Fluor Daniel Inc v. Travis County Texas ( 2003 )

United States Court of Appeals
Fifth Circuit
F I L E D
April 30, 2003
IN THE UNITED STATES COURT OF APPEALS
Charles R. Fulbruge III
FOR THE FIFTH CIRCUIT Clerk
No. 02-50378
FLUOR DANIEL, INC.,
Plaintiff-Counter Defendant-Appellee,
versus
TRAVIS COUNTY, TEXAS,
Defendant-Counter Claimant-Appellant.
Appeal from the United States District Court for
the Western District of Texas
_______________________________________________________
Before KING, Chief Judge, REAVLEY and STEWART, Circuit Judges.
REAVLEY, Circuit Judge:*
*
Pursuant to 5TH CIR. R. 47.5, the Court has determined that this opinion should
not be published and is not precedent except under the limited circumstances set forth in
5TH CIR. R. 47.5.4.
We conclude, under Travis County v. Pelzel & Associates, Inc.1 and related
authority, that Travis County (the County) was immune from suit. We must therefore
reverse and render judgment in favor of the County.
Fluor Daniel, Inc. (Fluor) argues that prior to Pelzel counties were not immune
from suit and that Pelzel should not be applied retroactively. Pelzel itself cites cases
going back to 1892 for the proposition that “[a] county is a governmental unit protected
by the doctrine of sovereign immunity.”2 We are not in a posture to second guess the
Texas Supreme Court’s interpretation of Texas law. In a diversity case, our task is to
decide the case as the state supreme court would decide it.3 We are persuaded that the
Texas Supreme Court would side with Travis County in the pending case.4
Fluor argues that the county is a separate legal entity which could, under Texas
law, waive sovereign immunity independently of any action by the Texas Legislature.
This question may be undecided under Texas law, or Pelzel’s reference to waiver by “a
1
77 S.W.3d 246 (Tex. 2002).
2
Id. at 248.
3
Tex. Dep’t of Housing & Cmty. Affairs v. Verex Assurance, Inc., 68 F.3d 922,
928 (5th Cir. 1995).
4
Furthermore, Pelzel held that sovereign immunity barred suit on a contract
entered into in March 1994, see 30 S.W.3d at 664 (court of appeals decision), before the
parties entered into the contract at issue in the pending case. Even if Pelzel changed the
law and does not, for some reason, apply retroactively to all cases, we think the Texas
Supreme Court at least intended it to apply to contracts executed after the date of the
contract in that case, especially where, as here, the defendant claiming sovereign
immunity repeatedly moved for a trial continuance until the Texas Supreme Court ruled
in Pelzel.
2
governmental entity”5 and discussion of whether the county in that case had waived
immunity6 may have been intended to recognize such authority on the part of Texas
counties.7 Assuming without deciding that a county can waive its sovereign immunity
without action by the Texas Legislature, and that this argument was duly preserved below
or is otherwise properly before us, we cannot agree with Fluor that the County waived
immunity in this case.
Fluor argues that the County waived sovereign immunity in paragraph 8 of the
Third Amendment to the contract, which states:
Neither Fluor nor County waives any right to enforce any provision of the
contract as it was approved in August of 1994 and modified twice by
Amendment. It is the clear and expressed intent of Fluor and the County
that this reservation and non-waiver should survive the Project and the
Contract. All rights to resolution, including enforcement by litigation, are
reserved.
The amendment was signed by the county judge. At the outset, we are unsure
whether the county judge acting in his capacity as the county’s chief executive can waive
5
77 S.W.3d at 248.
6
Id. at 251-52.
7
We recently recognized that a Texas home-rule municipality can waive
sovereign immunity by enacting a “sue and be sued” provision in its city charter, Webb v.
City of Dallas, 314 F.3d 787, 795 (5th Cir. 2002), though we also noted a state statute
providing that home-rule municipalities “‘may plead and be impleaded in any court,’” id.
at 793 (quoting TEX. LOC. GOV’T CODE ANN. § 51.075 (Vernon 1999)). Pelzel, however,
noted that the Texas Legislature had long ago repealed “sue and be sued” language in a
statute applicable to counties. “Thus well over a hundred years ago, the Legislature
deleted the only [statutory] language arguably waiving sovereign immunity, suggesting
that it intended to preserve counties’ immunity from suit.” Id. at 250.
3
sovereign immunity. In Texas Natural Resource Conservation Commission v. IT-Davy,8
the court rejected the argument that a contractual provision providing that disputes could
be decided by arbitration or in court effected a waiver of sovereign immunity. The court
held that since only the Legislature could waive sovereign immunity, “administrative
agents,” even those with authority to enter into contracts, had no authority to waive
immunity.9 By analogy, the Texas Supreme Court might conclude that only the
legislative body of the county—the commissioner’s court—can waive sovereign
immunity. It has previously stated that a waiver can only occur by statute or “legislative
resolution.”10
Assuming as a factual matter that the full commissioner’s court voted in favor of
the Third Amendment as a formal legislative act, Texas law provides that a waiver of
sovereign immunity must the “clear and unambiguous.”11 The amendment does not
clearly and unambiguously waive sovereign immunity. We read it as a non-waiver of
whatever rights the parties had before, not a waiver of sovereign immunity. It states that
the rights of the parties are “reserved” and that the “non-waiver” of rights survives. One
of the “rights” preserved is the county’s sovereign immunity. At the very least, the
8
74 S.W.3d 849 (Tex. 2002).
9
Id. at 857-58.
10
Federal Sign v. Tex. S. Univ., 951 S.W.2d 401, 405 (Tex. 1997).
11
See Pelzel 77 S.W.3d at 248; IT-Davy, 74 S.W.3d at 854; Gen. Servs. Comm’n
v. Little-Tex Insulation Co., 39 S.W.3d 591, 594 (Tex. 2001); Federal Sign, 951 S.W.2d
at 405.
4
provision’s meaning is uncertain and it does not clearly and unambiguously waive
sovereign immunity. It does not mention sovereign immunity.
Fluor argues in the alternative that the county waived its sovereign immunity by
filing counterclaims and third-party claims. We again assume without deciding that this
argument was timely presented.
Fluor cites Anderson, Clayton & Co. v. State ex rel. Allred,12 which according to
another cited case, Fesal v. Hutchinson County,13 is “authority for the general rule that
where the state voluntarily files a suit and submits its right for judicial determination, the
state will be bound thereby and the defendant will be entitled to plead and prove all
matters which are properly defensive . . . .”14 These cases do not persuade us that the
filing of a counterclaim or third-party claim in the pending circumstances effected a
waiver of sovereign immunity. We would characterize another case cited by Fluor,
Railroad Commission v. Arkansas Fuel Oil Co.,15 as a judicial estoppel case recognizing
the rule preventing a party from asserting a position in a legal proceeding that is contrary
to a position earlier taken in the same or some earlier proceeding.16 It is not a sovereign
immunity case. We read another case cited by Fluor, State v. City National Bank of
12
62 S.W.2d 107 (Tex. Comm’n App. 1933, opinion adopted).
13
443 S.W.2d 937 (Tex. Civ. App.–Amarillo 1969, writ ref’d n.r.e.).
14
Id. at 938.
15
148 S.W.2d 895 (Tex. Civ. App.–Austin 1941, writ ref’d).
16
See United States v. McCaskey, 9 F.3d 368, 378 (5th Cir. 1993).
5
Austin,17 as a case where a state agency expressly waived sovereign immunity by stating
it its contract that it could be sued for unpaid rent. It did not address whether the filing of
a counterclaim or third-party claim effected a waiver of sovereign immunity, and in any
event preceded the latest Texas Supreme Court decisions on the subject of sovereign
immunity. In short, none of the cases cited by Fluor squarely holds that a county who is
initially sued as a defendant and who asserts sovereign immunity throughout the
proceeding nevertheless waives that immunity by filing a counterclaim or third-party
claim.
Wallace v. City of Midland18 rejected an appellant’s argument that a city “waived
its defense of sovereign immunity by going to court seeking relief by either claim or
counterclaim.”19 It interpreted prior case law as not holding “that a governmental entity
waives its sovereign immunity by requesting affirmative relief in court but only that a
state agency is subject to the same rules of procedure as any other litigant.”20
We conclude that the filing of a counterclaim or third-party claim should not be
deemed a waiver of immunity in the pending case. It should be deemed pleading in the
alternative. The County points out that throughout the lower court proceedings it asserted
17
578 S.W.2d 155 (Tex. Civ. App.–Tyler 1979), aff’d, 603 S.W.2d 764 (Tex.
1980).
18
836 S.W.2d 641 (Tex. App.–El Paso 1992, writ denied).
19
Id. at 643.
20
Id.
6
sovereign immunity, asserted the counterclaims and third-party claims only after losing
its motion to dismiss on grounds of sovereign immunity, and asserted these affirmative
claims subject to and without waiving its immunity.
Again, any uncertainty on this question must be resolved in favor of the County,
since Texas law requires that waivers of sovereign immunity be clear and unambiguous.
Further, holding that the filing of a counterclaim or third-party claim waived immunity is
a either a variant of the “waiver by conduct” argument, which the Texas Supreme Court
rejected in IT-Davy21 and Little-Tex,22 or an implied waiver theory, inconsistent with
Pelzel’s requirement that “[e]xpress consent is required to show that immunity from suit
has been waived.”23 Finally, as a court sitting in diversity, we must not “expand state law
beyond its presently existing boundaries.”24
In a FED. R. APP. P. 28(j) letter, Fluor cites Lubbock County v. Trammel’s
Lubbock Bail Bonds,25 which allowed a suit to proceed against a county. Suffice it to say
that this case did not discuss sovereign immunity, for reasons not readily apparent to us,
and was not a suit on a contract. Given the choice between relying on Trammel’s
21
74 S.W.3d at 857 (“[W]e reject IT-Davy’s argument that we should fashion such
a waiver-by-conduct exception in a breach-of-contract suit against the State.”).
22
39 S.W.2d at 597 (“[W]e refuse to intercede . . . by judicially adopting a waiver-
by-conduct doctrine.”).
23
77 S.W.3d at 248.
24
Rubinstein v. Collins, 20 F.3d 160, 172 (5th Cir. 1994).
25
80 S.W.3d 580 (Tex. 2002).
7
Lubbock Bail Bonds, or the four recent Texas Supreme Court cases discussed
above—Pelzel, IT-Davy, Little-Tex, and Federal Sign—all of which address at length
sovereign immunity in contract cases, we rely on the latter cases.
For the foregoing reasons, the judgment is reversed and a take-nothing judgment is
hereby entered in favor of the County.
REVERSED AND RENDERED.
8