Justice Debra Lehrmann

In an issue never before directly decided, the Texas Supreme Court has held that a political subdivision does not have governmental immunity from a condemnation proceeding brought by another political subdivision.

Hidalgo County Water Improvement District No. 3 v. Hidalgo County Irrigation District No. 1 (No. 21-0507) arose from a dispute between the two districts over the extension of the improvement district’s underground irrigation pipeline that runs along the right-of-way for Bicentennial Boulevard in McAllen. When the city decided to extend the road, it entered into an agreement with the improvement district to do likewise with the pipeline. In order to do that, however, the improvement district had to cross the irrigation district’s open irrigation outtake canal, which also supplies drinking water to the City of Edinburgh. The improvement district sought a subsurface easement from the irrigation district to dig under the canal. The irrigation district, citing concerns that the project would wreck the canal, refused. The improvement district filed a condemnation proceeding. The trial court appointed special commissioners to determine the irrigation district’s damages. Though the irrigation district did not attend the hearing, the commissioners awarded it $1,900 in damages.

Back in the trial court, the irrigation district objected to the commissioner’s finding based on the “paramount public importance doctrine,” which bars “a condemnation authority [from condemning] land already dedicated to public use if doing so would effectively destroy its existing use, unless the condemnor can show that the intended use is of ‘paramount public importance’ and cannot be achieved by any other means” (citation omitted). It also filed a plea to the jurisdiction, which the trial court granted. On appeal by the improvement district, the Corpus Christi Court of Appeals affirmed, wary of “separation-of-powers issues by asking the judiciary to interfere with the Irrigation District’s discretion regarding the disposition of its property.” The court of appeals further rejected the improvement district’s argument that § 49.222, Water Code, which grants eminent domain authority to improvement districts, waives the irrigation district’s immunity.

In an interesting and illuminating opinion by Justice Lehrmann, SCOTX reversed and remanded to the trial court. The Court’s analysis commenced with a discussion of the basis of sovereign immunity in the common law. Consequently, [the Court has] recognized that the judiciary is responsible for defining the doctrine’s boundaries and determining whether it applies in the first instance” (citing City of Conroe v. San Jacinto River Auth., 602 SW.3d 445, 457 (Tex. 2020)). While the judiciary must decide “whether the doctrine should be modified or abrogated under particular circumstances,” the Legislature “determines the circumstances under which immunity is waived” (citations omitted). Turning to the “nature and purpose” of sovereign immunity, Justice Lehrmann observed that “[o]ur modern jurisprudence justifies the doctrine as a means of (1) protecting the public fisc by shielding tax resources from being diverted to pay litigation costs and money judgments and (2) preserving the separation of powers and the Legislature’s prerogative to apportion tax dollars to their intended purposes” (citation omitted). But, when a governmental entity filesa claim seeking monetary relief, “it is no longer immune from suit for ‘claims against it which are germane to, connected with and property defensive to’ the governmental entity’s own claims, at least to the extent that the relief sought does not exceed the amount necessary to offset the entity’s recovery.’” Moreover, sovereign immunity does not block ultra vires suits against state officials, nor suits under the Expedited Declaratory Judgment Act (the issue in City of Conroe) (allowing municipal bond issuers to bring an expedited action in rem to confirm the validity of a proposed public-securities issuance). In the ultra vires context, suits “do not seek to alter government policy but rather to enforce existing policy,” while EDJA actions “do not subject governments to the ‘costs and consequences’ of improvident government actions’ because the entities the Act intends to protect are governmental entities themselves.”

Turning from one sovereign power to another, the Court considered “how sovereign immunity interacts with a second power inherent to the state’s status as sovereign: eminent domain.” Citing authorities stretching all the way back to Tacitus, the Court briefly discussed the history of eminent domain and legislative enactments granting the inherent power to public and private entities. While SCOTX has long determined cases “arising from the condemnation of land already dedicated to public use,” it has always done so under the paramount-public-importance doctrine (citations omitted). The Court observed further that “neither the parties nor this Court raised the specter of governmental immunity in those cases.” It could find no cases prior to 2010 in which the issue of whether immunity applies in condemnation proceedings even came up, but those were in the waiver context, not as an antecedent question.

Justice Lehrmann’s analysis of the central legal issue concluded that: (1) condemnation suits between public entities has no net effect on the public fisc, since they merely reallocate risk between those entities; (2) such suits raise no separation-of-powers concerns that are not also raised by interfering with the Legislature’s authority to grant eminent domain authority to improvement districts, which “would provide a political subdivision with the unilateral ability to undermine the Legislature’s allocation of condemnation power to an entity to fulfill an identified public need.” Indeed, this is exactly the problem the paramount-public-importance doctrine addresses. “In applying the doctrine,” Justice Lehrmann wrote, “the court defers to each entity’s policy discretion by first considering whether allowing the condemnation undermines the condemnee’s ability to fulfill [its own public] purpose.” If a court concludes that the entities’ public purposes cannot “coexist,” the “inquiry [turns to] which interest should prevail under the circumstances of a particular case.” Here the irrigation district “asks us to replace this framework with a rigid judicial declaration that the policy decision of the condemnee public landowner should always prevail unless the Legislature expressly provides otherwise. We decline to do so.”

Observing further that “a governmental entity may be sued for inverse condemnation, by either a public or private landowner,” Justice Lehrmann pointed out that “[i]f a governmental entity is not immune from a takings claim on the ‘back end’—that is, after it has taken property without compensation—it logically follows that the entity may pursue a pre-taking eminent-domain action.” In fact, the statutory framework for eminent domain proceedings favors that approach, and any “rule that encourages governmental subdivisions to do the opposite, to bury the pipe now and sort out the consequences later, is improvident.” The Court sent the case back to the trial court, presumably to consider the irrigation district’s objection to the commissioners’ award on grounds of the paramount-public-importance doctrine.

This is a really interesting case for a number of reasons, not least of which is its informative discussion of the common-law origin of sovereign immunity and the unique proprietary role of the courts in defining the limits of such immunity. Every session we are inundated by bills that seek to waive immunity for this, that, or the other, without any apparent regard to the fiscal consequences to taxpayers of doing so. It seems contradictory to rail against governmental entities for high property taxes on one hand, and, on the other, turn around and let people sue them for damages, costs, and attorney’s fees on all sorts of claims. Of course, it is telling that many of these immunity waivers don’t apply to the state, only to local governments, as if they are hostile actors with their own agendas despite the fact that they are just as elected and representative as the Legislature is. When TCJL was formed in 1986, we worked together with local governments to strengthen governmental immunity, to which the Legislature was generally receptive. Somewhere along the line, local governments became the enemy, working against the state instead of in concert to improve the lives of all citizens. Perhaps if citizens could sue the Legislature for policy decisions they find adverse to them, things would move back in a positive direction.

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