Court Opinion

ID: 9762719
Source: CourtListenerOpinion
Date Created: 2023-08-29 02:29:51.461865+00
Date Added: 2024-06-11T07:29:36.898198
License: Public Domain

ENOCH, Justice,
joined by SPECTOR and ABBOTT, Justices,
dissenting.
Today, the Court holds that the State cannot be sued for its breach of contract unless the Legislature independently gives permission for the plaintiff to bring suit against the State. This holding calls into question the enforceability of State contracts and goes counter to the national trend recognizing that the State waives sovereign immunity when it enters contracts.
I. Immunity from Liability/Immunity from Suit
The Court notes two different types of sovereign immunity: immunity from liability and immunity from suit. 951 S.W.2d at 405. The Court then holds that by entering a contract with a private party, the State waives immunity from liability but not immunity from suit. Id. However, the Court fails to explain with any clarity why the State waives one but not the other. Cf. Tex. Civ. Prac. & Rem.Code § 101.021 et al. (waiving both immunity from liability and immunity from suit for certain tort claims against the State). I agree that the State’s act in entering a contract waives immunity from liability, but I would also hold that this same act waives immunity from enforcement of the contract by suit.
The Court primarily relies on three Texas cases to support its position that the State does not waive immunity from suit. 951 S.W.2d at 408 (citing Herring v. Houston Nat’l Exch. Bank, 114 Tex. 394, 269 S.W. 1031 (1925); W.D. Haden Co. v. Dodgen, 158 Tex. 74, 308 S.W.2d 838 (1958); Missouri Pac. R.R. Co. v. Brownsville Navigation Dist., 453 S.W.2d 812 (Tex.1970)). However, only Herring, decided over seventy years ago, touches the issue before the Court today.
In Herring, the Houston National Exchange Bank sued the Texas Prison Commission for money owed under a contract. Herring, 269 S.W. at 1031. The Court concluded that such a suit against the State could not be maintained without the State’s consent. Id. at 1032. The Court conceded that Houston National “should be accorded a hearing before a tribunal capable of passing upon the legal issues involved, to wit, a court of competent jurisdiction,” but then concluded that *417“the fixing of the governmental policy in this regard rests with the Legislature.” Id. at 1032-38. Regardless, the Court left open the possibility that a government agency, performing extra-governmental functions and existing for extra-governmental purposes, could be sued for breach of contract. Id. at 1033. Notably, none of the parties argued, as is argued today, that the State’s act in entering the contract waived its immunity from suit.
Thirty years after Herring, this Court decided W.D. Haden Co. v. Dodgen, 158 Tex. 74, 308 S.W.2d 838 (1958). In Haden, the W.D. Haden Co. sued the Game and Fisheries Commission for changing the terms of its state permit to remove mudshell from Galveston Bay. Haden, 308 S.W.2d at 839. The main issue in Haden was whether Haden was actually suing the State within the meaning of the sovereign immunity doctrine. Id. The Court concluded that Haden’s suit to determine its rights under the permit was a suit against the State. Id. at 840-41. Both parties and the Court assumed that Haden could not bring suit against the State without legislative permission. No one argued, and the Court did not address, whether the State’s act of entering a contract waived its immunity from suit.
Finally, in MOP AC, this Court held that a statute enabling a state agency to “sue or be sued” expressly waived the State’s immunity from suit. Missouri Pac. R.R., 453 S.W.2d 812, 813 (Tex.1970). MOPAC did not involve the issue presented in this case of whether by its act in entering the contract, the State waived its immunity from suit. Thus, the Court relies on three Texas cases, none of which was asked to address the principal issue presented today.
II. Sovereign Immunity
The Court defers to the Legislature and refuses to allow Federal Sign to sue the State for its breach of contract claim. However, I contend that the better approach would be to hold that the State, by entering a contract with a private party, waives its sovereign immunity, including its immunity from suit.
The doctrine of sovereign immunity is a common law creation. See Hosner v. DeYoung, 1 Tex. 764, 769 (1847) (adopting the doctrine of sovereign immunity without citation). Despite its common law roots, issues of sovereign immunity are generally addressed by the Legislature. University of Texas Medical Branch v. York, 871 S.W.2d 175, 177 (Tex.1994) (citing Lowe v. Texas Tech Univ., 540 S.W.2d 297, 298 (Tex.1976)). To waive sovereign immunity, the Legislature must use clear and unambiguous language. York, 871 S.W.2d at 177 (citing Duhart v. State, 610 S.W.2d 740, 742 (Tex.1980)).
The concept of sovereign immunity derives from the ancient belief that “the King can do no wrong.” See Glen A. Majure et al., The Governmental Immunity Doctrine in Texas—An Analysis and Some Proposed Changes, 23 Sw. L.J. 341, 341 (1969); Louis L. Jaffe, Suits Against Governments and Officers: Sovereign Immunity, 77 Harv. L. Rev. 1, 1 (1963). The modem justification for sovereign immunity is that suits against the state would deplete resources of treasury and tax funds necessary to operate the government. See Elizabeth K. Hocking, Federal Facility Violations of the Resource Conservation and Recovery Act and the Questionable Role of Sovereign Immunity, 5 Admin. L.J. 203, 211 (1991) (“Sovereign immunity protects the public fisc, and, therefore, the public welfare by limiting assaults on the public fisc.”). Because the Legislature appropriates, in advance, sufficient funds to meet the State’s contractual obligations, it would appear that the modem justification for sovereign immunity is without merit in this context.
I note that Justice Hecht discusses additional political and financial concerns underlying the sovereign immunity doctrine. See 951 S.W.2d at 414 (Hecht, J., concurring). However, many, if not all, of these political and financial concerns can be satisfied through the legislative appropriation process.
III. Waiver
The Court concedes that the State, by entering a contract, waives its immunity from *418liability. In fact, the Court holds only that the State is immune from suit. Nevertheless, the Court’s holding renders the State’s contract with TSU unenforceable.
In our modem society, commercial entities and individuals, as well as our local, state, and federal government, contract with other parties every day. TSU could not function without countless day-to-day contractual dealings with private parties. TSU expects these parties to honor their obligations, and it can and does seek redress when they fail to do so. Similarly, these parties expect TSU to honor its obligations and to have recourse when it fails to do so.
Specifically, the Legislature granted TSU authority to enter into contracts for permanent improvements such as the construction of a scoreboard. See Tex. Educ.Code § 51.907 (authorizing competitive bidding for contracts for the construction of permanent improvements at institutions of higher education). Unquestionably, the Legislature intended for TSU to enter into valid and enforceable contracts.
A valid contract exists when each party promises an obligation, and such promise is enforceable by law. 1 Samuel Williston, A TREATISE ON THE LAW OF CONTRACTS § 1 (4th ed.1990). Today, Federal Sign has lost the right to enforce by suit its contract with the State. This result is undesirable and ignores fundamental tenets of contract law.
The Court argues that Chapter 107 of the Civil Practice and Remedies Code provides a remedy to private parties. 951 S.W.2d at 409; see Tex. Civ. PRAC. & Rem.Code §§ 107.001-.005 (allowing a private party to petition the Legislature for permission to sue the State); but see Texas House of REPRESENTATIVES, INTERIM REPORT TO THE 75TH LEGISLATURE 9 (1996) (noting that only six percent of the requests to sue have been granted in the past eight years). Admittedly, requiring legislative consent to sue does provide the Legislature an opportunity to resolve matters of public policy. But, as I previously mentioned, these political concerns may also be resolved through the legislative appropriation process.
The issue here is whether a private party has recourse to enforce by suit its contract with the State and to determine the amount of the State’s liability, if any. The concurrence acknowledges that “the courts are better suited to resolving factual and legal disputes in contract actions.” 951 S.W.2d at 415 (Hecht, J., concurring). Furthermore, such disputes should be resolved free from the political considerations that the concurrence recognizes accompany the Legislature’s decision to permit suit.
The concurrence argues that sovereign immunity should prohibit suit because even if we were to conclude that the State waives suit immunity by entering into a contract, plaintiffs could not be assured of obtaining their judgments without legislative appropriation. 951 S.W.2d at 414 (Hecht, J., concurring). I simply point out that whether the Legislature ultimately appropriates the funds necessary to satisfy a judgment is not relevant to the issue of whether the Legislature has waived sovereign immunity. See Texas Dep’t of Human Servs. v. Green, 855 S.W.2d 136, 145 (Tex.App.—Austin 1993, writ denied) (concluding that the Whistleblower Act waived the State’s immunity from suit and liability but noting that the plaintiff still had to seek a legislative appropriation to recover the damages awarded to him).
All things considered, the Court’s conclusion that the State retains sovereign immunity from suit renders Federal Sign’s contract unenforceable. See Restatement (Second) of CONTRACTS § 8 cmt. c (1979) (recognizing that “where the only direct remedy is by legislative approval of a private bill or by unreviewable administrative action, the contract is within the present definition of unenforceable contracts”). In my view, the more reasoned approach would be for the Court to carry its waiver of liability immunity determination to its logical conclusion: the Legislature, by authorizing TSU to enter into contracts, intended the contracts to be enforceable and waived both the State’s immunity from liability and immunity from suit for breach of contract claims. See George & Lynch, Inc. v. State, 197 A.2d 734, 736 (Del.1964); Pan-Am Tobacco Corp. v. Department of Corrections, 471 So.2d 4, 5 *419(Fla.1985); V.S. DiCarlo Constr. Co. v. State, 485 S.W.2d 52, 54 (Mo.1972) (all recognizing that invoking the State’s sovereign immunity, including immunity from suit, renders a contract invalid and holding that the Legislature’s authorizing the State to enter valid contracts has waived the State’s immunity from liability and suit for breach of contract).
The Court’s holding also runs counter to the nationwide trend recognizing that states, through contracting, waive immunity from suit for breach of contract claims. In fact, the majority of states does not permit sovereign immunity as a defense against private parties seeking redress from the State for breach of contract. I realize that not all of these states allow private parties to litigate their claims in general jurisdiction courts. For example, in 1855, the federal government established a Court of Claims for the sole purpose of hearing breach of contract claims against the United States. See 28 U.S.C. §§ 171, 1491. Several states have adopted a similar approach. See ARK.Code §§ 19-10-201, 19-10-204 (creating a state claims commission to hold an abbreviated trial for breach of contract claims against the State); 705 III. Comp. Stat. 505/8 (conferring on the State Court of Claims exclusive jurisdiction to hear and determine all claims against the state founded upon any contract entered into with the state); N.Y. Ct. Cl. Act § 9 (conferring on the Court of Claims jurisdiction to hear breach of contract claims brought against the state); Ohio Rev.Code § 2743.02(A)(1) (providing the Court of Claims jurisdiction to determine the liability of the state for breach of contract claims); 72 Pa. Cons.Stat. § 4651-1 (creating Board of Claims to arbitrate breach of contract claims against the Commonwealth); Tenn.Code § 9-8-307(a)(l)(L) (providing the Tennessee Claims Commission jurisdiction to determine actions for breach of written contract between claimant and state); W. Va.Code §§ 14-2-4, 14-2-13 (establishing a court of claims with jurisdiction to hear breach of contract claims brought against the state).
However, a significant number of states have opened their courts to hear breach of contract claims against the State. Many of these states have judicially recognized the State’s waiver of sovereign immunity, including immunity from suit, when the State enters a contract. See State Highway Dep’t v. Milton Constr. Co., 586 So.2d 872, 875 (Ala.1991); Souza & McCue Constr. Co. v. Superior Court, 57 Cal.2d 508, 20 Cal.Rptr. 634, 370 P.2d 338, 339 (1962); Ace Flying Serv., Inc. v. Colorado Dep’t of Agric., 136 Colo. 19, 314 P.2d 278, 280 (1957); George & Lynch, Inc. v. State, 197 A.2d 734, 736 (Del.1964); Pan-Am Tobacco Corp. v. Department of Corrections, 471 So.2d 4, 5 (Fla.1985); Regents of Univ. Sys. v. Blanton, 49 Ga.App. 602, 176 S.E. 673, 675 (1934); Grant Constr. Co. v. Burns, 92 Idaho 408, 443 P.2d 1005, 1010 (1968); Kersten Co. v. Department of Social Servs., 207 N.W.2d 117, 120 (Iowa 1973); J.A. Sullivan Corp. v. Commonwealth, 397 Mass. 789, 494 N.E.2d 374, 377 (1986); Hersey Gravel Co. v. State, 305 Mich. 333, 9 N.W.2d 567, 569 (1943); State Highway Comm’n v. Wunderlich, 194 Miss. 119, 11 So.2d 437, 438 (1943); V.S. DiCarlo Constr. Co. v. State, 485 S.W.2d 52, 55 (Mo.1972); Meens v. State Bd. of Educ., 127 Mont. 515, 267 P.2d 981, 984-85 (1954); Smith v. State, 289 N.C. 303, 222 S.E.2d 412, 423-24 (1976); State Bd. of Pub. Affairs v. Principal Funding Corp., 542 P.2d 503, 505-06 (Okla.1975); Kinsey Constr. Co. v. South Carolina Dep’t of Mental Health, 272 S.C. 168, 249 S.E.2d 900, 903 (1978); Wiecking v. Allied Med. Supply Corp., 239 Va. 548, 391 S.E.2d 258, 261 (1990). Other states have judicially abolished sovereign immunity in the breach of contract context. See Stone v. Arizona Highway Comm’n, 93 Ariz. 384, 381 P.2d 107, 109 (1963); Brown v. Wichita State Univ., 217 Kan. 279, 540 P.2d 66, 84-86 (1975); Todd v. Board of Educ. Lands and Funds, 154 Neb. 606, 48 N.W.2d 706, 710 (1951); P. T. & L. Constr. Co. v. Commissioner, Dep’t of Transp., 60 N.J. 308, 288 A.2d 574, 578 (1972). And for a large number of states, the issue of waiver is moot because their legislatures have statutorily waived or abolished sovereign immunity for breach of contract claims. See Alaska Stat. § 09.50.250; Aek.Code §§ 19-10-201-210; Conn. Gen. Stat. § 4 — 61(a); Haw. Rev. Stat. § 661-1; 705 III. Comp. Stat. 505/8; Ind. Code § 34-4-16-1.1; Ky. Rev. Stat. § 45A245; La. Const, art. 12, § 10(A); Me. *420Rev. Stat. tit. 5 § 1510-A; Md.Code, State Gov’t § 12-201(a); Minn. Stat. § 3.751; Nev. Rev. Stat. § 41.031; N.H. Rev. Stat. § 491:8; N.M. Stat. § 37-1-23; N.Y. Ct. Cl. Act § 8; N.D. Cent.Code § 32-12-02; Ohio Rev.Code § 2743.02(A)(1); OR. Rev. Stat. § 30.320; 72 Pa. Cons.Stat. § 4651-1; R.I. Gen. Laws § 37-13.1-1; Tenn.Code § 9-8-307(a)(l)(L); S.D. Codified Laws §§ 21-32-2, 21-32-10; Utah Code § 63-30-5; Wash. Rev.Code § 4.92.010; W. Va.Code §§ 14-2-4, 14-2-13; Wyo. Stat. § 1-39-104. In fact, only two states provide no relief for breach of contract claims against the state other than legislative approval of a private bill. See Vt. Stat. tit. 12, § 5601 (statute waiving tort liability does not apply to any claim for “damages caused by the fiscal operations of any state officer or department”); Wis. Stat. § 16.007 (establishing a Claims Board to hear breach of contract claims against the state with the only remedy of proposing a private bill to the legislature).
Perhaps all these other States recognize the inherent problems of concluding that sovereign immunity precludes suits on contracts. Notably, the concurrence would carefully narrow the Court’s holding to leave open the possibility of suit against the State by private parties who have tendered performance, performed services on State property, delivered materials to the State, or loaned the State money. See 951 S.W.2d at 412 (Hecht, J., concurring).
This Court had the opportunity to align this State with the vast majority of other states in permitting suits against the State for breach of contract claims. However, the Court declined the opportunity, leaving Texas in the distinct minority.
IV. CONCLUSION
Today the Court holds that the State waives just immunity from liability when it enters a contract — a decision that can only be described as a cateh-22. According to the Court, the State can be liable for its breach of contract, but it cannot be held liable.
I respectfully dissent.