Triple X-Ray Inc. v. Winkler County Memorial Hospital

• Court: Court of Appeals of Texas
• Decided: April 11, 2012
• Docket: 08-10-00364-CV
• Status: Published

Opinion

COURT OF APPEALS EIGHTH DISTRICT OF TEXAS EL PASO, TEXAS

TRIPLE X-RAY, INC., ' No. 08-10-00364-CV Appellant, ' Appeal from the v. ' 109th District Court WINKLER COUNTY MEMORIAL ' HOSPITAL, of Winkler County, Texas ' Appellee. ' (TC# 15,555)

OPINION

Appellant, Triple X-Ray, Inc. (Triple X-Ray) filed suit for breach of contract against

Winkler County Memorial Hospital (the County). The trial court affirmed the County’s plea to

the jurisdiction in which it asserted its immunity from suit. We reverse.

BACKGROUND

In or about September or October 1999, Triple X-Ray and the County entered into a

contract whereby Triple X-Ray would provide diagnostic imaging equipment to the County for a

term of five years and thereafter amended the contract in 2002, extending the term of the contract

period by five years. The contract provided that the County would not duplicate, expand, contract

for, or initiate another similar diagnostic imaging modality without the prior written consent of

Triple X-Ray. After the County allegedly violated those terms, Triple X-Ray filed suit against the County for breach of contract seeking actual damages and attorney’s fees. In its answer, the

County asserted the affirmative defense of governmental immunity from suit and counterclaimed

that the contract was invalid under Article 11, Section 7 of the Texas Constitution and sought

declaratory judgment, recovery of monies paid under the contract, prejudgment interest, and

attorney’s fees. The County thereafter nonsuited its counterclaim against Triple X-Ray and filed

a plea to the jurisdiction based upon the doctrine of sovereign immunity. 1 Triple X-Ray

contended that the County, by its conduct and by seeking affirmative relief, waived its immunity

from suit. After hearing the parties’ contentions, the trial court sustained the County’s plea to the

jurisdiction and entered its written findings of fact and conclusions of law, which included a

finding that “Winkler County Memorial Hospital is a unit of Winkler County, Texas, a

governmental entity.”

DISCUSSION

In its sole issue, and in reliance upon Reata Construction Corp. v. City of Dallas, Triple

X-Ray asserts that the trial court erred in granting the County’s plea to the jurisdiction because the

County had waived its immunity concerning claims against it that are germane to, connected with,

and properly defensive to the matters on which the County based its claims for affirmative relief.

Reata Construction Corp. v. City of Dallas, 197 S.W.3d 371, 376 (Tex. 2006). Triple X-Ray also

contends that the trial court erred in granting the plea because the County, by its conduct, waived

its immunity.

Appellate Jurisdiction

We first address the threshold matter of our jurisdiction to review the trial court’s grant of

1 In its second-amended answer, the County alleged and recognized that counties are cloaked with governmental immunity as discussed hereafter. 2 the County’s plea to the jurisdiction. Juarez v. Tex. Ass’n of Sporting Officials El Paso Chapter,

172 S.W.3d 274, 278 (Tex. App. -- El Paso 2005, no pet.) (“We must inquire into our own

jurisdiction, even if it is necessary to do so sua sponte.”). Absent a statute specifically

authorizing an appeal, our jurisdiction is restricted to reviewing final judgments. Cherokee Water

Co. v. Ross, 698 S.W.2d 363, 365 (Tex. 1985).

Section 51.014(a)(8) of the Civil Practices and Remedies Code specifies that a person may

appeal from an interlocutory order of a district court, county court at law, or county court that

grants or denies a governmental unit’s plea to the jurisdiction. TEX. CIV. PRAC. & REM.

CODE ANN. ' 51.014(a)(8) (West 2008). The term “governmental unit” is statutorily defined to

include a county of this state. TEX. CIV. PRAC. & REM. CODE ANN. ' 101.001(3) (West

2011). Because Winkler County is statutorily defined to be a governmental unit and the County is

a county hospital under Section 263.021 of the Health and Safety Code, we find that we have

jurisdiction to consider Triple X-Ray’s interlocutory appeal of the trial court’s order granting the

County’s plea to the jurisdiction. TEX. CIV. PRAC. & REM. CODE ANN. ' 51.014(a)(8) (West

2008); TEX. CIV. PRAC. & REM. CODE ANN. ' 101.001(3); TEX. HEALTH & SAFETY

CODE ANN. § 263.021 (West 2010).

Standard of Review

When a party asserts governmental immunity to suit, it challenges the trial court’s

jurisdiction. Harris Co. Hosp. Dist. v. Tomball Reg. Hosp., 283 S.W.3d 838, 842 (Tex. 2009); see

also Bland Independent School District v. Blue, 34 S.W.3d 547, 554 (Tex. 2000); Samaniego v.

Keller, 319 S.W.3d 825, 828 (Tex. App. -- El Paso 2010, no pet.). Because it involves a question

of law, we review de novo a motion or plea asserting governmental immunity. Harris Co. Hosp.

3 Dist., 283 S.W.3d at 842. Thus, we review de novo whether a trial court has subject-matter

jurisdiction and whether a pleader has alleged facts that affirmatively demonstrate the trial court’s

subject-matter jurisdiction. Texas Department of Parks & Wildlife v. Miranda, 133 S.W.3d 217,

228 (Tex. 2004); Samaniego, 319 S.W.3d at 828.

A plaintiff has the burden of pleading facts which affirmatively show that the trial court has

jurisdiction. Tex. Ass’n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440, 446 (Tex. 1993). Thus,

we first consider the plaintiff=s petition to determine whether the facts pled affirmatively

demonstrate that jurisdiction exists. State v. Holland, 221 S.W.3d 639, 642 (Tex. 2007), citing

Texas Department of Parks & Wildlife, 133 S.W.3d at 226. We construe the pleadings liberally in

favor of the pleader, look to the pleader’s intent, and accept as true the factual allegations in the

pleadings. Texas Department of Parks & Wildlife, 133 S.W.3d at 226, 228. If the pleadings are

insufficient to establish jurisdiction but do not affirmatively demonstrate an incurable defect, the

plaintiff should be afforded an opportunity to replead. Holland, 221 S.W.3d at 643; Texas

Department of Parks & Wildlife, 133 S.W.3d at 226-27. However, in some instances, a plea to

the jurisdiction may require our consideration of evidence pertaining to jurisdictional facts.

Holland, 221 S.W.3d at 643; Texas Department of Parks & Wildlife, 133 S.W.3d at 227; Bland

Independent School District, 34 S.W.3d at 555. “A plea should not be granted if a fact issue is

presented as to the court’s jurisdiction, but if the relevant undisputed evidence negates jurisdiction,

then the plea to the jurisdiction must be granted.” Holland, 221 S.W.3d at 643, citing Texas

Department of Parks & Wildlife, 133 S.W.3d at 227-28.

Governmental Immunity

The Texas Supreme Court has distinguished the related concepts of sovereign immunity 4 and governmental immunity. Wichita Falls State Hosp. v. Taylor, 106 S.W.3d 692, 694 n.3 (Tex.

2003). Sovereign immunity protects from suit and liability the State and its various divisions

such as agencies, boards, hospitals, and universities, and governmental immunity protects from

suit and liability the State’s political subdivisions such as counties, cities, and school districts. Id.

Political subdivisions of the State, including hospital districts, are protected by governmental

immunity from lawsuits for damages. Harris Co. Hosp. Dist., 283 S.W.3d at 842; see also

Wichita Falls State Hosp., 106 S.W.3d at 694 n.3.

The two components of governmental immunity are “whether the State has consented to

suit and whether the State has accepted liability.” Harris Co. Hosp. Dist., 283 S.W.3d at 842;

Tooke v. City of Mexia, 197 S.W.3d 325, 332 (Tex. 2006). Although immunity from liability is

not jurisdictional and protects the governmental entity from the enforcement of judgments against

it, immunity from suit is jurisdictional and bars suit against the entity altogether. Harris Co.

Hosp. Dist., 283 S.W.3d at 842; Tooke, 197 S.W.3d at 332; Texas Department of Parks & Wildlife,

133 S.W.3d at 224. Thus, while a governmental entity which enters into a contract necessarily

waives immunity from liability and, like any other party, binds itself to the terms of the agreement,

the entity does not waive immunity from suit. Tooke, 197 S.W.3d at 332; Vantage Systems

Design, Inc. v. Raymondville I.S.D., 290 S.W.3d 312, 315 (Tex. App. -- Corpus Christi 2009, pet.

denied).

Waiver of Immunity from Suit by Statute

A governmental entity’s conduct in accepting benefits under a contract does not

necessarily waive immunity from suit for breach of contract. See Tex. A & M Univ. Sys v.

Koseoglu, 233 S.W.3d 835, 840 (Tex. 2007) (Legislature had not consented to suit), citing Gen.

5 Servs. Comm’n v. Little-Tex Insulation Co., 39 S.W.3d 591, 597-98 (Tex. 2001). As noted by the

Texas Supreme Court, “there is but one route to the courthouse for breach-of-contract claims

against the State, and that route is through the Legislature.” Little-Tex, 39 S.W.3d at 597-98;

Catalina Dev. Inc. v. County of El Paso, 121 S.W.3d 704, 705-06 (Tex. 2003).

Section 311.034 of the Code Construction Act states that a statute shall not be construed as

a waiver of sovereign immunity unless the waiver is effected by clear and unambiguous language.

TEX. GOV=T CODE ANN. '' 311.001, 311.034 (West 2005). Thus, exceptions to the

governmental-immunity doctrine are applicable under those conditions established by the Texas

Legislature. See Wichita Falls State Hosp., 106 S.W.3d at 696 (consent to suit must typically be

provided in a constitutional provision or by legislative enactment); Harris County v. Dillard, 883

S.W.2d 166, 168 (Tex. 1994).

In Section 271.152 of the Texas Local Government Code, the Legislature has specified that

a local governmental entity authorized by statute or constitution to enter into a contract and that

enters into a contract subject to the subchapter, waives sovereign immunity to suit for the purpose

of adjudicating a claim for breach of contract. TEX. LOC. GOV’T CODE ANN. § 271.152

(West 2005); Sharyland Water Supply Corp. v. City of Alton, 354 S.W.3d 407, 412 (Tex. 2011)

(Section 271.152 waived city’s immunity from suit for breach-of-contract claim arising from

contract for services). However, because the Legislature expressly excluded counties from those

political subdivisions encompassed within the definition of “local governmental entity,” the

waiver-of-immunity provision in Section 271.152 is not applicable to counties that are sued for

breach of contract. TEX. LOC. GOV’T CODE ANN. § 271.151(3) (West 2005); Potter County

v. Tuckness, 308 S.W.3d 425, 431 (Tex. App. -- Amarillo 2010, no pet.). Thus, Section 271.152

does not waive the County’s immunity for breach of contract.

6 7 Counterclaim, Nonsuit, and Wavier by Conduct

The Texas Supreme Court has found to be fundamentally unfair a governmental entity’s

assertion of affirmative claims against a party when the entity contends that it is immune from the

party’s claims against it. Reata Construction Corp. v. City of Dallas, 197 S.W.3d 371, 376 (Tex.

2006). In Reata, the Supreme Court held that “when an affirmative claim for relief is filed by a

governmental entity, . . . immunity from suit no longer completely exists for the governmental

entity.” Reata, 197 S.W.3d at 376. There, the Court explained that:

[W]here the governmental entity has joined into the litigation process by asserting its own affirmative claims for monetary relief, we see no ill befalling the governmental entity or hampering of its governmental functions by allowing adverse parties to assert, as an offset, claims germane to, connected with, and properly defensive to those asserted by the governmental entity.

Reata, 197 S.W.3d at 376-77. Subsequently, the Court held that an entity does not have immunity

from suit for claims germane to, connected with, and properly defensive to its counterclaim to the

extent an opposing party’s claims act as an offset against the entity’s recovery, even when the

counterclaim is compulsory. City of Irving v. Inform Const., Inc., 201 S.W.3d 693, 694 (Tex.

2006) (per curiam).

During the pendency of this appeal, the Supreme Court issued its opinion in City of Dallas

v. Albert, 354 S.W.3d 368 (Tex. 2011). There, the Supreme Court determined that a

governmental entity’s nonsuit of its counterclaim did not reinstate the entity’s immunity from suit

for claims that would offset, in whole or in part, any recovery by the city and that were germane to,

connected with, or properly defensive to the entity’s claims. Id. at 374-75. The Albert opinion

explains:

[W]hen a governmental entity asserts affirmative claims for monetary recovery, whether by filing suit or by counterclaim, the trial court acquires jurisdiction over the entity’s claims and certain offsetting, defensive claims asserted against the

8 entity.

Id. at 375. However, nonsuit of a governmental entity’s counterclaim neither reinstates nor

creates immunity for the entity. Id. at 376. Where a party has affirmative claims pending at the

time the governmental entity nonsuits its counterclaim, “the trial court retain[s] jurisdiction over

the [party’s] claims to the extent it had acquired it.” Id. at 375.

Triple X-Ray also contends that the County, by its conduct, waived its immunity from suit.

Because the Legislature alone can waive sovereign immunity, an entity’s conduct in accepting

benefits under a contract does not waive immunity from suit. Tex. Natural Resource

Conservation Com’n v. IT-Davy, 74 S.W.3d 849, 857 (Tex. 2002). Recently, in its Sharyland

opinion, the Supreme Court again rejected “the invitation to recognize a waiver-by-conduct

exception in a breach-of-contract suit against a governmental entity.” Sharyland, 354 S.W.3d at

414. Therefore, the County did not by its conduct waive its governmental immunity from suit.

However, because the County asserted affirmative claims for monetary recovery by

counterclaim, the trial court acquired jurisdiction over the County’s claims and certain offsetting,

defensive claims asserted against the entity. Albert, 354 S.W.3d at 375. Because Triple X-Ray

had affirmative claims pending at the time the County nonsuited its counterclaim, the trial court

retained its jurisdiction over Triple X-Ray’s claims to the extent it had acquired it. Albert, 354

S.W.3d at 375. We therefore sustain Issue One.

CONCLUSION

The trial court’s order sustaining the plea to the jurisdiction is reversed and the case is

remanded for further proceedings.

April 11, 2012 GUADALUPE RIVERA, Justice

Before McClure, C.J., Rivera, J., and Antcliff, J.