Reata Const. Corp. v. City of Dallas

• Decision Date: 30 June 2006
• Docket Number: No. 02-1031.,02-1031.
• Citation: 197 S.W.3d 371
• Parties: REATA CONSTRUCTION CORPORATION, Petitioner, v. CITY OF DALLAS, Respondent.
• Court: Texas Supreme Court

197 S.W.3d 371

REATA CONSTRUCTION CORPORATION, Petitioner, v. CITY OF DALLAS, Respondent.

No. 02-1031.

Supreme Court of Texas.

Argued December 12, 2004.

Decided June 30, 2006.

Lee L. Cameron Jr., Rebecca M. Alcantar, Amy Elizabeth Stewart, Jeffrey Osmon Marshall, Wilson Elser Moskovitz Edelman & Dicker LLP, Dallas, for petitioner.

Charles S. Black Jr., Asst. City Atty., Julie B. Essenburg, Office of the City Atty. of City of Dallas, Deborah G. Hankinson, Law Office of Deborah Hankinson PC, Dallas, for respondent.

Malinda York Crouch, Sr. Asst. City Atty., Houston, Elliot Clark, Winstead Sechrest & Minick, P.C., Rafael Edward Cruz, Office of the Atty. Gen., Kristofer S. Monson, Asst. Solicitor Gen., Don Wayne Cruse Jr., Asst. Solicitor Gen., Austin, Bruce S. Powers, Asst. County Atty., Houston, William M. Boyd, John R. Stooksberry, Boyd Veigel, P.C., McKinney, Robert C. Lyon, Robert Lyon & Associates, Rowlett, Bob Gorsky, Lyon Gorsky Baskett, et al., Dallas, Delmar L. Cain, Office of Gen. Counsel, College Station, Miles T. Bradshaw, Feldman & Rogers, L.L.P., Dallas, for amicus curiae.

Justice JOHNSON delivered the opinion of the Court, in which Chief Justice JEFFERSON, Justice WAINWRIGHT, Justice MEDINA, and Justice GREEN joined.

We grant the City of Dallas's motion for rehearing. We withdraw our opinion of April 2, 2004, and substitute the following in its place.

The issue in this case is whether the City of Dallas has governmental immunity from suit for claims by Reata Construction Corporation arising from the City's alleged negligence. The court of appeals held that the City had immunity. We conclude that the City does not have immunity from suit as to Reata's claims which are germane to, connected with, and properly defensive to the City's claims, to the extent Reata's claims offset those asserted by the City. We reverse the court of appeals' judgment and remand the case to the trial court for further proceedings.

I. Background

The City of Dallas issued Dynamic Cable Construction Corporation, Inc., a temporary license to install fiber optic cable in Dallas. Dynamic subcontracted with Reata Construction Corporation to do the drilling for the project. Reata inadvertently drilled into a thirty-inch water main, flooding a nearby building owned by Southwest Properties Group, Inc. Southwest sued Dynamic and Reata for negligence, and some tenants of the building intervened. Reata filed a third-party claim against the City alleging that the City negligently misidentified the water main's location. Before answering Reata's third-party claim, the City intervened in the case, asserting negligence claims against Dynamic. A few weeks after intervening in the suit, the City answered Reata's petition and filed special exceptions asserting that Reata's claims were not within the Texas Tort Claims Act's waiver of immunity. See TEX. CIV. PRAC. & REM. CODE § 101.021. The City subsequently filed an amended plea in intervention asserting claims of negligence against Reata and a plea to the jurisdiction asserting governmental immunity from suit. Reata filed a response claiming that (1) governmental immunity did not apply because the City subjected itself to the trial court's jurisdiction by intervening in the lawsuit and seeking affirmative relief; (2) the Dallas City Charter and section 51.075 of the Texas Local Government Code contain express waivers of governmental immunity because they provide, respectively, that the City may "sue or be sued" and "plead and be impleaded"; (3) under the common law, the City could not assert governmental immunity for its actions in failing to properly identify the water main's location prior to 1970 because water services were considered a proprietary function; and (4) even if the Texas Tort Claims Act applied, Reata's claim fell within the Act's waiver of immunity. The trial court denied the City's plea to the jurisdiction, and the City took an interlocutory appeal. See TEX. CIV. PRAC. & REM. CODE § 51.014(a)(8).

Rejecting each of Reata's asserted bases for a waiver of governmental immunity, the court of appeals reversed and dismissed Reata's claims against the City. 83 S.W.3d 400. The court of appeals held that even though the City intervened in the suit against Reata, by such action the City asserted its right to sue but did not waive its governmental immunity from suit. Id. at 398-400.

In Anderson, Clayton & Co. v. State ex rel. Allred, 122 Tex. 530, 62 S.W.2d 107, 110 (1933), we stated: "[W]here a state voluntarily files a suit and submits its rights for judicial determination it will be bound thereby and the defense will be entitled to plead and prove all matters properly defensive. This includes the right to make any defense by answer or cross-complaint germane to the matter in controversy." But the court of appeals relied on other language in that opinion providing that the State, having invoked the jurisdiction of the district court, was "subject to the same rules as other litigants, except in so far as such rules may be modified in favor of the State by statute or may be inapplicable or unenforceable because of exemptions inherent in sovereignty." 83 S.W.3d at 399 (quoting Anderson, 62 S.W.2d at 110). The court of appeals concluded that when a governmental entity intervenes in a lawsuit, "sovereign immunity still forecloses suit against that governmental entity." Id.

In this Court, Reata asserts (1) governmental immunity did not apply because the City subjected itself to the trial court's jurisdiction by intervening in the lawsuit and seeking affirmative relief; (2) the Dallas City Charter and section 51.075 of the Texas Local Government Code contain express waivers of governmental immunity because they provide, respectively, that the City may "sue or be sued" and "plead and be impleaded"; and (3) even if the Texas Tort Claims Act applied, Reata stated a claim within the Act's waiver of immunity.

II. Sovereign Immunity

"Sovereign immunity protects the State from lawsuits for money damages." Tex. Natural Res. Conservation Comm'n v. IT-Davy, 74 S.W.3d 849, 853 (Tex.2002). Political subdivisions of the state, including cities, are entitled to such immunity—referred to as governmental immunity—unless it has been waived.¹ See Wichita Falls State Hosp. v. Taylor, 106 S.W.3d 692, 694 n. 3 (Tex.2003). Sovereign immunity encompasses immunity from suit, which bars a suit unless the state has consented, and immunity from liability, which protects the state from judgments even if it has consented to the suit. Tex. Dep't of Transp. v. Jones, 8 S.W.3d 636, 638 (Tex.1999). We have held that sovereign immunity from suit deprives a trial court of subject-matter jurisdiction. Tex. Dep't of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 224 (Tex.2004); Jones, 8 S.W.3d at 638.

Sovereign immunity is a common-law doctrine that initially developed without any legislative or constitutional enactment. See Cohens v. Virginia, 6 Wheat. 264, 19 U.S. 264, 293, 5 L.Ed. 257 (1821) (recognizing the doctrine without citing statutory or constitutional authority); Hosner v. De Young, 1 Tex. 764, 769 (1846) (same); see also Tex. A & M University-Kingsville v. Lawson, 87 S.W.3d 518, 520 (Tex.2002). We have consistently deferred to the Legislature to waive such immunity. See IT-Davy, 74 S.W.3d at 854; Guillory v. Port of Houston Auth., 845 S.W.2d 812, 813 (Tex.1993); Duhart v. State, 610 S.W.2d 740, 741 (Tex.1980); Lowe v. Tex. Tech Univ., 540 S.W.2d 297, 298 (Tex. 1976). We have previously discussed the possibility that a governmental entity might waive its immunity by certain actions, even absent a legislative waiver of immunity. See Catalina Dev., Inc. v. County of El Paso, 121 S.W.3d 704, 705-06 (Tex.2003). However, there is tension between the concept of a governmental entity waiving its immunity from suit by some action independent from the Legislature's waiving immunity and the principle that only the Legislature can waive sovereign immunity. See IT-Davy, 74 S.W.3d at 853. There is also tension between the concept of a governmental entity waiving its immunity from suit and the principle that a court's lack of subject-matter jurisdiction generally cannot be waived. See Fed. Underwriters Exch. v. Pugh, 141 Tex. 539, 174 S.W.2d 598, 600 (1943). Recognizing that sovereign immunity is a common-law doctrine, we have not foreclosed the possibility that the judiciary may modify or abrogate such immunity by modifying the common law. See Taylor, 106 S.W.3d at 695-96; see also Tex. Dep't of Criminal Justice v. Miller, 51 S.W.3d 583, 593 (Tex.2001) (Hecht, J., concurring) (noting that judicial abolition of immunity may be necessary to prompt the Legislature to enact a reasoned system for determining the government's responsibility for its torts). Therefore, it remains the judiciary's responsibility to define the boundaries of the common-law doctrine and to determine under what circumstances sovereign immunity exists in the first instance.

We have generally deferred to the Legislature to waive immunity because the Legislature is better suited to address the conflicting policy issues involved. See IT-Davy, 74 S.W.3d at 854. A lack of immunity may hamper governmental functions by requiring tax resources to be used for defending lawsuits and paying judgments rather than using those resources for their intended purposes. Id. The Legislature has expressed its desire to preserve its interest in managing fiscal matters through the appropriations process by maintaining sovereign immunity unless it has clearly and unambiguously stated otherwise. TEX. GOV'T CODE § 311.034. The United States Supreme Court has also recognized that suits for money damages against states "may threaten the financial integrity of the States" and that "at the time of the founding, many of the States could have been forced into insolvency but for their immunity from private suits for money damages." Alden v. Maine, 527 U.S. 706, 750, 119...