Wasson Interests, Ltd. v. City of Jacksonville

• Decision Date: 01 April 2016
• Docket Number: NO. 14–0645,14–0645
• Citation: 489 S.W.3d 427
• Parties: Wasson Interests, Ltd., Petitioner, v. City of Jacksonville, Texas, Respondent
• Court: Texas Supreme Court

489 S.W.3d 427

Wasson Interests, Ltd., Petitioner,

v.City of Jacksonville, Texas, Respondent

NO. 14–0645

Supreme Court of Texas.

Argued January 14, 2016

OPINION DELIVERED: April 1, 2016

Rehearing Denied June 3, 2016

Barbara E. Rosenberg, Assistant City Attorney, Charles Steven Estee, Office of the Dallas City Attorney, James B. Pinson, Assistant City Attorney, Warren M.S. Ernst, Dallas City Attorney, for Amicus Curiae City of Dallas.

Joseph M. Nixon, Beirne, Maynard & Parsons, L.L.P., Houston, for Amicus Curiae pro se.

Heather Mahurin Lockhart, Texas Municipal League, Austin, for Amicus Curiae Texas Municipal League and Texas City Attorneys Association.

Arthur J. Anderson, Christopher Alan Brown, Winstead PC, Dallas, David Fowler Johnson, Winstead PC, Fort Worth, for Amicus Curiae Trinity East Energy, LLC.

Jeffrey R. Pruitt, Jeffrey R. Pruitt, Attorney at Law, Corpus Christi, for Petitioner.

D. Brett Brewer, Steven Rade Guy, The Norman Law Firm, Jacksonville, for Respondent.

Justice Brown delivered the opinion of the Court.

Texas is inviolably sovereign. In re BP Oil Supply Co., 317 S.W.3d 915, 919 (Tex.App.—Houston [14th Dist.] 2010, no pet.) (orig.proceeding).¹ Such sovereignty is inherent in its statehood, Alden v. Maine, 527 U.S. 706, 713, 119 S.Ct. 2240, 144 L.Ed.2d 636 (1999), and generally protects the state from suits for money damages, Tex. Nat. Res. Conservation Comm'n v. IT–Davy, 74 S.W.3d 849, 853 (Tex.2002).² Political subdivisions of the state—such as counties, municipalities, and school districts—share in the state's inherent immunity. Reata Constr. Corp. v. City of Dallas, 197 S.W.3d 371, 374 (Tex.2006). But “[t]hey represent no sovereignty distinct from the state and possess only such powers and privileges as have been expressly or impliedly conferred upon them.” Payne v. Massey, 145 Tex. 237, 196 S.W.2d 493, 495 (1946). Therefore, in the realm of sovereign immunity as it applies to such political subdivisions—referred to as governmental immunity—this Court has distinguished between those acts performed as a branch of the state and those acts performed in a proprietary, non-governmental capacity. See Dilley v. City of Houston, 148 Tex. 191, 222 S.W.2d 992, 993 (1949) ; City of Galveston v. Posnainsky, 62 Tex. 118, 127 (1884).³ Consistent with the understanding that a municipality's immunity extends only as far as the state's but no further, we have long held that “[a] municipality is not immune from suit for torts committed in the performance of its proprietary functions, as it is for torts committed in the performance of its governmental functions.” Tooke v. City of Mexia, 197 S.W.3d 325, 343 (Tex.2006).

Yet, although the rationale for governmental immunity remains firmly established in our jurisprudence, we have never decided whether the distinction between governmental and proprietary acts—sometimes referred to as the proprietary-governmental dichotomy—applies to breach-of-contract claims against municipalities. See id. This case, involving a municipality's lease of real property to a private party, requires us to address that question. Relying on a string of cases that emerged in the wake of Tooke, the court of appeals held that this dichotomy does not extend to the contract-claims context. And so the court of appeals held that in a breach-of-contract action, a city has immunity from suit for proprietary acts.⁴ We disagree and reverse. However, because the court of appeals did not address whether the lease contract was entered into in the city's proprietary or governmental capacity, we remand this case to the court of appeals for further proceedings consistent with this opinion.

I

In the 1990s, the Wassons assumed an existing 99–year lease of lakefront property owned by the City of Jacksonville. The lease specifies, among other things, that the property is to be used for residential purposes only. While they initially lived on the property, in 2009, the Wassons moved and conveyed their interest in the lease to Wasson Interests, Ltd. (“WIL”). WIL then began renting the property for terms of less than one week—apparently a violation of the lease terms. The city responded by sending WIL an eviction notice. Shortly thereafter, however, the city and WIL entered into a reinstatement agreement which required WIL to cease and desist all commercial activity in violation of the lease. The agreement allowed WIL to lease to families and small groups if the lease was for thirty or more days.

Nevertheless, in 2011, contending that WIL's use of the property violated the reinstatement agreement, the city sent WIL yet another eviction notice. WIL sued for breach of contract, seeking injunctive and declaratory relief. Following discovery, the city filed a combined motion for traditional and no-evidence summary judgment on several grounds, including governmental immunity. The trial court granted the motion without comment. WIL appealed, attacking both the traditional and no-evidence summary-judgment grounds.

The court of appeals affirmed based on governmental immunity. Wasson Interests, Ltd. v. City of Jacksonville, No. 12–13–00262–CV, 2014 WL 3368413, at *3–4 (Tex.App.—Tyler July 9, 2014) (mem.op.). Following the San Antonio court of appeals' recent opinion in City of San Antonio v. Wheelabrator Air Pollution Control, Inc., 381 S.W.3d 597 (Tex.App.—San Antonio 2012, pet. denied), the court of appeals rejected WIL's argument that the proprietary-governmental dichotomy applied in the contract-claims context. Wasson, 2014 WL 3368413, at *2–4 (noting that the “supreme court has never held that the [proprietary-governmental dichotomy] determines whether immunity from suit is waived for breach[-]of[-]contract claims.”). The court of appeals instead held that immunity is the “default position” in contract cases. Id. at *3. Therefore, as immunity was the default position and the court of appeals found no waiver, it affirmed the trial court's summary judgment. Id. at *3–4. WIL appealed, arguing that the proprietary-governmental dichotomy does extend to the contract-claims context. We granted review to resolve that question.

II

A

Two years after Texas joined the Union, this Court recognized the doctrine of sovereign immunity: “no state can be sued in her own courts without her consent, and then only in the manner indicated by that consent.” Hosner v. DeYoung, 1 Tex. 764, 769 (1847). This common-law doctrine—“inherent in the nature of sovereignty,” The Federalist No. 81 (Alexander Hamilton)—“initially developed without any legislative or constitutional enactment,” Reata Constr. Corp., 197 S.W.3d at 374. See also Bd. of Land Comm'rs v. Walling, Dallam 524, 525 (Tex.1843) (“That it is one of the essential attributes of sovereignty not to be amenable to the suit of a private person without its own consent has grown into a maxim, sanctioned as well by the laws of nations as the general sense and practice of mankind.”).

Yet despite being “an established principle of jurisprudence in all civilized nations,” Beers v. Arkansas, 61 U.S. 527, 20 How. 527, 15 L.Ed. 991 (1857), the stated reasons for immunity have changed over time. The theoretical justification has evolved from the English legal fiction that “[t]he King can do no wrong,”1 William Blackstone, Commentaries *246,⁵ to “accord[ing] States the dignity that is consistent with their status as sovereign entities,” Fed. Mar. Comm'n v. S.C. State Ports Auth. , 535 U.S. 743, 760, 122 S.Ct. 1864, 152 L.Ed.2d 962 (2002), to “protect[ing] the public treasury,” Taylor, 106 S.W.3d at 695. Regardless of which justification is most compelling, however, it is firmly established that “an important purpose [of immunity] is pragmatic: to shield the public from the costs and consequences of improvident actions of their governments.” Tooke, 197 S.W.3d at 332.

Aside from the substance of the common-law roots of immunity, the very fact that it has developed through the common law—and has remained there—has important implications. Namely, as the arbiter of the common law, the judiciary has historically been, and is now, entrusted with “defin[ing] the boundaries of the common-law doctrine and ... determin[ing] under what circumstances sovereign immunity exists in the first instance.” See Reata, 197 S.W.3d at 375 ; see also Houston Belt & Terminal Ry. v. City of Houston, 487 S.W.3d 154 n.1 (Tex.2016); Tex. Dep't of Criminal Justice v. Miller, 51 S.W.3d 583, 592 (Tex.2001) (Hecht, J., concurring) (“The common-law rule of immunity in Texas was the judiciary's to recognize, and it is ours to disregard.”). In doing so, of course, we take as guides both the nature and purposes of immunity. We are also mindful that “the pragmatic rationale supporting this immunity ... helps to delineate its limits.” Houston Belt, 487 S.W.3d at 157.

But while the judiciary prunes and shapes the doctrine of immunity, its roots remain secure within the sovereign. Thus, because the doctrine dictates that a sovereign may not be sued “without her consent,” Hosner, 1 Tex. at 769, we generally defer to the sovereign will of the state —as expressed by “the people”—for any waiver of already existing immunity. See Tooke, 197 S.W.3d at 332 ; see also Tex. Const. art. I, § 2 (“All political power is inherent in the people, and all free governments are founded on their authority, and instituted for their benefit.”). “In Texas, the people's will is expressed in the Constitution and laws of the State,” and thus “to waive immunity, consent to suit must ordinarily be found in a constitutional provision or legislative enactment.” Taylor, 106 S.W.3d at 695. Consistent with the doctrine's well-established roots, we have ordinarily “deferred to the Legislature to waive sovereign immunity from suit, because this allows the Legislature to protect its policymaking function.” IT–Davy, 74 S.W.3d at 854 ; see also Taylor, 106 S.W.3d at 695 ; Fed. Sign, 951 S.W.2d at 409. And, in addition to the doctrinal consistency of deferring to the legislative...