law-waiver-by-conduct (governmental / sovereign immunity)
the Texas Supreme Court has consistently held that a governmental entity does not waive immunity from suit by
accepting the benefits of a contract. See Tex. A&M Univ. Sys. v. Koseoglu, 233 S.W.3d 835, 840 (Tex. 2007); Little-
Tex, 39 S.W.3d at 598; Catalina Dev. Co., 121 S.W.3d at 705-06; Travis County v. Petzel & Assocs., Inc., 77 S.W.
3d 246, 248 (Tex. 2002); IT-Davy, 74 S.W.3d at 860. We decline the invitation to depart from these authorities and
therefore re-affirm that, even if the Port derived benefits from a contract to which it was not a party, the Port did not
thereby waive its immunity from suit.
Seureau v. Exxon Mobil Corp (Tex.App.- Houston [14th Dist.] Oct. 16, 2008)(Brown)
Even were the Port obligated by ExxonMobil's contractual obligations, a governmental entity's immunity from suit is
not waived merely because the entity breaches a contract. “When the State contracts, it is liable on contracts made
for its benefit as if it were a private person. Consequently, when the State contracts with private citizens it waives
immunity from liability. But the State does not waive immunity from suit simply by contracting with a private person."
Little-Tex, 39 S.W.3d at 594 (citations omitted); Slade v. Tex. S. Univ. Bd. of Regents, 232 S.W.3d 395, 400 (Tex.
App.- Houston [1st Dist.] 2007, no pet.) (upholding immunity from suit despite plaintiff's pleading of facts potentially
demonstrating breach of contract by governmental entity).
One of the reasons that courts defer to the Legislature to waive immunity from suit is so that the Legislature may
revise existing agreements if doing so would benefit the public. IT-Davy, 74 S.W.3d at 854. Thus, legislative control
ensures that current policymakers are neither bound by, nor held accountable for, their predecessors' rationale for
entering into long-term contracts. See id. For this reason, finding waiver by conduct merely because the plaintiff
alleges that the governmental entity breached the contract would render immunity useless by permitting the
exception to swallow the rule.
Waiver by Conduct
In 1997, the Texas Supreme Court held that a governmental entity does not waive immunity from a breach-of-
contract suit simply by entering into a contract for goods and services. Fed. Sign v. Tex. S. Univ., 951 S.W.2d 401,
408 (Tex. 1997). In a footnote, Justice Baker's majority opinion suggested that A[t]here may be other
circumstances where the State may waive its immunity by conduct other than simply executing a contract so that it is
not always immune from suit when it contracts." Id. at 408 n.1.
Justice Hecht concurred, offering that “today's decision does not hold that the State is always immune from suit for
breach of contract absent legislative consent; it holds only that the mere execution of a contract for goods and
services, without more, does not waive immunity from suit." Id. at 413 (Hecht, J., concurring).
Relying on the footnote, several courts of appeals opted to recognize a judicially imposed, equitable waiver of
immunity from suit. Gen. Servs. Comm'n v. Little-Tex Insulation Co., 39 S.W.3d 591, 595 (Tex. 2001). Those courts
concluded that the State waives immunity from a breach-of-contract suit if it accepts benefits under a contract for
goods or services. See id.
But in 2002, Justice Baker, writing for a plurality of four justices, insisted that no such “waiver by conduct" exception
exists:
We again reaffirm that it is the Legislature's sole province to waive or abrogate sovereign immunity. . . . Creating a
waiver-by-conduct exception would force the State to expend its resources to litigate the waiver-by-conduct issue
before enjoying sovereign immunity's protections - and this would defeat many of the doctrine's underlying policies.
. . . . Because we have consistently held that only the Legislature can waive sovereign immunity from suit, allowing
other governmental entities to waive immunity by conduct that includes accepting benefits under a contract would
be fundamentally inconsistent with our established jurisprudence. . . . Accordingly, we reject IT-Davy's argument
that we should fashion such a waiver-by-conduct exception in a breach-of-contract suit against the State.
IT-Davy, 74 S.W.3d at 857 (citations omitted). Justice Hecht, writing a concurring opinion for a plurality of four
justices, found no waiver because IT-Davy presented “nothing more than an ordinary contract dispute," but refused
to foreclose altogether the possibility of a waiver-by-conduct exception in a subsequent lawsuit. See id. at 860-61
(Hecht, J., concurring).
In a dissenting opinion, Justice Enoch admonished his colleagues for continuing to offer “false hope" to litigants by
failing to outline the parameters that constitute waiver by conduct:
Oddly, Justice Hecht, rather than join Justice Baker, offers hope that there remains another key - a magic key that
will loosen sovereign immunity's lock and open the courthouse doors. But it is false hope. He is unable to identify
and can give only vague clues about what that key may look like. This just encourages endless, fruitless litigation
as each new contracting party, thinking it has discovered the key, seeks to open the courthouse door. . . . [IT-Davy]
will learn from this Court that, alas, it didn't have the magic key.
Id. at 863 (Enoch, J., dissenting).
Although the Texas Supreme Court has yet to find, much less define, waiver by conduct, the Court has strongly
hinted that equitable concerns would come into play:
In Federal Sign, we noted that there might be circumstances “where the State may waive its immunity by conduct
other than simply executing a contract," although under the facts of that case, it was not necessary to indicate what
those circumstances might be. Since Federal Sign, we have had several occasions to consider circumstances that
were urged to constitute a waiver by conduct. We held that the facts these cases presented did not support an
equitable waiver by conduct of the governmental entities' immunity.
Catalina Dev., Inc. v. County of El Paso, 121 S.W.3d 704, 705 (Tex. 2003) (citations omitted) (emphasis added).
Finding that the governmental entity “did not profit unfairly" at the expense of the party with which it contracted, the
Court held that “the equitable basis for such a waiver simply does not exist under this set of facts." Id. at 706.
Instead of adopting a categorical approach or bright-line rule, it appears that courts are to evaluate the waiver-by-
conduct exception on the facts and equity of each case. See Tex. S. Univ. v. State Street Bank & Trust Co., 212 S.
W.3d 893, 907 (Tex. App.- Houston [1st Dist.] 2007, pet. denied).
Last year, the First Court of Appeals found that under “extraordinary factual circumstances" a governmental entity
engaged in conduct so inequitable and egregious as to waive its immunity. See id. at 907-08. Texas Southern
University had contractually agreed to lease physical-plant equipment from CMS Viron Corporation. See id. at 897.
Attached as an exhibit to the Master Lease between TSU and Viron was an opinion letter authored by TSU's general
counsel, upon which Viron was entitled to rely. See id. at 898. The opinion letter assured Viron that the Master
Lease was legal, valid, binding, and enforceable, and that, in the event of a judgment for money damages, TSU
would be “obligated to pay" any judgment. See id. After Viron installed the equipment, however, TSU announced
that the Master Lease was void and unenforceable. See id. at 898, 899. After Viron filed suit, TSU then attempted
to invoke sovereign immunity. See id. at 897. The appellate court found waiver by conduct:
[Viron] argues . . . that “the injustice is even worse, because this case also includes an additional fact that appears
in none of the prior [immunity] cases: The government officials lured Viron into the Master Lease with false
promises that the contract would be valid and enforceable, then disclaimed any obligation on the contract by taking
the position that the contract was not valid after all.”
We agree. Based on the facts before us, we . . . hold that sovereign immunity does not defeat the trial court's
subject-matter jurisdiction over Viron's claims for breach of contract.
Id. at 908.
Seureau v. Exxon Mobil Corp (Tex.App.- Houston [14th Dist.] Oct. 16, 2008)(Brown)
In this case, Father attempts to analogize the Port's conduct to TSU's in State Street, and asserts that he, too,
carries the “magic key" to unlock the courthouse doors. See IT-Davy, 74 S.W.3d at 863 (Enoch, J., dissenting). He
does not. We will discuss his specific allegations below; generally, he asserts that the Port (1) engaged in a joint
enterprise with ExxonMobil to acquire the Seureaus' lands; (2) enjoyed benefits from the 1966 Letter Agreement
used to acquire those lands; (3) refused to honor the obligations owed by its joint-enterprise agent under the Letter
Agreement; and (4) tried to exercise its eminent-domain powers inequitably.
Moreover, the Seureaus - who rejected the proposal - have not demonstrated that by merely offering to swap land
tracts, the Port profited unfairly at their expense. See Catalina Dev., Inc., 121 S.W.3d at 706; see also IT-Davy, 74
S.W.3d at 861 (Hecht, J., concurring) (“My hypothetical [in Federal Sign] supposed a governmental entity that
chiseled a contractor just because it could get away with doing so."). In a general sense, waiver involves an
“intentional relinquishment of a known right or intentional conduct inconsistent with claiming that right." Jernigan v.
Langley, 111 S.W.3d 153, 156 (Tex. 2003) (citations omitted). Thus, one can envision waiver by conduct where, for
example, the governmental entity lures one into a contract by promising that the contract would be enforceable,
legal, valid, and binding, and that the governmental entity would be obligated to pay damages for breaching same.
See, e.g., State Street, 212 S.W.3d at 898, 908. Such an example evinces an implied promise that the
governmental entity has intentionally relinquished its right to claim immunity. See generally id. This case does not
involve the type of “extraordinary circumstances" present in State Street. Waiver by conduct is not warranted in
ordinary contract disputes. See Slade, 232 S.W.3d at 400; IT-Davy, 74 S.W.3d at 861 (Hecht, J., concurring).
Thus, we are disinclined to extend waiver by conduct to a case that does not even involve a contract with a
governmental entity.
Accordingly, we affirm the trial court's order granting the Port's plea to the jurisdiction and dismissing, for lack of
subject-matter jurisdiction, the Seureaus' claims against the Port.