File: 030004DF - From documents
transmitted: 09/29/2003
DISSENTING
OPINION; Issued September 26, 2003
In The
Court of Appeals
Fifth District of Texas at
Dallas
............................
No. 05-03-00004-CV
............................
SATTERFIELD & PONTIKES CONSTRUCTION, INC.,
Appellant
V.
IRVING INDEPENDENT SCHOOL DISTRICT, Appellee
.............................................................
On Appeal from the 14th Judicial District
Court
Dallas County,
Texas
Trial Court Cause No.
02-09368-A
.............................................................
DISSENTING OPINION
Before James, Francis, and Lang
Dissenting Opinion By Justice Lang
The issue in this appeal
is whether the Legislature, by including “sue and be sued” language in a statute outlining the powers and duties of the board
of trustees of an independent school district, waived the school district's
governmental immunity to a suit for breach of contract. The majority today
affirms the trial court's ruling that Irving Independent School District (“the
District”) is immune from suit on claims that it breached a construction
contract with Satterfield & Pontikes Construction, a private litigant. I
respectfully disagree with the majority's opinion, which sets forth its view of
the law relating to governmental immunity from suit on contract claims. Based
upon my reading of the decisions of the Texas Supreme Court, I would reverse the
trial court's ruling. I respectfully dissent.
Because I am not in
accord with the majority in its decision or on the reading of the case law which supports its decision, I believe it is
appropriate, during the discussion of my views, to chronicle the law on
governmental immunity as pertinent to this case. Accordingly, the following is
offered for consideration.
The Roots of Governmental
Immunity in Texas
Sovereign
immunity See
Footnote 1
was generated from the common law, not
legislative enactment. See Hosner v. DeYoung, 1 Tex. 764, 769 (1847);
Bd. of Land Comm'rs v. Walling, Dallam 524, 1843 WL 3919 (Tex. 1843);
see also City of Amarillo v. Martin, 971 S.W.2d 426, 427 (Tex. 1998).
Over time, the doctrine of immunity has been divided into several distinct areas
of law. For example, some case law discusses immunity in a general sense.
See, e.g., Hosner, 1 Tex. at 769; Tex. Worker's Comp. Comm'n v.
Garcia, 862 S.W.2d 61, 72 (Tex. App.-San Antonio 1993), rev'd on
other grounds, 893 S.W.2d 504 (1995) (referring generally to the
concept of immunity founded on the principle that “the king can do no wrong”).
Other statutes and cases deal with immunity as it relates exclusively to tort
claims. See Tex. Civ. Prac. & Rem. Code Ann. § 101.021 (Vernon Supp.
2003) (the “Texas Tort Claims Act”); see also Shade v. City of Dallas,
819 S.W.2d 578, 582 Tex. App.-Dallas 1991, no writ) (government enjoys sovereign
immunity for its negligent acts except to extent the Tort Claims Act waives that
immunity); see generally Michael Shaunessy, Sovereign Immunity and the
Extent of the Waiver of Immunity Created By the Texas Tort Claims Act, 53
Baylor L. Rev. 87 (2001). Still others describe the doctrine as it relates to
injunctive and equitable relief, see Cobb v. Harrington, 190 S.W.2d 709,
712 (Tex. 1945) (suit for declaratory judgment); Bagg v. Univ. of Tex. Med.
Branch, 726 S.W.2d 582, 584-85 (Tex. App.-Houston [14th Dist.] 1987, writ
ref'd n.r.e.) (suit for injunctive relief), or as it relates to premises
liability claims, see Tex. Civ. Prac. & Rem. Code Ann. § 101.022;
see also Tex. Dep't of Transp. v. Able, 35 S.W.3d 608, 612 (Tex. 2000).
Finally, and most important to our considerations in this case, courts have
defined the nature of immunity respecting claims brought by private citizens
against the State for breach of contract. See Mo. Pac. R.R. Co. v.
Brownsville Navigation Dist., 453 S.W.2d 812, 813 (Tex. 1970); see also
Catalina Dev., Inc. v. County of El Paso, 46 Tex. Sup. Ct. J. 636, 2002 WL
32088025, at *2 (Tex. May 8, 2003); Tex. A & M Univ.-Kingsville v.
Lawson, 87 S.W.3d 518, 521 (Tex. 2002); Travis County v. Pelzel &
Assocs., Inc., 77 S.W.3d 246, 248 (Tex. 2002); Tex. Natural Res.
Conservation Comm'n v. IT-Davy, 74 S.W.3d 849, 854 (Tex. 2002); Gen.
Servs. Comm'n v. Little- Tex Insulation Co., 39 S.W.3d 591, 594 (Tex. 2001);
Fed. Sign v. Tex. S. Univ., 951 S.W.2d 401, 405 (Tex. 1997). Of course,
litigation in the area of governmental immunity described above has defined the
breadth and depth of the immunity as well as the waiver of such
immunity.
Governmental immunity as
to contracts encompasses two distinct concepts. First, the State retains immunity from suit, unless there exists
legislative consent, even when the State's liability is not disputed. Fed.
Sign, 951 S.W.2d at 405 (citing Mo. Pac. R.R., 453 S.W.2d at 813).
The State must expressly give its consent to be sued “by clear and unambiguous
language,” and such consent may be by statute or by legislative resolution.
Id. at 405 (citing Univ. of Tex. Med. Branch v. York, 871 S.W.2d
175, 177 (Tex. 1994); Duhart v. State, 610 S.W.2d 740, 742 (Tex.
1980)).
The second distinct
concept is that the State retains immunity from liability even though the Legislature may have granted consent to the
suit. Id. (citing Mo. Pac. R.R., 453 S.W.2d at 813). As such, the
State neither creates nor admits liability by granting permission to be sued.
Id. “However, when the State contracts, the State is liable on contracts
made for its benefit as if it were a private person.” Id. Thus, the
supreme court has recognized that when the State contracts with private
citizens, it waives immunity from liability. Yet, the issue of whether
the Legislature has waived the State's immunity from suit on the contract
is often litigated. Id. at 405-06; see also Catalina Dev.,
2002 WL 32088025 at *2; Lawson, 87 S.W.3d at 520-21; Pelzel, 77
S.W.3d at 248; IT-Davy, 74 S.W.3d at 854; Little-Tex, 39 S.W.3d at
594. Of course, it is this precise issue of whether The District is immune from
suit that is the subject of the appeal before this Court.
The Missouri
Pacific Case and the Federal Sign Progeny
The majority rejects
Satterfield's argument that the supreme court's decision in Missouri Pacific Railroad Co. v. Brownsville Navigation
District, 453 S.W.2d 812 (Tex. 1970), is controlling authority and that The
District is not immune from suit. I respectfully suggest that the effect of the
majority's decision is to treat the decision in Missouri Pacific as if it
had been overruled by stating that “the supreme court has since departed from
the logic of Missouri Pacific in the three decades following that
decision.” Contrary to the majority's view, I believe that the Texas Supreme
Court has carefully protected and described the continued applicability of
Missouri Pacific.
A.
Missouri Pacific
In 1970, the supreme
court issued its succinct opinion in Missouri Pacific. The case arose when a brakeman for Missouri Pacific Railroad died
after being knocked from a train ladder by a crane that had been left too close
to the track. The brakeman's beneficiaries sued Missouri Pacific, which filed a
cross-action for indemnity against the Brownsville Navigation District. Missouri
Pacific claimed the navigation district had entered into a contract with
Missouri Pacific where the district agreed not to allow construction or
placement of any obstruction which would violate any law or regulation
respecting clearance or safety margins in the vicinity of railroad tracks. The
trial court sustained the district's plea to the jurisdiction on the grounds
that the district was a subdivision of the State and that consent to its being
sued had not been given. The court of civil appeals affirmed. Mo. Pac.
R.R., 453 S.W.2d at 813.
The supreme court noted
that the navigation district was governed by a provision of a 1925 act that provided as follows: “All navigation
districts established under this Act may, by and through the navigation and
canal commissioners, sue and be sued in all courts of this State in the
name of such navigation district, and all courts of this State shall take
judicial notice of the establishment of all districts.” Id. (emphasis
added). At issue was whether the phrase “sue and be sued” was a waiver of the
district's immunity from suit. The court concluded quite unequivocally: “In our
opinion [the navigation district statute] is quite plain and gives
general consent for District to be sued in the courts of Texas in the same
manner as other defendants.” Id. (emphasis added). In so holding, the
court rejected the district's argument that other statutes more clearly
expressed the Legislature's consent to suit. Id. More recently, the
supreme court recalled that in Missouri Pacific, it had “held that a
statute that provided that the Navigational District could 'sue and be sued' met
the legislative permission requirement.” See Fed. Sign, 951 S.W.2d at
408.
B.
The Federal Sign
Progeny
Since the delivery of its
Missouri Pacific decision over thirty-three years ago, the supreme court has cited the case only eight times. These
cases frame the doctrine of governmental immunity respecting suits against the
State for breach-of-contract claims by private citizens. See Footnote 2
However, the cases decided after Missouri Pacific did not address
statutes containing “sue and be sued” language. Accordingly, Missouri
Pacific is subsisting, authoritative case law which stands for the
proposition that “sue and be sued” language satisfies the legislative permission
requirement for waiver of immunity from suit. The cases that cite Missouri
Pacific bear this out.
1.
Federal Sign
The first case citing
Missouri Pacific which dealt with immunity respecting a breach of contract claim was Federal Sign v. Texas
Southern University, 951 S.W.2d 401 (Tex. 1997). The supreme court first
discussed the separate concepts of immunity from suit and immunity from
liability. In its discussion of immunity from suit, the court reaffirmed that
the State may consent to suit by either statute or legislative resolution, but
in any event the legislative consent must be by “clear and unambiguous
language.” Id. at 405. Later in the opinion, the court briefly discussed
Missouri Pacific and summarized that case's holding as establishing that
“sue and be sued” language “met the legislative permission requirement.”
Id. at 408 (citing Mo. Pac. R.R., 453 S.W.2d at 813). This led to
three points in the court's conclusion: (1) when the State contracts with
private citizens, it only waives immunity from liability; (2) legislative
consent is still required in order for a private citizen to sue the State on a
breach of contract claim; and (3) the act of contracting alone does not waive
the State's immunity from suit. See id. Applying that law to the facts of
the case, the court determined that Federal Sign, the private litigant in the
case, did not receive permission to sue Texas Southern University, a state
institution. Id. Therefore, the court affirmed the court of appeals's
holding that sovereign immunity precluded suit.
Two statements in
Federal Sign seemed to limit the court's holding. See L.
Katherine Cunningham & Tara D. Pearce,
Contracting With the State: The Daring Five-The Achilles' Heel of Sovereign
Immunity?, 31 St. Mary's L.J. 255, 269 (1999). First, footnote one in the
majority opinion expressly limited the holding to the facts before it, stating,
“We do not attempt to decide this issue in any other circumstances other than
the one before us today. There may be other circumstances where the State may
waive its immunity by conduct other than simply executing a contract so
that it is not always immune from suit when it contracts.” Fed. Sign, 951
S.W.2d at 408 n.1 (emphasis added). Second, Justice Hecht's concurrence, in
which three other justices joined, attempted to make clear that the court's
holding was a narrow one: the State does not waive immunity from suit for breach
of contract, simply by entering into the contract, before the other party
tenders full performance. See id. at 412-13 (Hecht, J.,
concurring) (“We do not attempt to decide such hypotheticals today, but they do
suggest that the State may waive immunity by conduct other than simply
executing a contract, so that it is not always immune from contract suits.”
(emphasis added)).
Justice Enoch, along with
Justices Spector and Abbott, dissented from the holding in Federal Sign. The dissent suggested the best approach
to sovereign immunity was that the State waives both immunity from liability
and immunity from suit when it enters into a contract with a private
party. Id. at 417 (Enoch, J., dissenting). As to the holding in
Missouri Pacific, the dissent noted that case established that a statute
enabling a state agency to “'sue or be sued' expressly waived the State's
immunity from suit.” Id. (citing Mo. Pac. R.R., 453 S.W.2d at
813). The Missouri Pacific holding, however, did not answer the issue
presented in Federal Sign of whether the State waived its immunity from
suit for breach of contract simply by entering into the contract.
Id.
2.
Little-Tex
Almost four years later,
the supreme court issued its opinion in General Services Commission v. Little-Tex Insulation Co., Inc., 39 S.W.3d
591 (Tex. 2001). At issue was the question the court left open in Federal
Sign: whether the State may waive immunity by conduct other than simply
executing a contract. Id. at 593. The opinion actually involved two
separate cases. The first was a general contractor suing Texas A & M
University for additionally incurred expenses under a construction contract.
Id. at 594. The second involved a dispute over the performance under a
contract by an asbestos-removing company and the General Services Commission
when the project was thirty percent complete. Id. Both private litigants
conceded that the act of contracting alone did not waive the State's immunity
from suit, but both argued that the State had waived immunity by accepting
benefits under the contract. Id. at 595. Thus, both plaintiffs cited
Federal Sign's footnote one and Justice Hecht's concurrence to support
their arguments that the court had held only that the State did not waive
immunity from suit by simply entering into the contract but that in their cases
the State had done something more to waive immunity, i.e., they had
accepted benefits under the contract. Id. The court cited
Missouri Pacific only once in its discussion about the concept that
governmental immunity encompassed the separate principles of immunity from
liability and immunity from suit. Id. (citing Mo. Pac. R.R., 453
S.W.2d at 813).
The Little-Tex
court recognized that the language in Federal Sign might have
opened the door for the plaintiffs' arguments.
Id. However, the court once again held that the State was entitled to
immunity from suit. Id. at 598. This holding was premised on the passage
in 1999 of article 2260 of the Texas Government Code, which retained sovereign
immunity from suit over certain breach-of- contract claims but which provided
for an administrative procedure to resolve those claims. See Tex. Gov't
Code Ann. §§ 2260.001-.108 (Vernon 2000). Both plaintiffs argued that chapter
2260 did not apply because the State's conduct waived immunity. Thus, obtaining
legislative consent was not necessary. Little-Tex, 39 S.W.3d at 596. The
court rejected this argument, stating, “[W]e are not inclined in this case to
impute knowledge to the Legislature of decisions establishing a
waiver-by-conduct exception to immunity when the Legislature made its intent
clear through the words it choose [sic] in Chapter 2260.” Id. at 597. The
court further stated that “there is but one route to the courthouse for
breach-of-contract claims against the State, and that route is through the
Legislature.” Id.
The ultimate holding was
that the State does not waive its immunity for breach of contract by accepting the benefits of the contract. Id.
Therefore, the Little-Tex decision added to Federal Sign, and
it was clear afterwards that the State does not waive its immunity from suit in
a breach of contract case by (1) simply entering into the contract, or (2) by
accepting some benefits under the contract. However, the court carefully
noted in Little-Tex: “Absent special statutory consent to sue, a
party may not pursue a breach-of-contract claim without participating in Chapter
2260's administrative process.” Id. at 598 (emphasis added). Justice
Enoch dissented, once again arguing that the State waives its immunity from both
liability and suit when it authorizes its agencies to enter into contracts.
See id. at 604 (Enoch, J., dissenting).
3.
IT-Davy
The next governmental
immunity case involving breach of contract was Texas Natural Resource Conservation Commission v. IT-Davy,
74 S.W.3d 849 (Tex. 2002). In that case, a general contractor sued a state
agency for expenses incurred in cleaning a hazardous waste site in Houston.
There was no dispute that the contractor had fully performed under the contract.
Rather, the dispute was over “equitable adjustments” provided for in the
contract after the contractor claimed he had incurred additional expenses and
lost profits stemming from materially different site conditions. Id. at
851. One of the contractor's arguments, based on the majority's footnote one and
Justice Hecht's concurrence in Federal Sign, was that the state agency
had waived its immunity from suit by fully accepting benefits under the
contract. Id. at 856. The court once again rejected the argument,
refusing to “fashion . . . a waiver-by-conduct exception in a breach-of-contract
suit against the State.” Id. at 857. The court ultimately rejected each
of the contractor's arguments and held that the state agency was entitled to
governmental immunity. Id. at 860. Missouri Pacific was cited only
two times, both in support of the proposition that it is the Legislature's sole
province to waive or abrogate sovereign immunity. See id. at 853, 857
(citing Mo. Pac. R.R., 453 S.W.2d at 813-14).
Justice Hecht, joined by
Chief Justice Phillips and Justices Owen and Jefferson, concurred in the result, but refused to join the “broad language” in the
majority opinion that seemed to indicate that the State is always immune
from suit absent legislative consent. Id. at 860 (Hecht, J.,
concurring). Justice Hecht's concurrence acknowledged that he had left open the
possibility in Federal Sign that the situation in that case might have
been different if Texas Southern University had acknowledged that Federal Sign
had fully complied with the contract but refused to pay the agreed price. See
id. (citing Fed. Sign, 951 S.W.2d at 412 (Hecht, J., concurring)).
Justice Hecht explained that the Federal Sign “hypothetical supposed
a government agency that chiseled a contractor just because it could get away
with doing so.” Id. Nevertheless, the concurring opinion stated that it
did not answer the question in Federal Sign and did not need to answer it
in IT-Davy because both involved “ordinary contract disputes.”
IT-Davy, 74 S.W.3d at 861 (Hecht, J., concurring). Finally, Justice Enoch
dissented, again arguing that the State waives its immunity from liability and
suit when it enters into a contract. Id. at 863 (Enoch, J.,
dissenting).
4.
Pelzel & Associates,
Inc.
The next
breach-of-contract case involving waiver of immunity was Travis
County v. Pelzel & Associates,
Inc., 77 S.W.3d 246 (Tex. 2002). In that case, Travis County contracted with
Pelzel to construct an office building. Pelzel substantially completed the
building, and the county accepted and occupied the building thereafter. The
county paid the contract price, minus $5500 in delay costs provided for by the
contract's liquidated damages clause. Pelzel, claiming it was owed over
$130,000, presented its claim to the county commissioner's court pursuant to
section 89.004 of the local government code, which provides the procedure for
presenting claims against a county. See Tex. Local Gov't Code Ann. §
89.004 (Vernon Supp. 2003). After the county refused to pay the claim, Pelzel
filed suit in district court, which denied the county's plea to the
jurisdiction. Pelzel, 77 S.W.3d at 247. The court of appeals affirmed on
two grounds, holding that (1) the county waived immunity from suit by its
conduct, and (2) section 89.004 conferred on Pelzel a right to sue the county
after Pelzel presented its claim to the commissioners court and that claim was
rejected. See Travis County v. Pelzel & Assocs., Inc., 30 S.W.3d 662,
669 (Tex. App.-Austin 2000), rev'd, 77 S.W.3d 246 (Tex.
2002).
Section 89.004 provided
that “[a] person may not sue on a claim against a county unless the person has presented the claim to the commissioners
court and the commissioners court has neglected or refused to pay all or part of
the claim.” Tex. Local Gov't Code Ann. § 89.004(a). Because this was Pelzel's
lone basis for statutory waiver of immunity, the sole issue before the supreme
court on statutory waiver was whether the Legislature, through section 89.004,
clearly and unambiguously waived the county's immunity from suit. Pelzel,
77 S.W.3d at 248-49. The court held it did not. Id. at
249.
First, the court stated
that section 89.004 “stood in stark contrast to other statutes that contain language which does clearly and unambiguously waive
sovereign immunity from suit,” such as the Texas Tort
Claims Act, See
Footnote 3
the Private Real Property Rights Preservation
Act, See
Footnote 4
and the Whistleblower Act. See Footnote 5
Id. Instead, the county presentment statute “merely establishes a
condition precedent to suit.” Id. Second, the court stated that its
construction of the statute as a condition precedent was supported by the
statute's purpose, which was to notify the commissioners court of a claim and
afford it an opportunity to investigate and settle the claim. Id. Then
the court stated that its construction also comported with the statute's
history. The court quoted the original statute, which contained “sue and be
sued” language. The original statute read as follows:
All suits brought by or against any of the counties of this
state, shall be brought in the name of or
against the county of [naming the county], and by that name they may sue and
be sued, plead and be impleaded, defend and be defended, in any court of
record or other place where justice may be administered: Provided, however, that
no county shall be sued, unless the claim upon which suit is founded shall have
first been presented to the county court for allowance, and such court shall
have neglected or refused to audit and allow the same.
See id. at
249-50 (quoting Act of May 11, 1846, 1st. Leg., Paschal's Digest, 1044, 1045
(amended 1879) (emphasis added)). The court
noted that the Legislature amended the statute in 1879 by omitting all language
before “no county shall be sued . . . .” See id. at 250. The court then
referred to Missouri Pacific when it stated, “Thus well over a hundred
years ago, the Legislature deleted the only language arguably waiving
sovereign immunity, suggesting that it intended to preserve counties' immunity
from suit.” Id. (emphasis added).
Later in the opinion, the
Pelzel court discussed Missouri Pacific in some detail. The court summarized its 1970 holding in three
sentences, which state:
In Missouri
Pacific, we held that a statute applicable to navigation districts “is quite
plain and gives general consent for District to
be sued in the courts of Texas.” The statute stated that navigation districts
may, “'by and through the navigation and canal commissioners, sue and be sued in
all courts of this State in the name of such navigation district, and all courts
of this State shall take judicial notice of the establishment of all
districts.'” In response to the district's argument that other statutes had more
clearly expressed consent to suit, we noted that “suits against counties have
been held to be authorized by statutes that simply require the filing of a claim
before institution of suit.”
Id. at 251 (citations
omitted). Distinguishing the statute in Missouri Pacific from the county
presentment statute, the court stated, “But
Missouri Pacific involved a different statute than the one in this case
and that statute, unlike the current version of the statute here,
contained 'sue and be sued' language.” Id. (emphasis added). Then, the
court noted it had found no cases to support the Missouri Pacific dicta
that other statutes, such as “those that simply require the filing of a claim
before institution of suit,” expressed a less clear consent to suit than
inclusion of “sue and be sued” language. Id. (referring to Mo. Pac.
R.R., 453 S.W.2d at 813).
Finally, the
Pelzel court rejected the separate issue of whether the county had
waived immunity from suit by its conduct, citing
its opinion in IT-Davy. Id. at 251-52. Justice Enoch dissented on
the grounds that the county waived its immunity by entering into the contract
and stated that he would not have reached the presentment issue. Id. at
253 (Enoch, J., dissenting).
5.
Lawson
The most recent supreme
court opinion to cite Missouri Pacific in the immunity context was Texas A & M University-Kingsville v.
Lawson, 87 S.W.3d 518 (Tex. 2002). The case involved the breach of a
settlement agreement that Lawson and the university had
entered following0Lawson's suit over violation of the Whistleblower
Act. See Footnote 6
The Austin court of appeals had held that the State waived its immunity by
accepting some of the benefits of a contract and then refusing to pay for those
benefits. See Lawson, 28 S.W.3d 211, 214 (Tex. App.-Austin 2000),
aff'd, 87 S.W.3d 518 (Tex. 2002). The supreme court affirmed.
Lawson, 87 S.W.3d at 523.
In a plurality opinion,
Justice Hecht cited Missouri Pacific two times: first, for the proposition that sovereign immunity encompasses the
separate principles of immunity from liability and immunity from suit; and
second, for the statement that, “For breach of contract claims, the Legislature
has waived immunity in some instances but not all.” See id. at 520 n.15,
521 n.21. The plurality's holding was that “when a governmental entity is
exposed to suit because of a waiver of immunity, it cannot nullify that waiver
by settling the claim with an agreement on which it cannot be sued.” Id.
at 521. Justice Enoch filed a concurring opinion, in which he maintained that
the Legislature, by authorizing state agencies to enter into contracts,
expressly waived their sovereign immunity. Id. at 523 (Enoch, J.,
concurring).
The dissent argued that a
suit to enforce a settlement agreement is a separate breach-of- contract action. See id. at 524 (Rodriguez, J.,
dissenting) (citing Mantas v. Fifth Court of Appeals, 925 S.W.2d 656,
658-59 (Tex. 1996)). As such, the dissent would have framed the issue in
Lawson as “whether the State may assert sovereign immunity in an ordinary
breach-of-contract case.” Lawson, 87 S.W.3d at 524 (Rodriguez, J.,
dissenting). The dissent cited Federal Sign, IT-Davy, and
Pelzel in support of its argument that the answer to that question was
“decidedly 'yes.'”
6.
The Law Crafted By the Federal Sign
Progeny
The cases stemming from
Missouri Pacific and Federal Sign have established a set of rules for waiver of immunity in the
breach-of-contract context. First, the State waives its immunity from liability
when it contracts with a private citizen. See Fed. Sign, 951 S.W.2d at
405. Second, the State does not waive its immunity from suit simply by entering
into a contract. See id. at 408. Third, the State does not waive its
immunity from suit when it accepts some of the benefits of a contract.
See Little-Tex, 39 S.W.3d at 597. Fourth, it appears the State will not
waive immunity from suit even when the private citizen has fully performed under
the contract and the State has accepted the resulting benefits. However, it
seems reasonable to assume that the State will not be allowed to “chisel” a
contractor after full performance just because the State could “get away with
it.” See IT-Davy, 74 S.W.3d at 861 (Hecht, J., concurring). Finally, if
the State enters into a settlement agreement stemming from a lawsuit where
immunity from suit has been waived, the waiver will extend to the separate
settlement agreement contract. See Lawson, 87 S.W.3d at
520.
Of course, in considering
the cases in the Federal Sign progeny, it is important to recognize that all but Pelzel involved claims that
the State has waived its immunity from suit by implication, i.e. the
State's conduct resulted in a waiver of immunity. Pelzel held the
county presentment statute merely described “a condition precedent to suit.” It
did not waive immunity from suit. Pelzel, 77 S.W.3d at 249. The court
reasoned that the “only language arguably waiving sovereign immunity,” i.e.,
“sue and be sued” language, was deleted from the statute by the Legislature over
100 years ago. Id. at 250. Yet, as previously stated, the court steered
carefully to avoid a declaration that “sue and be sued” language was
insufficient to meet the requirement that language be clear and unambiguous to
affect a waiver of immunity from suit in a contract context.
Missouri
Pacific As It Relates to This Case
A.
Missouri Pacific Stands As Controlling
Law
Having analyzed the
supreme court cases that have cited Missouri Pacific, I turn now to the majority's statements that would have the
effect of squeezing any continued viability from the Missouri Pacific
decision. The majority believes that the supreme court has “since departed from
the logic of Missouri Pacific in the three decades following that
decision.” The clear meaning of this statement is that Missouri Pacific
is not effective precedent. I disagree.
Far from “departing from
the logic of the case in the three decades following that decision,” the supreme court has cited Missouri Pacific eight
times and has never once wavered from the soundness of its holding. Instead, the
court continues to cite Missouri Pacific as an undiminished part of the
tapestry of the rule of law on governmental immunity, especially as to waivers
of governmental immunity from suit in contract cases. In short, Missouri
Pacific has not been overruled, and it is the law. A court of appeals is
bound by the decisions of the Texas Supreme Court. See, e.g., Lubbock County
v. Trammel's Lubbock Bail Bonds, 80 S.W.3d 580, 585 (Tex. 2002) (“It is not
the function of a court of appeals to abrogate or modify established precedent.
That function lies solely with [the Supreme] Court.”); Lofton v. Tex. Brine
Corp., 777 S.W.2d 384, 386 (Tex. 1989) (courts of appeals must follow the
supreme court's pronouncements); Swilley v. McCain, 374 S.W.2d 871, 875
(Tex. 1964) (same).
To illustrate its point
that Missouri Pacific is no longer good authority, the majority cites several cases which reaffirm the supreme
court's insistence that waiver of immunity from suit must be expressed by clear
and unambiguous waiver. I agree with the legal proposition as to how a waiver
must be expressed. Yet, that proposition does not form the basis for questioning
the soundness of Missouri Pacific. After all, the supreme court stated in
Missouri Pacific that the “sue and be sued” language was “quite plain
and gives general consent” for the State to be sued. Mo. Pac.
R.R., 453 S.W.2d at 813 (emphasis added). The supreme court's use of the
term “quite plain” in its description of the Legislature's waiver using the “sue
and be sued” language certainly applies to virtually identical language in the
case before us.
Next, the majority quotes
Pelzel as providing support for its conclusion that the rationale behind Missouri Pacific, “which was based in
part on an understanding that a presentment statute waived immunity from
suit,” has been called into question. However, Pelzel and its
reference to Missouri Pacific should only be described as making a
distinction between the statute in Pelzel, i.e., a presentment of
claims statute without “sue and be sued” language, and that in the
Missouri Pacific case, i.e., a statute delineating the powers of
navigation district commissioners with “sue and be sued” language. The
supreme court only described the Missouri Pacific discussion of county
statutes as “dicta.” That discussion in Pelzel does not diminish the
court's unequivocal decision that “sue and be sued” language in the navigation
district statute constituted the necessary waiver. It is worthy of note that in
Pelzel, it was the absence of “sue and be sued” language in the
county presentment statute which actually gave support to the majority's
conclusion that the Legislature had not waived immunity. See
Pelzel, 77 S.W.3d at 251.
B.
“Sue and Be
Sued” Does Not Refer To the State's Capacity To Sue
In addition to my
differences with the majority respecting the interpretation of Missouri Pacific and the Federal
Sign progeny, I respectfully disagree relative to the meaning of the
words “sue and be sued” as used in the relevant statutes. The majority holds
that the meaning of “sue and be sued” language in statutes describes an entity's
capacity to sue, rather than as a waiver of immunity. The majority finds
the meaning of “sue and be sued” language in a law review discussion. See
George C. Kraehe, “There's Something About Cities”: Understanding
Proprietary Functions of Texas Municipalities and Governmental Immunity, 32
Tex. Tech L. Rev. 1, 35-36 (2000). The commentator argues that “sue and be sued”
is nothing more than an acknowledgment by the Legislature that the entity
described in a particular statute has a corporate-type legal existence, i.e.,
that in appropriate circumstances, the entity can be a
party to a suit, just as it could buy and sell real estate. See
id. See Footnote 7
Having adopted the commentator's views, the majority cites the recent decision
of this Court in City of Dallas v. Reata Construction Corp., 83 S.W.3d
392 (Tex. App.-Dallas 2002, pet. filed), as cause to determine that the “sue and
be sued” language in the case before us is insufficient to waive immunity to
suit.
In Reata, the city
granted a license to a general contractor for the installation of a fiber optic cable conduit in downtown Dallas. The
contractor subcontracted the drilling work to Reata Construction. During the
drilling, Reata ruptured a water main, which resulted in substantial flooding of
some downtown property. The property owner sued Reata, and Reata filed a
third-party action against the city arguing that the city had been negligent by
(1) improperly mapping or plotting the location of the water main when it was
constructed in 1948, and (2) improperly identifying or marking the water main in
response to Reata's request in 2000. The issue before this Court was whether the
City's immunity had been waived so that Reata could proceed with its claims
against the city. Id. at 394. Accordingly, the bulk of the opinion
concerns waiver under the Tort Claims Act because Reata's claims against the
city were all based in tort.
The portion of the
Reata opinion relevant to the analysis in this case involved Reata's claims that the city had been negligent in 1948,
before the 1970 passage of the Tort Claims Act. For its argument that the
Legislature had expressly waived the city's immunity from suit, Reata pointed to
(1) section 51.075 of the local government code, which stated that the “[t]he
municipality may plead and be impleaded in any court,” and (2) the city's
charter, which stated the city had the power “to sue and be sued” and “to
implead and be impleaded in all courts.” See id. at 398 (citing Tex.
Local Gov't Code Ann. § 51.075 (Vernon 1999); Dallas City Charter ch. II, §
1(2), (3) (Aug. 1999)). This Court concluded that the provisions at issue spoke
to the city's capacity to sue when immunity had been waived, but the
provisions themselves did not expressly waive immunity. Reata, 83 S.W.3d
at 398.
I respectfully disagree
with the majority's reliance on Reata in this case for several reasons. First, Reata is a tort case with an
entirely separate body of law, which is distinct from that applicable to
contract cases. The majority opinion addresses its view that this difference
lacks importance when it states, “We are aware of no case that has made such a
distinction.” However, I believe the distinction between tort and contract as it
relates to governmental immunity cannot be overstated. As described
earlier, the supreme court and the Legislature have distinguished the
requirements for waiver of immunity in a tort context from that in a contract
context. Tort claim immunity extends to both liability and suit. However,
in the contract context, the common law was altered to allow governmental
entities to waive immunity of liability by the State's own actions, i.e.,
by the State entering into a contract. See Lawson, 87 S.W.3d at
520-21; Pelzel, 77 S.W.3d at 429; Little Tex, 39 S.W.3d at 594;
Fed. Sign, 951 S.W.2d at 408. Moreover, sound policy supports
distinguishing between tort suits against the State and contract suits against
the State. See, e.g., Fed. Sign, 951 S.W.2d at 417 (Enoch, J.,
dissenting) (modern justification for immunity, that suits against the State
would deplete resources of treasury and tax funds necessary to operate the
government, is not applicable in breach-of-contract context because the
Legislature appropriates sufficient funds to meet the State's contractual
obligations in advance); see also Green Int'l, Inc. v. State, 877 S.W.2d
428, 440 (Tex. App.-Austin 1994, writ dism'd) (Kidd, J., dissenting) (“In this
modern age of sophisticated commerce, why should the State be accorded an
unequal position under the law regarding mutual contractual obligations? There
can be no doubt that if the State chose to sue Green on the contract, the State
would face no impediment to suit.”).
Second, and most
importantly, in making its statement that “sue and be sued” language goes only to capacity to sue, Reata does not
distinguish Missouri Pacific's holding that “sue and be sued” language
plainly waives immunity from suit. Reata does not cite Missouri
Pacific. However, Reata did cite Jackson v. City of Galveston,
a 1992 opinion from the Houston Fourteenth Court of Appeals. 837 S.W.2d 868
(Tex. App.-Houston [14th Dist.] 1992, writ denied). Once again, Jackson
was a tort case and is distinguishable from the case before us. Furthermore, in
support of its statement that “sue and be sued” language did not impliedly See Footnote 8
waive immunity from suit, the Jackson court cited Townsend v. Memorial
Hospital Medical Center, 529 S.W.2d 264 (Tex. Civ. App.-Corpus Christi 1975,
writ ref'd n.r.e.) and Childs v. Greenville Hospital, 479 S.W.2d 399
(Tex. Civ. App.-Texarkana 1972, writ ref'd n.r.e.). A reading of Townsend
reveals that it relied exclusively on Childs. Further, it is clear
that Childs not only involved immunity in the tort context, it
relied exclusively on cases decided before Missouri Pacific. See
Townsend, 529 S.W.2d at 267; Childs, 479 S.W.2d at 401. Accordingly,
I would decline to follow Reata's reasoning and distinguish it to the
extent it discussed the effect of “sue and be sued” language prior to the 1970
Tort Claims Act.
C.
The Fifth Circuit's Decision In Webb v. City of
Dallas
A recent case
written by the United States Fifth Circuit Court of Appeals is instructive in reaching my stance on this issue. In Webb
v. City of Dallas, 314 F.3d 787 (5th Cir. 2002), the city of Dallas claimed
that a United States district court was without jurisdiction in a suit for
damages and reverter brought against the city by the Webbs. At issue was whether
the city was immune from suit under the Texas law regarding sovereign immunity.
See id. at 792. The Webbs claimed that the basis for waiver of immunity
from suit was the same government code and city charter provisions cited to us
in the Reata case. Id. at 793 n.21, n.22 (citing Tex. Local Gov't
Code Ann. § 51.075; Dallas City Charter ch. II, § 1(2), (3)). The city argued
that those provisions, which contained “sue and be sued” language, did not
expressly waive immunity from suit. Rather, the city claimed the provisions were
“simply confirmations that the city of Dallas has the corporate capacity to sue
and be sued.” Webb, 314 F.3d at 793-94. Alternatively, the city asked the
federal court to certify the express question of waiver of immunity on what it
deemed an “unsettled” area of Texas law.
The Fifth Circuit refused
to certify the question to the Texas Supreme Court because there was controlling authority from the supreme court that
squarely addressed the issue in the case. See id. at 795-96. The
Webb court researched Texas law and concluded, definitively, that
Missouri Pacific was subsisting authority which holds that “sue and be
sued” language constitutes an express legislative waiver of immunity.
Importantly, the Fifth Circuit declined to follow Reata, Jackson,
Townsend, and Childs, stating that “the Texas Supreme Court has
addressed the question we are called upon to now answer, and the state appellate
court decisions cited by the City do not persuade us to veer from this
precedent.” Id. at 795. Finally, with regard to the city's contention
that “sue and be sued” language speaks only of capacity to sue, the Fifth
Circuit stated that argument was “belied by the fact that the vast majority of
state courts of appeals to address the express legislative waiver question in
the context of similar 'sue and be sued' clauses follow Missouri Pacific
as controlling Texas Supreme Court precedent.” Id. I believe the Fifth
Circuit correctly analyzed the state of Texas's law on governmental immunity,
and its conclusion regarding the thirty-three-year-old decision in Missouri
Pacific is sound.
D.
What the
Legislature Means When It Uses “Sue and Be Sued”
Language
Finally, any lingering
doubt or concern about the effect that the phrase “sue and be sued” has on governmental immunity should have been assuaged when
the Texas Legislature recently clearly identified the meaning it attributes to
the language. On June 1, 2003, the Legislature passed Senate Bill 1017,
“relating to the ability of a county to sue and be sued.” See Tex. S.B.
1017, 78th Leg., R.S. (2003). Section two of the bill adds a new section 262.007
of the local government code, entitled “Suit Against County Arising Under
Certain Contracts.” Id. Governor Perry signed the bill on June 20, 2003,
and the statute took effect on September 1, 2003. While the new provisions of
Senate Bill 1017 will have no bearing on the outcome of this particular case, I
refer to the bill for the language it uses and the effect which the Legislature
must have intended to reside in such language.
The unmistakable clarity
of the Legislature's motivations is set out in the statement of “Background and Purpose” in both the House and Senate
committee reports. See Bill Analysis, Tex. S.B. 1017, 78th Leg., R.S.
(2003). Identical language in each report states, “In May 2002, the Texas
Supreme Court held that Section 89.004, Local Government Code, does not clearly
and unambiguously waive immunity from suit for claims against counties.”
Id. The supreme court's decision that prompted the resulting legislative
action is unquestionably Pelzel. That decision was decided on May 9, 2002
and clearly addressed the absence of “sue and be sued” language in section
89.004 of the local government code as the basis for concluding that the
Legislature had not waived immunity from suit in contract claims described in
the statute. See Pelzel, 77 S.W.3d at 251.
Senate Bill 1017 amends
section 89.004, and then adds section 262.007. Section (a) of the 262.007 provides that a county that is a party to a
contract for certain enumerated goods or services “may sue or be sued,
plead or be impleaded, or defend or be defended on a claim arising
under the contract.” Id. (emphasis added). Subsection (a) also requires
that a suit on the contract be brought in the name of the county and shall be
brought in a state court in that county. Id. Later, subsection (d) of the
new statute states “This section does not waive a defense or a limitation
on damages available to a party to a contract, other than a bar against suit
based on sovereign immunity.” Id. (emphasis added). Clearly,
subsection (d) would have no effect if the Legislature's use of the phrase “sue
or be sued, plead or be impleaded, or defend or be defended” was not a statutory
waiver of immunity from suit for breach of contract. It is clear that the
Legislature is cognizant that waiver of immunity must be by “clear and unambiguous language.”
See Footnote 9
It is likewise clear that “sue and be sued” is clear and unambiguous
language.
Conclusion
The Legislature expressly
waives immunity from suit respecting a contract claim when it uses “sue and be sued” language in a statute. The supreme court
came to the same conclusion in Missouri Pacific Railroad Co. v. Brownsville
Navigation District. The majority's opinion in this case treats
Missouri Pacific as if overruled without authority to do so. There is no
question that the supreme court has had the opportunity to overrule Missouri
Pacific. It has not taken that step. I respectfully suggest that this Court
should not proceed where the supreme court has not directed. I would reverse the
trial court's granting of The District's plea to the jurisdiction. Therefore, I
respectfully dissent.
DOUGLAS S.
LANG
JUSTICE
030004df.p05
Footnote
1
It appears that courts often use
the terms “sovereign immunity” and “governmental
immunity” interchangeably. The Corpus Christi court of appeals recently noted
the distinction in Nueces County v. Hoff, 105 S.W.3d 208, 211 n.3 (Tex.
App.-Corpus Christi 2003, no pet. h.). “Sovereign immunity” refers to the
State's immunity from suit and liability, while “governmental immunity” protects
political subdivisions of the State, including counties, cities, and school
districts. Id. I will generally refer to the alleged immunity in this
case as governmental. However, if case authority is cited that uses the term
“sovereign,” I will use that court's terminology.
Footnote
2
Three of the eight cases citing
Missouri Pacific are not relevant to the
present discussion of waiver of immunity. Missouri Pacific was cited in
Texas Department of Transportation v. Jones, 8 S.W.3d 636 (Tex. 1999), in
a discussion of the difference between immunity from suit and immunity from
liability. Id. at 638. The issue before the court in Jones was
whether immunity from suit was properly challenged in a plea to the
jurisdiction. The court held it was. Id. In Texas Education Agency v.
Leeper, 893 S.W.2d 432 (Tex. 1995), Justice Gonzalez cited Missouri
Pacific in his dissent criticizing the court's allowance of an award for
attorney's fees in a suit for declaratory judgment brought by home school
parents and curriculum providers. Id. at 447 (Gonzalez, J., dissenting).
Finally, Guaranty Petroleum Corp. v. Armstrong, 609 S.W.2d 529 (Tex.
1980), cited Missouri Pacific in support of its conclusion that a water
district is a political subdivision with authority to enter into a lease.
Id. at 530. These cases are omitted from the above discussion of
Missouri Pacific and the Federal Sign progeny.
Footnote
3
See Tex. Civ. Prac. &
Rem. Code Ann. § 101.025(a) (Vernon 1997).
Footnote
4
See Tex. Gov't Code Ann.
§ 2007.004(a) (Vernon 2000).
Footnote
5
See Tex. Gov't Code Ann.
§ 554.0035 (Vernon Supp. 2002).
Footnote
6
See Tex. Gov't Code Ann.
§ 554.0035.
Footnote
7
Although the commentator does
acknowledge the holding of Missouri
Pacific, he describes it as the first and only time the Texas Supreme Court
has determined that “sue and be sued” language clearly and unambiguously waived
immunity from suit. Because the article was published in 2000, the author was
not able to include the reasoning from at least four Texas Supreme Court cases
issued since that time. As stated above, these cases clarify and enhance the
effect of Missouri Pacific as the rule for statutory waiver from suit in
breach-of-contract cases. See Lawson, 87 S.W.3d at 520-21;
Pelzel, 77 S.W.3d at 248; IT-Davy, 74 S.W.3d at 854;
Little-Tex, 39 S.W.3d at 594.
Footnote
8
Jackson's argument was that the
doctrine of sovereign immunity was
unconstitutional. In making that argument, he argued that “sue and be sued”
language impliedly waived immunity from suit. Thus, it appears Jackson
incorrectly conceded that “sue and be sued” was not an express
waiver.
Footnote
9
See Bill Analysis, Tex.
S.B. 2017, 78th Leg., R.S. (2003).
File Date[09/29/2003]
File Name[030004DF]
File
Locator[09/29/2003-030004DF]