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Court of Appeals of Texas,Texarkana.

CITY OF TEXARKANA, Texas d/b/a Texarkana Water Utilities, Appellants, v. CITIES OF NEW BOSTON, Hooks, DeKalb, Wake Village, Maud, Avery, and Annona, Texas, Appellees.

No. 06-04-00023-CV.

Decided: July 23, 2004

Before MORRISS, C.J., ROSS and CARTER, JJ. Charles C. Frederiksen, Oscar Rey Rodriguez, Fulbright & Jaworski, LLP, Dallas, for appellants. Christopher V. Popov, David J. Tuckfield, David P. Blanke, Vinson & Elkins, LLP, Austin, Paul Miller, Miller, James, Miller & Hornsby, LLP, Texarkana, for appellees.


Seven cities 1 to which the City of Texarkana, Texas, d/b/a Texarkana Water Utilities, has been supplying water for decades sued Texarkana in both contract and tort, asserting various causes of action arising from that relationship.   Texarkana asserted below that governmental immunity completely bars the suit, but the trial court rejected its assertion.   Texarkana now asks this Court to uphold its claim of governmental immunity and dismiss the action entirely.   Although we agree with Texarkana that governmental immunity bars the causes of action sounding in tort, we conclude it does not bar those sounding in contract.   Accordingly, we affirm as to the contract claims, leaving those pending for further action in the trial court, and reverse as to the tort claims, dismissing them.

Governmental Immunity, Generally

 It is well established in Texas that sovereign or governmental immunity 2 protects the State, its agencies, and its officials from lawsuits for damages, absent the Legislature's consent through statute or legislative resolution.  Tex. Natural Res. Conservation Comm'n v. IT-Davy, 74 S.W.3d 849, 853-54 (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).   The courts have uniformly held that “it is the Legislature's sole province to waive or abrogate sovereign immunity” and that any waiver must be expressed clearly and unambiguously.  IT-Davy, 74 S.W.3d at 853-54 (quoting Fed. Sign, 951 S.W.2d at 409);  see Tex. Gov't Code A nn. § 311.034 (Vernon Supp.2004) (stating that “a statute shall not be construed as a waiver of sovereign immunity unless the waiver is effected by clear and unambiguous language”);  Univ. of Tex. Med. Branch v. York, 871 S.W.2d 175, 177 (Tex.1994).   Because such immunity defeats a trial court's subject matter jurisdiction, a plea to the jurisdiction asserting immunity requires de novo review.  IT-Davy, 74 S.W.3d at 855 (citing Tex. Dep't of Transp. v. Jones, 8 S.W.3d 636, 638 (Tex.1999);  Mayhew v. Town of Sunnyvale, 964 S.W.2d 922, 928 (Tex.1998)).

Immunity Applies Among Cities

 Before reaching the question of waiver, we examine the Seven Cities' contention that Texarkana cannot assert governmental immunity when sued by other state governmental entities.   Texarkana and the Seven Cities are political subdivisions, or “governmental units,” of the State as defined by the Texas Tort Claims Act.   See Tex. Civ. Prac. & Rem. Code Ann. § 101.001(3)(B) (Vernon Supp.2004).   As such, they enjoy governmental immunity to the extent it has not been abrogated by the Legislature.  San Antonio Indep. Sch. Dist. v. McKinney, 936 S.W.2d 279, 283 (Tex.1996) (citing City of Galveston v. Posnainsky, 62 Tex. 118 (1884)).   Recognizing that the parties in this case are all political subdivisions of the same sovereign, however, the Seven Cities argue that Texarkana cannot claim immunity from their suit, because immunity is designed to protect against actions brought by private parties, not against actions brought by other subdivisions of the State.

The Seven Cities cite two cases to support their position that Texarkana should not be permitted to assert governmental immunity to bar their claims, Texas Workers' Compensation Commission v. City of Eagle Pass, 14 S.W.3d 801 (Tex.App.-Austin 2000, pet. denied), and City of Canyon v. Fehr, 121 S.W.3d 899 (Tex.App.-Amarillo 2003, no pet.).   In the former, the Third District Court of Appeals explained that “municipalities are created as political subdivisions of the State and ‘represent no sovereignty distinct from the state and possess only such powers and privileges as have been expressly or impliedly conferred upon them.’ ”  City of Eagle Pass, 14 S.W.3d at 803 (quoting Payne v. Massey, 145 Tex. 237, 196 S.W.2d 493, 495 (1946)).   The court reasoned that because “[a] political subdivision's immunity is a privilege afforded it based on its existence as a subdivision of the State,” its “derivative immunity acts as a shield against actions brought by private parties but not as a shield against the State, from which it derives its immunity.”  Id. at 804.   In the latter, the Seventh District Court of Appeals similarly stated that because “sovereign immunity exists as a means of protecting the independent sovereignty of the governmental unit[,] ․ it operates to bar suits initiated by private third parties, not by entities in relation to which the governmental unit has no independent sovereignty.”   Fehr, 121 S.W.3d at 902.

Despite the apparent clarity of these positions, these two holdings are narrow and are easily distinguished from the case at bar.   The court in City of Eagle Pass summarized its reasoning by agreeing that, “because municipalities and other political subdivisions of the State exist under the authority of the State and are subject to the State's regulatory authority, such entities do not enjoy sovereign immunity from state regulatory authority.”  City of Eagle Pass, 14 S.W.3d at 803 (emphasis added).   While Texarkana's and the Seven Cities' authority derives from the State, neither party can exercise regulatory authority over the other.   They are, instead, considered coequal under the law, neither party superior to the other.   They share a common origin, but are wholly independent of each other and, unlike a municipality attempting to exert immunity against the sovereign from which its rights and privileges were originally obtained, immunity for these cities remains as viable a defense as when involved in a dispute by any other completely independent party.

 The Seven Cities' reliance on Fehr does not alter this analysis.   There, two residents of the City of Canyon sued the city for injunctive relief, seeking a decree ordering the city to abide by various provisions of its local charter and to submit a rezoning issue to a referendum election.  Fehr, 121 S.W.3d at 902.   Canyon argued the lawsuit was barred by governmental immunity, but the court, in light of the plaintiffs' claims, determined that “the citizenry [had] become the legislative branch of the governmental unit involved” and concluded that “the doctrine of sovereign immunity cannot be used by a municipality against itself.”  Id.  This situation is not at all analogous to the claims against Texarkana, a municipality entirely independent of the Seven Cities.   We note also that courts generally apply sovereign immunity analyses in disputes between state agencies.   See, e.g., Tex. Dep't of Transp. v. City of Sunset Valley, 92 S.W.3d 540 (Tex.App.-Austin 2002, pet. granted) (noting that municipalities are themselves agencies of the State);  City of Houston v. Northwood Mun. Util. Dist. No. 1, 73 S.W.3d 304 (Tex.App.-Houston [1st Dist.] 2001, pet. denied);  Tex. Dep't of Transp. v. City of Floresville Elec. Power & Light Sys., 53 S.W.3d 447 (Tex.App.-San Antonio 2001, no pet.).   We, therefore, conclude sovereign immunity principles are to be applied horizontally between governmental entities.   That is, political subdivisions of government cannot assert immunity against the sovereign from which its immunity is derived, but can assert immunity against other governmental entities deriving their rights and privileges from the same source.

Immunity Bars These Tort Claims

 Having determined that Texarkana is entitled to invoke any viable governmental immunity defense against the Seven Cities' claims, we now consider whether immunity applies given the nature of the operations underlying this dispute.   Texarkana argues its role in this dispute is clearly governmental;  while the Seven Cities contend their injuries stem, not from Texarkana's governmental functions, but from its proprietary functions, potentially exposing Texarkana to unlimited liability.   See City of Tyler v. Likes, 962 S.W.2d 489, 501 (Tex.1997) (explaining that the Texas Tort Claims Act is applicable to a municipality only in connection with its governmental functions).

 While the doctrine of governmental immunity protects municipalities from being sued in tort for matters arising from the performance of their governmental functions (except as authorized by the Texas Tort Claims Act), no such protection exists for municipalities performing their proprietary functions.  City of Corpus Christi v. Absolute Indus., 120 S.W.3d 1, 3 (Tex.App.-Corpus Christi 2001, pet. denied);  see Tex. Civ. Prac. & Rem. C ode Ann. §§ 101.0215(a), (b), § 101.023(c) (Vernon Supp.2004), § 101.025(a) (Vernon 1997).  “Accordingly, when a municipality commits a tort while engaged in a proprietary function[ ], it is liable to the same extent as a private entity or individual.”  Absolute Indus., 120 S.W.3d at 3.   The question on appeal, therefore, is whether Texarkana's obligations under its agreement to provide water to the Seven Cities are considered governmental or proprietary.

 Although waterworks and a number of other municipal functions have traditionally been considered proprietary under the common law, Section 101.0215 of the Texas Tort Claims Act reclassified them as governmental.   See City of Odessa v. Bell, 787 S.W.2d 525, 527 (Tex.App.-El Paso 1990, no writ);  George C. Kraehe, “There's Something About Cities”:  Understanding Proprietary Functions of Texas Municipalities and Governmental Immunity, 32 T ex. Tech L. Rev. 1, 18-22 (2000).   The section now enumerates as governmental thirty-six municipal functions, describing them as “those functions that are enjoined on a municipality by law and are given it by the state as part of the state's sovereignty,” including, among others, health and sanitation services, sanitary and storm sewers, waterworks, dams and reservoirs, and water and sewer services.  Tex. Civ. Prac. & Rem. Code Ann. § 101.0215(a)(2), (9), (11), (19), (32) (Vernon Supp.2004).   Even with this legislative designation, however, the Seven Cities contend that, while those water services provided for Texarkana's citizens are clearly governmental, the relationship between Texarkana and the Seven Cities should not be similarly construed.   Unlike Texarkana's obligation to provide water for residents within its municipal boundaries-an obligation “enjoined” on it by the State-the Seven Cities argue that Texarkana voluntarily contracted to supply them with water services for profit, making those activities proprietary.

 The attempt to distinguish between the services provided by Texarkana for its own citizens and for the citizens of the Seven Cities, however, is not so clear.   While the Texas Tort Claims Act “does not apply to the liability of a municipality for damages arising from its proprietary functions, which are those functions that a municipality may, in its discretion, perform in the interest of the inhabitants of the municipality,” it expressly excludes those governmental activities listed in Section 101.0215(a) from those activities that may be considered proprietary.  Tex. Civ. Prac. & R em. Code Ann. § 101.0215(b), (c) (Vernon Supp.2004).   Accordingly, “all activities associated with the operation of one of the government functions listed in section 101.0215(a) are governmental and cannot be considered proprietary, regardless of the city's motive for engaging in the activity.”  City of San Antonio v. Butler, 131 S.W.3d 170, 177-78 (Tex.App.-San Antonio 2004, pet. filed) (citing Tex. River Barges v. City of San Antonio, 21 S.W.3d 347, 356-57 (Tex.App.-San Antonio 2000, pet. denied) (explaining that the city's removal of a barge company from a marina is included in the governmental function of operating a marina and park even if the removal was motivated by the desire to protect the city's profits)).3  Because the services Texarkana provides to the Seven Cities cannot be distinguished from those governmental functions enjoined on Texarkana by the State, the Texas Tort Claims Act applies, effectively barring the Seven Cities' tort claims.4  Therefore, we hold that, as to the tort claims, the trial court erred by failing to grant Texarkana's motion to dismiss.

Immunity Does Not Bar These Contract Claims

 We now consider whether the trial court erred by failing to grant Texarkana's motion to dismiss with respect to the Seven Cities' contract claims.   As explained in Federal Sign,

[s]overeign immunity embraces two principles:  immunity from suit and immunity from liability.   First, the State retains immunity from suit, without legislative consent, even if the State's liability is not disputed.   Second, the State retains immunity from liability though the Legislature has granted consent to the suit.

Immunity from suit bars a suit against the State unless the State expressly gives its consent to the suit.   In other words, although the claim asserted may be one on which the State acknowledges liability, this rule precludes a remedy until the Legislature consents to suit.

Immunity from liability protects the State from judgments even if the Legislature has expressly given consent to the suit.   In other words, even if the Legislature authorizes suit against the State, the question remains whether the claim is one for which the State acknowledges liability.   The State neither creates nor admits liability by granting permission to be sued.

Fed. Sign, 951 S.W.2d at 405 (citations omitted).   As there is no dispute that Texarkana contracted to supply water to the Seven Cities, immunity from liability is not at issue.  Little-Tex Insulation Co., 39 S.W.3d at 594 (State waives immunity from liability when it contracts).   Nevertheless, because the act of contracting waives only the State's immunity from liability, the question we must address is whether Texarkana's immunity from suit was somehow waived, potentially exposing it to liability on its contracts with the Seven Cities.   See Travis County v. Pelzel & Assocs., Inc., 77 S.W.3d 246, 248 (Tex.2002);  Little-Tex Insulation Co., 39 S.W.3d at 594-95;  Fed. Sign, 951 S.W.2d at 408.

Crucial to our analysis is the meaning of Section 51.075 of the Texas Local Government Code, which states that home-rule municipalities like Texarkana “may plead and be impleaded in any court.”  Tex. Loc. Gov't Code A nn. § 51.075 (Vernon 1999).   The Seven Cities contend this language constitutes an unambiguous legislative waiver of governmental immunity, thereby conferring jurisdiction on the district court.   Texarkana, on the other hand, argues that Section 51.075, standing alone, does not effect a waiver of immunity;  rather, it merely expresses an element of a municipality's authority as a corporate entity.5

Although the Texas Supreme Court has yet to address whether the “plead and be impleaded” language of Section 51.075 constitutes waiver of a municipality's immunity from suit, it did address the effect of similar language in Missouri Pacific Railroad Co. v. Brownsville Navigation District, 453 S.W.2d 812 (Tex.1970).   There, the Court examined the phrase “sue and be sued,” concluding the phrase “is quite plain and gives general consent” to be sued in Texas courts.6  Id. at 813.   Since the Court's opinion was issued in 1970, the majority of related cases decided by the courts of appeals have similarly held that the words “sue and be sued” provide a general waiver of governmental immunity from suit, see United Water Services, Inc. v. City of Houston, 137 S.W.3d 747, 751, 755 (Tex.App.-Houston [1st Dist.] 2004, pet. filed), and the Court has continued to reaffirm this position.   In 1997, for example, the Court again stated that “ ‘sue and be sued’ met the legislative permission requirement.”  Fed. Sign, 951 S.W.2d at 408.   In 2002, the Court's discussion of whether another statute clearly and unambiguously waived the State's immunity from suit turned on the omission of the “sue and be sued” language.  Pelzel & Assocs., Inc., 77 S.W.3d at 250.   The Court reasoned that the statute in question did not waive immunity because “the only language arguably waiving sovereign immunity” (i.e., the “sue and be sued” language) was deleted from the statute, “suggesting that [the Legislature] intended to preserve counties' immunity from suit.” 7  Id.

A number of courts, including the Houston, Fort Worth, El Paso, and Fifth Circuit Courts of Appeals, have treated the phrases “sue and be sued” and “plead and be impleaded” as being synonymous.   See City of Houston v. Clear Channel Outdoor, Inc., No. 14-03-00022-CV, 2004 WL 63561, --- S.W.3d ---- (Tex.App.-Houston [14th Dist.] Jan. 15, 2004, pet. filed) (finding no distinction between the two phrases);  see also Webb v. City of Dallas, 314 F.3d 787 (5th Cir.2002);  Goerlitz v. City of Midland, 101 S.W.3d 573 (Tex.App.-El Paso 2003, pet. filed);  Knowles v. City of Granbury, 953 S.W.2d 19 (Tex.App.-Fort Worth 1997, pet. denied);  Avmanco, Inc. v. City of Grand Prairie, 835 S.W.2d 160 (Tex.App.-Fort Worth 1992, writ dism'd);  City of Garland v. Shierk, No. 05-99-00258-CV, 2000 WL 721602 (Tex.App.-Dallas June 6, 2000, pet. denied) (not designated for publication).   As a result, these courts have concluded, at least impliedly, that the phrase “plead and be impleaded” constitutes an unambiguous waiver of governmental immunity in light of the Texas Supreme Court's holding in Missouri Pacific Railroad.

Other courts, including the Waco, Dallas, and San Antonio Courts of Appeals, have reached the opposite conclusion.   See City of Carrollton v. McMahon Contracting, L.P., 134 S.W.3d 925 (Tex.App.-Dallas 2004, pet. filed);  City of San Antonio v. Butler, 131 S.W.3d 170 (Tex.App.-San Antonio 2004, pet. filed);  City of Mexia v. Tooke, 115 S.W.3d 618 (Tex.App.-Waco 2003, pet. granted);  but see Shierk, 2000 WL 721602, at *1-2.   Although they acknowledge the Texas Supreme Court's decision in Missouri Pacific Railroad, noting that the phrase “sue and be sued” acts as a legislative waiver of immunity, they disagree that the words “plead and be impleaded” should be given the same effect.   Instead, they reason that if the phrases are construed to have the same meaning, courts will “run afoul” of the settled principle of statutory construction that the Legislature intended the entirety of the Texas Local Government Code to be effective and, therefore, used every word for a particular purpose.  Tooke, 115 S.W.3d at 622-23 (citing Tex. Loc. Gov't Code Ann. § 311.021(2) (Vernon 1998);  City of Austin v. Southwestern Bell Tel. Co., 92 S.W.3d 434, 442 (Tex.2002)).

While there certainly are distinctions that can be made between the phrases in question, we agree that, in the context of Section 51.075, the phrases “sue and be sued” and “plead and be impleaded” are synonymous and the latter, therefore, equally serves to waive a municipality's governmental immunity from suit in light of the Texas Supreme Court's decision in Missouri Pacific Railroad.   See Clear Channel Outdoor, Inc., 2004 WL 63561, at *4, 161 S.W.3d at ---- - ----.  In making this determination, we note that the original 1913 legislation granting home-rule municipalities the authority to “plead and be impleaded in any court” has not been amended since its enactment and that, until recently, “[t]here has never been any question about the capacity of Texas municipalities to both sue and be sued.”  22 David B. Brooks, Texas Practice § 2.02 (West 1999);  see Home Rule Act of 1913, 33d Leg., R.S., ch. 147, § 4, at 307, 310 (current version at Tex. Loc. Gov't Code Ann. § 51.075 (Vernon 1999)).

 When interpreting statutes, courts must consider the entire statute in its appropriate context, seeking to avoid considering disputed provisions in isolation.  State v. Shumake, 131 S.W.3d 66, 75 (Tex.App.-Austin 2003, pet. filed) (citing Fitzgerald v. Advanced Spine Fixation Sys., Inc., 996 S.W.2d 864, 866 (Tex.1999)).   Courts must also “consider such things as the circumstances under which the statute was enacted, former statutory provisions on the same or similar subjects, and the consequences of a particular construction․ and should not give one provision an interpretation that is inconsistent with the other provisions of the act.”  Id. (citing Kroger Co. v. Keng, 23 S.W.3d 347, 349 (Tex.2000)).   It is significant, therefore, that the 1858 and 1875 acts (which, like the legislation granting authority to home-rule municipalities, have not been amended since their enactment and remain current law), granting authority to what are today's Type A and Type B general-law municipalities, included both the phrase “sue and be sued” and variations on the phrase “plead and be impleaded.”   Brooks, supra;  see Act approved Jan. 27, 1858, 7th Leg., R.S., ch. 61, § 9, at 69-70 (current version at Tex. Loc. Gov't Code Ann. § 51.033 (Vernon 1999));  Act approved Mar. 15, 1875, 14th Leg., 2d C.S., ch. 100, § 1a, at 113-14 (current version at Tex. Loc. Gov't Code Ann. § 51.013 (Vernon 1999)).8  If the two phrases were, in fact, designed to have different meanings and the latter does not equally constitute an unambiguous waiver of immunity from suit, as does the former, one would conclude that the Legislature intentionally waived governmental immunity for Type A and Type B general-law municipalities, but not for home-rule municipalities.   We can conceive of no legal or policy reasons why the Legislature would make such a distinction between different types of municipalities on the issue of waiver and are unaware of any legislative history that would support such a position.   See Clear Channel Outdoor, Inc., 2004 WL 63561, at *4 & n. 5, 161 S.W.3d at ---- & n. 5.

 The phrases are not themselves so distinctive as to preclude us from determining that they carry the same meaning and were meant to have the same effect.   The word “sue” simply means to “institute a lawsuit against (another party)”;  the word “plead” means, among other things, to “file or deliver a pleading.”   Black's Law Dictionary 1190, 1473 (8th ed. 2004).   As defined by the Texas Rules of Civil Procedure, a pleading is an original or amended petition or answer, stating the plaintiff's cause of action or the defendant's grounds of defense.   See Tex. R. Civ. P. 45, 78-82.   Because a pleading is the vehicle used for alleging a cause of action, it is also the means by which one party institutes a lawsuit against another, or, in other words, sues them at law.   See In re L.A.M. & Assocs., 975 S.W.2d 80, 84 (Tex.App.-San Antonio 1998, no pet.);   see also Stockburger v. Dolan, 87 P.2d 411, 413 (Cal.Dist.Ct.App.1939) (“Pleadings are ․ the machinery by which an issue or issues are brought to the attention of the trial court.”);  Utah v. Topham, 41 Utah 39, 123 P. 888, 894 (1912) (“[P]leadings are the juridical means of investing a court with jurisdiction.”).

While one can certainly discern differences in their breadth, the terms “sue” and “plead” have been used interchangeably in the past and are still usually considered to be synonymous.   See The Random House Dictionary of the English Language 1900 (2d ed. 1987).   Some of the definitions of the word “sue” include:  “to institute a process in law against,” “bring a civil action against,” and “to institute legal proceedings, or bring suit.”  Id.  Similarly, to “plead” is “to make any allegation or plea in an action at law,” “to prosecute a suit or action at law,” or “to allege or set forth (something) formally in an action at law.”  Id. at 1486.   Other dictionaries state directly that to “sue” is to “plead,” Webster's New World Dictionary of the American Language 1457 (College ed. 1960), and to “plead” is “to institute a lawsuit” (i.e., to “sue”), Webster's Ninth New Collegiate Dictionary 902 (1991).

Parsing the two phrases into their component words, one can certainly identify differing shades of meaning between “be sued” and “be impleaded.”   But we believe each phrase is written as a whole and ought to be understood in that context.   When each phrase is read as a single expression-that is, as written-the two phrases seem to carry the same meaning.

Although most courts that have addressed similar issues of waiver of governmental immunity have done so by analyzing the phrase “sue and be sued,” few have had the opportunity to consider whether the phrase “plead and be impleaded,” standing alone, has the same effect.   A long line of Georgia cases, however, offers some helpful insight.   As early as 1912, the Georgia Court of Appeals determined that a statute granting the Trustees of the University of Georgia authority to “plead and be impleaded” also expressly waived the body's governmental immunity.  First Dist. Agric. & Mech. Sch. v. Reynolds, 11 Ga.App. 650, 75 S.E. 1060, 1061 (1912).   Although the Georgia Supreme Court abandoned this long-held position in 1989, what is important to our review is that, throughout the history of these cases, the courts continued to treat the phrases “sue and be sued” and “plead and be impleaded” as carrying the same meaning.  Self v. City of Atlanta, 259 Ga. 78, 377 S.E.2d 674, 676 (1989) (overruling those cases holding that the language waived governmental immunity);  Med. Ctr. Hosp. Auth. v. Andrews, 250 Ga. 424, 297 S.E.2d 28, 30 (1982);  McCafferty v. Med. Coll. of Ga., 249 Ga. 62, 287 S.E.2d 171, 174-176 (1982);  Busbee v. Ga. Conference, Am. Assoc. of Univ. Professors, 235 Ga. 752, 221 S.E.2d 437, 442 (1975);  Georgia v. Regents of the Univ. Sys. of Ga., 179 Ga. 210, 175 S.E. 567, 572 (1934).   Though Georgia courts no longer consider the language at issue a waiver of governmental immunity, it is significant that they expressly determined the phrase “plead and be impleaded” to be “the historic language used to authorize a body to sue and be sued.”   Busbee, 221 S.E.2d at 440 (citing Reynolds, 75 S.E. at 1061);  see Andrews, 297 S.E.2d at 30.

Because we agree that, in the context of Section 51.075, there is no practical difference between the phrases “sue and be sued” and “plead and be impleaded,” we are constrained by the Texas Supreme Court's ruling in Missouri Pacific Railroad.   See Clear Channel Outdoor, Inc., 2004 WL 63561, at *4, 161 S.W.3d at ----.  We hold that Texarkana's governmental immunity from suit was waived and that therefore, with respect to the Seven Cities' contract claims, the trial court was correct in overruling Texarkana's motion to dismiss.


Having determined that Texarkana may assert governmental immunity as a defense against the Seven Cities' tort claims, we hold that the Texas Tort Claims Act effectively bars those claims.   We also hold, however, that Section 51.075 of the Texas Local Government Code effectively waives Texarkana's immunity from suit, requiring it to defend the contract causes of action asserted by the Seven Cities.   Accordingly, as to the contract claims, we affirm the trial court's refusal to dismiss, leaving the contract claims pending for further action in the trial court;  and, as to the tort claims, we reverse and render judgment dismissing those claims.


1.   These cities include New Boston, Hooks, DeKalb, Wake Village, Maud, Avery, and Annona and will collectively be referred to as the Seven Cities.

2.   The Texas Supreme Court has noted that[c]ourts often use the terms sovereign immunity and governmental immunity interchangeably.   However, they involve two distinct concepts.   Sovereign immunity refers to the State's immunity from suit and liability.   In addition to protecting the State from liability, it also protects the various divisions of state government, including agencies, boards, hospitals, and universities.   Governmental immunity, on the other hand, protects political subdivisions of the State, including counties, cities, and school districts.Wichita Falls State Hosp. v. Taylor, 106 S.W.3d 692, 694 n. 3 (Tex.2003) (citations omitted);  United Water Servs., Inc. v. City of Houston, 137 S.W.3d 747, 750 n. 4 (Tex.App.-Houston [1st Dist.] 2004, pet. filed).   Because Texarkana and the Seven Cities are municipalities, we employ the term “governmental immunity” where applicable, except when cited authority states otherwise.

3.   We note that the Seven Cities' reliance on City of Ranger v. Morton Valley Water Supply Corp., 79 S.W.3d 776 (Tex.App.-Eastland 2002, pet. denied), is misplaced.   There, the Eleventh District Court of Appeals, addressing governmental authority to regulate water rates and not governmental immunity, stated:  “To provide the wholesale supply of water to a nonresident retail supplier is to provide a proprietary function.”   Id. at 779.   While this appears to buttress the Seven Cities' position that Texarkana's supply of water to other cities is proprietary, it is significant that the court of appeals cites as its authority City of Big Spring v. Board of Control, 404 S.W.2d 810, 812 (Tex.1966)-a case decided before the 1970 enactment of the Texas Tort Claims Act and the 1987 amendment reclassifying as governmental a number of activities that were considered proprietary under the common law.   See Act of June 3, 1987, 70th Leg., 1st C.S., ch. 2, § 3.02, 1987 Tex. Gen. Laws 37, 47-48.When addressing apparent discrepancies that may arise between functions listed as either governmental or proprietary under the Texas Tort Claims Act, one commentator has explained:If a proprietary function does not include governmental functions, a function containing a governmental component cannot be considered proprietary, and therefore must be governmental.   Thus, in regard to mixed functions, the rule now seems to be that if any one component of a function is governmental, the entire function will be considered governmental, and an action involving that function will have to be brought under the Tort Claims Act.Christopher D. Jones, Comment, Texas Municipal Liability:  An Examination of the State and Federal Causes of Action, 40 Baylor L. Rev. 595, 615 (1988).   We agree.   The introduction of a proprietary element into an activity designated by the Legislature as governmental does not serve to alter its classification.  Tex. Civ. PracC. & Rem. Code AnnN. § 101.0215(c) (Vernon Supp.2004) (“The proprietary functions of a municipality do not include those governmental activities listed under Subsection (a).”).

4.   While the Texas Tort Claims Act waives governmental immunity, waiver is limited to claims arising from property damage, personal injury, and death.  Tex. Civ. PracC. & Rem. Code AnnN. § 101.021 (Vernon 1997).

5.   For further discussion of the proposition that the provisions of the Texas Local Government Code do not waive governmental immunity, but merely outline a municipality's capacity as a corporate entity, see A. Craig Carter, Is Sue and Be Sued Language a Clear and Unambiguous Waiver of Immunity?, 35 St. Mary's L.J. 275, 287-90 (2004);  George C. Kraehe, “There's Something About Cities”:  Understanding Proprietary Functions of Texas Municipalities and Governmental Immunity, 32 Tex. Tech L. Rev. 1, 33-39 (2000).   See also City of San Antonio v. Butler, 131 S.W.3d 170, 177 (Tex.App.-San Antonio 2004, pet. filed);  Satterfield & Pontikes Constr., Inc. v. Irving Indep. Sch. Dist., 123 S.W.3d 63, 66 (Tex.App.-Dallas 2003, pet. filed);  City of Dallas v. Reata Constr. Corp., 83 S.W.3d 392, 399 (Tex.App.-Dallas 2002), rev'd on other grounds, No. 02-1031, 2004 WL 726906, --- S.W.3d ---- (Tex. Apr. 2, 2004);  but see Satterfield, 123 S.W.3d at 78-81 (Lang, J., dissenting) (examining the “unmistakable clarity of the Legislature's motivations” in using the “sue or be sued, plead or be impleaded” language as an express waiver of sovereign immunity).

6.   We find persuasive the argument that both phrases-“sue and be sued” and “plead and be impleaded”-are intended to grant powers to cities and therefore should not be understood as being “clear and unambiguous” waivers of governmental immunity.   But, for present purposes, whether we tend to agree with that argument is irrelevant.   Until the Texas Supreme Court overrules its holding in Missouri Pacific Railroad that the phrase “sue and be sued” is a clear and unambiguous waiver of immunity, or otherwise resolves the split of authority in the Courts of Appeals, we believe we are bound by that decision, even if the phrases are more properly construed only as authority for municipalities to exercise certain powers.   See City of Houston v. Clear Channel Outdoor, Inc., No. 14-03-00022-CV, 2004 WL 63561, at *4, --- S.W.3d at ---- (Tex.App.-Houston [14th Dist.] Jan. 15, 2004, pet. filed).

7.   For an interesting analysis of the Legislature's reaction to Pelzel, see Satterfield, 123 S.W.3d at 80-81 (Lang, J., dissenting) (“[A]ny 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.”).

8.   In corresponding provisions, all municipalities are granted specific authority relating to lawsuits.   A Type A general-law municipality, for example, “may sue and be sued, implead and be impleaded, and answer and be answered in any matter in any court or other place,” T ex. Loc. GovV't Code Ann . § 51.013 (Vernon 1999);  a Type B general-law municipality “may sue and be sued and may plead and be impleaded.”  Tex. Loc. Gov V 't Code Ann. § 51.033 (Vernon 1999). The language granting home-rule municipalities authority relating to lawsuits, however, states simply:  “The municipality may plead and be impleaded in any court.”  T ex. Loc. GovV't Code Ann. § 51.075 (Vernon 1999).

Opinion by Chief Justice MORRISS.

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