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Click here for the full text of this decision FACTS:The City of Galveston and Galveston County asked the Texas Department of Transportation to build a roadway in Galveston County. The city was to take responsibility for a municipal water line that ran underneath a ramp. The waterline ruptured, the earth around it eroded, and the road and nearby bridge threatened to collapse. The attorney general, on behalf of TxDOT, sued the city for negligence in the installation, maintenance and upkeep of the water line, seeking more than $180,000 in actual damages. The city filed a plea to the jurisdiction, based on governmental immunity. It said it had governmental immunity from suit, and that the case did not fall under the terms of the Tort Claims Act, where immunity is waived. The trial court granted the plea. The state appeals and asks for en banc consideration. HOLDING:Reversed and remanded with instructions to reinstate the cause. En banc consideration denied. Municipalities are political subdivisions of the state, the court begins. The court finds the Texas Supreme Court has shown that a municipality’s immunity from suit for governmental activity is not due to any inherent sovereignty. They are immune from suit owing to the fact that the state has cloaked them with its own immunity from suit while they carry out the state’s public purposes. Thus, any immunity from suit that a municipality enjoys derives solely from the state’s immunity, and only when the municipality is carrying out governmental activities implicitly delegated to it to carry out in the state’s stead. The court finds a ruling on similar facts as these from Austin in Texas Workers’ Compensation Commission v. City of Eagle Pass, 14 S.W.3d 801 (Tex.App. � Austin 2000, pet. denied). That court found that “a political subdivision’s derivative immunity acts as a shield against actions brought by private parties but not as a shield against the State, from which the subdivision derives its immunity.” The court agrees with Eagle Pass, and consequently holds that governmental immunity does not shield a municipality from the state’s suit asserting tort claims for actual damages because any immunity that a municipality enjoys derives from the state’s own immunity. The court says its reading and acceptance of Eagle Pass does not mean that it is creating an exception to immunity from suit. No exception was necessary because immunity from the state’s suit would first have to exist for there to be an exception to it. The court also rejects the idea that its holding “goes well beyond” Eagle Pass. The Eagle Pass court expressly declined to confine its holding to an interpretation of the Labor Code. The court goes on to find that its own ruling does not conflict with the policy reasons behind governmental immunity. The court acknowledges that allowing the state to recover damages from a municipality potentially shifts costs from the state to the local level, depleting local coffers for already-budget matters. This shifting, however, also replenishes other public funds, the court finds: those funds allocated in the state budget for the state’s and its agencies’ public projects that are lost due to the municipality’s alleged fault. This is different from what a suit by an individual does. The court disposes of the city’s arguments that by bringing the suit, the attorney general, as a member of the executive branch, is usurping the role of the legislative branch. First, as TxDOT is entrusted to create and maintain roads on behalf of the public, the AG does not merely represent TxDOT as a stand-alone agency. He is representing the interests of the sovereign state, which is, “of course,” the AG’s job. Nor is the AG usurping legislative power by “waiving” immunity from suit. Instead, the AG represents the position of the state, as its advocate, that no immunity exists in the first instance for this type of claim. As the state’s chief legal officer, it is within the AG’s ambit to seek legal redress in the courts on behalf of the state. Besides, if the city does not enjoy immunity from this type of suit at all, then there is no immunity from suit to waive. If there is no immunity from suit to waive, then the AG may represent the state in this claim for redress. The court also rejects the notion that the city is immune from suit by virtue of its status as a home-rule city. Home-rule municipalities, which can establish themselves under certain provisions of the constitution, are not sovereigns in and of themselves. Their immunity, once again, derives from the state’s sovereign immunity. “Our holding today recognizes that the sovereign State possesses the authority to seek redress in its courts against its own political subdivisions and that they possess no blanket immunity from suit in such situations. “We do not address the State’s wisdom in bringing a claim in tort, but only its authority to do so. Ultimately, the State, as sovereign, is empowered to seek redress and to enforce state law. Without such authority, political subdivisions of the State would adopt the mantle of independent sovereigns over whom the State, through its chief legal officer, could seek no redress.” OPINION:Taft, J.; Taft, Keyes and Bland, JJ. DISSENT:Keyes, J. “It is undisputed that, in this case, the City was performing a governmental function in committing the acts of negligence giving rise to the State’s claims and that normally the []TCA recognizes the immunity of municipalities from such claims. . . . It is further undisputed that no other applicable statute waives the municipality’s immunity from suit. Thus any grounds for the City’s amenability to suit and liability in this case must be sought outside the purview of the []TCA and all other statutes, which is where the majority finds it.” The dissent would find that a municipality acts as an agent of the state in performing governmental functions, and so shares the state’s immunity unless the legislature, by statute, declareds that the municipality may be sued. “I fear the majority is opening a Pandora’s box of future litigation over which governmental entities enjoy the sovereign immunity of the State, and are thus entitled to sue other governmental entities, and which governmental entities have merely derivative immunity and are subject to such suits, with immense potential damage to the foundational principles of representative government and the separation of powers. More immediately, I fear the majority is opening municipal coffers to potential plunder by state agencies, with no permission from the Legislature for this rearrangement of the State’s own carefully crafted laws.” DISSENT TO THE DENIAL OF EN BANC CONSIDERATION:Jennings, J. This dissent anticipates a “shockwave of grave concern” will spread through every local governmental unit in the state. This dissent would find that regardless of whether a city’s governmental immunity from tort liability derives from the state’s sovereign immunity, a city, as a “governmental unit” enjoys that immunity against all plaintiffs, period. This dissent would require the case be analyzed under the Tort Claims Act, and since the type of claim the state is brining does not fall within the TCA’s terms for waiver of immunity, the city would be immune from the state’s suit. “Immunity means immunity, i.e., immunity from suit or liability as to all potential plaintiffs-including state governmental units. Regardless of any”derivative’ nature of sovereign immunity, the Legislature, in the Tort Claims Act, has expressly defined, quite literally, the “governmental liability” of municipalities and all other governmental units as to all potential plaintiffs. Thus, the panel’s broad holding judicially creates an exception to the Legislature’s expressly stated limits of liability for local governmental units, . . . and the primary effect of the holding is that it relieves the State of the deficiency of its own pleadings.”

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