Dillard v. Austin Independent School Dist.

• Decision Date: 20 March 1991
• Docket Number: No. 3-88-241-CV,3-88-241-CV
• Citation: 806 S.W.2d 589
• Parties: 66 Ed. Law Rep. 1354 Robert W. DILLARD and Diane Dillard, Appellants, v. AUSTIN INDEPENDENT SCHOOL DISTRICT, Appellee.
• Court: Texas Court of Appeals

Page 589

806 S.W.2d 589

66 Ed. Law Rep. 1354

Robert W. DILLARD and Diane Dillard, Appellants, v. AUSTIN INDEPENDENT SCHOOL DISTRICT, Appellee.

No. 3-88-241-CV.

Court of Appeals of Texas Austin.

March 20, 1991.

Bill Whitehurst and Scott Ozmun, Austin, for appellants.

Larry F. York, Austin, for appellee.

Before POWERS, GAMMAGE and JONES, JJ.

ON MOTION FOR REHEARING

PER CURIAM.

Our opinion of December 19, 1990, is withdrawn and the following is substituted therefor.

At issue in this cause is the extent of a school district's governmental immunity and its liability for initiating condemnation proceedings. The district court granted a motion for summary judgment based on governmental immunity and the absence of a taking under article I, section 17 of the Texas Constitution. We will affirm the judgment of the district court. ¹

In 1984 the Austin Independent School District (AISD) board of trustees voted to negotiate to purchase or condemn twenty-four acres of land owned by Robert W. Dillard and Diane Dillard (the Dillards). This land was to be used for a new high school in south Austin. The Dillards were amenable to selling their land to AISD and platted the land and obtained various surveys and permits that were necessary in order to develop the property, allegedly spending $151,000.00 of their own money in the process. AISD later purchased a different tract of land for the school from Gary Bradley in February 1986.

The Dillards sued for damages in excess of three million dollars for both their expenses in developing the property and for diminution in value of the land, alleging causes of action for breach of contract, promissory and equitable estoppel, breach of the duty of good faith negotiation, slander of title, fraud, gross negligence, and a taking under article I, section 17 of the Texas Constitution. The trial court found that: (1) no contract existed between the Dillards and AISD; (2) the doctrines of promissory and equitable estoppel are inapplicable because AISD is protected by governmental immunity; (3) governmental immunity barred causes of action based on fraud, slander of title, gross negligence, and breach of the duty of good faith negotiation; and (4) the Dillards's property was not taken so as to invoke the protection of article I, section 17 of the Texas Constitution. The Dillards, in four points of error, argue that governmental immunity does not bar claims based on: (1) promissory and equitable estoppel; (2) a taking under article I, section 17 of the Texas Constitution; (3) fraud; and (4) breach of the duty of good faith negotiation.

When a defendant moves for summary judgment on the basis of an affirmative defense such as governmental immunity, it must conclusively prove all essential elements of that defense. Swilley v. Hughes, 488 S.W.2d 64, 67 (Tex.1972). AISD, thus, had the burden of showing that no genuine issue of material fact existed and that it was entitled to judgment as a matter of law. Nixon v. Mr. Property Management Co., 690 S.W.2d 546, 548 (Tex.1985).

I. GOVERNMENTAL IMMUNITY

In their first point of error, the Dillards claim the trial court erred in holding that governmental immunity barred the application of the doctrines of promissory and equitable estoppel against AISD. We agree with the trial court.

A. General Principles

Governmental immunity consists of two basic principles of law. ² First, the state as sovereign is immune from suit without consent even though there is no dispute regarding the state's liability. Missouri Pac. R.R. v. Brownsville Navigation Dist., 453 S.W.2d 812, 813 (Tex.1970); see, e.g., Hosner v. De Young, 1 Tex. 764, 769 (1847); Board of Land Comm'rs v. Walling, Dallam 524, 525-26 (Tex.1843). The doctrine bars a suit against the state unless the state has expressly given its consent to be sued. See, e.g., Missouri Pac. R.R. at 814 (statute creating a navigation district that states that the district can "sue and be sued in all courts of this state" is sufficient consent to sue the state); Texas Tort Claims Act, Tex.Civ.Prac. & Rem.Code Ann. § 101.025 (1986) (person having a claim under the Tort Claims Act is granted permission to sue) [hereinafter Tort Claims Act]; Tex.Civ.Prac. & Rem.Code Ann. §§ 107.001-.005 (Supp.1991) (legislative resolution granting permission to sue the state).

Second, the state has immunity from liability even though the state has consented to be sued. Missouri Pac. R.R., 453 S.W.2d at 813; State v. Isbell, 127 Tex. 399, 94 S.W.2d 423, 424 (1936); Tex.Civ.Prac. & Rem.Code Ann. § 107.002(b) (Supp.1991) (legislative resolution granting permission to sue the state does not waive immunity from liability); see, e.g., Tort Claims Act §§ 101.021, .023, .025(a), .107 (1986 & Supp.1991). An important corollary is that the state is generally not liable for the acts of public servants. E.g., Lowe v. Texas Tech Univ., 540 S.W.2d 297, 298 (Tex.1976); Whitfield v. City of Paris, 84 Tex. 431, 19 S.W. 566, 567 (1892) (doctrine of respondeat superior does not apply against the state); City of Galveston v. Posnainsky, 62 Tex. 118, 125 (1884); Tex.Civ.Prac. & Rem.Code Ann. §§ 104.001-.008 (1986 & Supp.1991) (state liability for conduct of public servants).

A critical exception, however, is that the state waives its immunity from liability when it contracts:

It is well settled that so long as the state is engaged in making or enforcing laws, or in the discharge of any other governmental function, it is to be regarded as a sovereign, and has prerogatives which do not appertain to the individual citizen; but when it becomes ... a party to a contract with a citizen, the same law applies to it as under like conditions governs the contracts of an individual.

Fristoe v. Blum, 92 Tex. 76, 45 S.W. 998, 999 (1898); see State v. Elliott, 212 S.W. 695, 698 (Tex.Civ.App.1919, writ ref'd). The state is still immune from suit sounding in contract, however, even though the state has consented to liability by the act of contracting. Elliott, 212 S.W. at 698 ("Because of her sovereignty, the state is not amenable to the processes of courts, and cannot be sued therein, without her consent, but this in no way detracts from the proposition that she may be liable."); see, e.g., Miller v. Hood, 536 S.W.2d 278, 284 (Tex.Civ.App.1976, writ ref'd n.r.e.); Townsend v. Memorial Medical Center, 529 S.W.2d 264, 267 (Tex.Civ.App.1975, writ ref'd n.r.e.) ³ ; Ferguson v. Johnson, 57 S.W.2d 372, 376 (Tex.Civ.App.1933, writ dism'd). The Fristoe doctrine also applies to deeds and leases. Rutherford Oil Corp. v. General Land Office, 776 S.W.2d 232, 235 (Tex.App.1989, no writ).

Although the justifications for governmental immunity have long been criticized, the supreme court has said that the waiver of governmental immunity is a matter properly addressed to the legislature, not the courts. Lowe, 540 S.W.2d at 298.

B. The Governmental/Proprietary Distinction

The distinction between municipalities and other governmental units is fundamental to Texas governmental-immunity jurisprudence. In City of Galveston v. Posnainsky, the supreme court first carved out an exception to governmental immunity by defining a municipality's liability in terms of its governmental and proprietary functions. In writing the Posnainsky opinion, Justice Stayton set out the basis for the distinction between governmental and proprietary functions as follows:

In so far as a quasi corporation exercises powers exclusively public in their character, forced upon it without its consent, simply because the state can thus, through such local agencies, more easily and effectively discharge duties essentially its own, it is but proper that no action should be maintained against it for the negligence, or even misfeasance, of its officers, unless the action be given by an expression of the same sovereign will which arbitrarily imposed the duty.

. . . . .

It would seem that, in so far as municipal corporations of any class, and however incorporated, exercise powers conferred on them for purposes essentially public--purposes pertaining to the administration of general laws made to enforce the general policy of the state,--they should be deemed agencies of the state, and not subject to be sued for any act or omission occurring while in the exercise of such power, unless, by statute, the action be given; that, in reference to such matters, they should stand as does sovereignty, whose agents they are, subject to be sued only when the state, by statute, declares they may be.

. . . . .

In so far, however, as they exercise powers not of this character, voluntarily assumed--powers intended for the private advantage and benefit of the locality and its inhabitants,--there seems to be no sufficient reason why they should be relieved from that liability to suit and measure of actual damage to which an individual or private corporation exercising the same powers for a purpose essentially private would be liable.

Posnainsky, 62 Tex. at 125, 127, quoted in City of Austin v. Daniels, 160 Tex. 628, 335 S.W.2d 753, 755 n. 3 (1960).

Although courts in the past have differed on the scope of governmental immunity and on which subdivisions of the state may exercise proprietary functions, it is now the settled law of this state that governmental immunity extends to all agencies, political subdivisions, and other institutions which are derived from the state constitution and laws. See Tort Claims Act § 101.001(2) (Supp.1991). ⁴ The only exception to the general rule of governmental immunity is that a municipality is not immune for its proprietary functions, a theory first expressed in Posnainsky. See Tort Claims Act § 101.0215 (Supp.1991).

C. Estoppel

The supreme court has said that when a governmental unit is exercising governmental powers it is not subject to estoppel. Leeco Gas & Oil Co. v. County of Nueces, 736 S.W.2d 629, 630 (Tex.1987); City of Hutchins v. Prasifka, 450 S.W.2d 829, 835 (Tex.1970); see City of...