Federal Sign v. Texas Southern University

CourtSupreme Court of Texas
Citation951 S.W.2d 401
Docket NumberNo. 94-1317,94-1317
Parties121 Ed. Law Rep. 394, 40 Tex. Sup. Ct. J. 676 FEDERAL SIGN, Petitioner, v. TEXAS SOUTHERN UNIVERSITY, Respondent.
Decision Date02 October 1997

Robert A. Plessala, Houston, for Petitioner.

Patrick J. Feeney, Carey E. Smith, Austin, for Respondent.

BAKER, Justice, delivered the opinion of the Court in which PHILLIPS, Chief Justice, GONZALEZ, HECHT, CORNYN and OWEN, Justices, join.

The issue in this case is whether the sovereign immunity doctrine precludes Federal Sign, a private party, from suing Texas Southern University, a state institution, for breach of contract without legislative permission. The trial court denied TSU's plea to the jurisdiction, which was based on sovereign immunity from suit. Following a jury trial, the trial court rendered judgment on the verdict for Federal Sign. TSU appealed, urging as its sole point of error that the trial court erred by denying its plea to the jurisdiction. TSU asserted that sovereign immunity bars contract claims against the State. The court of appeals agreed and reversed the trial court and remanded the case to the trial court with instructions to dismiss. We agree with the court of appeals. Accordingly, we affirm the court of appeals' judgment.

I. FACTS AND PROCEDURAL BACKGROUND

In late 1988, TSU began accepting bids for the construction and delivery of basketball scoreboards for its new Health and Physical Education facility. Federal Sign submitted a bid for the contract. Federal Sign secured the Pepsi-Cola Company as sponsor. In early 1989, TSU accepted Federal Sign's bid. TSU instructed Federal Sign to begin building the scoreboards. Following TSU's instructions, Federal Sign began building the scoreboards. However, in September 1989, before Federal Sign delivered anything to TSU, TSU notified Federal Sign that Federal Sign's bid was unacceptable and told Federal Sign that TSU intended to pursue other avenues to secure the scoreboards. Later, TSU contracted with Spectrum Scoreboards and Coca-Cola for the scoreboards.

In early 1990, Federal Sign sued TSU. Federal Sign alleged TSU breached the contract and violated the competitive bidding and open meeting laws. Federal Sign sued for damages of $67,481 in lost profits and $22,840 in expenses. TSU answered Federal Sign's suit and filed a plea to the jurisdiction. TSU asserted that its sovereign immunity barred Federal Sign's suit. The trial court originally abated Federal Sign's action until Federal Sign obtained legislative consent to sue.

Rather than obtaining legislative consent to sue, Federal Sign moved for rehearing. Federal Sign asserted that it did not need legislative consent to sue TSU under the facts of the case. The trial court granted Federal Sign's motion and set aside the abatement order. The parties tried the case to a jury. The trial court rendered judgment for Federal Sign based on the jury's finding of a breach of contract and awarded Federal Sign the damages the jury found.

TSU appealed, contending that the trial court erred by overruling TSU's plea to the jurisdiction. TSU argued that sovereign immunity barred Federal Sign's contract claims. The court of appeals agreed and reversed the trial court's judgment. The court of appeals remanded the case to the trial court with instructions to dismiss Federal Sign's suit.

We granted writ of error to determine Federal Sign's claims that the court of appeals erred in holding that, absent legislative consent, TSU was immune from suit because: (1) Federal Sign's allegation that TSU violated state laws in connection with the Federal Sign contract stated a claim for which specific legislative consent to sue was not necessary; (2) TSU waived immunity from suit and legislative consent was unnecessary when TSU entered into a contract with a private citizen; and (3) sovereign immunity from contract claims violates the Texas Constitution's Open Courts and Due Course of Law provisions.

II. FEDERAL SIGN'S STATE LAW CLAIMS

Federal Sign first asserts that because it alleged causes of action for which it did not need legislative permission to sue TSU, the trial court correctly set aside the abatement order and allowed the case to proceed to trial. Federal Sign argues that it did not need legislative consent to sue TSU because its claims included allegations of TSU's state law violations. In its original petition, in addition to its breach of contract claim, Federal Sign alleged that TSU officials violated the Competitive Bidding on Contracts Statute, TEX. EDUC.CODE § 51.907, and the Open Meetings Act, TEX.REV.CIV. STAT. art. 6252-17 (Vernon 1970), repealed by Act or Apr. 30, 1983, 73rd Leg., R.S., ch. 268, § 46(1), 1993 Tex. Gen. Laws 583, 986.

A. APPLICABLE LAW

A private litigant does not need legislative permission to sue the State for a state official's violations of state law. Director of the Dept. of Agric. & Env't v. Printing Indus. Ass'n of Texas, 600 S.W.2d 264, 265-66 (Tex.1980)(holding legislative consent not required for suit for injunctive relief against state agency to halt unauthorized printing equipment and printing activities); Texas Highway Comm'n v. Texas Ass'n of Steel Importers, Inc., 372 S.W.2d 525, 530 (Tex.1963)(holding legislative consent not required for declaratory judgment suit against Highway Commission to determine the parties' rights); Cobb v. Harrington, 144 Tex. 360, 190 S.W.2d 709, 712 (1945)(holding legislative consent not required for declaratory judgment suit against State Comptroller to determine parties' rights under tax statute). A state official's illegal or unauthorized actions are not acts of the State. See, e.g., Director of the Dep't of Agric. & Env't, 600 S.W.2d at 265-66; Texas Highway Comm'n, 372 S.W.2d at 525; Cobb, 190 S.W.2d at 712. Accordingly, an action to determine or protect a private party's rights against a state official who has acted without legal or statutory authority is not a suit against the State that sovereign immunity bars. See Cobb, 190 S.W.2d at 712. In other words, we distinguish suits to determine a party's rights against the State from suits seeking damages. A party can maintain a suit to determine its rights without legislative permission. See Cobb, 190 S.W.2d at 712.

B. APPLICATION OF LAW TO FACTS

Here, Federal Sign argues that the trial court correctly overruled TSU's plea to the jurisdiction because its live pleadings, when the trial court lifted the abatement order, included Competitive Bidding and Open Meetings Acts violations--potential state law violations. See Director of Dept. of Agric. and Env't, 600 S.W.2d at 265-66; Texas Highway Comm'n, 372 S.W.2d at 530; Cobb, 190 S.W.2d at 712. However, even though Federal Sign may not have needed legislative permission to sue TSU on these claims, Federal Sign still sought damages for its breach of contract claim. Consequently, because Federal Sign's suit sought monetary damages from the State, its breach of contract claim did not fit under the rule established in Cobb, Director of Department of Agriculture and Environment, and Texas Highway Commission. Therefore, Federal Sign's state violation claims did not dispense with the necessity that Federal Sign secure legislative consent to sue TSU for damages for breach of contract.

III. SOVEREIGN IMMUNITY

Federal Sign next argues that the court of appeals erred by reversing the trial court's judgment based on sovereign immunity. Federal Sign first argues that the State waives its sovereign immunity protection when it enters into a contract with a private citizen. Then Federal Sign argues that, if sovereign immunity protects the State from breach of contract suits, any contract the State enters into with a private citizen is illusory and void because it lacks mutuality. Lastly, Federal Sign contends that if sovereign immunity is the law in Texas, then "this court should act to declare in clear and unmistakable language that the doctrine of sovereign immunity does not apply in any form when the State enters into a contract with a citizen."

A. SOVEREIGN IMMUNITY AND STATE CONTRACTS
1. Applicable Law--Sovereign Immunity

This Court has long recognized that sovereign immunity, unless waived, protects the State of Texas, its agencies and its officials from lawsuits for damages, absent legislative consent to sue the State. Director of the Dep't of Agric. & Env't, 600 S.W.2d at 265; Griffin v. Hawn, 161 Tex. 422, 341 S.W.2d 151, 152-53 (1960); Hosner v. DeYoung, 1 Tex. 764, 769 (1847). Sovereign immunity embraces two principles: immunity from suit and immunity from liability. Missouri Pac. R.R. Co. v. Brownsville Navigation Dist., 453 S.W.2d 812, 813 (Tex.1970). First, the State retains immunity from suit, without legislative consent, even if the State's liability is not disputed. Missouri Pac. R.R., 453 S.W.2d at 813. Second, the State retains immunity from liability though the Legislature has granted consent to the suit. Missouri Pac. R.R., 453 S.W.2d at 813.

Immunity from suit bars a suit against the State unless the State expressly gives its consent to the suit. Missouri Pac. R.R., 453 S.W.2d at 813; see also TEX. CIV. PRAC. & REM.CODE § 101.025; TEX. CIV. PRAC. & REM.CODE §§ 107.001-.005. 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. Missouri Pac. R.R., 453 S.W.2d at 813. The State may consent to suit by statute or by legislative resolution. Missouri Pac. R.R., 453 S.W.2d at 814. Legislative consent for suit or any other sovereign immunity waiver must be "by clear and unambiguous language." University of Texas Med. Branch at Galveston v. York, 871 S.W.2d 175, 177 (Tex.1994); Duhart v. State, 610 S.W.2d 740, 742 (Tex.1980).

Immunity from liability protects the State from judgments even if the Legislature has expressly given consent to the suit. Missouri...

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