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Governmental Immunity in the Construction Industry

02.16.2022

Governmental Immunity in the Construction Industry

By Joshua W. Upham, Associate

Sovereign immunity is a concept that predates the formation of America’s justice system but has been implemented for political, financial, and practical purposes.[1]  At its core, sovereign immunity protects the State from liability in its court because the State is said to be “entirely sovereign.”[2] Such sovereignty is inherent to statehood but can be extended to political subdivisions of the state (such as schools, counties, cities) in limited circumstances.[3]  Political subdivisions, however, are not sovereign, and so they share in the State’s immunity only when performing governmental functions as the state’s agent.[4]

Sovereign immunity raises its head in construction litigation often.  Often, a city or state is involved in financing, approving, overseeing, or initiating real estate development or construction projects.  Cities can also enter into contracts with private developers or landowners.  When litigation arises out of a city’s actions, the question often arises of whether suit may be brought against the municipal defendant.

A recent decision from the Texas supreme court is helpful in making this distinction and provides a clear path for would-be plaintiffs to argue that a city has acted on its own behalf and is thus not protected by the state’s sovereign immunity.

Governmental v. Sovereign Immunity

Governmental immunity is a distinct, but closely related concept to sovereign immunity.  Sovereign immunity protects the State and its divisions such as state hospitals.[5]  Governmental immunity operates like an extension of sovereign immunity to shield “political subdivisions” of the state such as counties and cities.  However, this immunity typically only applies when political subdivisions are acting “as a branch of the state.”[6]

There are two forms of governmental immunity that can protect cities from litigation: immunity from suit and immunity from liability.  Immunity from suit bars an action against a governmental entity if the State hasn’t consented to it. Typically, the State consents to litigation via a constitutional provision or a legislative action.[7]  Immunity from suit is a strong protection that acts as a jurisdictional bar – even if the city has conceded liability, state courts lack subject matter jurisdiction to hear the case without the State’s consent.[8]

Immunity from liability is a separate protection which protects governmental entities from judgments “even if the Legislature has expressly given consent to suit.”[9]  The Supreme Court has consistently held that “The State neither creates nor admits liability by granting permission to be sued.”[10]  The Texas Tort Claims Act is an example of a legislative act that provides a limited waiver of the State’s immunity from both suit and liability.

Governmental Immunity in Texas

In Texas, governmental immunity is governed by Chapter 101 of Title V of the Civil Practice and Remedies Code.  Known as the Texas Tort Claims Act (“TTCA”), this statute defines liability for municipalities and other “political subdivisions” of the State of Texas. Because Texas courts have found that governmental immunity extends “as far as the state’s immunity but no farther,” the statute delineates between so-called “governmental” actions taken on behalf of the state and “proprietary” actions that a subdivision takes primarily for its own benefit.[11]

The TTCA defines thirty-six acts as “governmental,” though the statute is clear that this list is not exhaustive.[12]  The TTCA permits extremely limited municipal liability when governmental actions are involved, nearly always requiring the use of a motor vehicle in the commission of the tort.[13] Additionally, this section of the statute includes strict pleading and notice guidelines that must be met to validly state a claim against a city.[14]

The TTCA only defines three “proprietary” functions of local government, the operation of public utilities, amusement parks, and ultra-hazardous activities.[15]  For proprietary actions, a municipality is subject to liability and unlimited damages.  However, the issue of what acts are considered “proprietary” has always been a particularly thorny and difficult one for Texas courts.[16] Would-be plaintiffs seeking to sue over an act not enumerated in the TTCA have had an uphill battle until recently.  In 2018, the Texas Supreme Court issued a decision that gave a four-part factors test for determining where an unenumerated action falls on the governmental/proprietary dichotomy.

Unenumerated Municipal Actions Under the TTCA

In Wasson Interests, Ltd. v. City of Jacksonville, the Texas Supreme Court announced a four-part test for ascertaining whether a city’s actions are governmental, and thereby immune from suit, or proprietary, and thus subject to liability and unlimited damages.  Wasson involved an action arising out of a city’s decision to lease property to private owners an act not enumerated under the TTCA.  The court applied “general definitions” to the case yielding the four factors.   The court considered whether:

  1. the city’s act was mandatory or discretionary,
  2. the city’s actions were intended to benefit the general public or the city’s residents,
  3. the city was acting on the State’s behalf or its own behalf when it took the action in question, and
  4. the city’s action was sufficiently related to a governmental function to render the act governmental even if it would otherwise have been proprietary.[17]

Consideration of these factors has led the Texas supreme court to expand the basis of a city’s liability and narrow the set of circumstances in which a city can claim governmental immunity.  Though it is a relatively recent decision, the Wasson test has fared well in lower and intermediate appellate courts so far.[18]

Would-be plaintiffs should carefully consider their claims in light of the Wasson framework.  The Texas Supreme Court has opened the door for plaintiffs to a greater basis of municipal liability by narrowing when governmental immunity can shield a city.  Plaintiffs in a construction-based suit should be careful to avoid stating the basis of their claims as one of the thirty-six enumerated acts in the TTCA.

Many potential bases for liability are already addressed by the statute such as permitting and approvals, zoning, building codes, and transportation systems.  However, by stating a claim based on an unenumerated action, plaintiffs may invoke the Wasson framework and argue that a city has taken actions on its own behalf, thus opening it up to litigation from those the city injures.


[1] See Rosenberg Dev. Corp. v. Imperial Performing Arts, Inc., 571 S.W.3d 738, 740 (Tex. 2019) (“Though rooted in the feudal fiction that the ‘king can do no wrong,’ modern justifications for sovereign immunity are political, pecuniary, and pragmatic.”).
[2] In re BP Oil Supply Co., 317 S.W.3d 915, 919 (Tex. App. 2010).
[3] Wasson Ints., Ltd. v. City of Jacksonville, 489 S.W.3d 427, 430 (Tex. 2016).
[4] See Rosenberg Dev. Corp. v. Imperial Performing Arts, Inc., 571 S.W.3d 738, 746 (Tex. 2019).
[5] Wichita Falls State Hosp. v. Taylor, 106 S.W.3d 692, 694 n.3 (Tex. 2003) (“In addition to protecting the State from liability, [sovereign immunity] also protects the various divisions of state government, including agencies, boards, hospitals, and universities.”).
[6] City of Galveston v. Posnainsky, 62 Tex. 118, 127 (Tex. 1884).
[7] Fed. Sign v. Texas S. Univ., 951 S.W.2d 401, 405 (Tex. 1997) (“The State may consent to suit by statute or by legislative resolution.”).
[8] Id.
[9] Id. at 405-06.
[10] Id.
[11] Rosenberg Dev. Corp. v. Imperial Performing Arts, Inc., 571 S.W.3d 738, 746 (Tex. 2019).
[12] Tex. Civ. Prac. & Rem. Code Ann. § 101.0215(a) (West).
[13] Id.
[14] Id. at § 101.101, 201(1).
[15] Tex. Civ. Prac. & Rem. Code Ann. § 101.0215(b) (West).
[16] See e.g., Wasson Ints., Ltd. v. City of Jacksonville, 489 S.W.3d 427, 438 (Tex. 2016) (“the distinction [between governmental and proprietary acts] has not been a clear one, as determining which functions are proprietary and which are governmental is not always a cut-and-dried task.”); City of Houston v. Shilling, 150 Tex. 387, 390, 240 S.W.2d 1010, 1012 (1951) (“This rule is well settled. It is in the application of this rule to a particular fact situation that the difficulty arises.”).
[17] Wasson Ints., Ltd. v. City of Jacksonville, 559 S.W.3d 142, 150 (Tex. 2018).
[18] See e.g. City of Dallas v. Oxley Leasing N. Loop, LLC, No. 05-21-00241-CV, 2021 WL 5275828, at *7 (Tex. App. Nov. 12, 2021) (applying Wasson factors to find a city engaged in proprietary actions and was subject to liability); Jimmy Changas Inc. v. City of League City, Texas, No. 18CV0818, 2019 WL 11274988, at *1 (Tex.Dist. Sep. 24, 2019) (denying City’s plea to the jurisdiction in the face of plaintiff’s argument of Wasson factors); Owens v. City of Tyler, 564 S.W.3d 850, 851 (Tex. 2018) (remanding to lower court for application of the Wasson factors).


wm-bio-headshots-josh-u

Joshua W. Upham

Associate

Contact: 713.2553.3562

Joshua is a litigation associate for West Mermis PLLC. His practice focuses on the representation of general contractors, subcontractors and suppliers in construction disputes. As a litigator, Joshua prioritizes the business needs of his clients to achieve their goals in an efficient and cost-effective manner.

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