Ben Bolt v. Texas Political Subdivisions

Decision Date29 December 2006
Docket NumberNo. 05-0340.,05-0340.
Citation212 S.W.3d 320
CourtTexas Supreme Court

Mark C. Brodeur, Brodeur Law Firm, Dallas, TX, and Nora Barrera, Alice, TX, for petitioner.

Merritt M. Clements, Judith R. Blakeway, Stephen T. Dennis, Strasburger & Price, San Antonio, TX, for respondent.

Rafael Edward Cruz, Office of the Attorney General, Austin TX, for Attorney General of Texas.

Rance L. Craft, Office of the Attorney General, Austin TX, for amicus curiae.

Justice O'NEILL delivered the opinion of the Court, joined by Chief Justice JEFFERSON, Justice WAINWRIGHT, Justice BRISTER, Justice MEDINA, and Justice JOHNSON.

The issue in this insurance coverage dispute is whether a self-insurance fund composed of local political subdivisions enjoys governmental immunity against a fund member school district's coverage claim. In the suit underlying this appeal, fund member Ben Bolt-Palito Blanco Consolidated Independent School District ("Ben Bolt") sued the Texas Political Subdivisions Property/Casualty Joint Self-Insurance Fund (the "Fund") after the Fund denied a claim for benefits under its policy. The Fund asserted immunity in a plea to the jurisdiction, which the trial court denied. A divided court of appeals reversed, concluding that the Fund is immune from suit. 163 S.W.3d 172, 176-77. We agree that the Fund possesses governmental immunity. However, after the court of appeals rendered its judgment, the Legislature enacted a limited immunity waiver for breach of contract claims against governmental entities.1 We conclude that the statutory waiver applies to this insurance-coverage dispute. Accordingly, we reverse the judgment of the court of appeals.

I. Background

The Texas Interlocal Cooperation Act (the "Act") allows political subdivisions to contract with one another to more efficiently share resources and responsibilities. TEX. GOV'T CODE §§ 791.001-.033 ("The purpose of this chapter is to increase the efficiency and effectiveness of local governments by authorizing them to contract, to the greatest possible extent, with one another and with agencies of the state."). Id. § 791.001. Under the Act, a local government may contract with another local government to perform authorized governmental functions and services. Id. § 791.011 Local governments under the Act include municipalities, special districts, counties, and other political subdivisions, as well as combinations of such entities. Id. § 791.003(4).

Ninety-two local governmental entities formed the Fund involved in this dispute by entering into an Interlocal Cooperation Agreement to pool funds to provide casualty insurance to participants. The Fund provides a self-insurance risk pool and claim administration for its members. Participants in the Fund include eight counties, six municipalities, forty-three independent school districts, and various special districts and other political subdivisions.

Ben Bolt, a small school district in Jim Wells County, purchased an insurance policy from the Fund for a coverage period between April 2002 and 2003. In December of 2002, Ben Bolt sustained extensive water and mold damage to one of its school facilities and submitted a claim to the Fund. Until that point Ben Bolt had paid, and the Fund had accepted, all premiums due under the policy. The Fund denied the claim on the basis that the alleged loss was not covered under Ben Bolt's policy. Ben Bolt then filed a declaratory-judgment action seeking a determination that the loss was a covered occurrence under the insurance agreement's terms, and any "other further relief" to which it might be entitled. In response, the Fund asserted immunity in a plea to the jurisdiction and motion to dismiss, which the trial court denied. The Fund then filed an interlocutory appeal. TEX. CIV. PRAC. & REM.CODE § 51.014(a)(5). The court of appeals held that, as a governmental entity, the Fund is entitled to immunity from suit; finding no legislative waiver of that immunity, the court of appeals reversed and dismissed the case for want of jurisdiction. 163 S.W.3d 172, 177.

In its petition to this Court, Ben Bolt contends the Fund is not a governmental entity entitled to immunity. Alternatively, Ben Bolt claims that any immunity the Fund may possess derives from its member political subdivisions and cannot be asserted against its source. And even if the Fund may assert immunity against its members, Ben Bolt argues, that immunity has been waived in a number of ways: first, recently enacted section 271.152 of the Local Government Code is a clear expression of legislative intent to waive governmental immunity from suit on contract claims, TEX. LOC. GOV'T CODE § 271.152; second, the Act contains an implied waiver of immunity from suit for governmental units that contract under its authority, TEX. GOV'T CODE §§ 791.001-.033; and third, even absent a statutory waiver, the Fund waived its immunity from suit by accepting payment of Ben Bolt's premiums and inducing reliance. Finally, Ben Bolt argues that the Legislature waived governmental immunity for actions brought under the Uniform Declaratory Judgments Act ("UDJA").

The Fund counters that it is a governmental entity existing under the Legislature's authority and thus enjoys immunity in its own right irrespective of its members. Moreover, the Fund argues that Chapter 271 is not a clear and unambiguous waiver of immunity because it is unclear whether that waiver applies to the Fund's insurance agreement with its members, some of which are excluded from the waiver. The Fund also contends there is no implied waiver or waiver by conduct, and that the UDJA does not prevent the Fund from asserting immunity here. We granted Ben Bolt's petition for review to determine the nature and extent of the Fund's alleged immunity from suit.

II. Discussion
A. Standard of Review

Governmental immunity from suit defeats a trial court's jurisdiction. Tex. Dep't of Transp. v. Jones, 8 S.W.3d 636, 638 (Tex.1999). Whether a trial court has jurisdiction is a question of law subject to de novo review. See Tex. Natural Res. Conservation Comm'n v. IT-Davy, 74 S.W.3d 849, 855 (Tex.2002). Because the issue in this case is whether the trial court lacked jurisdiction due to the Fund's assertion of immunity, our review is de novo.

B. Sovereign and Governmental Immunity

Sovereign immunity protects the State, its agencies, and its officials from lawsuits for damages.2 See Tooke v. City of Mexia, 197 S.W.3d 325, 331 n. 11 (Tex.2006); IT-Davy, 74 S.W.3d at 853-54; Gen. Serv. Comm'n v. Little-Tex Insulation Co., Inc., 39 S.W.3d 591, 594 (Tex. 2001); Fed. Sign v. Tex. S. University, 951 S.W.2d 401, 405 (Tex.1997). Under this centuries-old common-law doctrine, the sovereign is immune from liability and also from lawsuits. See IT-Davy, 74 S.W.3d at 853; Little-Tex, 39 S.W.3d at 594; Fed. Sign, 951 S.W.2d at 405. Immunity from liability shields the State from judgments. IT-Davy, 74 S.W.3d at 853; Little-Tex, 39 S.W.3d at 594; Fed. Sign, 951 S.W.2d at 405. Immunity from suit prohibits a suit against the State unless the Legislature grants consent. Little-Tex, 39 S.W.3d at 594. By entering into a contract the State waives its immunity from liability but not its immunity from suit. Id. Thus, even if the State acknowledges liability on a claim, immunity from suit bars a remedy until the Legislature consents to suit. Taylor, 106 S.W.3d at 695.

The State's sovereign immunity extends to various divisions of state government, including agencies, boards, hospitals, and universities. Tooke, 197 S.W.3d at 331; Taylor, 106 S.W.3d at 694 n. 3. The appurtenant common-law doctrine of governmental immunity similarly protects political subdivisions of the State, including counties, cities, and school districts. Taylor, 106 S.W.3d at 694 n. 3; see also Harris County v. Sykes, 136 S.W.3d 635, 638 (Tex.2004). A political subdivision enjoys governmental immunity from suit to the extent that immunity has not been abrogated by the Legislature. See IT-Davy, 74 S.W.3d at 853.

It is clear that the Fund in this case is composed of members which, like Ben Bolt, are themselves governmental units entitled to immunity. However, the Fund asserts discrete governmental-unit status in its own right separate and apart from its members. If it is true, as the Fund contends, that the Fund itself enjoys immunity from suit, then the extent to which the Fund might derive immunity from its members is immaterial. Accordingly, we begin by examining the nature of the Fund.

C. The Fund

Chapter 2259 of the Texas Government Code authorizes "governmental unit[s]," which include "local government[s]," to self insure. TEX. GOV'T CODE §§ 2259.031-.034; 2259.001. The issuance of public securities or use of money for the purpose of funding self insurance "is a public purpose of the governmental unit." Id. § 2259.032. Chapter 2259 specifically provides that a governmental unit's establishment and maintenance of a self-insurance program "is not a waiver of immunity." Id. § 2259.002. Types of local governments able to self-insure under Chapter 2259 include a "municipality or other political subdivision of this state or a combination of political subdivisions, including a combination created under Chapter 791." Id. § 2259.001(2).

Chapter 791 of the Government Code, known as the Interlocal Cooperation Act, allows local governments to contract with each other to collectively perform certain governmental functions. Id. § 791.011(a). The Act defines the term "local government" to mean a "county, municipality, special district, . . . or other political subdivision of this state or another state" or a combination of two or more political subdivisions. Id. § 791.003(4)(A), (E). Because the term "local government"...

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