Maverick Drilling & Well Service Co., Inc. v. Railroad Commission of Texas

Maverick Drilling & Well Service v. Railroad Commission et al IN THE TENTH COURT OF APPEALS No. 10-96-058-CV MAVERICK DRILLING & WELL SERVICE CO., INC., Appellant v. RAILROAD COMMISSION OF TEXAS, ET AL., Appellees From the 13th District Court Navarro County, Texas Trial Court # 93-00-03294-CV O P I N I O N Maverick Drilling and Well Service ("Maverick") appeals from an order dismissing for want of jurisdiction its suit against the Railroad Commission of Texas ("RRC"). As Maverick framed the issue in oral argument: The only question is whether sovereign immunity applies when the State contracts with a citizen. Because we believe that a waiver of sovereign immunity is a policy decision to be made by the legislature, we affirm the judgment. PROCEDURAL BACKGROUND In late 1991, the RRC awarded Maverick a bid to plug five oil wells. After Maverick plugged one well, the RRC cancelled the awards on the remaining four wells. Maverick requested payment of $48,151.71; the Commission paid $24,251.00. Maverick sued the RRC seeking (1) the unpaid balance for plugging the first well and (2) "$27,650.00 which was the value of the remainder of the contract which was wrongfully canceled." Maverick also sued Randall Earley, a RRC official, for tortious interference with its contract. The RRC filed a Plea to the Jurisdiction asserting that Maverick had not received legislative consent to sue the State or its agencies. Maverick conceded that it had not received consent to sue, but asserted that in a breach-of-contract suit (1) legislative consent is not a prerequisite and (2) sovereign immunity violates the Open Courts and Due Course of Law provisions of the Texas Constitution. POINTS OF ERROR In three points, Maverick asserts that the court erred in ruling that RRC was immune from suit. entering into contract waives immunity Maverick's first point asserts that the court's dismissal is erroneous because sovereign immunity from suit is waived (and thus legislative consent unnecessary) in breach-of-contract suits. Sovereign immunity consists of two elements: immunity from liability and immunity from suit. Missouri Pacific R.R. v. Brownsville Navigation Dist., 453 S.W.2 812, 813 (Tex. 1970). Unless waived, the State retains its sovereign immunity. Id. The State waives its immunity from liability when it enters into a contract. Fristoe v. Blum, 92 Tex. 76, 45 S.W. 998, 999 (1898). The question here is: Does the State waive its immunity from suit when it enters into a contract? Several courts of appeals have answered that question in the negative. Texas Southern Univ. v. Federal Sign, 889 S.W.2d 509, 511 (Tex. App.—Houston [14th Dist.] 1994, writ granted) ("[E]ven though the State waives its immunity from liability when it enters into a contract, it retains its immunity from suit."); Green Int'l, Inc. v. State, 877 S.W.2d 428, 432-33 (Tex. App.—Austin 1994, writ denied, order withdrawn, dism'd); see also University of Texas Sys. v. Courtney, 1996 WL 490783, at *2 (Tex. App.—Fort Worth, August 29, 1996, n.w.h.) ("[T]he trial court did not have jurisdiction over Courtney's contract claim. . . . [P]ermission of the state is required to sue the state for breach of contract."). We recognize that the Dallas Court has stated that "the sovereign immunity doctrine does not apply to contracts made by the State, or any of its agencies under our Constitution . . . ." Industrial Const. Mgmt v. DeSoto Indep. Sch. Dist., 785 S.W.2d 160, 163 (Tex. App.—Dallas 1989, no writ); see also Texas Dep't of Health v. Texas Health Enterp., Inc., 871 S.W.2d 498, 506 (Tex. App.—Dallas 1993, writ denied). We likewise acknowledge Justice Kidd's well-reasoned dissent in Green. Green, 877 S.W.2d at 439-41 (Kidd, J., dissenting) ("[T]he State may not hide behind the cloak of sovereign immunity to escape its legitimate contractual obligations."). Our Supreme Court has agreed to review Texas Southern Univ., 889 S.W.2d 509. 39 Tex. Sup. Ct. J. 92 (November 7, 1995). It specifically granted writ of error on three points, two of which are germane to this appeal: (1) whether immunity from suit is waived when the State or its agencies enter into a contract with a citizen; and (2) whether immunity from suit in a breach-of-contract suit violates the Open Courts and Due Course of Law provisions of the Texas Constitution. Until the Court determines otherwise, we will follow the Austin Court's reasoning in Green. 877 S.W.2d at 433. Although the justifications for sovereign immunity have been criticized—particularly in contractual situations—the waiver of sovereign is a matter properly addressed to the legislature. Id. Maverick concedes that it did not obtain the State's consent to be sued. Thus, the RRC retained immunity from suit, depriving the court of jurisdiction. Id. We overrule point one. open courts doctrine Maverick's second point asserts that the court's ruling violates the open courts and due course of law provisions of the Texas Constitution. Tex. Const. art. I, §§ 13, 19. The open-courts provision guarantees a litigant's right to redress if (1) the litigant has a cognizable common-law cause of action and (2) the restriction on the litigant's right to bring that cause of action is unreasonable or arbitrary when the effect of the restriction is balanced against its purpose and effect. Sax v. Votteler, 648 S.W.2d 661, 666 (Tex. 1983). The Austin Court stated in Green: "Sovereign immunity is a common-law doctrine; it preceded the current Texas Constitution. Thus, we must read the open-courts provision in light of the preexisting concept of sovereign immunity. We find no authority holding that the open-courts provision was intended to abolish or limit sovereign immunity." Green, 877 S.W.2d at 437. Further, "in light of the long-standing recognition of the doctrine of sovereign immunity," the Austin Court did not find that its application was an "unreasonable or arbitrary restriction of Green's right to redress." Id. Similarly, Maverick has not met the two-prong test to establish an open-courts violation. See Sax, 648 S.W.2d at 666. We overrule point two. public taking Maverick's final point asserts that it pled a cause of action for an unconstitutional taking, which is an exception to the doctrine of sovereign immunity. "No person's property shall be taken, damaged, or destroyed for or applied to public use without adequate compensation being made . . . ." Tex. Const. art. I, § 17. We again rely on the Austin Court's analysis in Green. 877 S.W.2d at 433-35. The RRC has paid some monies to Maverick over the course of the performance of the contact. The facts alleged do not indicate that the RRC had the intent to "take" for public use under its powers of eminent domain. Id. at 435. We overrule point three and affirm the judgment. BILL VANCE Justice Before Chief Justice Davis, Justice Cummings, and Justice Vance Affirmed Opinion delivered and filed September 18, 1996 Do not publish t would be inequitable or unjust to allow the judgment to stand. Id. Under general equitable principles, TASB’s right to reimbursement is subject to Ward’s right to first be made whole. Ortiz v. Great Southern Fire & Cas. Ins. Co., 597 S.W.2d 342, 343 (Tex. 1980); Esparza, 909 S.W.2d at 552. The court found Ward was not made whole by the settlement and TASB has not challenged that finding. Because there is evidence in the record to support the court’s finding, it is binding on us. McGalliard v. Kuhlmann, 722 S.W.2d 694, 696 (Tex. 1986); Reliance Ins. Co. v. Denton Cent. Appraisal Dist., 999 S.W.2d 626, 629 (Tex. App.—Fort Worth 1999, no pet h.). Furthermore, the court found that Ward had recovered the maximum amount of insurance available to compensate him for his injuries, a finding which is also unchallenged and supported by the record. Thus, the court acted within its discretion in refusing to require Ward to reimburse TASB from the settlement monies. Ortiz, 597 S.W.2d at 343; Esparza, 909 S.W.2d at 552, 553. The court correctly recognized that the subrogation right conferred on TASB by section 172.015 is governed by equitable principles. No abuse of discretion has been shown by the court’s balancing of the equities between the parties. We affirm the judgment. BILL VANCE Justice Before Chief Justice Davis Justice Vance, and Justice Gray Affirmed Opinion delivered and filed April 26, 2000 Publish