City of San Antonio, Acting Through City Public Service Board of San Antonio v. Wheelabrator Air Pollution Control, Inc.

OPINION
No. 04-11-00821-CV
CITY OF SAN ANTONIO,
Acting By and Through City Public Service Board a/k/a CPS Energy,
Appellant
v.
WHEELABRATOR AIR POLLUTION CONTROL, INC.,
Appellee
From the 225th Judicial District Court, Bexar County, Texas
Trial Court No. 2011-CI-13756
Honorable Larry Noll, Judge Presiding
Opinion by: Phylis J. Speedlin, Justice
Sitting: Phylis J. Speedlin, Justice
Steven C. Hilbig, Justice
Marialyn Barnard, Justice
Delivered and Filed: August 1, 2012
REVERSED AND RENDERED; REMANDED FOR FURTHER PROCEEDINGS
The City of San Antonio, acting by and through CPS Energy 1 (hereinafter “CPS”),
appeals the trial court’s denial of its plea to the jurisdiction in this lawsuit by Wheelabrator Air
Pollution Control, Inc. in which it asserts a breach of contract claim and, alternatively, a quasi-
contractual quantum meruit claim to recover a 10% contract retainage withheld by CPS. This
1
The City of San Antonio owns and operates the electric and gas utility known as CPS Energy, which is managed
by a five-member board of directors; the City’s mayor is a voting member of the board.
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interlocutory appeal raises a question of first impression—whether the governmental/proprietary
distinction employed in the Texas Tort Claims Act applies in a contractual or quasi-contractual
setting to determine whether a municipality is immune from suit. We hold that the
governmental/proprietary distinction does not apply, and conclude CPS is immune from suit on
the quantum meruit claim. Accordingly, we reverse the trial court’s order denying CPS’s plea to
the jurisdiction, render judgment dismissing Wheelabrator’s quantum meruit claim for want of
jurisdiction, and remand the cause to the trial court for further proceedings. 2
FACTUAL AND PROCEDURAL BACKGROUND
Contract for Project. On or about August 5, 2004, Wheelabrator Air Pollution
Control, Inc. (“Wheelabrator”) and Casey Industrial, Inc. (“Casey”) entered into a written
contract with CPS for the design and construction of two baghouses at the J.T. Deely Station, a
coal-fired power station owned and operated by CPS. A baghouse traps fly ash, a coal by-
product, before it enters the air, providing a reduction in emissions from a power station. CPS
agreed to pay $41,818,460 to Wheelabrator and $43,541,737 to Casey for their roles in the
project. Wheelabrator was involved in the engineering design and procurement, while Casey
was involved in the actual construction of the baghouse units. The contract provided that CPS
would withhold from Wheelabrator 10% of the total contract price ($4,173,099) as retainage.
CPS fully paid Wheelabrator its contract price, except for the agreed upon 10% retainage. When
Wheelabrator sought payment of the retainage in 2007, contending it had fully and timely
performed, CPS informed Wheelabrator that it was going to withhold payment of the retainage
pending resolution of the claims asserted by Casey against CPS. Casey sought to recover an
2
A related appeal also issued on this date, City of San Antonio, Acting By and Through City Public Service Board
a/k/a CPS Energy v. Casey Industrial, Inc. (Appeal Nos. 04-11-791-CV & 04-11-00814-CV), arises out of the same
underlying dispute and raises the same issue as to whether CPS is immune from suit on a quantum meruit claim,
along with an additional issue concerning the validity of the contract.
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additional $12,000,000 from CPS for costs of delay it alleged were caused by Wheelabrator.
Eventually, both Casey and Wheelabrator filed suit against CPS.
Casey Lawsuit. In 2008, Casey filed suit against CPS asserting claims of
breach of contract, implied contract/quasi-contract, and quantum meruit. The litigation
proceeded for three years before Wheelabrator separately filed suit against CPS. Casey filed a
summary judgment motion, asserting that the three-party contract entered into by CPS,
Wheelabrator, and Casey is void due to violations of Texas’ procurement law requiring
competitive bidding, and that Casey should therefore be allowed to recover in quantum meruit
for additional work it performed. The City, acting on behalf of CPS, filed its own summary
judgment motion asserting the contract is valid and that Casey is barred from any equitable
recovery outside the contract. After a hearing, the trial court denied the City’s motion and
granted Casey’s summary judgment motion, finding that the contract is void and that Casey “is
entitled to prove liability, if any, and damages, if any, under the doctrine of quantum meruit.”
The City also filed a plea to the jurisdiction asserting it is immune from suit for additional work
or quantum meruit; the trial court denied the plea. The City is appealing both rulings in the
Casey appeal—the summary judgment order finding the contract is void, and the denial of its
plea to the jurisdiction asserting immunity from the quantum meruit claim.
Wheelabrator Lawsuit. Wheelabrator filed suit against CPS on August 23, 2011,
seeking to recover the $4,173,099 in retainage funds under a breach of contract claim and,
alternatively, a quantum meruit claim. 3 CPS filed a plea to the jurisdiction asserting immunity
from suit because there is no waiver of sovereign immunity for contractual claims outside the
3
Wheelabrator was not, and is not currently, a participant in the Casey litigation. CPS has sought to consolidate the
Wheelabrator litigation with the Casey litigation at the trial level, but the trial court has not yet ruled on the issue of
consolidation.
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scope of Chapter 271 of the Local Government Code or for quantum meruit claims in equity.
Wheelabrator responded that CPS does not have any immunity from suit for functions taken in
its proprietary capacity, such as operation of a public utility, and even if it had immunity, it has
waived it through its conduct; therefore, Wheelabrator’s quantum meruit claim should survive.
Wheelabrator’s pleadings allege that CPS “is not immune from suit by virtue of the express
terms of the Agreement, and by virtue of Chapter 271 of the Texas Local Government Code.”
At the end of a hearing on the plea to the jurisdiction, the trial court denied CPS’s plea.
The court’s written order finding CPS is “not immune from suit for claims for additional work or
quantum meruit,” and denying the plea to the jurisdiction, was signed on November 15, 2011.
CPS now appeals that finding. See TEX. CIV. PRAC. & REM. CODE ANN. § 51.014(a)(8) (West
Supp. 2011).
STANDARD OF REVIEW
Subject matter jurisdiction is necessary for a court to have the authority to resolve a case.
Tex. Ass’n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440, 443 (Tex. 1993). Sovereign and
governmental immunity from suit deprive a trial court of subject matter jurisdiction. Reata
Const. Corp. v. City of Dallas, 197 S.W.3d 371, 374 (Tex. 2006). To invoke a trial court’s
subject matter jurisdiction over a claim against a governmental entity, the plaintiff must allege a
valid waiver of immunity from suit and plead sufficient facts demonstrating the trial court’s
jurisdiction. Tex. Dept. of Parks and Wildlife v. Miranda, 133 S.W.3d 217, 226 (Tex. 2004);
Tex. Ass’n of Bus., 852 S.W.2d at 446. A governmental entity properly raises immunity through
a plea to the jurisdiction. Reata, 197 S.W.3d at 374. In reviewing a trial court’s ruling on a plea
to the jurisdiction, we do not examine the merits of the cause of action, but consider only the
plaintiff’s pleadings and any evidence relevant to the jurisdictional inquiry. Miranda, 133
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S.W.3d at 227; County of Cameron v. Brown, 80 S.W.3d 549, 555 (Tex. 2002). We construe the
pleadings liberally in favor of jurisdiction, and accept the pleadings’ factual allegations as true.
Miranda, 133 S.W.3d at 226. The existence of subject matter jurisdiction is a question of law
that we review de novo. Tex. Nat’l Res. Conservation Comm’n v. IT-Davy, 74 S.W.3d 849, 855
(Tex. 2002); Mayhew v. Town of Sunnyvale, 964 S.W.2d 922, 928 (Tex. 1998).
IMMUNITY FROM SUIT
On appeal, CPS contends the trial court does not have jurisdiction over Wheelabrator’s
quantum meruit claim because (i) the legislature has not waived CPS’s immunity from suit for
quantum meruit claims, (ii) the proprietary-governmental dichotomy has not been extended
beyond the tort claim context, and (iii) CPS did not waive its immunity from suit by its conduct.
Presumption of Governmental Immunity
Sovereign immunity protects the State, as well as its agencies and officials, from lawsuits
for damages and from liability. Ben Bolt-Palito Blanco Consol. Indep. Sch. Dist. v. Tex.
Political Subdivs. Prop./Cas. Joint Self-Ins. Fund, 212 S.W.3d 320, 323-24 (Tex. 2006)
(sovereign is immune from both liability and suit). “The appurtenant common-law doctrine of
governmental immunity similarly protects political subdivisions of the State, including counties,
cities, and school districts.” Id. at 324; City of Houston v. Williams, 353 S.W.3d 128, 134 n.5
(Tex. 2011) (noting distinction between sovereign and governmental immunity). Political
subdivisions of the State, such as the City of San Antonio, have governmental immunity from
suit unless the Legislature has expressly waived such immunity by statute. Williams, 353 S.W.3d
at 134; Ben Bolt, 212 S.W.3d at 324. A statute shall not be construed as waiving immunity
unless the waiver is effected by “clear and unambiguous” language. TEX. GOV’T CODE ANN.
§ 311.034 (West Supp. 2011); Williams, 353 S.W.3d at 134. It has long been recognized that it
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is the Legislature’s sole province to waive immunity from suit. IT-Davy, 74 S.W.3d at 853-54.
On the other hand, a political subdivision may waive its immunity from liability by entering into
a contract with a private party. Id. at 854. Only immunity from suit operates as a jurisdictional
bar; immunity from liability constitutes an affirmative defense. Williams, 353 S.W.3d at 134;
Miranda, 133 S.W.3d at 224.
Limited Legislative Waiver of Immunity for Certain Contract Claims
The Legislature has clearly and unambiguously waived a governmental entity’s immunity
from suit for certain contractual claims. Ben Bolt, 212 S.W.3d at 327. Chapter 271 of the Local
Government Code expressly waives qualifying local governmental entities’ immunity from suit
for certain breach of contract claims. TEX. LOC. GOV’T CODE ANN. §§ 271.151-.160 (West 2005
& Supp. 2011). For section 271.152’s limited waiver to apply, three elements must be
established: (1) the party against whom waiver is asserted must be a “local governmental entity,”
(2) authorized to enter into contracts, and (3) the entity must have in fact entered into a “contract
subject to this subchapter.” Williams, 353 S.W.3d at 134; TEX. LOC. GOV’T CODE ANN.
§ 271.152 (West 2005). 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.” TEX.
LOC. GOV’T CODE ANN. § 271.151(2) (West 2005); Williams, 353 S.W.3d at 135. Thus, the
legislative waiver of immunity in the contract context is restricted to suits for breach of a written
contract for goods and services. TEX. LOC. GOV’T CODE ANN. § 271.152; Williams, 353 S.W.3d
at 135. Wheelabrator has indeed brought a breach of contract claim based on its written contract
with CPS as its primary claim, and CPS has not claimed immunity with respect to this claim.
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CPS argues that because the Legislature chose to limit the statutory waiver of immunity
for contractual claims against governmental entities to suits for breach of express written
contracts, it consciously excluded quasi-contractual claims based on an implied contract or
quantum meruit from the waiver. We agree. In 2008, we addressed this issue in Somerset Indep.
Sch. Dist. v. Casias, and held that section 271.152’s waiver of immunity does not apply to an
implied contract claim or claim of quantum meruit. Somerset Indep. Sch. Dist. v. Casias, No.
04-07-00829-CV, 2008 WL 1805533, at *3 (Tex. App.—San Antonio Apr. 23, 2008, pet.
denied) (mem. op.). We concluded that, based on its plain language, section 271.152 applies
only to written contracts, and that quantum meruit claims, being based in equity, “are simply not
included in section 271.152’s limited waiver of governmental immunity.” Id.; see Excess
Underwriters at Lloyd’s, London v. Frank’s Casing Crew & Rental Tools, Inc., 246 S.W.3d 42,
49-50 (Tex. 2008) (equitable theory of recovery based on quantum meruit is a quasi-contractual
doctrine under which one who provides valuable services may establish that recipient has
implied-in-law obligation to pay for value of services when on reasonable notice that provider
expects to be paid). Several other courts of appeals have agreed. See, e.g., Harris Cnty. Flood
Control Dist. v. Great Am. Ins. Co., 309 S.W.3d 614, 617 (Tex. App.—Houston [14th Dist.]
2010, no pet.) (section 271.152 does not apply to quantum meruit claims, which are barred by
governmental immunity) (citing City of Houston v. Petroleum Traders Corp., 261 S.W.3d 350,
359-60 (Tex. App.—Houston [14th Dist.] 2008, no pet.)); Vantage Sys. Design, Inc. v.
Raymondville Indep. Sch. Dist., 290 S.W.3d 312, 316-17 (Tex. App.—Corpus Christi 2009, pet.
denied) (holding section 271.152’s waiver of immunity does not extend to quantum meruit
claims); City of Houston v. Swinerton Builders, Inc., 233 S.W.3d 4, 12-13 (Tex. App.—Houston
[1st Dist.] 2007, no pet.) (plain language of section 271.152 limits waiver of sovereign immunity
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to breach of contract, and “lists no other claims, either in law or in equity;” thus, legislature did
not intend to include quantum meruit claims within the waiver).
Under the rules of statutory construction, we take the plain meaning of the statutory
language, which expressly limits the waiver to breach of contract claims based on written
contracts, and give effect to the Legislature’s omission of other types of contractual and quasi-
contractual claims. TEX. GOV’T CODE ANN. § 311.022 (West 2005); Hernandez v. Ebrom, 289
S.W.3d 316, 318 (Tex. 2009) (statutory interpretation begins with plain language of statute); City
of Rockwall v. Hughes, 246 S.W.3d 621, 625 (Tex. 2008) (court construes legislative intent as
expressed by statute’s words); Cameron v. Terrell & Garrett, Inc., 618 S.W.2d 535, 540 (Tex.
1981) (in construing statute, court gives effect not only to terms used, but also to terms the
legislature chose not to use). In excluding equitable claims such as quantum meruit from the
waiver, the Legislature balanced competing interests and made a policy decision that binds this
court. Somerset, 2008 WL 1805533, at *3.
Proprietary/Governmental Distinction
Wheelabrator responds to CPS’s argument that there is no waiver of immunity for
contractual or quasi-contractual claims outside the scope of Chapter 271 by asserting CPS has no
immunity in the first place with respect to its quantum meruit claim because it acted in a
proprietary capacity when it contracted with Wheelabrator and Casey for the baghouse project.
Wheelabrator seeks to import the proprietary/governmental distinction from the Texas Tort
Claims Act into this quasi-contractual context. In Chapter 101 of the Civil Practice and
Remedies Code, known as the Texas Tort Claims Act (“TTCA”), the Legislature has clearly
waived governmental immunity from liability and suit for certain tort claims arising out of its
governmental functions, as specified in the Act. See TEX. CIV. PRAC. & REM. CODE ANN.
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§§ 101.021-.029 (West 2011). A municipality’s governmental functions are those conducted “in
the performance of purely governmental matters solely for the public benefit.” Tooke v. City of
Mexia, 197 S.W.3d 325, 343 (Tex. 2006) (quotation omitted). In the TTCA, the Legislature
specifically excluded from the waiver of immunity all claims arising from a municipality’s
proprietary functions, which it defined to include “the operation and maintenance of a public
utility.” TEX. CIV. PRAC. & REM. CODE ANN. § 101.0215(b) (West 2011); Tooke, 197 S.W.3d at
343 (a municipality’s proprietary functions are those conducted “in its private capacity, for the
benefit only of those within its corporate limits, and not as an arm of the government”).
In arguing for application of the governmental/proprietary dichotomy to its quasi-
contractual claim, Wheelabrator first relies on cases that have characterized a city’s operation of
a public utility as a proprietary function. See San Antonio Indep. Sch. Dist. v. City of San
Antonio, 550 S.W.2d 262, 264 (Tex. 1976) (“A city which owns and operates its own public
utility does so in its proprietary capacity.”); see also Int’l Bank of Commerce of Laredo v. Union
Nat’l Bank of Laredo, 653 S.W.2d 539, 546 (Tex. App.—San Antonio 1983, writ ref’d n.r.e.)
(noting that a municipality’s proprietary functions have been defined to include providing gas
and electric service). Wheelabrator then argues that under common law when a municipality
engages in a proprietary function it is subject to the same duties and liabilities as private persons
and corporations, i.e., it is not immune from claims arising out of its proprietary acts. See Gates
v. City of Dallas, 704 S.W.2d 737, 739 (Tex. 1986) (noting that, “[c]ontracts made by municipal
corporations in their proprietary capacity have been held to be governed by the same rules as
contracts between individuals”). Thus, Wheelabrator asserts CPS has no immunity from a
common law quantum meruit claim arising out of its proprietary actions.
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The flaw in Wheelabrator’s argument is that this common law principle pre-dates the
2005 enactment of Chapter 271 in which the Legislature established a statutory scheme imposing
a limited waiver of a municipality’s immunity for certain contract claims; it excluded quasi-
contract claims such as quantum meruit from the statutory waiver of immunity, as discussed
supra. As it had already done in the tort-claims context, the Legislature could have incorporated
the proprietary/governmental distinction into the statutory waiver scheme for contract claims;
however, it chose not to incorporate that distinction into a contract setting. See Tex. Mut. Ins.
Co. v. Ruttiger, No. 08-0751, 2012 WL 2361697, at *19 (Tex. June 22, 2012) (the court
“presumes the Legislature deliberately and purposefully selects words and phrases it enacts, as
well as deliberately and purposefully omits words and phrases it does not enact”). It is the
Legislature’s function to weigh competing interests and establish public policy. Id. at *17. “In
the contract-claims context, legislative control over sovereign immunity allows the Legislature to
respond to changing conditions and revise existing agreements if doing so would benefit the
public.” IT-Davy, 74 S.W.3d at 854. In excluding quasi-contractual claims from Chapter 271’s
waiver of immunity, the Legislature made a public policy decision. Tooke, 197 S.W.3d at 332-
33 (Chapter 271’s waiver of governmental immunity in the contract-claims context involves
complex policy choices best made by the Legislature).
In addition, Gates pre-dates Tooke in which the Supreme Court made clear that sovereign
immunity is the “default” rule for municipalities with respect to all types of claims. Id. at 331-32
(sovereign immunity in the absence of a clear legislative waiver is the firmly established
principle); see also Wichita Falls State Hosp. v. Taylor, 106 S.W.3d 692, 694 n.3 (Tex. 2003)
(general rule is immunity). When it issued Tooke the Supreme Court was well aware of the
common law principle espoused in Gates, i.e., that “contracts made by municipal corporations in
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their proprietary capacity . . . [are] governed by the same rules as contracts between individuals.”
Gates, 704 S.W.2d at 739. With that knowledge, the Supreme Court used a compare signal
when citing Gates right after explicitly stating it has never held that the proprietary/governmental
distinction applies to determine whether immunity is waived for breach of contract claims,
thereby putting Gates into question. Tooke, 197 S.W.3d at 343 n.89. Moreover, Gates deals
with immunity from liability, not immunity from suit. Gates, 704 S.W.2d at 739 (proprietary
functions subject municipalities to the “same duties and liabilities” as private persons).
By asking us to hold that CPS has no immunity from a common law quantum meruit
claim arising out of a proprietary function, Wheelabrator requests that we create an exception to
the default principle of sovereign immunity confirmed in Tooke. We decline to do so, as that is
the sole province of the Legislature. IT-Davy, 74 S.W.3d at 853-54. As of this date, neither the
Texas Legislature nor the Texas Supreme Court has stated that the proprietary/governmental
distinction used in the tort-claims context is to be used to determine a municipality’s immunity
from suit on a contractual or quasi-contractual claim such as quantum meruit. Indeed, in
considering application of the governmental/proprietary distinction to a breach of contract claim,
the Supreme Court expressly said in Tooke, “we have never held that this same distinction
[proprietary/governmental functions] determines whether immunity from suit is waived for
breach of contract claims, and we need not determine that issue here.” Tooke, 197 S.W.3d at
343. Since Tooke, the Supreme Court has not revisited the issue. 4
4
Wheelabrator cites us to PKG Contracting, Inc. v. City of Mesquite, 197 S.W.3d 388, 388-89 (Tex. 2006) (per
curiam), in which the Court rejected PKG’s argument that the city’s immunity from suit for breach of contract was
waived because it acted in a proprietary capacity when it contracted for construction of a storm drainage system,
finding it was part of the city’s governmental functions. PKG was issued on the same day as Tooke, and the
immunity analysis in PKG was not conducted under Chapter 271; in fact, the Court noted the newly enacted statute,
and remanded for a determination of whether the statutory waiver of immunity applied to the breach of contract
claim at issue. Id. at 389.
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Wheelabrator cites several courts of appeals cases decided after Tooke that it
characterizes as applying the governmental/proprietary distinction in determining whether
governmental immunity was waived for contract and quantum meruit claims, but they are not
persuasive. In all the cases, the courts of appeals did not reach the issue of whether the
governmental/proprietary distinction applies to contractual or quasi-contractual claims because
they determined the municipality was engaged in a governmental function. See, e.g., City of San
Antonio v. Reed S. Lehman Grain, Ltd., No. 04-04-00930-CV, 2007 WL 752197, at *3 (Tex.
App.—San Antonio Mar. 14, 2007, pet. denied) (city was acting in a governmental capacity and
was immune from suit raising breach of contract and estoppel claims); East Houston Estate
Apartments, L.L.C. v. City of Houston, 294 S.W.3d 723, 731-32 (Tex. App.— Houston [1st Dist.]
2009, no pet.) (city acted in governmental capacity in entering into loan agreement and was thus
immune from breach of contract claim); City of Emory v. Lusk, 278 S.W.3d 77, 83 (Tex. App.—
Tyler 2009, no pet.) (city was immune from suit for breach of contract); City of Houston v.
Petroleum Traders Corp., 261 S.W.3d 350, 355-56 (Tex. App.—Houston [14th Dist.] 2008, no
pet.) (stating it need not decide whether the governmental/proprietary dichotomy applies in
contract actions, but “even assuming for argument’s sake that the dichotomy does apply” to the
contract claim, the city’s procurement of fuel was a governmental function); City of Weslaco v.
Borne, 210 S.W.3d 782, 790-93 (Tex. App.—Corpus Christi 2006, pet. denied) (city’s operation
of mobile home park was governmental function, and thus city was immune from suit for breach
of contract). 5
5
Wheelabrator also relies on Temple v. City of Houston, in which the court held the city had no sovereign immunity
from a breach of contract suit because it was performing a proprietary function when it provided life insurance
benefits to its employees. Temple v. City of Houston, 189 S.W.3d 816, 819-21 (Tex. App.—Houston [1st Dist.]
2006, no pet.). Temple was decided in January 2006, before Tooke was issued.
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In sum, the Texas Supreme Court has so far declined to address whether application of
the governmental/proprietary distinction to a contractual or quasi-contractual setting is
appropriate for purposes of determining a municipality’s immunity from suit. Tooke, 197
S.W.3d at 343. The appellate courts that have considered the issue since Tooke have not
squarely reached the issue, concluding that governmental functions were involved. In Chapter
271, the Legislature has balanced competing public and private interests and enacted a
comprehensive scheme for handling contract claims against municipalities. Sharyland Water
Supply Corp. v. City of Alton, 354 S.W.3d 407, 414 (Tex. 2011). The statutory scheme for
waiving a municipality’s immunity from suit in the contract context omits quasi-contractual
claims such as quantum meruit. Somerset, 2008 WL 1805533, at *3. The Legislature easily
could have included the proprietary/governmental dichotomy it used in the tort-claims context in
the contract-claims scheme, but chose not to do so. As it is solely the Legislature’s role to
“clearly and unambiguously” waive governmental immunity from suit, and it has not done so for
quantum meruit claims, we hold CPS is immune from suit on Wheelabrator’s quantum meruit
claim. See IT-Davy, 74 S.W.3d at 853-54.
Waiver of Immunity by Conduct
Finally, Wheelabrator makes an equitable argument, contending CPS waived its
immunity from the quantum meruit claim by accepting benefits under the contract while
wrongfully withholding the retainage; in addition, it asserts CPS was complicit in violating the
competitive bidding laws based on the trial court’s finding in the Casey litigation that the
contract is void. CPS asserts that the circumstances of this case do not warrant a finding of
waiver of immunity by conduct, and further asserts the concept of waiver by conduct has not
been applied by the courts. We agree.
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In arguing for application of a waiver-by-conduct, Wheelabrator relies on the Supreme
Court’s footnote in a 1997 case, Federal Sign v. Texas Southern University, that suggested there
could be circumstances where the State waives its sovereign immunity by its conduct, other than
by entering into a contract. Fed. Sign v. Tex. S. Univ., 951 S.W.2d 401, 408 n.1 (Tex. 1997).
Despite the footnote, in the years since Federal Sign the Supreme Court has declined to apply a
waiver-by-conduct theory. See, e.g., Sharyland, 354 S.W.3d at 414 (it is sole province of
legislature to recognize waiver-by-conduct exception to immunity in breach of contract suit); IT-
Davy, 74 S.W.3d at 856-57 (rejecting a waiver-by-conduct argument and stating it is legislature’s
province to waive immunity); Tex. A&M Univ. Sys. v. Koseoglu, 233 S.W.3d 835, 840 (Tex.
2007) (governmental unit does not waive immunity from breach of contract action by accepting
benefits under a contract); Catalina Dev., Inc. v. County of El Paso, 121 S.W.3d 704, 705-06
(Tex. 2003) (nothing in circumstances showed waiver of immunity by conduct). We have also
repeatedly declined to apply waiver-by-conduct. See Somerset, 2008 WL 1805533, at *4 (also
noting that although supreme court has discussed the “possibility” of waiver by conduct absent a
legislative waiver of immunity, “it has recognized a ‘tension’ in this waiver concept”); Dimmit
Cnty. Mem’l Hosp. v. CPM Med., LLC, No. 04-11-00710-CV, 2012 WL 1431366, at *5 (Tex.
App.—San Antonio Apr. 25, 2012, no pet.) (mem. op.). Based on this precedent, CPS’s conduct
in accepting the benefit of the contract while withholding the retainage did not waive its
governmental immunity.
CONCLUSION
Because the Legislature’s limited waiver of governmental immunity from suit in Chapter
271 does not include quantum meruit claims, and the proprietary/governmental distinction from
the TTCA does not apply in this contractual or quasi-contractual context, CPS is immune from
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suit on Wheelabrator’s quantum meruit claim. In addition, the circumstances do not support a
waiver of immunity by conduct. Therefore, the trial court erred in denying CPS’s plea to the
jurisdiction as to the quantum meruit claim. Accordingly, we reverse the trial court’s order
denying CPS’s plea to the jurisdiction and render judgment that Wheelabrator’s quantum meruit
claim is dismissed for want of jurisdiction. We remand the cause to the trial court for further
proceedings consistent with this opinion.
Phylis J. Speedlin, Justice
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