|April 30, 2004, 10:57PM
Texas ruling waives Houston immunity
from law suits
United Water cannot be denied
payment in contract dispute
By KRISTEN MACK
Copyright 2004 Houston Chronicle
The city of Houston is not immune from being sued, a
state appeals court has ruled in a decision that threatens a protection
the city has used often to avoid costly lawsuits.
The First Court of Appeals, reversing a lower court
ruling, issued its decision Thursday in favor of United Water Services
Inc., which sued after the city refused payment on a contract.
"It is a significant ruling for the city of
Houston and other major cities," said Kent Rutter of the Houston
firm Haynes and Boone, who has handled numerous appellate cases.
"This would be a blanket waiver of the city's governmental
While the ruling will allow lawsuits that could not
have gone forward before, Rutter said, it will not open the floodgates
to a wave of new lawsuits. He said the types of cases it most likely
will open the city to are contract lawsuits for money damages -- an
issue that "hits the city in the pocketbooks."
City Attorney Arturo Michel downplayed the ruling's
"In the bigger picture, it is probably not that
significant," he said.
Michel maintains that the Texas Supreme Court
ultimately will decide on the relatively new law concerning governmental
immunity, since lower courts throughout the state have issued
"It's already in play at the Supreme Court, and
(this case) may be appealed to preserve the issue," he said, noting
that the ruling has nothing to do with the underlying merits of the
The city hired United Water to operate and maintain a
water purification plant. After the contract expired, however, the city
claimed the company had breached the contract and refused to pay.
United Water sued, seeking more than $900,000 in
damages, but the city asserted that it was immune from the lawsuit.
The First Court of Appeals considered the question of
whether the city charter "expressly and unambiguously waives the
city's immunity from suit." It cited the charter and a state law,
which both contain language saying the city can "sue and be
Municipalities have used the immunity defense to their
advantage, experts say, and the city invokes it frequently.
"If we have a defense, we are bound to assert it
if we can do it in good faith," said Randy Pourteau, a senior
assistant city attorney. "There are good reasons for not letting
people sue the city for everything."
By state law, municipalities also are immune from
liability under most circumstances. So even if the city is sued, it
can't necessarily be held liable for damages.
"The city has limited funds, and it is
responsible for guarding the taxpayers' money," Pourteau said.
"Until the Legislature says that a governmental entity ought to be
responsible for paying particular kinds of claims, it's not."
Jeff Joyce, an attorney with the firm Winstead
Sechrest & Minick, which represented United Water, said he assumes
the city invokes immunity "quite a bit."
"It looks like it is a standard way of doing
business in the city of Houston," he said.
Joyce said he was pleased with Thursday's decision,
noting that prior rulings have made it harder to sue City Hall.
"People contracting with the city don't have the
right to go to the courthouse, absent of getting the city to say it's OK
to do so," he said. "It's sort of like owning your own courts,
and that's not fair."
Susan Taylor, a senior assistant city attorney, said
city officials are disappointed with Thursday's ruling and have not
decided how to proceed.
"It is a fluid area of the law that we expect the
Texas Supreme Court will ultimately rule on," she said. "But
it's important to cities that we maintain our immunity from suit."