Opinion
NO. 12-11-00272-CV
04-11-2012
SABINE COUNTY HOSPITAL DISTRICT, APPELLANT v. STANTON PACKARD, M.D., APPELLEE
APPEAL FROM THE 1ST
JUDICIAL DISTRICT COURT
SABINE COUNTY, TEXAS
MEMORANDUM OPINION
Sabine County Hospital District (SCHD) appeals the trial court's denial of its plea to the jurisdiction regarding a claim by Stanton Packard, M.D., that SCHD breached a consulting agreement between the parties. In one issue, SCHD contends that the trial court erred in denying its plea. We reverse and render.
BACKGROUND
SCHD and Packard entered into an emergency room agreement whereby Packard agreed to provide services to patients of SCHD. The parties also conducted negotiations regarding a consulting agreement. Packard signed the agreement, but SCHD did not. Over time, the quality of the parties' business relationship worsened, and Packard sued SCHD for breach of the emergency room agreement, breach of the consulting agreement, libel, slander, tortious interference with contract, and intentional infliction of emotional distress.
The parties conducted discovery, during which it became apparent that SCHD had not executed the consulting agreement. Thereafter, SCHD filed a plea to the jurisdiction regarding Packard's tort claims and his claim that SCHD breached the consulting agreement. Packard agreed with SCHD that the trial court lacked jurisdiction over his tort claims. However, Packard argued that the trial court had jurisdiction over his claim that SCHD breached the consulting agreement. Ultimately, the trial court denied SCHD's plea to the jurisdiction with regard to Packard's claim for breach of consulting agreement. This interlocutory appeal followed.
SOVEREIGN IMMUNITY
In its sole issue, SCHD argues that Packard's claim that it breached the consulting agreement is barred under the doctrine of sovereign immunity. Conversely, Packard argues that the trial court correctly denied SCHD's plea because SCHD waived its immunity by actively litigating the matter for more than two years before filing its plea to the jurisdiction. Standard of Review and Governing Law
The State of Texas cannot be sued in its own courts without its consent and, then, only in the manner indicated by that consent. Wichita Falls State Hosp. v. Taylor, 106 S.W.3d 692, 694 (Tex. 2003) (citing Hosner v. De Young, 1 Tex. 764, 769 (1847)). For the legislature to waive the state's sovereign immunity, a statute or resolution must contain a clear and unambiguous expression of that waiver of immunity. See Taylor, 106 S.W.3d. at 696. In other words, a statute that waives the state's immunity must do so beyond doubt. Id. at 697. When construing a statute that purportedly waives sovereign immunity, we generally resolve ambiguities in favor of the state's retaining its immunity. See id.
Where the state has not given its consent to suit, a trial court lacks subject matter jurisdiction. Tex. Dep't of Transp. v. Jones, 8 S.W.3d 636, 639 (Tex. 1999). Sovereign immunity from suit is properly asserted by a plea to the jurisdiction. See id. Subject matter jurisdiction is essential to the authority of the trial court to decide a case. Starkey v. Andrews Center, 104 S.W.3d 626, 628 (Tex. App.-Tyler 2003, pet. denied). Whether a court has subject matter jurisdiction is a question of law reviewed de novo. Tex. Dep't of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 226 (Tex. 2004). The state can contest whether a plaintiff has alleged facts that affirmatively demonstrate a trial court's subject matter jurisdiction or whether undisputed evidence of jurisdictional facts establishes a trial court's jurisdiction. Id. However, in some cases, disputed evidence of jurisdictional facts that also implicate the merits of the case may require resolution by the fact finder. Id.
When a plea to the jurisdiction challenges the existence of the jurisdictional facts pleaded, we consider relevant evidence submitted by the parties where necessary to resolve the jurisdictional issues raised, as the trial court is required to do. Id. at 227. In a case in which the jurisdictional challenge implicates the merits of the nonmovant's cause of action and the plea to the jurisdiction includes evidence, the trial court reviews the relevant evidence to determine if a fact issue exists. Id. If there is a fact question regarding the jurisdictional issue, the trial court cannot grant the plea to the jurisdiction, and the fact issue should be left for trial. Id. at 227-28. However, if the relevant evidence is undisputed or if there is no fact question on the jurisdictional issue, the trial court should rule on the plea to the jurisdiction as a matter of law. Id. at 228. When reviewing a plea to the jurisdiction in which the pleading requirement has been met and evidence has been submitted to support the plea that implicates the merits of the case, we take as true all evidence favorable to the nonmovant, indulge every reasonable inference, and resolve any doubts in the nonmovant's favor. See id.
A hospital district is a local governmental entity entitled to sovereign immunity. Sweeny Cmty. Hosp. v. Mendez, 226 S.W.3d 584, 589 (Tex. App.-Houston [1st Dist.] 2007, no pet.). SCHD is a hospital district. Tex. Rev. Civ. Stat. Ann. art. 4494q (West 2010).
Local Government Code, Chapter 271 applies to local governmental entities that are a political subdivision of Texas, other than a county or a unit of state government, including a special purpose district. See Tex. Loc. Gov't Code Ann. § 271.151(3) (West 2005). A hospital district is a special purpose district. Cf. Tex. Civ. Prac. & Rem. Code Ann. 15.0151(b) (West 2002); see De Santiago v. W. Tex. Cmty. Supervision & Corr. Dep't, 203 S.W.3d 387, 394-95 (Tex. App.-El Paso 2006, no pet.). Local Government Code, Section 271.152 waives sovereign immunity when (1) the party against whom the waiver is asserted is a "local governmental entity," (2) the entity is authorized by statute or the constitution to enter into contracts, and (3) the entity, in fact, entered into a contract that is "subject to this subchapter." See id. § 271.152; City of Houston v. Williams, 353 S.W.3d 128, 134-35 (Tex. 2011).
A "contract subject to this subchapter" is defined as a "written contract stating the essential terms of the agreement for providing goods or services to the local governmental entity that is properly executed on behalf of the local governmental entity." Id. § 271.151(2). Thus, for a contract to be subject to Section 271.152's waiver of sovereign immunity, the contract must (1) be in writing, (2) state the essential terms of the agreement, (3) provide for goods or services to the local governmental entity, and (4) be executed on behalf of the local governmental entity. Id.; Williams, 353 S.W.3d at 135.
In its plea to the jurisdiction, SCHD focused on the fifth element—the lack of a properly executed contract. Generally, to properly execute a contract, the local governmental entity will have a representative sign it. See City of Oak Ridge N. v. Mendes, 339 S.W.3d 222, 230 (Tex. App.-Beaumont 2011, no pet.). However, the key inquiry is whether there is evidence that the execution of the contract is completed. See Williams, 353 S.W.3d at 139 (ordinances that comprised contract were duly enacted by local governmental entity and, thus, execution of contract was finished and completed even though ordinances were not signed by representative of local governmental entity).
To the extent that an opposing party is entitled to an offset, a governmental entity waives sovereign immunity by asserting its own affirmative claims for monetary relief. Reata Constr. Co. v. City of Dallas, 197 S.W.3d 371, 376-77 (Tex. 2006). A governmental entity does not waive sovereign immunity by participating in the litigation process without asserting its own affirmative claims for monetary relief. Vantage Sys. Design, Inc. v. Raymondville Indep. Sch. Dist., 290 S.W.3d 312, 317-18 (Tex. App.-Corpus Christi 2009, pet. denied). Application
In the instant case, the consulting agreement was signed by Packard and not by a representative of SCHD. Packard acknowledged that SCHD told him that it had not signed the consulting agreement. Further, Packard presented no other evidence that the contract was completed or finished. Instead, based on our review of the record, it is apparent that Packard signed the consulting agreement and SCHD never acted on it. Because Packard failed to present evidence that the contract was executed by SCHD, he cannot rely on Section 271.152 to establish that SCHD waived its sovereign immunity.
Packard tacitly acknowledges this fact in his brief and argues that SCHD waived sovereign immunity by engaging in extended litigation before filing its plea to the jurisdiction. SCHD never filed a counterclaim against Packard. But it did participate in the litigation process for more than two years before filing its plea to the jurisdiction. Thus, Packard contends that SCHD's defending itself in this suit constitutes a waiver of its sovereign immunity. Our sister court in Corpus Christi considered a similar issue and held that sovereign immunity was not waived as a result of a government entity's engaging in litigation for several years. See Vantage Sys. Design, Inc., 290 S.W.3d at 317-18. We likewise decline to hold that a local governmental entity can waive sovereign immunity by its protracted participation in litigation. Accordingly, we hold that Packard failed to show that SCHD waived its sovereign immunity.
In sum, Packard's claim that SCHD breached the consulting agreement is barred by sovereign immunity. Generally, the proper remedy when a court lacks subject matter jurisdiction is to dismiss the case without prejudice. See Hickman v. Adams, 35 S.W.3d 120, 124 (Tex. App.-Houston [14th Dist.] 2000, no pet.). But when a dispositive defect cannot be remedied, dismissal with prejudice is proper. Id. The jurisdictional facts in this case affirmatively negate the existence of subject matter jurisdiction. See Miranda, 133 S.W.3d at 228. Therefore, we hold that the trial court erred by denying SCHD's plea to the jurisdiction regarding Packard's claim for breach of the consulting agreement. Instead, the trial court should have granted the plea and dismissed this claim with prejudice. SCHD's sole issue is sustained.
DISPOSITION
Having sustained SCHD's sole issue, we reverse the trial court's order denying SCHD's plea to the jurisdiction. We render judgment granting its plea to the jurisdiction and dismissing with prejudice Packard's cause of action against SCHD based on SCHD'S alleged breach of the consulting agreement.
BRIAN HOYLE
Justice
Opinion delivered April 11, 2012. Panel consisted of Worthen, C.J., Griffith, J., and Hoyle, J.
(PUBLISH)
See Tex. Civ. Prac. & Rem. Code Ann. § 51.014(a)(8) (West Supp. 2011).