. GDS Transport, LLC (No. 24-0924; May 8, 2026) arose from a contract dispute involving the Dallas Area Rapid Transit System (DART), a contractor hired to provide paratransit and microtransit services to eligible people (MV), and a subcontractor retained to provide vehicles and drivers for paratransit and microtransit services (LDS). A few months after LDS started providing service, it abruptly terminated the subcontract. GDS sued DART and MV for breach of contract and several contort claims. MV sought a declaratory judgment that GDS breached the contract. Defendants moved to dismiss LDS’s claim under Rule 91a. MV further raised an affirmative defense that limits the liability of a private operator who contracts with a transit authority to damages only to the extent the authority would be liable if sued. § 452.056(d), Transporation Code. The trial court granted the motion in part and denied it in part. The court of appeals reversed and remanded. Defendants appealed.
In an opinion by Justice Young, SCOTX reversed and reinstated the trial court’s judgment of dismissal as to LDS’s fraud claim. Weirdly, the case record did not include the master agreement between DART and MV that controls the outcome of the case. The Court thus had to decide whether the omission impeded their review. Since the original petition invoked the agreement, the agreement could be regarded as part the petition, allowing the court to demand its production. In any event, the parties didn’t dispute the terms of agreement.
Defendant MV Transporation argued that it was entitled to a derivative form of sovereign immunity based on the statutory limitation of liability provision. LDS countered that the statutory limitation didn’t apply “because fraud is not a ‘function’ of DART.” The Court rejected that argument, holding that the alleged fraud clearly arose within MV’s exercise of DART’s function, that is, to manage paratransit and microtransit services. Moreover, the master agreement transferred “total control” to MV “to hire subcontractors just as DART would have.” GDS’s fraud claim was thus barred by § 452.056(d) because the TTCA does not waive liability for intentional torts, i.e. fraud. The Court reinstated the trial court’s judgment dismissing that claim under Rule 91a.
