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Click here for the full text of this decision FACTS:United Water Services contracted with Houston to operate and maintain a water purification plant. At the expiration of the contract term, UWS filed suit, claiming that the city had breached the contract by refusing to pay for certain services. The city filed a counterclaim for breach of contract, saying UWS hadn’t performed certain services. The city then filed a plea to the jurisdiction on UWS’s suit. UWS responded by saying Local Government Code �51.075 waived the city’s immunity. The statutory provision applies to home-rule cities and says they may “plead and be impleaded in any court.” Further, UWS argued, the city’s charter states that the city “may sue and be sued” in all matters. Plus, the city waived immunity by filing a counterclaim. The trial court granted the city’s plea to the jurisdiction and dismissed the case. HOLDING:Reversed and remanded. The court sets out the basic principles of governmental immunity, stating that there is immunity from suit and immunity from liability. By entering into a contract, a governmental entity waives immunity from liability for breaching that contract but does not waive immunity from suit by entering into a contract, the court notes. To waive immunity from suit, the Legislature must do so using clear and unambiguous language. The case governing this particular action is still Missouri Pacific Railroad Co. v. Brownsville Navigation Dist., 453 S.W.2d 812 (Tex. 1970), the court says. In that case, the court held that a statute that provided that a certain state entity could “sue and be sued” met the standard for express waiver of immunity from suit. The court then describes how the Texas appellate courts have split on this issue of whether Missouri Pacific stands for the general proposition that such “sue and be sued” language always waives immunity. Some appellate courts, namely the 13 thand 14 thCourts of Appeals, have even issued rulings on both sides of the issue. The city relies primarily on City of Dallas v. Reata Constr. Corp., 83 S.W.3d 392 (Tex.App.-Dallas 2002), which ruled that the phrase did not waive immunity. The court faults the Reata case for failing to even mention Missouri Pacific. The court also notes how many of the cases that held similarly to Reata tended to rely on cases issued before Missouri Pacific. The court adds that the Dallas appeals court revisited Reata in Satterfield & Pontikes Constr. Inc. v. Irving Indep. Sch. District, 123 S.W.3d 63 (Tex.App.-Dallas 2002, pet. filed). Satterfield concluded that the “sue and be sued” language referred only to the city’s capacity to be sued once immunity has been waived. The Satterfield court suggested that the language was inserted to refer only to the governmental entity status as a corporate entity. Satterfield, too, cited Missouri Pacific, finding what it said was evidence of the Supreme Court’s departure from that case in Travis County v. Pelzel & Assocs. Inc., 77 S.W.3d 246 (Tex. 2002), which did not include “sue and be sued” statutes in listing examples of clear and unambiguous waiver of immunity. Also, the Satterfield case noted, Wichita Falls State Hosp. v. Taylor, 106 S.W.3d 692 (Tex. 2003), did not mention Missouri Pacific. The Taylor court fashioned several factors for a court to consider in determining whether a statute waives immunity: “(1) the statute in question must waive immunity ‘beyond doubt’; (2) ambiguities are generally resolved in favor of immunity; (3) if the Legislature requires the joinder of a governmental entity in a suit for which immunity would otherwise attach, the Legislature has waived immunity; and (4) if the Legislature simultaneously enacts legislation limiting the governmental unit’s potential liability, a waiver of immunity may be found.” Satterfield thus concluded that Missouri Pacific had been impliedly overruled. The court disagrees with Satterfield’s analysis and conclusion: “As an intermediate court of appeals, we must follow our supreme court’s expressions of the law and leave changes in the application of common-law rules to that higher authority.” The court then looks to the alleged waiver in the city charter. The court examines the history of Houston’s city charter, and the city charters of other major Texas cities in general, as derived from legislative authority. The court concludes that the legislature waived the city’s immunity from suit in 1903, so the city did not have immunity when it amended its charter in 1905. The court concludes that the “sue and be sued” language in the charter is a clear and unambiguous waiver of the city’s immunity from suit. OPINION:Higley, J.; Radack, C.J., Jennings and Higley, JJ.

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