Summary
identifying common law waiver of sovereign immunity from suit by filing counterclaim
Summary of this case from Metro. v. CubicOpinion
No. 02-1031.
Opinion Delivered: April 2, 2004.
On Petition for Review from the Court of Appeals for the Fifth District of Texas.
The issue in this case is whether a city waives its governmental immunity from suit by intervening in a lawsuit to assert claims for affirmative relief. The court of appeals held that it does not. 83 S.W.3d 392. Because we disagree, we reverse the court of appeals' judgment and remand this case to the trial court.
The City of Dallas issued Dynamic Cable Construction Company, Inc. ("Dynamic") a temporary license to install fiber optic cable in downtown Dallas. Dynamic subcontracted with Reata Construction Company ("Reata") to do the drilling for the conduit. On September 4, 2000, Reata inadvertently drilled into a thirty-inch water main, flooding a nearby residential building owned by Southwest Properties Group, Inc. ("Southwest"). Soon after, Southwest sued Dynamic and Reata for negligence. The building's tenants intervened in the suit seeking damages.
On January 12, 2001, Reata filed a third-party claim against the City of Dallas alleging that the plaintiffs' damages were caused by the City's misidentification of the water main's location when it was installed in 1948 and again in response to Reata's request in 2000. With its answer to Reata's petition, the City filed special exceptions asserting that Reata's claims were not within the Texas Tort Claims Act's waiver of immunity. The City also intervened asserting claims against Dynamic. Eight months later, on September 11, 2001, the City filed a second amended plea in intervention asserting a claim of negligence against Reata related to the flooding, and seeking actual damages, pre- and post-judgment interest, costs, and "any other relief at law and equity to which it may be entitled."
The next day, the City filed a plea to the jurisdiction asserting governmental immunity from suit with regard to Reata's claims against it. Reata filed a response to the plea, arguing that: (1) governmental immunity did not apply because the City subjected itself to jurisdiction by intervening in the lawsuit and seeking affirmative relief; (2) the Dallas City charter and section 51.057 of the Texas Local Government Code contain express waivers of sovereign immunity because they provide that the City may "sue or be sued" and "plead and be impleaded"; (3) under the common law, the City could not assert governmental immunity for its actions predating 1970 because water services were considered a proprietary function; and (4) even if the Texas Tort Claims Act applied, Reata's claim fell within the Act's waiver of sovereign immunity.
The Dallas City charter provides that the City has the power "to sue and be sued" and "to implead and be impleaded in all courts." DALLAS CITY CHARTER ch. II, § 1(2), (3) (Aug. 1999). Section 51.075 provides that "[t]he municipality may plead and be impleaded in any court." TEX. LOC. GOV'T CODE § 51.075.
The trial court denied the City's plea to the jurisdiction, and the City took an interlocutory appeal. See TEX. CIV. PRAC. REM. CODE § 51.014 (a)(8). Rejecting each of Reata's asserted bases for a waiver of governmental immunity, the court of appeals reversed and dismissed Reata's claims against the City. 83 S.W.3d 392. The court of appeals held that even though the City intervened in the suit against Reata, the City did not waive any right to object to a lack of subject matter jurisdiction. Id. at 398-99. By intervening, the court of appeals reasoned, the City asserted its right to sue but did not waive its governmental immunity from suit. Id. at 400. Because we agree with Reata that the City waived its immunity from suit by intervening and asserting claims for damages against Reata, we reverse.
The court of appeals' judgment provided: "In accordance with this Court's opinion of this date, the judgment of the trial court is REVERSED and [Reata's] claims against the City of Dallas are DISMISSED." The court of appeals' judgment constitutes a final judgment from which an appeal can be taken to this Court.
To the extent the City enjoyed governmental immunity from suit with regard to Reata's claims, the City waived that immunity by intervening in the lawsuit and asserting claims for damages against Reata. Therefore, the trial court had subject matter jurisdiction over Reata's claims against the City, and the court of appeals erred in dismissing them. Because this appeal concerns a plea to the jurisdiction, our review is necessarily limited to determining whether the City waived its immunity from suit, and we do not decide whether the City waived its immunity from liability.
The court of appeals recognized that our decision in Anderson, Clayton Co. v. State ex rel. Allred, 62 S.W.2d 107, 110 (Tex. 1939), states: "[W]here a state voluntarily files a suit and submits its rights for judicial determination, it will be bound thereby, and the defense will be entitled to plead and prove all matters properly defensive. This includes the right to make any defense by answer or cross-complaint germane to the matter in controversy." But the court of appeals relied on other language in that decision providing that the State, having invoked the jurisdiction of the district court, was "subject to the same rules as other litigants, except in so far as such rules may be modified in favor of the state by statute or may be inapplicable or unenforceable because of exemptions inherent in sovereignty." Id. (emphasis added). Relying on this language, the court of appeals concluded that, when a governmental entity intervenes in a lawsuit, "sovereign immunity still forecloses suit against that governmental entity." 83 S.W.3d at 399.
Although there may have been some ambiguity after Anderson regarding whether immunity from suit is waived by the State's invoking a court's jurisdiction, this ambiguity was resolved by our decision in Kinnear v. Tex. Comm'n on Human Rights ex rel. Hale, 14 S.W.3d 299 (Tex. 2000). In Kinnear, the Texas Commission on Human Rights filed suit against Kinnear, alleging that he had violated the Texas Fair Housing Act. Kinnear counterclaimed for attorney's fees as provided by the Act, and when he prevailed the trial court awarded them. In response to the Commission's assertion of immunity, we held that "[b]ecause the Commission initiated [the] proceeding under the Texas Fair Housing Act, and Kinnear claimed attorney fees as a consequence of that suit, the jurisdictional question in this case was answered when the Commission filed suit. . . ." Id. at 300. Thus, under Kinnear, when a governmental entity files suit against a party, that entity waives, at a minimum, immunity from suit for counterclaims filed as a consequence of the suit. Id.
Moreover, by filing a suit for damages, a governmental entity waives immunity from suit for any claim that is "incident to, connected with, arises out of, or is germane to the suit or controversy brought by the State." State v. Martin, 347 S.W.2d 809, 814 (Tex.Civ.App. — Austin 1961, writ ref'd n.r.e.); see also Tex. Natural Res. Conservation Comm'n v. IT-Davy, 74 S.W.3d 849, 861 (Tex. 2002) (Hecht, J., concurring) (citing Kinnear and Anderson for the proposition that "it has long been held that the State can waive immunity by filing suit"); State v. Humble Oil Ref. Co., 169 S.W.2d 707, 710 (Tex. 1943) (rejecting a waiver of immunity from suit because the claim was not "dependent upon" or "connected with" and did not grow out of the subject matter of the suit brought by the State). Therefore, if the City had filed an original petition against Reata for damages, the filing of the suit would have waived the City's immunity from suit for Reata's claims against the City related to the flooding. See Kinnear, 14 S.W.3d at 300; Anderson, 62 S.W.2d at 110.
Any "person or entity has the right to intervene if the intervenor could have brought the same action, or any part thereof, in his own name, or, if the action had been brought against him, he would be able to defeat recovery, or some part thereof." Guaranty Fed. Sav. Bank v. Horseshoe Operating Co., 793 S.W.2d 652, 657 (Tex. 1990); TEX. R. CIV. P. 60. To be voluntarily joined as a plaintiff, a party must assert claims for relief that arise "out of the same transaction, occurrence, or series of transactions or occurrences. . . ." TEX. R. CIV. P. 40. The City, therefore, had the option to file its own suit, or in the interest of judicial economy, intervene in Southwest's suit. For purposes of waiver of governmental immunity from suit, we see no reason to differentiate between a governmental entity as a plaintiff and as a plaintiff-intervenor. When the City filed its plea in intervention against Reata, it subjected itself to the jurisdiction of the trial court and waived its governmental immunity from suit with regard to Reata's claims "germane to the matter in controversy." Martin, 347 S.W.2d at 814. Accordingly, pursuant to Texas Rule of Appellate Procedure 59.1 and without hearing oral argument, we reverse the court of appeals' judgment and remand the case to the trial court for further proceedings. TEX. R. APP. P. 59.1.