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Click here for the full text of this decision FACTS:The Texarkana Water Utilities has been supplying water to seven area cities for decades. The seven cities sued Texarkana under contract and tort theories. Texarkana asserted governmental immunity from both types of cases, but the trial court rejected the argument. Texarkana appeals. HOLDING:Affirmed in part; reversed and dismissed in part. Texarkana’s assertion of governmental immunity should have been granted on the tort claim, but the trial court was correct in rejecting it for the contract claim. The court first addresses the seven cities’ contention that the city cannot assert governmental immunity when it is being sued by another state governmental entity. Distinguishing a case cited by the seven cities, the court finds that, unlike a municipality trying to assert immunity against the sovereign from whom its rights and privileges were originally secured, immunity for the seven cities and Texarkana � all wholly independent of each other � remains a viable defense as when involved in a dispute by any other completely independent party. “We, therefore, conclude sovereign immunity principles are to be applied horizontally between governmental entities. That is, political subdivisions of government cannot assert immunity against the sovereign from which its immunity is derived, but can assert immunity against other governmental entities deriving their rights and privileges from the same source.” To determine if Texarkana was immune from the tort claim, the court notes that a governmental entity is immune when the claim arises from the exercise of its governmental obligations, but not from its proprietary ones. Though waterworks was once considered proprietary, the Texas Tort Claims Act reclassified them as governmental. The court rejects the seven cities’ attempt to distinguish this characterization based on whether the water service is being provided to citizens or to other governmental entities. The court points out that under 101.0215(a) of the TTCA, the government’s motive for engaging in an activity is irrelevant. “Because the services Texarkana provides to the Seven Cities cannot be distinguished from those governmental functions enjoined on Texarkana by the State, the Texas Tort Claims Act applies, effectively barring the Seven Cities’ tort claims. . . . Therefore, we hold that, as to the tort claims, the trial court erred by failing to grant Texarkana’s motion to dismiss.” The court, however, rules that Texarkana has waived its immunity for the contract claims. Local Government Code 51.075 states that home-rule municipalities like Texarkana “may plead and be impleaded in any court.” The court finds it is among the first courts in Texas to decide whether the “plead and be impleaded” language, like the “sue and be sued” language discussed in Missouri Pacific Railroad Co. v. Brownsville Navigation District, 453 S.W.2d 812 (Tex. 1970), waives a municipality’s immunity from suit on a contract. The court counts off the number of courts who have read Missouri Pacific to waive immunity under statutes using the “sue and be sued” language, and those courts who have not so ruled. The court’s own precedents are in the camp saying the “sue and be sued” language does waive immunity. The court then finds that, though there are distinctions in the two phrases, there are no practical differences. “Parsing the two phrases into their component words, one can certainly identify differing shades of meaning between ‘be sued’ and ‘be impleaded.’ But we believe each phrase is written as a whole and ought to be understood in that context. When each phrase is read as a single expression � that is, as written � the two phrases seem to carry the same meaning.” Consequently the phrase, as used in 51.075, waives Texarkana’s immunity from the contract claim. OPINION:Morriss, C.J.; Morriss, C.J., Ross and Carter, JJ.

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