Nueces County v. San Patricio County (Tex. 2008)

Claiming governmental immunity, Defendant gets to keep property tax revenues belonging to neighbor in county vs. county suit

Nueces County v. San Patricio County, No. 07-0166 (Tex. Jan. 25, 2008)(per curiam) (Tooke progeny, governmental immunity, county v. county dispute over border and wrongfully collected property taxes)

The enlightened public may have learned in Government 101, or even in high school, that sovereignty is an attribute of nations and states, but in Texas, any governmental entity can invoke the sovereignty mantra, when convenient, thanks to the Supreme Court's exercise of its power to make the common law what it wants it to be. The immunity doctrine allows local governments to win lawsuits they might otherwise lose when sued by their citizens, contractors, or employees without even defending them on the merits. But it does not stop there: In another twist to its immunity jurisprudence, the Texas Supreme Court holds that a county may invoke derivative sovereign immunity and keep ill-gotten gains (property tax revenues) that belonged to the neighboring county, which brought suit for declaratory judgment in a border dispute and for recoupment of lost taxes which - it turns out - rightfully belonged to it.

In the per curiam opinion allowing the defendant county to keep the extra cash, the Court also reiterates the remarkable proposition that the Texas Legislature, which meets but for a few months every other year, is in a better position to decide whether County B is entitled to recoup the taxes at issue from County A. As has become customary in sovereign immunity appeals, the Court mischaracterizes the resolution of this type of dispute as a policy choice, rather than a case-specific ruling based on the facts of the dispute, which is precisely what juries (or judges in a bench trial) are supposed to sort out, whereas it is the legislature's job to pass laws of general applicability.

The current Court would put the Legislature in charge of making special laws to deal with each situation (or pass resolutions to waive immunity in specific disputes after the aggrieved party has hired a high-powered lobbyist, and then have the paty return to court to litigate for actual judicial relief on the merits of its claim).

Nueces County v. San Patricio County, No. 07-0166 (Tex. Jan. 25, 2008)(per curiam) (governmental immunity, county vs. county dispute over wrongfully collected property taxes)

PER CURIAM OPINION

Nueces County collected ad valorem taxes on property later determined in a boundary dispute to belong to its neighbor San Patricio County. We must decide whether governmental immunity protects Nueces County from San Patricio County’s suit to recover the taxes that it paid. We hold that it does, and reverse the court of appeals’ judgment.

San Patricio County sued Nueces County under Local Government Code section 72.009 to establish their common boundary line. See Tex. Loc. Gov’t Code § 72.009. As part of that suit, San Patricio County sought to recover taxes that Nueces County had collected on the disputed land. The trial court resolved the boundary dispute as to some of the disputed land in San Patricio County’s favor, but held that Nueces County was protected by governmental immunity from San Patricio County’s suit to recover the taxes collected by Nueces County on the land.

The court of appeals affirmed the trial court’s boundary determination but reversed its dismissal of the tax-recovery suit, concluding that governmental immunity did not protect Nueces County. 214 S.W.3d 536, 553–54. Reasoning by analogy to cases holding that municipalities do not enjoy governmental immunity when performing proprietary functions, the court of appeals held that counties enjoy immunity only when “carrying out governmental activities implicitly delegated by the State to be carried out.” Id. at 553 (citing City of Galveston v. Posnainsky, 62 Tex. 118, 128 (1884)). The court concluded that governmental immunity does not protect Nueces County because its assessment and collection of ad valorem taxes on property not located within its boundaries is not a governmental activity delegated by the state. Id.

The court of appeals reasoned that immunity does not exist in the first instance, an argument asserted by the state, though on different grounds, in City of Galveston v. Texas, 217 S.W.3d 466, 471 (Tex. 2007). Identifying no waiver of immunity here, the court of appeals determined that immunity does not exist when a county acts beyond its delegated power. 214 S.W.3d at 553. But we have said that the 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.” City of Galveston, 217 S.W.3d at 471. Governmental immunity, then, would presumptively apply in this suit between counties.

The court of appeals’ reasoning that Nueces County was not entitled to immunity because it acted beyond its governmental authority in taxing what turned out to be San Patricio’s land is additionally flawed to the extent it is based upon a line of cases holding that cities do not enjoy immunity from suit when they undertake “proprietary” rather than “governmental” functions.

The court of appeals reasoned that, although counties are granted the power to assess taxes on their own land, they have no governmental authority to tax other counties’ land; when they do, they act beyond their governmental authority and thus outside sovereign immunity’s protections. 214 S.W.3d at 553; see Tex. Const. art. VIII, § 1-a (granting counties the exclusive right to assess ad valorem taxes on property within their own boundaries).

However, as “involuntary agents of the state” without the power to serve the local interests of their residents, counties have no “proprietary” functions; all of their functions are “governmental” in nature. Tex. Const. art. XI, § 1 interp. commentary; Posnainsky, 62 Tex. at 128. The court of appeals’ premise that Nueces County is not entitled to immunity because it mistakenly taxed land beyond its boundaries does not diminish the governmental nature of Nueces County’s actions. Virtually all negligent or improvident action on the part of a governmental unit could be characterized as action beyond its delegated constitutional authority. But such characterization does not deprive the governmental unit of immunity.

For example, in City of Galveston, we held that the city was shielded by governmental immunity even though it presumably had no delegated constitutional power to negligently destroy state roads. See City of Galveston, 217 S.W.3d at 468. We have likewise recognized immunity in suits alleging that the governmental unit exercised what could as well be characterized as nondelegated powers, like collection of illegal taxes from voluntary payers, see Dallas County Cmty. Coll. Dist. v. Bolton, 185 S.W.3d 868, 876–79 (Tex. 2005), injury against citizens, see Posnainsky, 62 Tex. at 125, and breach of contract, see Tooke v. City of Mexia, 197 S.W.3d 325, 328 (Tex. 2006).

Governmental immunity nevertheless shields counties against such suits absent express legislative waiver. Cf. Tooke, 197 S.W.3d at 332 (noting that one of the primary policies behind governmental immunity is to shield the public from “the costs and consequences of improvident actions of their governments”).

San Patricio County contends that allowing a money-damages suit against Nueces County under these circumstances is consistent with the policies supporting governmental immunity, insofar as the suit does not seek to divert Nueces County’s properly collected tax resources from their intended purpose; rather, Nueces County is itself the wrongful depletor of tax revenues which belong to San Patricio County. See Tex. Natural Res. Conservation Comm’n v. IT-Davy, 74 S.W.3d 849, 854 (Tex. 2002).

However, we emphasized in City of Galveston that the “heavy presumption in favor of immunity” derives not just from principles related to separation of powers but from practical concerns: “In a world with increasingly complex webs of governmental units, the Legislature is better suited to make the distinctions, exceptions, and limitations that different situations require. The extent to which any particular city, county, port, municipal utility district, school district, or university should pay damages involves policy issues the Legislature is better able to balance.” City of Galveston, 217 S.W.3d at 469. That principle holds equally true here.

Accordingly, without hearing oral argument, we grant the petition for review, vacate the court of appeals’ judgment, and render judgment dismissing San Patricio County’s claim for damages for lack of jurisdiction. See Tex. R. App. P. 59.1, 60.2(c).

OPINION DELIVERED: January 25, 2008

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Full style: NUECES COUNTY v. SAN PATRICIO COUNTY; from Refugio County; 13th district (13-05-00022 CV, 214 S.W.3d 536, 12-07-2006)
Pursuant to Texas Rule of Appellate Procedure 59.1, after granting the petition for review and without hearing oral argument, the Court vacates the court of appeals' judgment and renders judgment. Per Curiam Opinion
Link to briefs

Opinion below by Honorable Errlinda M. Castillo 214 S.W.3d 536, (Tex. App. - Corpus Christi, December 7, 2006)

EXCERPT FROM COURT OF APPEAL'S OPINION BY JUSTICE CASTILLO

IV. IMMUNITY

On January 7, 2005, simultaneously with entry of the judgment granting the bill of review judgment, the trial court granted Nueces's summary-judgment motion and denied San Patricio's motion in the tax suit. The trial court determined that it lacked jurisdiction because Nueces was immune from suit and entered the following judgment:

On September 29, 2004, the court heard the parties' motions for summary judgment. The parties appeared by their lawyers and argued their motions.
The Court found that Nueces County established conclusively and as a matter of law that it has immunity from San Patricio County's suit and therefore this Court has no jurisdiction over such suit.

The Court therefore GRANTS Defendant's motion for summary judgment and denies Plaintiff's motion for summary judgment.

The Court ORDERS this suit dismissed for want of jurisdiction.

In discovery responses, Nueces expressly admitted that it collected ad valorem taxes on property determined in the boundary suit to lie within San Patricio boundary. By its cause of action, San Patricio alleged that Nueces collected ad valorem taxes on property adjudged located within San Patricio's boundary. The issue San Patricio posits is whether the doctrine of governmental immunity rendered the trial court powerless to grant relief to one county whose sovereign prerogative was usurped by another county. San Patricio maintains that immunity does not apply and, thus, it and not Nueces was entitled to summary judgment as a matter of law.

A. Plea to the Jurisdiction

Encompassed within Nueces's summary-judgment motion was its plea to the jurisdiction. Nueces asserted that it enjoyed sovereign immunity from suit and it had not waived immunity. San Patricio countered with a motion for partial summary judgment (exclusive of the amount of taxes due and owing) asserting as grounds its
sovereign right to a claim for ad valorem taxes admittedly collected and retained by Nueces on property adjudged within San Patricio's boundary.

A. Standard and Scope of Review

A plea to the jurisdiction is a dilatory plea used to defeat a cause of action without regard to whether the claims asserted have merit. Bland Indep. Sch. Dist., 34 S.W.3d 547, 554 (Tex. 2000). To prevail on a plea to the jurisdiction, the defendant must show an incurable jurisdictional defect on the face of the pleadings, making it impossible for the plaintiff to amend its petition in order to confer jurisdiction on the district court. MAG-T, L.P. v. Travis Cent. Appraisal Dist., 161 S.W.3d 617, 624 (Tex. App.-Austin 2005, pet. denied). The plaintiff then has the burden of alleging facts to affirmatively demonstrate that the court has jurisdiction. Tex. Dep't of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 226 (Tex. 2004); Tex. Ass'n of Bus. v. Texas Air Control Bd., 852 S.W.2d 440, 446 (Tex. 1993).

In deciding a plea to the jurisdiction, a court may not weigh the claims' merits but must consider only the plaintiffs' pleadings and the evidence pertinent to the jurisdictional inquiry. Texas Natural Res. Conservation Comm'n v. White, 46 S.W.3d 864, 868 (Tex. 2001); Bland, 34 S.W.3d at 554. When we consider a trial court's order on a plea to the jurisdiction, we construe the pleadings in the plaintiff's favor and look to the pleader's intent. See Texas Ass'n of Bus. v. Texas Air Control Bd., 852 S.W.2d at 446; Peek v. Equipment Serv. Co. of San Antonio, 779 S.W.2d 802, 804-05 (Tex. 1989). When a plaintiff fails to plead facts that establish jurisdiction, but the petition does not affirmatively demonstrate incurable defects in jurisdiction, the issue is one of pleading sufficiency and the plaintiff should be afforded the opportunity to amend. See Peek, 779 S.W.2d at 804-05; Texas Dep't of Corrections v. Herring, 513 S.W.2d 6, 9-10 (Tex. 1974). On the other hand, if the pleadings affirmatively negate the existence of jurisdiction, then a plea to the jurisdiction may be granted without allowing the plaintiff an opportunity to amend. See Peek, 779 S.W.2d at 804-05; see also County of Cameron v. Brown, 80 S.W.3d 549, 555 (Tex. 2002).
We review a denial of a plea to the jurisdiction de novo. See Miranda, 133 S.W.3d at 226. We do not look at the merits of the case but construe the pleadings liberally in favor of the plaintiff, look to the pleader's intent, and accept the pleadings' factual allegations as true. Tex. Ass'n of Bus., 852 S.W.2d at 446. If a plea to the jurisdiction challenges the existence of jurisdictional facts, we consider evidence necessary to resolve the jurisdictional issues. See Miranda, 133 S.W.3d at 227 (citing Bland, 34 S.W.3d at 555).

In Miranda, the Supreme Court recognized that a trial court's review of a plea to the jurisdiction challenging the existence of jurisdictional facts "mirrors" that of a traditional summary judgment. Id.; Tex. R. Civ. P. 166a(c). The Miranda Court explained that, by requiring the state to meet the summary judgment standard of proof, "we protect the plaintiffs from having to 'put on their case simply to establish jurisdiction.'" Miranda, 133 S.W.3d at 228 (quoting Bland, 34 S.W.3d at 554). Under this procedure, the burden is on the defendant to put forth evidence establishing as a matter of law that the trial court lacks jurisdiction. (17) Id.; Tex. R. Civ. P. 166a. The burden then shifts to the plaintiff to demonstrate that there is a disputed issue of material fact regarding the jurisdictional issue. Miranda, 133 S.W.3d at 228. The defendant cannot simply deny the existence of jurisdictional facts and force the plaintiff to raise a fact issue. See Johnson v. Brewer & Pritchard, P.C., 73 S.W.3d 193, 207 (Tex. 2002); see also Brown, 80 S.W.3d at 555 ("In deciding a plea to the jurisdiction, a court may not weigh the claims' merits but must consider only the plaintiffs' pleadings and evidence pertinent to the jurisdictional inquiry.").

B. Governmental Immunity

The parties do not dispute that counties of the State are authorized to levy ad valorem taxes upon all property within their respective boundaries for county purposes. See Tex. Const. art. VIII, § 1-a. The question squarely before us, however, is whether Nueces enjoys immunity from suit on taxes levied on property adjudged as San Patricio's property.

As a general rule, a governmental unit (18) is immune from tort liability under the doctrine of sovereign immunity. (19) See Harris County v. Dillard, 883 S.W.2d 166, 168 (Tex. 1994). Historically, this doctrine, as its name implies, shields the sovereign from liability. Tyrrell v. Mays, 885 S.W.2d 495, 499 (Tex. App.-El Paso 1994, reh'g denied). Because the governmental entities involved here are counties, (20) we use the term governmental immunity in this opinion. (21) United Water Servs. v. City of Houston, 137 S.W.3d 747, 750 n.4 (Tex. App. 2004).

A trial court is required to look to common law principles to determine whether a county enjoys governmental immunity from suit. See Texas A&M University-Kingsville v. Lawson, 87 S.W.3d 518, 520 (Tex. 2002) ("In Texas, the bar of sovereign immunity is a creature of the common law and not of any legislative enactment."). Because we have found no case law addressing the horizontal immunity question before us, for guidance we look to case law addressing derivative immunity in the context of municipalities.

Since 1884, municipalities have enjoyed immunity when performing governmental functions, but not when performing proprietary functions. See City of Galveston v. Posnainsky, 62 Tex. 118, 132-33 (1884) (first distinguishing between municipality's governmental and proprietary functions for purposes of immunity from tort claims). The court reasoned that in so far as municipalities exercised powers conferred on them for public purposes pertaining to the administration of general laws made to enforce the general policy of the state, they should be deemed agencies of the state, and not subject to be sued for any act or omission occurring while in the exercise of such power. Id. at 127. The Supreme Court's reasoning shows that municipalities enjoy immunity from suit for governmental activity, not due to any inherent sovereignty, but, rather, because the State cloaks them with the State's sovereign immunity from suit while they carry out the State's public purposes. See id. at 126-27. Thus, any immunity from suit that a municipality enjoys derives solely from the State's immunity-the former receives immunity from suit only when carrying out governmental activities implicitly delegated to it to carry out in the latter's stead. See id. at 128. Texas courts have repeatedly noted or applied variations of the "derived immunity" reasoning that the Posnainsky court first recognized. (22)

"Counties are declared, by the laws of this state, to be corporations and they are municipal corporations in the sense that they are agencies 'to regulate and administer the internal concerns of the locality in matters peculiar to the place incorporated. . . ." Posnainsky, 62 Tex. at 127. (23) Thus, for municipal corporations of any class, and however incorporated, exercising powers conferred on them for public purposes that pertain to the administration of general laws made to enforce the general policy of the state, they should be deemed agents of the state, subject to suit only when the state, by statute, declares they may be. Id. at 127. Therefore, a county's immunity from suit arises from the State's immunity and is exercised only when the county is carrying out governmental activities implicitly delegated by the State to be carried out. (24) Id. at 128.

C. Application of the Law to the Facts

San Patricio maintains that the trial court erred in granting Nueces's jurisdictional plea because immunity from suit does not apply to a governmental entity when it is performing an act that is not a governmental function. Nueces's immunity from suit "does not arise from any inherent sovereignty of its own, but instead derives from its status as a political subdivision of the state." See State of Texas v. City of Galveston, 175 S.W.3d 1, 5 (Tex. App.-1st Dist. Houston 2004). Immunity is exercised only when the county is carrying out governmental activities implicitly delegated by the State to be carried out. Posnainsky, 62 Tex. at 128. Nueces cannot be shielded by the umbrella of governmental immunity when it assesses and collects ad valorem taxes on property not located within its boundaries because this is not a governmental activity delegated by the State. See id. Because the State does not delegate the collection of taxes on property that is not within a county's boundaries, immunity does not arise. (25) Because Nueces admittedly levied taxes on property adjudged located in San Patricio County and retains those taxes, governmental immunity did not apply to an act not authorized and not derived from the sovereign State.

Accordingly, we agree with and adopt San Patricio's argument as follows:

While the State may also have independent general immunity with respect to its governmental subdivisions, a county has no independent general immunity with respect to the State or the State's governmental subdivisions. A county's immunity is derivative. It enjoys immunity when it acts as an agent of the State in exercising sovereign rights delegated to it by the State.
It follows that Nueces has no immunity from San Patricio's suit for taxes levied on property within San Patricio's boundary. Nueces could have immunity only if exercised a sovereign right when it collected the taxes. It could exercise a sovereign right only if it was delegated the power by the State to collect the taxes. The State delegated Nueces no right to tax property in San Patricio nor to resist San Patricio's suit to recover the taxes. On the other hand, when San Patricio brought this suit, it exercised its State sovereignty committed to it to collect taxes on [property within its boundaries].

[In short], we have a suit brought by one county asserting a sovereign right against another county defending no sovereign right. While Nueces is sovereign with respect to objects committed to it, Nueces is not sovereign with respect to objects committed to San Patricio. Nueces has no sovereignty with respect to San Patricio on [the summary-judgment facts]. Nueces has no immunity on [the summary-judgment facts]. (26)

We conclude that, as a matter of law, summary judgment on governmental immunity grounds in favor of Nueces was improper. Conversely, San Patricio has demonstrated, as a matter of law, summary judgment in its favor is proper. We sustain San Patricio's second issue and overrule Nueces's first counterpoint to the extent it relates to the tax suit. We reverse the trial court's dismissal judgment in the tax suit. Because San Patricio sought only partial judgment with respect to the question of immunity, we remand the case for further proceedings. See Tex. R. App. P. 43.3, 44.1.

V. CONCLUSION

We sustain San Patricio's issues on appeal and overrule Nueces' counterpoints. By our decision, we affirm the April 11, 2003 judgment in the boundary case, vacate the bill of review judgment, and reverse and remand the tax suit judgment.

ERRLINDA CASTILLO

Justice