Court Opinion

ID: 6497559
Source: CourtListenerOpinion
Date Created: 2022-07-04 00:15:02.624442+00
Date Added: 2024-06-11T08:51:14.550766
License: Public Domain

NUMBER 13-21-00071-CV

                            COURT OF APPEALS

                  THIRTEENTH DISTRICT OF TEXAS

                    CORPUS CHRISTI – EDINBURG

EDUCATION SERVICE CENTER REGION 2,                                         Appellant,

                                              v.

GLOBAL SPECTRUM, LP D/B/A
SPECTRA VENUE MANAGEMENT
AND NUECES COUNTY,                                                         Appellees.

              On appeal from the County Court at Law No. 2
                       of Nueces County, Texas.

                         MEMORANDUM OPINION

            Before Justices Benavides, Longoria, and Tijerina
              Memorandum Opinion by Justice Benavides

      In this interlocutory appeal from the denial of a plea to the jurisdiction, we must

decide whether appellant Education Service Center Region 2 (ESCR2) is a state or local

governmental entity. ESCR2 contends that, as a unit of state government, the waiver of
immunity in Chapter 271 of the Local Government Code does not apply to appellees

Global Spectrum, LP d/b/a Spectra Venue Management’s (Global) and Nueces County’s

breach of contract claims. Because we agree, we reverse and render a judgment

dismissing the claims for want of jurisdiction.

                                    I.      BACKGROUND

       Nueces County owns the Richard M. Regional Fairgrounds, which includes a

conference facility. Global manages and operates the fairgrounds on Nueces County’s

behalf.

       ESCR2 rented the conference facility for a parent engagement conference. The

licensing agreement between the parties contains an indemnity agreement whereby

ESCR2 agreed to “indemnify, defend, and hold harmless [Global] and [Nueces

County] . . . from and against any and all claims . . . arising . . . from the use . . . of the

Fairgrounds by [ESCR2], its employees, agents, contractors, exhibitors, invitees, guests

or patrons.” The licensing agreement also required ESCR2 to obtain commercial general

liability insurance and name appellees as additional insureds.

       Two attendees at the conference fell off a stage and sued all three parties for

premises liability. Appellees filed cross-claims against ESCR2 for breach of contract after

ESCR2 refused to defend and indemnify them from the attendees’ claims. The cross-

petition alleged that the trial court had jurisdiction over the cross-claims because they

“arise out of, and [are] directly related to,” the attendees’ claims.

       ESCR2 filed a plea to the jurisdiction contending that “Education Service Centers

such as [ESCR2] have been deemed to be arms of the State of Texas/units of state

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government, not local governmental entities such as school districts.” ESCR2 further

argued that Chapter 2260 of the Texas Government Code provides the exclusive process

for resolving contractual disputes with state entities but does not waive ESCR2’s immunity

from appellees’ contractual claims. ESCR2 concluded that appellees had failed to

establish a waiver of immunity, and consequently, the trial court lacked subject-matter

jurisdiction over appellees’ claims.

       Appellees filed a response arguing that Chapter 2260 does not apply to their

contract claim with ESCR2 because the licensing agreement “does not involve a project”

and “does not involve goods or services.” Appellees posited that because their contractual

dispute was not covered by Chapter 2260, they were necessarily permitted to file suit

against ESCR2. According to appellees, their cross-claims for defense and indemnity

under the licensing agreement did not “implicate” ESCR2’s immunity.

       ESCR2 replied that appellees “fail to recognize the basic principle that [ESCR2] is

entitled to sovereign immunity and that such immunity is afforded to it by the common

law, not by a legislative waiver of such immunity.” ESCR2 reiterated that appellees

“cannot point to any legislative waiver of sovereign immunity” that would apply to their

contractual claims.

       Appellees subsequently amended their cross-petition but did not make any new

jurisdictional allegations. After a hearing, the trial court denied the plea, and this

interlocutory appeal ensued. See TEX. CIV. PRAC. & REM. CODE ANN. § 51.014(a)(8).

                      II.   STANDARD OF REVIEW & APPLICABLE LAW

       Subject matter jurisdiction is essential to a court’s authority to decide a case. Bland

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Indep. Sch. Dist. v. Blue, 34 S.W.3d 547, 554 (Tex. 2000) (citing Tex. Ass’n of Bus. v.

Tex. Air Control Bd., 852 S.W.2d 440, 443 (Tex. 1993)). Whether a trial court has subject

matter jurisdiction is a question of law we review de novo. State Dep’t of Highways & Pub.

Transp. v. Gonzalez, 82 S.W.3d 322, 327 (Tex. 2002). A plaintiff must plead facts that

affirmatively demonstrate the trial court’s subject matter jurisdiction. Fleming v. Patterson,

310 S.W.3d 65, 68 (Tex. App.—Corpus Christi–Edinburg 2010, pet. struck) (citing Tex.

Air Control Bd., 852 S.W.2d at 446).

         Sovereign immunity protects the State and its agencies from lawsuits for money

damages and deprives a trial court of subject matter jurisdiction over the plaintiff’s claims.

Mission Consol. Indep. Sch. Dist. v. Garcia, 253 S.W.3d 653, 655 & n.2 (Tex. 2008).

Governmental immunity offers the same protections for political subdivisions of the State,

including municipalities and school districts. Id. To prevail on a claim of immunity, the

governmental defendant “may challenge the pleadings, the existence of jurisdictional

facts, or both.” Alamo Heights Indep. Sch. Dist. v. Clark, 544 S.W.3d 755, 770 (Tex.

2018).

         “Governmental entities are typically immune from suit unless the state consents

through an express legislative enactment.” City of Fort Worth v. Pridgen, No. 20-0700,

2022 WL 1696036, at *4 (Tex. May 27, 2022) (citing Rosenberg Dev. Corp. v. Imperial

Performing Arts, Inc., 571 S.W.3d 738, 746 (Tex. 2019)). Chapter 271 of the Texas Local

Government Code provides a limited waiver of immunity for certain contract claims

against a “local governmental entity.” TEX. LOC. GOV’T CODE ANN. § 271.152. Chapter 271

defines “local governmental entity” as “a political subdivision of this state, . . . including

                                              4
a . . . public school district” but expressly excludes counties and any “unit of state

government.” Id. at § 271.151(3). The Texas Government Code defines “unit of state

government” as “the state or an agency, department, commission, bureau, board, council,

court, or other entity that is in any branch of state government and that is created by the

constitution or a statute of this state.” TEX. GOV’T CODE ANN. § 2260.001(4). Accordingly,

Chapter 271’s waiver of immunity does not apply to state entities. Prairie View A&M Univ.

v. Dickens, 243 S.W.3d 732, 735 (Tex. App.—Houston [14th Dist.] 2007, no pet.) (holding

Chapter 271 did not waive the university’s immunity from suit because it was a state

entity).

       Chapter 2260 of the Texas Government Code provides the exclusive procedure

for resolving certain contractual disputes between state entities and their contractors “but

does not waive sovereign immunity to suit or liability.” TEX. GOV’T CODE ANN.

§§ 2260.005–.006. Instead, “Chapter 2260 establishes a mediation process for certain

disputes between state agencies and their contractors[, and] [i]f mediation fails, then a

contractor may request that the state agency refer the contractor’s claim to the State

Office of Administrative Hearings for an administrative law judge to hear it.” In re City of

Galveston, 622 S.W.3d 851, 853 (Tex. 2021) (orig. proceeding). Finally, “the contractor

may use the judge’s findings and conclusions to seek payment of the claim through

legislative appropriation.” Id. Thus, regardless of whether Chapter 2260 applies to

appellees’ claims, it cannot serve as a valid waiver of immunity to suit that would establish

the trial court’s authority to hear this case. See TEX. GOV’T CODE ANN. § 2260.006.

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                                            III.    ANALYSIS

        The parties agree that ESCR2 is a governmental entity entitled to some form of

immunity. But they dispute whether ESCR2 is a “local governmental entity” susceptible

to Chapter 271’s waiver of immunity or a “unit of state government” that falls outside the

scope of Chapter 271.1

A.      Motion to Strike

        As a preliminary matter, appellees ask us to consider three interlocal agreements

included as Tabs 2–4 in the appendix to their brief, as well as content on various websites,

all of which allegedly support their position that ESCR2 is a local governmental entity.

See TEX. R. APP. P. 38.1(k). ESCR2 filed a motion to strike, asking us to disregard the

agreements and websites because they are outside the appellate record.

        Our review is generally confined to the appellate record filed by the district clerk

and the court reporter. Arbor E & T, LLC v. Lower Rio Grande Workforce Dev. Bd., Inc.,

476 S.W.3d 25, 29 (Tex. App.—Corpus Christi—Edinburg 2013, no pet.); see TEX. R.

APP. P. 34. We may strike “material outside the record that is improperly included in or

attached to a party’s brief.” Id. at 30 (quoting Siefkas v. Siefkas, 902 S.W.2d 72, 74 (Tex.

App.—El Paso 1995, no writ)). This ensures that we only consider the evidence before

        1  We note that appellees did not allege in their cross-petition that ESCR2 is a local governmental
entity or identify Chapter 271 as a waiver of immunity. See City of San Antonio v. Maspero, 640 S.W.3d
523, 528 (Tex. 2022) (“The party suing the governmental unit bears the burden of affirmatively showing
waiver of immunity.”). “We do not consider issues that were not raised in the courts below, but parties are
free to construct new arguments in support of issues properly before the Court.” Greene v. Farmers Ins.
Exch., 446 S.W.3d 761, 764 n.4 (Tex. 2014). The question ESCR2 presented to the trial court—and thus
the question squarely before us—is whether the trial court lacks jurisdiction over appellees’ contract claims
because “Education Service Centers such as [ESCR2] have been deemed to be arms of the State of
Texas/units of state government, not local governmental entities such as school districts.” Because
appellees’ new jurisdictional argument turns on the same question, it is properly before us. See id.
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the trial court when it made the ruling challenged on appeal. See FinServ Cas. Corp. v.

Transamerica Life Ins., 523 S.W.3d 129, 147 (Tex. App.—Houston [14th Dist.] 2016, pet.

denied). Because these interlocal agreements and websites were not considered by the

trial court, we grant ESCR2’s motion to strike and limit our review to the appellate record.

See Arbor, 476 S.W.3d at 29–30.

B.     ESCR2 is a “Unit of State Government”

       Education Service Centers like ESCR2 are the middle rung of Texas’s three-tiered

education system, situated between local school districts and the Texas Education

Agency and State Board of Education. San Antonio Indep. Sch. Dist. v. McKinney, 936

S.W.2d 279, 282 (Tex. 1996); see TEX. EDUC. CODE ANN. §§ 8.001–.124. The state is

divided into twenty regions, and each Education Service Center (ESC) serves the various

school districts within its region. TEX. EDUC. CODE ANN. § 8.001.

       In Perez v. Region 20 Education Service Center—the case ESCR2 primarily relies

on—the Fifth Circuit determined whether an ESC was an “arm of the state” for purposes

of Eleventh Amendment sovereign immunity. 307 F.3d 318, 326–31 (5th Cir. 2002). “The

Eleventh Amendment bars an individual from suing a state in federal court unless the

state consents to suit or Congress has clearly and validly abrogated the state’s sovereign

immunity.” Id. (citing U.S. CONST. amend. XI). This protection “extends to any state

agency or entity deemed an ‘alter ego’ or ‘arm’ of the state.” Id. (quoting Vogt v. Bd. Of

Comm’rs, 294 F.3d 684, 688–89 (5th Cir. 2002)). In Perez, the ESC and the State of

Texas, appearing as amicus curie, took the position that ESCs were arms of the state,

while the plaintiff argued that ESCs were more like local school districts. Id.

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       The Perez Court employed the following six-factor test:

       (1) whether state statutes and case law view the entity as an arm of the
       state; (2) the source of the entity’s funding; (3) the entity’s degree of local
       autonomy; (4) whether the entity is concerned primarily with local, as
       opposed to statewide, problems; (5) whether the entity has the authority to
       sue and be sued in its own name; and (6) whether the entity has the right
       to hold and use property.

Id. at 326–27 (citing Clark v. Tarrant County, 798 F.2d 744–45 (5th Cir. 1986)). The court

found that each factor, to varying degrees, supported a conclusion that ESCs “are

properly considered an arm of the State of Texas.” Id. at 327–31. Of note, the court found

that ESCs “are more closely aligned with state, rather than with local, government” under

the Texas Education Code; ESCs primarily rely on state funding, and, unlike local school

districts, they do not possess any taxing or bonding authority to raise funds; ESCs “are

subject to significant supervision by the state Commissioner of Education” while local

school districts enjoy “significant autonomy”; ESCs “serve as administrative divisions of

the unitary state educational system” because their “primary mission . . . is to ensure

statewide uniformity and quality in education”; and unlike local school districts, which are

expressly authorized to acquire and hold real property at their discretion, ESCs must first

seek approval from the Commissioner of Education. Id. (citations omitted).

       Texas courts have reached similar conclusions. In a case involving employment

discrimination claims, one of our sister courts concluded that ESC Region VII was a

governmental unit entitled to sovereign immunity from suit as “an agency of the State.”

Davis v. Educ. Serv. Ctr., Region VII, 62 S.W.3d 890, 896 (Tex. App.—Texarkana 2001,

no pet.). The Davis Court also concluded that when the plaintiff sued a Region VII

supervisor in his official capacity, “she sued the State of Texas.” Id. at 895; see Franka v.

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Velasquez, 332 S.W.3d 367, 382 (Tex. 2011) (explaining that, generally, “a suit against

a government employee in his official capacity is a suit against his government employer”

(citing Tex. A & M Univ. Sys. v. Koseoglu, 233 S.W.3d 835, 844 (Tex. 2007)).

        In a prior appeal, we also determined that ESCR2 was entitled to immunity from

suit as “an agency of the State.” Educ. Serv. Ctr. Region II v. Marikudi, No. 13-09-00371-

CV, 2010 WL 1254603, at *2 & n.3 (Tex. App.—Corpus Christi–Edinburg Apr. 1, 2010,

no pet.) (mem. op.).2 Based on the limited record before us, we have no reason to now

conclude otherwise or disagree with the extensive analysis undertaken by the Fifth Circuit

in Perez.

        Nevertheless, Nueces County and Global direct us to a 2014 Texas Attorney

General Opinion in which the State seemed to retreat from its previous position as an

amicus in Perez. In the opinion, then-Attorney General Greg Abbott deferred to a state

agency’s conclusion that an ESC was a “local government” under the Local Government

Records Act because, according to the opinion, “the law governing ESCs does not clearly

categorize these entities as either state agencies or local governments.” Tex. Att’y Gen.

Op. No. GA-1038, at 2 (2014). Of course, as the Supreme Court of Texas recently

reiterated, Attorney General opinions are merely advisory. In re Abbott, No. 22-0229,

2022 WL 1510326, at *2 (Tex. May 13, 2022).

        The opinion is also not particularly helpful to our analysis because it neither

        2 Appellees point out that in Marikudi we also described ESCR2 as a “quasi-governmental unit.”
Educ. Serv. Ctr. Region II v. Marikudi, No. 13-09-00371-CV, 2010 WL 1254603, at *2 (Tex. App.—Corpus
Christi–Edinburg Apr. 1, 2010, no pet.) (mem. op.). However, in Marikudi we did not consider the specific
question presented in this appeal. See id. at 1. Instead, we determined whether the plaintiff satisfied the
notice requirements under the Texas Tort Claims Act. Id. at *3–7.
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explains why the Attorney General considers ESCs difficult to categorize, nor cites any

authority for this proposition. See id. Whatever persuasive value the opinion may have,

we disagree with appellees’ suggestion that the opinion “concluded that ESCs are, in fact,

local governmental entities rather than arms of the state.” Instead, the opinion takes no

definitive position on the matter. See id. As the Perez Court noted, Attorney General

opinions have historically been inconsistent in their characterization of ESCs, referring to

an ESC as a “state agency” in one opinion, but then stating in another opinion that ESC

employees are “hired by and accountable to the local board of directors” instead of the

state board.3 Perez, 307 F.3d at 328 n.4 (first quoting Tex. Att’y Gen. Op. No. MW-61, at

3 (1979); and then quoting Tex. Att’y Gen. Op. No. JM-203, at 12 (1984)).

        After surveying these various persuasive authorities, we find the analysis from

Perez well-reasoned and adopt it as our own. Because ESCR2 is a “unit of state

government,” Chapter 271’s waiver of immunity does not apply to appellees’ contract

claims, and the trial court erred when it denied ESCR2’s plea to the jurisdiction. See TEX.

LOC. GOV’T CODE ANN. §§ 271.151(3), 271.152.

                                          IV.     CONCLUSION

        We reverse and render a judgment of dismissal for want of jurisdiction.

                                                                          GINA M. BENAVIDES
                                                                          Justice

Delivered and filed on the
30th day of June, 2022.
        3 We invited the Solicitor General of Texas to submit an amicus brief clarifying the views of the
State. See TEX. R. APP. P. 11. Although the Solicitor General accepted our invitation and submitted a brief,
the State ultimately declined to address the issue, saying it “takes no position.”
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