CHEROKEE COUNTY ELECTRIC COOPERATIVE ASSOCIATION v. GAITAN AS NEXT FRIEND OF (2022)

OPINION

Cherokee County Electric Cooperative Association (CCEC) appeals the trial court's denial of its plea to the jurisdiction. In three issues, CCEC urges it is a governmental unit entitled to immunity and the trial court should have granted its plea. We dismiss for want of jurisdiction.

Background

On March 15, 2021, CCEC dispatched a work crew to install a utility pole and security light for a customer. Alexander Sandoval-Calvillo was an apprentice lineman on the work crew and a CCEC employee. While attempting to install the pole, electricity arced to a piece of equipment. This allowed electricity to pass from the lines, through the equipment and vehicle, through the ground, and into Sandoval-Calvillo's body. He sustained critical injuries and died in the hospital eight days later.

Mireya Gaitan, as Next Friend of L.D.G.-S., a Minor, and Representative of the Estate of Alexander Sandoval-Calvillo, Deceased, and Veronica Sandoval-Calvillo filed suit against CCEC, Terex Corporation, and Terex Utilities, Inc. (collectively Terex). L.D.G.-S., Sandoval-Calvillo's minor daughter, alleged a gross negligence claim against CCEC. All plaintiffs alleged products liability, negligence, and gross negligence claims against Terex regarding the digger derrick used when Sandoval-Calvillo was electrocuted.¹ CCEC filed a plea to the jurisdiction, urging that the electrical cooperative is entitled to governmental immunity. Following a hearing, the trial court denied CCEC's plea. This interlocutory appeal followed.²

Plea to the Jurisdiction

In three issues, CCEC contends the trial court should have granted its plea to the jurisdiction because (1) it is a governmental unit as defined by the statute; (2) it is entitled to governmental immunity; and (3) the claim against it should be dismissed with prejudice.

Standard of Review

A plea to the jurisdiction challenges the trial court's subject matter jurisdiction. Bland Indep. Sch. Dist. v. Blue, 34 S.W.3d 547, 554 (Tex. 2000). We review the record de novo to determine whether the trial court has subject matter jurisdiction. Mayhew v. Town of Sunnyvale, 964 S.W.2d 922, 928 (Tex. 1998). “We consider only the evidence pertinent to the jurisdictional inquiry and do not weigh the merits.” Cty. of Cameron v. Brown, 80 S.W.3d 549, 555 (Tex. 2002). Also, we construe the pleadings in favor of the plaintiff, accepting all its allegations as true. Bland Indep. Sch. Dist., 34 S.W.3d at 555. To prevail, the defense must show that, even accepting all of the plaintiff's allegations as true, an incurable jurisdictional defect remains on the face of the pleadings that deprives the trial court of subject matter jurisdiction. Brenham Hous. Auth. v. Davies, 158 S.W.3d 53, 56 (Tex. App.—Houston [14th Dist.] 2005, no pet.).

This Court's Jurisdiction

Unless CCEC is a “governmental unit,” as that term is defined by the Texas Tort Claims Act (“TTCA”), we do not have jurisdiction to hear this interlocutory appeal. See Tex. Civ. Prac. & Rem. Code Ann. §§ 51.014(a)(8), 101.001(3) (West 2019); LTTS Charter Sch., Inc. v. C2 Constr., Inc., 342 S.W.3d 73, 78 (Tex. 2011) (holding that a defendant's status as a “governmental unit” determines whether a party is “entitled to take an interlocutory appeal” of an order granting or denying a plea to the jurisdiction).

The TTCA states a four-part definition of “governmental unit,” including this broad provision: “any other institution, agency, or organ of government the status and authority of which are derived from the Constitution of Texas or from laws passed by the legislature under the constitution.” Tex. Civ. Prac. & Rem. Code Ann. § 101.001(3)(D). Thus, a private, non-governmental entity can qualify as a governmental unit under this definition, but only if (1) it is an institution, agency, or organ of government; and (2) it derives its status and authority as such from the Texas Constitution or statutes. Id.; CPS Energy v. Elec. Reliability Council of Tex., 671 S.W.3d 605, 614 (Tex. 2023).

In LTTS Charter School, Inc. v. C2 Construction, Inc., the Texas Supreme Court held that an open-enrollment charter school qualified as a governmental unit because it was “indisputably part of the Texas public-education system” and derived that status and authority from state statutes. 342 S.W.3d 73, 76 (Tex. 2011). The holding centered on various statutory pronouncements. The Court concluded that open-enrollment charter schools derive their status from the Education Code, which provides that they are “part of” the state's public-school system. Id. at 77. Their authority is also derived from the Education Code, which assigns them responsibilities for implementing the public-education system, provides them with substantial public funding and resources, grants them the same powers and privileges of traditional public schools, and subjects them to the same rules that govern public schools. Id. at 77-78. Finally, the Education Code designates open-enrollment charter schools as “governmental entit[ies],” “political subdivision[s],” and “local government[s]” for various purposes. Id. at 78.

In University of the Incarnate Word v. Redus (Redus I), the Texas Supreme Court concluded that a private university that operates a state-authorized police department qualifies as a governmental unit when defending suits relating to the department's actions. 518 S.W.3d 905 906 (Tex. 2017). The Court acknowledged that, unlike the charter schools at issue in LTTS, private universities do not receive public funding and are not statutorily labeled as governmental entities for any particular purpose. Id. at 910. Nevertheless, the Court observed that state statutes grant private universities the “status and authority” to operate a police department using commissioned peace officers and subject them to state law-enforcement rules and requirements, just like a municipal police department. Id. at 909-11. And although no statute expressly designates a private university or its police department as “part of” the state's law-enforcement system, the Court concluded that the university was an “organ of government” for purposes of its police department because it “operates as part of a larger governmental system” and performs the “uniquely governmental” function of law enforcement. Id.

More recently, the Texas Supreme Court held that the Electric Reliability Council of Texas (ERCOT) qualifies as a governmental unit. CPS Energy, 671 S.W.3d at 617. The Court acknowledged that ERCOT operates as part of the state's broader electricity-regulation system under the Public Utility Regulatory Act (PURA) and performs a uniquely governmental function of utilities regulation. Id. at 616. In explaining ERCOT's role under PURA, the Court recognized that ERCOT performs its functions under direct oversight from the Public Utility Commission (PUC). Id. The PUC also has complete authority over ERCOT's finances, budget, and operations, as well as authority over its bylaws and protocols. Id. In addition, the Court recognized that the regulation of utilities is “uniquely governmental.” Id. at 617. As a result, the Court concluded that because ERCOT performs a uniquely governmental function as part of a larger governmental system, it is an organ of government. Id. Additionally, ERCOT derives its status and authority from statute. Id.

Relying on LTTS and CPS Energy, CCEC insists that it meets the definition of a “governmental unit.” We first recognize that CCEC was created under the Electric Cooperative Corporation Act (ECCA), which is codified in Chapter 161 of the Texas Utilities Code. The ECCA was adopted in 1937 and authorizes the creation of electric cooperatives to provide power to rural communities. See Hilco Elec. Coop., Inc. v. Midlothian Butane Gas Co., Inc., 111 S.W.3d 75, 78-81 (Tex. 2003). Therefore, arguably, CCEC would not exist or have any authority absent the ECCA. As such, its status and authority are derived from statute.

However, CCEC must show that it performs a uniquely governmental function as part of a larger governmental system. See CPS Energy, 671 S.W.3d at 617. It is unclear to which “larger governmental system” CCEC believes it belongs. It seems to suggest that it is part of Texas's electricity-regulation system, similar to ERCOT. However, ERCOT operates the wholesale electric market and ensures the reliability and adequacy of the Texas power grid. Id. at 612. Texas's electric power industry is a competitive market that includes cooperatives, municipal utilities, and private entities. See id. In addition, CCEC's business and affairs are managed and governed by a board of directors, not a state agency. The board of directors is composed of members.

CCEC posits that it performs the “unique governmental function” of establishing and regulating electric utility rates. But the Legislature defined the administration of public utilities as a proprietary function regarding municipalities. See Tex. Civ. Prac. & Rem. Code Ann. § 101.0215(b)(1) (West 2019) (defining operation and maintenance of public utility as a proprietary function of a municipality instead of a governmental function). If the Legislature defined the providing of retail electric service as a proprietary function for a municipality, logically it must be a proprietary function for other entities as well. As such, establishing and regulating its own electric rates cannot be a “unique governmental” function.

In a single sentence, CCEC also asserts that cooperatives have the traditional governmental power of eminent domain. It is true that cooperatives have eminent domain power. See Tex. Util. Code Ann. § 161.125 (West 2007). While that may have been a power unique to government in the past, that is no longer the case. Eminent domain power has been granted to a wide variety of private interests. See Tex. Transp. Code Ann. §§ 112.002(b)(5) (West 2022) (railroads), 131.012 (West 2022) (electric railways); Tex. Util. Code Ann. §§ 181.004 (West 2007) (gas and electric corporations), 181.084 (West 2007) (telephone or telegraph corporation), 186.054 (West 2007) (utility, common carrier, cable operator, or energy transporter). In fact, every electric corporation operating in Texas has the power of eminent domain, whether a private entity or otherwise. Tex. Util. Code Ann. § 181.004. Therefore, CCEC's argument that its eminent domain power is a “unique governmental” function is unpersuasive.

Because CCEC does not perform a “uniquely governmental” function as part of a “larger governmental system,” it is not an organ of government under Section 101.001. Redus I, 518 S.W.3d at 910, 911. Therefore, we lack jurisdiction over this interlocutory appeal, overrule CCEC's first issue, and need not address CCEC's remaining issues. See Tex. R. App. P. 47.1.

Disposition

Having overruled CCEC's first issue, we dismiss the appeal for want of jurisdiction.

FOOTNOTES

1.   Terex, Mireya Gaitain as Representative of the Estate of Alexander Sandoval-Calvillo, and Veronica Sandoval-Calvillo are not parties to this appeal.

2.   See Tex. Civ. Prac. & Rem. Code Ann. § 51.014(a)(8) (West Supp. 2024) (permitting interlocutory appeal of an order that “grants or denies a plea to the jurisdiction by a governmental unit as that term is defined in Section 101.001”).

Brian Hoyle, Justice