SCOTT K. FIELD, Justice.
In this interlocutory appeal, appellant City of Georgetown (the City) challenges the trial court's order denying its plea to the jurisdiction based on governmental immunity. The underlying controversy concerns the City's long-term contract to purchase electricity from appellee, the Lower Colorado River Authority (the LCRA). The LCRA sought declaratory relief concerning the parties' rights and obligations under the contract, and the City filed a plea to the jurisdiction, asserting that the LCRA's pleadings fail to demonstrate a valid waiver of governmental immunity. Because we conclude that the City has no immunity from this suit, we affirm the trial court's order denying the City's plea to the jurisdiction.
According to its pleadings, the LCRA entered into standard "Wholesale Power Agreements" with various municipalities, including the City, in 1974. Under the terms of the Wholesale Power Agreement, the City would purchase 100% of its electricity from the LCRA and then resell that electricity to the City's retail customers through its municipal utility. The Wholesale Power Agreement is set to expire June 25, 2016, and the City has given LCRA notice of its intent not to renew the contract.
In response, the LCRA filed this underlying action, seeking a declaratory judgment that it has not materially breached the Wholesale Power Agreement.
A plea to the jurisdiction is a dilatory plea that challenges the trial court's authority to determine the subject matter of a specific cause of action. See Bland Indep. Sch. Dist. v. Blue, 34 S.W.3d 547, 553-54 (Tex.2000). Governmental immunity from suit deprives a court of subject-matter jurisdiction and therefore is properly asserted in a plea to the jurisdiction. State v. Lueck, 290 S.W.3d 876, 880 (Tex.2009). Whether a trial court has subject-matter jurisdiction is a question of law that we review de novo. Westbrook v. Penley, 231 S.W.3d 389, 394 (Tex.2007). When, as here, the plea to the jurisdiction challenges the pleadings, we construe the pleadings liberally in favor of the plaintiff, and unless challenged with evidence, we accept all allegations as true. Texas Dep't of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 226-27 (Tex.2004).
Some of the issues in this case concern interpretation of statutes, which is a question of law that we review de novo. See First Am. Title Ins. Co. v. Combs, 258 S.W.3d 627, 631 (Tex.2008). When construing a statute, our primary objective is to ascertain and give effect to the legislature's intent. Id. at 631-32. In determining legislative intent, we first consider the plain language of the statute. GMC v. Bray, 243 S.W.3d 678, 685 (Tex.App.-Austin 2007, no pet.). When statutory text is clear, it is determinative of legislative intent, unless enforcing the plain meaning of the statute's words would produce an absurd result. Entergy Gulf States, Inc. v. Summers, 282 S.W.3d 433, 437 (Tex.2009). Our analysis of the statute is also informed by the presumption that "the entire statute is intended to be effective" and that "a just and reasonable result is intended." Tex. Gov't Code § 311.021(2), (3). We may consider such matters as "the object
A municipality performs a governmental function when it acts "as the agent of the State in furtherance of general law for the interest of the public at large." Gates v. City of Dallas, 704 S.W.2d 737, 738-39 (Tex.1986) (internal quotations omitted), superseded by statute on other grounds as stated in City of Terrell v. McFarland, 766 S.W.2d 809, 813 (Tex.App.-Dallas 1988, writ denied). Given that the municipality is effectively acting on behalf of the state when it performs a governmental function, it is imbued with the state's sovereign immunity, and therefore is entitled to governmental immunity.
The LCRA asserts that when the City contracted to purchase power as a municipal utility, the City performed a proprietary function rather than a governmental function. See Tex. Civ. Prac. & Rem. Code § 101.0215(b)(1) (defining "operation or maintenance of a public utility" as proprietary function for purposes of Texas Tort Claims Act). Therefore, according to the LCRA, the City has no governmental immunity from this suit, which arises out of its operation of a municipal utility.
The City asserts that "the proprietary-governmental function dichotomy is a creature of tort law" that does not apply to contract claims. Specifically, the City argues that because section 271.152 of the Local Government Code—the statute that waives sovereign immunity for certain contract claims—does not mention the proprietary-governmental dichotomy, the legislature intended for the dichotomy not to apply to contract claims. Therefore, according to the City, municipalities have governmental immunity for contract claims regardless of whether the claim arises out of their proprietary or governmental functions. As a result, the City asserts that it has governmental immunity from LCRA's claims and that LCRA cannot demonstrate a clear and unambiguous waiver of the City's immunity. See Tooke v. City of Mexia, 197 S.W.3d 325, 332 (Tex.2006) (noting that legislature must clearly and unambiguously waive sovereign immunity).
Texas has long recognized sovereign immunity as the bedrock principle that "`no state can be sued in her own courts without her consent, and then only in the manner indicated by that consent.'" See Tooke, 197 S.W.3d at 331 (quoting Hosner v. DeYoung, 1 Tex. 764, 769 (1847)). This immunity extends to the various divisions of the state government as well as its political subdivisions, such as the City. See supra n. 2. "[G]overnmental immunity has two components: immunity from liability, which bars enforcement of a judgment against a governmental entity, and immunity from suit, which bars suit against the entity altogether." Tooke, 197 S.W.3d at 332. When a governmental entity enters into a contract it "necessarily waives immunity from liability, . . . but it does not waive immunity from suit." Id. Thus, when governmental immunity applies, a governmental entity may not be sued for breach of contract unless its immunity from suit has been waived. Id. We defer to the legislature to waive immunity from suit by statute or resolution. Wichita Falls State Hosp. v. Taylor, 106 S.W.3d 692, 695-96 (Tex.2003). The legislature's waiver of immunity from suit must be clear and unambiguous. Tooke, 197 S.W.3d at 332-33. These principles of immunity from suit and waiver of immunity are well established.
However, it is also well established that before a court considers whether governmental immunity has been waived, the court must determine whether governmental immunity exists in the first place. See, e.g., City of El Paso v. Heinrich, 284 S.W.3d 366, 371-72 (Tex.2009) (explaining that ultra vires claims are not against state and therefore do not implicate sovereign immunity). "[T]he distinction between waiving immunity and finding it nonexistent is a fine one that yields the same effect and, `[d]ue to the risk that the latter could become a ruse for avoiding the Legislature, courts should be very hesitant to declare immunity nonexistent in any particular case.'" Nueces Cnty. v. San Patricio Cnty. 246 S.W.3d 651, 652 (Tex.2008) (quoting City of Galveston v. Texas, 217 S.W.3d 466, 471 (Tex.2007)). Therefore, courts generally presume that governmental immunity applies. See id. With these principles in mind, we turn to the history of the proprietary-governmental dichotomy.
Over 125 years ago, the Texas Supreme Court considered the extent to which governmental immunity applies to municipalities. City of Galveston v. Posnainsky, 62 Tex. 118 (1884). In Posnainsky, a father sued a municipality for injuries resulting from his minor child's fall into an uncovered drain on a public street. Id. at 122-23. The court held that because the municipality constructed and maintained the streets for its "own advantage or emolument," it was not immune from suit for
Posnainsky established what has become the proprietary-governmental dichotomy. When a municipality exercises powers, public in nature, at the direction of the state, it performs a governmental function for which it has governmental immunity. But when a municipality acts within its discretion, primarily for the benefit of those within its corporate limits, it performs a proprietary function for which it has no immunity. See Nueces Cnty., 246 S.W.3d at 652-53 (citing Posnainsky, 62 Tex. at 125).
The courts have traditionally been left to determine which municipal functions are proprietary and which are governmental. See, e.g., Gates, 704 S.W.2d at 739. However, in 1987, the Texas Constitution was amended to give the legislature the authority to "define for all purposes those functions of a municipality that are to be considered governmental and those that are proprietary, including reclassifying a function's classification assigned under prior statute or common law." Tex. Const. art. XI, § 13(a). Thus, the legislature may, through statute, change the common-law classifications of municipal functions, effectively "grant[ing] municipalities immunity from certain suits that could have been maintained at common law." City of Tyler v. Likes, 962 S.W.2d 489, 503 (Tex. 1997).
The legislature has exercised its authority to reclassify proprietary functions as governmental functions almost exclusively in the Tort Claims Act.
Posnainsky applied the proprietary-governmental dichotomy to a tort
However, the supreme court's opinion in Tooke has brought that uniform assumption into question. In Tooke, the supreme court stated that the "proprietary-governmental dichotomy has been used to determine a municipality's immunity from suit for tortious conduct. . . . [b]ut we have never held that this distinction determines whether immunity from suit is waived for breach of contract claims. . . ."
Prior to Tooke, the appellate courts unanimously applied the proprietary-governmental dichotomy to contract claims. See supra n. 3. Following Tooke, several appellate courts, including this Court, have assumed without deciding that the dichotomy continues to apply to contract claims. See, e.g., East Houston Estate Apartments, L.L.C., 294 S.W.3d at 731-32; Smith v. City of Blanco, No. 03-08-00784-CV, 2009 WL 3230836, at *3 (Tex.App.-Austin Oct. 8, 2009, no pet.) (mem. op.). At least one of our sister courts has continued to expressly apply the proprietary-governmental dichotomy to contract claims post-Tooke. See Casso v. City of McAllen, No. 13-08-00618, 2009 WL 781863, at *5-7 (Tex.App.-Corpus Christi Mar. 26, 2009, pet. denied) (mem. op.) (concluding municipality's provision of health insurance to its employee is proprietary function for which it had no immunity from contract claim). These opinions did not engage in substantial analysis of why the dichotomy was equally applicable to contracts, perhaps because they did not think such analysis was necessary.
Although Tooke brought this issue into question, it did not suggest, and we have not found, any principled reason why the proprietary-governmental dichotomy should apply to tort claims but not contract claims under the common law.
In its brief, the City primarily relies on the San Antonio Court of Appeals' recent holding in City of San Antonio ex rel. City Public Service Board v. Wheelabrator Air Pollution Control, Inc., 381 S.W.3d 597, 603-05 (Tex.App.-San Antonio 2012, pet. filed). In that case, the court held that the legislature's failure to include the proprietary-governmental dichotomy in "the contract-claim scheme" meant that the dichotomy did not apply. Id. at 605. In reaching this conclusion, the court did not expressly state whether the legislature abrogated the common-law rule that would have applied the dichotomy to contract claims. However, the court noted that Tooke brought Gates—a previous supreme
We agree that Tooke's citation to Gates could be read to mean that Gates did not expressly hold that the proprietary-governmental dichotomy applies to contract claims, and thus there is no binding precedent from the supreme court that answers this question. See supra n. 4. Nevertheless, we do not agree with Wheelabrator's intimation that Tooke changed the common law or somehow called the holding of Gates into question. By its own terms, Tooke assumed without deciding that the proprietary-governmental dichotomy applied to contract claims and therefore did not overrule any prior precedent. See 197 S.W.3d at 343. Furthermore, the underlying analysis in Tooke primarily concerned whether the phrase "plead and be impleaded" within the local government code was a clear and unambiguous waiver of sovereign immunity. See id. at 342-43. As we have explained, the proprietary-governmental dichotomy concerns whether a municipality has governmental immunity in the first place, not whether that immunity has been waived. Therefore, Tooke's analysis of waiver of immunity has little bearing on the proprietary-governmental dichotomy, and the more relevant precedents are those cases addressing whether governmental immunity exists in the first instance. See, e.g., Heinrich, 284 S.W.3d at 371-72; Nueces Cnty., 246 S.W.3d at 652-53.
For the foregoing reasons, we adhere to our precedent and conclude that the proprietary-governmental dichotomy does apply to contract claims under the common law. See Bailey, 972 S.W.2d at 192. Having made this determination, we next consider whether the legislature has abrogated that common-law rule.
In its brief, the City argues that the legislature's failure to expressly adopt the propriety-governmental dichotomy for contract claims indicates that the dichotomy does not apply. As we have noted, the legislature has the authority to reclassify a municipality's functions as either proprietary or governmental, thereby abrogating their common-law classifications. See Tex. Const. art. XI, § 13(a). The legislature has exercised this authority almost exclusively in the Tort Claims Act, in which it provided non-exhaustive lists of proprietary and governmental functions. See Tex. Civ. Prac. & Rem.Code § 101.0215; supra n. 3. Section 271.152 of the Local Government Code—the section that waives local governmental entities' immunity from suit for certain contract claims—does not reference the proprietary-governmental dichotomy. Given that chapter 271 does not mention the proprietary-governmental dichotomy in any respect, there is no plain statutory text from which we can determine whether the legislature intended to abandon the dichotomy for contract claims.
The City asserts that we should take the legislature's silence to mean that the proprietary-governmental dichotomy no longer applies to contract claims. The City again relies on the analysis in Wheelabrator, in which the San Antonio Court of Appeals stated the following:
See 381 S.W.3d at 605 (internal quotation omitted). Because we conclude that this analysis incorrectly places the burden on the legislature to affirmatively adopt the common-law rule, we respectfully disagree.
We are mindful of the fact that although "silence can be significant. . . . legislatures do not always mean to say something by silence. Legislative silence may be due to mistake, oversight, lack of consensus, implied delegation to courts or agencies, or an intent to avoid unnecessary repetition." PPG Indus., Inc. v. JMB/Houston Ctr. Partners Ltd. P'ship, 146 S.W.3d 79, 84 (Tex.2004). Therefore, in order to give effect to the legislature's intent, we must utilize other tools of statutory construction. See Tex. Gov't Code § 311.023. In particular, we consider the common law's treatment of the proprietary-governmental dichotomy prior to the adoption of section 271.152, as well as the legislative history and purpose behind that section's adoption. See id. § 311.023(3)-(4); Tex. Loc. Gov't Code § 271.152.
Section 271.152 was signed into law on June 17, 2005, just over one year before the supreme court issued its opinion in Tooke. See Act of May 23, 2005, 79th Leg., R.S., ch. 604, §§ 1-2, 2005 Tex. Gen. Laws 1548, 1549; see also Tooke, 197 S.W.3d at 325. At the time the legislature considered and adopted section 271.152, the appellate courts unanimously applied the proprietary-governmental dichotomy to contract claims in the same manner that they applied the dichotomy to torts. See supra n. 3. We presume that the legislature was aware of the state of the common law when it adopted section 271.152. See Shook v. Walden, 304 S.W.3d 910, 917 (Tex.App.-Austin 2010, no pet.). The legislature did not express any disagreement with that precedent; therefore we presume that the legislature did not intend to abrogate the common law. See Cash Am. Int'l Inc. v. Bennett, 35 S.W.3d 12, 16 (Tex.2000) ("Abrogating common-law claims is disfavored and requires clear repugnance between the common law and statutory causes of action.") (internal quotations omitted). Furthermore, although the legislature could have repeated the list of proprietary and governmental functions from the Tort Claims Act in some part of chapter 271 of the Local Government Code, it could have reasonably concluded that such repetition was unnecessary. See Tex. Civ. Prac. & Rem.Code § 101.0215; PPG Indus., Inc., 146 S.W.3d at 84 (noting legislative silence may indicate intent to avoid unnecessary repetition); see also Tooke, 197 S.W.3d at 343-44 (concluding that there is "no reason to think that the classification [of proprietary and governmental functions] would be different under the common law.").
Similarly, the history behind section 271.152 indicates that it was adopted to expand, rather than limit, plaintiffs' ability to sue municipalities for contract damages. As section 271.158 of the Local Government Code makes clear, nothing in section 271.152 "shall constitute a grant of immunity to suit to a local governmental entity." This is consistent with the bill analysis for section 271.152, which states that it "clarifies and re-expresses the legislature's intent that all local governmental entities that are given the statutory authority to enter into contracts shall not be immune from suits arising from contracts, subject to the limitations set forth in C.S.H.B. 2039." House Comm. On Civil Practices,
Finally, as we have explained, the proprietary-governmental dichotomy concerns whether governmental immunity exists in the first place, not whether it has been waived. Therefore, the statutory provision that waives governmental immunity in chapter 271 does not logically implicate the proprietary-governmental dichotomy, which applies before consideration of waiver. As a result, the legislature could have reasonably believed it did not need to reiterate the validity of the dichotomy in section 271.152. This interpretation is directly supported by section 271.158, in which the legislature expressly stated that nothing in section 271.152 "shall constitute a grant of immunity to suit to a local governmental entity."
Therefore, we find that Wheelabrator's interpretation of the legislature's silence is inconsistent with legislative history and the purpose of section 271.152. We conclude that the legislature did not intend section 271.152 to abrogate the common law's treatment of the proprietary-governmental dichotomy. Having concluded that the common law applies that dichotomy to contract claims, and that the operation of a municipal utility is a proprietary function, we further conclude that the City was acting in its proprietary capacity when it entered into its contract with the LCRA. See Tex. Civ. Prac. & Rem.Code § 101.0215(b)(1) (listing operation and maintenance of municipal utility as proprietary function); Tooke, 197 S.W.3d at 344 (using classification of municipal function in Tort Claims Act in application to contract claim). Therefore, the City has no governmental immunity from the LCRA's claims, and the trial court did not err in denying the City's plea to the jurisdiction on this basis.
We affirm the trial court's order denying the City's plea to the jurisdiction.
Dissenting Opinion by Justice GOODWIN.
MELISSA GOODWIN, Justice, dissenting.
Because I would conclude that the Lower Colorado River Authority (LCRA) failed to allege a valid waiver of governmental immunity from suit by the City of Georgetown (the City), I respectfully dissent. See McCandless v. Pasadena Indep. Sch. Dist., No. 03-09-00249-CV, 2010 WL 1253581, at *3 (Tex.App.-Austin Apr. 2, 2010, no pet.) (mem. op.) ("Plaintiff bears the burden to affirmatively demonstrate the trial court's jurisdiction by alleging a valid waiver of immunity, which may be either by reference to a statute or to express
The majority concludes that the "City has no immunity from this suit" based upon its conclusion that "the City was acting in a proprietary capacity when it entered into its contracts with the LCRA." This conclusion, however, ignores the well-established doctrine of governmental immunity that protects political subdivisions of the state, including cities, from suit. See Ben Bolt v. Texas Political Subdivisions, 212 S.W.3d 320, 324 (Tex.2006); Tooke v. City of Mexia, 197 S.W.3d 325, 328 (Tex.2006); Multi-County Water Supply Corp. v. City of Hamilton, 321 S.W.3d 905, 907 (Tex.App.-Houston [14th Dist.] 2010, pet. denied). "A political subdivision enjoys governmental immunity from suit to the extent that immunity has not been abrogated by the Legislature." Ben Bolt, 212 S.W.3d at 324 (citing Texas Natural Res. Conserv. Comm'n v. IT-Davy, 74 S.W.3d 849, 853 (Tex.2002)); Multi-County Water Supply, 321 S.W.3d at 907 ("Immunity from suit deprives the trial court of subject-matter jurisdiction and bars an action against the governmental unit in the absence of express, clear, and unambiguous consent to suit." (citing Tex. Gov't Code § 311.034; Tooke, 197 S.W.3d at 332-33)).
The majority's analysis of the proprietary-governmental dichotomy also glosses over LCRA's pleadings. In its pleadings, LCRA does not allege a breach of contract claim but seeks declaratory relief. See Tex. Civ. Prac. & Rem.Code §§ 37.001.011 (UDJA); see, e.g., East Houston Estate Apartments, L.L.C. v. City of Houston, 294 S.W.3d 723, 731 (Tex.App.-Houston [1st Dist] 2009, no pet.) (noting that courts of appeals have "applied the governmental-proprietary dichotomy to breach of contract cases"). The UDJA "does not enlarge a trial court's jurisdiction." City of El Paso v. Heinrich, 284 S.W.3d 366, 370 (Tex.2009). Except for suits challenging statutes or ordinances, the UDJA does not waive governmental entities' immunity from suit. See id.; IT-Davy, 74 S.W.3d at 855-56; Multi-County Water Supply, 321 S.W.3d at 907 (noting that UDJA "is not a general waiver of governmental immunity" and that "[b]y entering into a contract, a governmental entity waives immunity from liability but does not waive immunity from suit"); Lower Colorado River Auth. v. Riley, No. 10-10-00092-CV, 2011 WL 6956136, at *2 (Tex.App.-Waco Dec. 28, 2011, no pet.) (mem. op.) (UDJA "not general waiver of sovereign immunity"). Thus, LCRA's UDJA claims do not satisfy its burden to allege a valid waiver of immunity from suit. See, e.g., IT-Davy, 74 S.W.3d at 855-56, 860 (stating that immunity generally protects a governmental entity from declaratory-judgment suits that seek to establish a contract's validity or enforce performance under the contract "because such suits attempt to control state action").
LCRA's pleadings also fail to establish that section 271.152 of the Local Government Code applies to waive the City's immunity from suit: the LCRA expressly states it is not bringing a breach of contract claim for money damages.
Although a governmental entity waives its immunity from liability by entering into contracts, it was LCRA's burden to allege a valid waiver of immunity from suit. See Ben Bolt, 212 S.W.3d at 324 ("By entering into a contract, the State waives its immunity from liability but not its immunity from suit."); Jones, 8 S.W.3d at 637 (plaintiff's burden to allege valid waiver of immunity). I would conclude that LCRA failed to do so.