Loyd v. ECO Resources, Inc.

• Decision Date: 18 September 1997
• Docket Number: No. 14-95-01233-CV,A,No. 81,81,14-95-01233-CV
• Citation: 956 S.W.2d 110
• Parties: Joseph LOYD, Individually and as Class Representative, Jo Ann Martin, Executrix of the Estate of Joseph Green, Deceased, The Certified Class Of Plaintiffs, and Pulte Home Corporation, Appellants, v. ECO RESOURCES, INC. and Harris County Municipal Utility Districtppellees. (14th Dist.)
• Court: Texas Court of Appeals

Page 110

956 S.W.2d 110

Joseph LOYD, Individually and as Class Representative, Jo Ann Martin, Executrix of the Estate of Joseph Green, Deceased, The Certified Class Of Plaintiffs, and Pulte Home Corporation, Appellants, v. ECO RESOURCES, INC. and Harris County Municipal Utility District No. 81, Appellees.

No. 14-95-01233-CV.

Court of Appeals of Texas Houston (14th Dist.).

Sept. 18, 1997.

Pascal P. Piazza, Maurice B. Bresenhan, Jr., Aubrey Martin, Jr., Mario L. Vasquez, Houston, for appellants.

Rick Gibson, Evelyn T. Allts, Terri S. Sechrist, Michael L. Burnett, Houston, for appellees.

Before LEE, AMIDEI, and EDELMAN, JJ.

OPINION

AMIDEI, Justice.

Appellants, Joseph Loyd, Individually and as Class Representative, Jo Ann Martin, Executrix of the Estate of Joseph Green, Deceased, the Certified Class of Plaintiffs and Pulte Home Corporation, appeal summary judgments granted in their class action suit against appellees, ECO Resources, Inc. (ECO) and Harris County Municipal Utility District No. 81 (the MUD), for damages to their water pipes allegedly caused by corrosive water sold to the class. Appellants bring two points of error complaining generally that the trial court erred in granting the take-nothing judgments against them. ¹ The MUD brings a cross-point contending it is entitled to costs as damages because appellants have brought this appeal without sufficient cause. We affirm in part and reverse and remand in part.

The MUD is a statutory municipal utility district created in 1974 for the purpose of operating and maintaining water and sewer works. The MUD sold water on a monthly basis to the homeowners in the Memorial Parkway Subdivision (the Subdivision) in Katy. By contract dated August 21, 1980, the MUD retained ECO to operate and maintain its water and sewer works and to deliver the water to the homeowners. Under the terms of the contract, for each home in the Subdivision, ECO was to install the tap and pipes, install the meter, distribute the water, read the meter, and bill and collect the monthly payments.

On November 6, 1989, Pulte Home Corporation (Pulte), through its counsel, served a statutory demand letter on the MUD complaining that the MUD's water caused pipe leaks in numerous homes in the district. In April 1990, Pulte sent a letter to the homeowners within the district advising them that Pulte considered the water supplied by the MUD to be highly corrosive and the cause of damages to plumbing systems in their homes. On May 8, 1990, Pulte filed suit alleging that because the MUD and ECO were not adding corrosion inhibitors to the water supplied to homes in the Subdivision, galvanized steel water pipes installed by Pulte in a number of the homes were corroding and leaking (the 1990 suit). Pulte requested that the MUD and ECO reimburse it for all sums it incurred in responding to pipe corrosion complaints. In addition, Pulte also asked the trial court to enter an injunction compelling the MUD and ECO to treat the water to reduce the alleged corrosive nature of the water. Pulte also sought a declaratory judgment that the MUD and ECO were solely responsible for the alleged pipe corrosion and resulting damages.

On June 28, 1990, the MUD filed a motion for summary judgment and a motion to dismiss as to all of Pulte's causes of action and requested relief. One of the grounds for summary judgment was that Pulte's allegations against the MUD were barred by the doctrine of governmental immunity. The basis for the motion to dismiss was that Pulte's requests were not within the scope of the Uniform Declaratory Judgments Act. See TEX. CIV. PRAC. & REM.CODE ANN. §§ 37.001-.011 (Vernon 1997); see, e.g., Abor v. Black, 695 S.W.2d 564, 566 (Tex.1985) (a declaration of non-liability in a suit for damages is not a proper function of the Declaratory Judgments Act). ECO filed a similar motion to dismiss. On August 29, 1990, the trial court granted the motions for summary judgment and to dismiss. Pulte did not appeal these orders.

This suit was filed against ECO on April 15, 1992 by Pulte, Joseph Loyd and Joseph Green. ² On December 3, 1992, the trial court certified a class of all persons who purchased a home in Sections Nine and Thirteen of the Subdivision and were provided water and waste water treatment by the MUD and ECO. The class asserted that ECO operated the water and waste water treatment system as the MUD's agent and independent contractor, and that ECO improperly treated the water it supplied to the class members' homes. They contend that chemicals should have been added to the water to alleviate alleged highly corrosive tendencies of the water, which caused damages to their water pipes. Appellants claim that beginning in 1989, the galvanized steel pipes in their homes began to leak and become "extensively corroded."

In December 1993, ECO moved for summary judgment, and on January 11, 1994, the trial court granted a partial summary judgment for ECO on appellants' contract and UCC warranty claims. On March 28, 1994 the MUD was added as a defendant against Pulte, in its individual capacity, who alleged a single cause of action for nuisance, and the class added a nuisance claim against ECO. The MUD filed a motion for summary judgment alleging that Pulte's nuisance claim was barred by res judicata, limitations and sovereign immunity. In the Third Amended Original Petition, filed on August 22, 1994, the class added the MUD as a defendant. The MUD also filed a cross-action against Pulte alleging its negligence was the cause of the pipe damage. The trial court granted a partial summary judgment against Pulte on its nuisance claim on October 4, 1994. The MUD filed a second motion for summary judgment in this suit, followed by a supplemental motion, based on grounds that appellants' remaining claims were barred as a matter of law by immunity, limitations, and res judicata. ECO also filed a subsequent motion for summary judgment on the remaining claims against it. In addition, ECO filed a counterclaim against appellants alleging their DTPA action against it was brought in bad faith. On June 14, 1995, the trial court granted separate take-nothing judgments on all remaining claims against the MUD and ECO. On June 28, 1995, the trial court dismissed the MUD's cross-action against Pulte and ECO's counterclaim against appellants, making the summary judgments final. This appeal resulted.

Standard of Review

In reviewing a summary judgment, we take the evidence favorable to the non-movant as true and indulge every reasonable inference in the non-movant's favor. Nixon v. Mr. Property Management Co., 690 S.W.2d 546, 548-49 (Tex.1985). When a trial court does not specify the grounds upon which it grants a summary judgment, as here, we will affirm the judgment if any one of the theories advanced in the motion is meritorious. State Farm Fire & Casualty Co. v. S.S., 858 S.W.2d 374, 380 (Tex.1993); Carr v. Brasher, 776 S.W.2d 567, 569 (Tex.1989). A defendant who conclusively negates at least one of the essential elements of each of the plaintiff's causes of action or who conclusively establishes all of the elements of an affirmative defense is entitled to summary judgment. Cathey v. Booth, 900 S.W.2d 339, 341 (Tex.1995).

Claims against the MUD

Appellants alleged causes of action against the MUD for breach of express and implied contracts, violations of Article 2 of the UCC including breach of express and implied warranties, nuisance, and products liability. The MUD contends the trial court properly granted both of its motions for summary judgment because appellants' claims are barred by the doctrine of governmental immunity, the applicable statutes of limitations, and res judicata.

Immunity

One of the MUD's grounds for summary judgment was that appellants' claims are barred by the doctrine of governmental immunity. Immunity is an affirmative defense, which the MUD properly pleaded. See City of Lancaster v. Chambers, 883 S.W.2d 650, 653 (Tex.1994). Accordingly, the MUD must establish all the elements of the defense as a matter of law. See id.

Municipal utility districts such as this one are created under the authority of article XVI, section 59 of the Texas Constitution. ³ TEX. CONST. art. XVI, § 59; TEX. WATER CODE ANN. § 54.011 (Vernon 1972); see Monsanto Co. v. Cornerstones MUD, 865 S.W.2d 937, 940 n. 4 (Tex.1993). Water districts and like entities created under section 59 of article XVI of the Texas Constitution can only perform governmental functions. ⁴ See Bennett v. Brown County Water Imp. Dist. No. 1, 153 Tex. 599, 272 S.W.2d 498, 500 (1954); Sears v. Colorado River Mun. Water Dist., 487 S.W.2d 810, 812 (Tex.Civ.App.--Eastland 1972, writ ref'd n.r.e.) (a water district is a political subdivision of the State, standing on the same footing as counties, rendering cases finding municipalities liable for proprietary functions inapplicable). As a general rule, sovereign immunity applies to governmental functions. Bennett v. Tarrant County Water Control and Improvement Dist. No. 1, 894 S.W.2d 441, 450 n. 11 (Tex.App.--Fort Worth 1995, writ denied). Accordingly, the district is immune from liability unless the legislature has expressly waived its immunity by clear and unambiguous language. See City of LaPorte v. Barfield, 898 S.W.2d 288, 291 (Tex.1995).

Sovereign immunity includes both immunity from suit and immunity from liability. Missouri Pac. R.R. Co. v. Brownsville Nav. Dist., 453 S.W.2d 812, 813 (Tex.1970). The State may consent to suit by statute or by legislative resolution. Id. at 814. Immunity from liability protects the State from judgment even if the legislature has expressly given consent to the suit. Id. at 813. 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. State v. Isbell, 127 Tex. 399, 94 S.W.2d 423, 425 (1936). The State neither creates nor admits liability by...