1. Sovereign Immunity and Contracts
Local Government Seminar January 29, 2015
Sovereign Immunity and Contracts
Presented by:
Eric C. Farrar

2. Immunity
“[N]o state can be sued in her own courts without her consent, and then only in the manner indicated by that consent.”
Hosner v. DeYoung, 1 Tex. 764, 769 (1847).

3. Waiver of Immunity Waiver is usually left to the Legislature.
Must be clear and unequivocal.
“Sue and be sued” or “plead and be impleaded,” alone, are insufficient.
Tooke v. City of Mexia, 197 S.W.3d 325, 331 (Tex. 2006).

4. Waiver by Contract
General rule – “when the State contracts with private citizens, the State waives only immunity from liability” but “does not waive [its] immunity from suit.” Fed. Sign v. Tex. S. Univ., 951 S.W.2d 401, 408 (Tex. 1997).

5. Chapter 271. Subchapter I
A local governmental entity that is authorized by statute or the constitution to enter into a contract and that enters into a contract subject to this subchapter waives sovereign immunity to suit for the purpose of adjudicating a claim for breach of the contract, subject to the terms and conditions of this subchapter. Tex. Loc. Gov’t Code Ann. §

6. Elements of Waiver of Immunity
The party against whom waiver is asserted must be a local governmental entity.
The entity must be authorized by law to enter into contracts.
(3) The claim must be for a contract and for damages specified in Subchapter I.

7. Local Governmental Entity
“Political subdivision of this state, other than a county or a unit of state government”
“Unit of state government” is, essentially, the state or a state agency, “including a university system or institution of higher education.”
Does not include a county, municipality, special purpose district, or other political subdivision of this state.

8. Contracts Covered
(1) In writing, stating the essential terms of the agreement.
(2) Agreement to provide goods or services to the local governmental entity
(3) Properly executed on behalf of the local governmental entity
Tex. Loc. Gov’t Code Ann. § (2)(A)

9. Waiver for Specific Damages
Money awarded limited to:
The balance due and owed under the contract.
(2) The amount owed for change orders or additional work ordered by the local governmental entity.
Attorney’s fees and interest allowed by law.
Tex. Loc. Gov’t Code Ann. § (a)

10. Goods or Services Services not defined in Ch. 271.
“[T]he term is broad enough to encompass a wide array of activities.”
Kirby Lake Dev., Ltd. v. Clear Lake City Water Auth., 320 S.W.3d 829, 839 (Tex. 2010).

11. “Services” Examples Self-insurance fund agreement
Contract for the construction of a middle school
ISD’s health insurance contract with employee (i.e., employee received insurance in exchange for work he did).

12. Not Services No “indirect” or “attenuated” benefits.
Leasing land from Water district for purpose of “operating a marina.”
Agreement to provide water and sewer at no charge if property was used as a “home for children who are wards of the State”