Texas Ass'n of School Bds. v. Benavides Isd

• Decision Date: 31 January 2007
• Docket Number: No. 04-06-00349-CV.,04-06-00349-CV.
• Citation: 221 S.W.3d 732
• Parties: TEXAS ASSOCIATION OF SCHOOL BOARDS RISK MANAGEMENT FUND, Appellant, v. BENAVIDES INDEPENDENT SCHOOL DISTRICT, Appellee.
• Court: Texas Court of Appeals

221 S.W.3d 732

TEXAS ASSOCIATION OF SCHOOL BOARDS RISK MANAGEMENT FUND, Appellant, v. BENAVIDES INDEPENDENT SCHOOL DISTRICT, Appellee.

No. 04-06-00349-CV.

Court of Appeals of Texas, San Antonio.

January 31, 2007.

Dale Jefferson, Christopher W. Martin, Martin, Disiere, Jefferson & Wisdom, L.L.P., Houston, Robin I. Krumme, Martin, Disiere, Jefferson & Wisdom, L.L.P., Max Renea Hicks, Law Office of Max Renea Hicks, Austin, Frank J. Enriquez, Law Office of Frank Enriquez, McAllen, for appellant.

Mark C. Brodeur, Brodeur Law Firm, P.L.L.C., Dallas, Charles L. Barrera, Barrera & Barrera Law Firm, Roland L. Leon, Stephen J. Chapman, Baker, Leon & Fancher, L.L.P., Corpus Christi, for appellee.

Sitting: KAREN ANGELINI, Justice, PHYLIS J. SPEEDLIN, Justice, REBECCA SIMMONS, Justice.

OPINION

Opinion by KAREN ANGELINI, Justice.

The Texas Association of School Boards Risk Management Fund appeals the trial court's denial of its plea to the jurisdiction. Because immunity from suit with respect to the contractual claims has been waived by chapter 271 of the Texas Local Government Code, we affirm the trial court's order in part. However, because there has been no waiver of immunity from suit with respect to the tort claims, we reverse the trial court's order in part and render judgment dismissing the tort claims against the Fund for want of jurisdiction.

BACKGROUND

Appellant Texas Association of School Boards Risk Management Fund ("the Fund") is an administrative agency of local governments, primarily school districts, which have joined in common purpose under the Interlocal Cooperation Act, see TEX. GOV'T CODE ANN. §§ 791.001-.033 (Vernon 2004 & Supp.2006), to self-insure against certain property and casualty claims. Appellee Benavides Independent School District ("the School District") is one of the school districts that entered into an Interlocal Cooperation Agreement with the Fund. When the School District suffered extensive water damage in the amount of $17 million, it submitted a claim to the Fund, which, after determining that the loss was not covered under the agreement, denied the claim.

In the underlying case, the School District brought claims sounding in both contract and tort. Specifically, the School District sued the Fund for breach of contract, DTPA, breach of the duty of good faith and fair dealing and fiduciary duties, negligence, and gross negligence. The School District also brought a declaratory action, seeking a declaration of coverage for the claims made. In defending itself from these claims, the Fund filed a plea to the jurisdiction based on governmental immunity, which was subsequently denied by the trial court. The Fund then brought this accelerated, interlocutory appeal.

GOVERNMENTAL IMMUNITY

Sovereign immunity protects the State from lawsuits for money damages. Reata Constr. Corp. v. City of Dallas, 197 S.W.3d 371, 374 (Tex.2006). Unless expressly waived, its political subdivisions are also entitled to such immunity, referred to as governmental immunity. Id. Governmental immunity encompasses both immunity from liability and immunity from suit. Immunity from liability protects the governmental unit from judgments even if it has consented to the suit. Id. In contrast, immunity from suit bars a suit unless the governmental unit has consented; as such, immunity from suit deprives a trial court of subject-matter jurisdiction. Id. Because the existence of subject-matter jurisdiction is a question of law, we review the trial court's ruling on a plea to the jurisdiction de novo. Tex. Dep't of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 228 (Tex.2004).

Here, there is no dispute that both the Fund and the School District are entitled to governmental immunity. See Ben Bolt-Palito Blanco Consol. Indep. Sch. Dist. v. Tex. Political Subdivisions Prop./Cas. Joint Self-Ins. Fund, 212 S.W.3d 320, 326 (Tex.2006) (holding that self-insurance fund, comprised of local governments, exists "as a distinct governmental entity entitled to assert immunity in its own right for the performance of a governmental function" and, as such, "enjoys the same governmental immunity as other political subdivisions"); Wichita Falls State Hosp. v. Taylor, 106 S.W.3d 692, 694 n. 3 (Tex.2003) ("Governmental immunity . . . protects political subdivisions of the state, including counties, cities, and school districts."). Instead, the dispute concerns whether immunity from suit exists between political subdivisions of the state, and if so, whether it has been waived.

A. Immunity Between Political Subdivisions of the State

On appeal, the Fund argues that governmental immunity protects it from the School District's claims. In response, the School District argues that there is no governmental immunity between political subdivisions of the state. For support, the School District relies on two cases: Texas Workers' Compensation Commission v. City of Eagle Pass/Texas Municipal League Workers' Compensation Joint Insurance Fund, 14 S.W.3d 801 (Tex.App.-Austin 2000, pet. denied), and State v. City of Galveston, 175 S.W.3d 1 (Tex.App.-Houston [1st Dist.] 2004, pet. granted). However, because both cases involve the State suing a city, not two political subdivisions of the state suing one another, they are distinguishable and do not apply here.

In City of Eagle Pass, 14 S.W.3d at 802-03, the Texas Workers' Compensation Commission ("TWCC") found that the City of Eagle Pass had violated provisions of the Texas Labor Code and assessed administrative penalties against the City. At the administrative hearing, the City argued that governmental immunity prevented it from having to pay the administrative penalties. Id. at 803. The Administrative Law Judge disagreed, and the City appealed the ALJ's decision to district court. Id. In reversing the ALJ's decision, the district court concluded that governmental immunity prevented the State's imposition of penalties absent the Legislature's express waiver of the subdivision's immunity. Id. The TWCC then appealed to the Austin Court of Appeals.

On appeal, the TWCC argued that because municipalities and other political subdivisions of the state exist under the authority of the state and are subject to the state's regulatory authority, they do not enjoy immunity from state regulatory authority. Id. In agreeing with the TWCC, the court of appeals emphasized that the City offered "no authority for the proposition that political subdivisions such as municipalities are sovereign entities." Id. Instead, the court explained that municipalities are merely created as political subdivisions of the state and "represent no sovereignty distinct from the state and possess only such powers and privileges as have been expressly or impliedly conferred upon them." Id. (quoting Payne v. Massey, 145 Tex. 237, 196 S.W.2d 493, 495 (1946)).

While it is well established that sovereign immunity protects the federal government from state suits and vice versa, this immunity stems from the basic precept of federalism that the federal and several state governments each possess independent sovereignty. Because political subdivisions of the state do not possess such independent sovereignty, they have no immunity as against the state.

Under the common law doctrine of immunity, municipalities and other political subdivisions of the state possess limited immunity from actions brought by private third parties. This immunity results from agency principles and the fact that municipalities and political subdivisions are agents of the state. A political subdivision's immunity is a privilege afforded it based on its existence as a subdivision of the state, and a municipality, as a political subdivision of the state, is not liable for the acts or conduct of its officers or employees. Thus, a political subdivision's derivative immunity acts as a shield against the state, from which the subdivision derives its immunity.

Id. at 803-04 (emphasis added) (quotations and citations omitted). As such, the Austin Court of Appeals reasoned that a political subdivision could not use immunity to shield itself from the State when it only enjoyed immunity because of the State. The court also found unpersuasive cases cited by the City, explaining that those cases involved conflicts between state and federal governments, which, under federalism principles, are independent sovereigns. Id. at 804. According to the court, because political subdivisions in Texas are not independently sovereign, the cases cited by the City offered no support. Id.

Likewise, applying City of Eagle Pass's analysis to the facts presented here, City of Eagle Pass offers the School District no support for its argument that there is no immunity between political subdivisions. The court in City of Eagle Pass reasoned that a city could not claim immunity from the state, the entity from which it derived its immunity. It said nothing about entities which both derive immunity from the state.

The other case relied on by the School District is City of Galveston. In that case, the State, on behalf of the Texas Department of Transportation, sued the City of Galveston for negligence in the installation, maintenance, and upkeep of a water line. 175 S.W.3d at 4. In response, the City filed a plea to the jurisdiction, arguing governmental immunity. Id. In holding that governmental immunity does not shield the City from claims brought by the State, the First Court of Appeals explained that municipalities are political subdivisions of the state and "enjoy immunity from suit for governmental activity, not due to any inherent sovereignty, but, rather, because the State cloaks them with the State's sovereign immunity from suit while they carry out the State's public purposes." Id. at 5. "Thus, any immunity from suit that a municipality enjoys derives solely from the State's immunity — the former receives immunity from suit only when carrying out governmental activities implicitly delegated to it...