Unreported / Non-Citable
Background
San Antonio Water System (SAWS) sued Bexar Medina Atascosa Counties Water Control and Improvement District Number 1 (BMA) and its board members over a “take or pay” water supply agreement. Under the 2007 Amended and Restated Water Supply Agreement, BMA was obligated to provide up to 19,974 acre-feet of untreated water from Medina Lake to SAWS when available, and SAWS was obligated to pay for the water regardless of whether it actually took delivery—receiving credits only for quantity shortfalls.
Beginning in April 2013, water quality at Medina Lake deteriorated due to prolonged low levels, rendering the water unsuitable for treatment at SAWS’ ultrafiltration plant. SAWS ceased taking water but continued making payments under the Agreement. SAWS then sued, claiming these payments constituted a gratuitous grant of public money in violation of Article III, Section 52(a) of the Texas Constitution (the “Gift Clause”). SAWS asserted both a declaratory judgment claim seeking to void the Agreement and ultra vires claims against the BMA board members for approving budgets funded by the disputed payments.
BMA filed a plea to the jurisdiction arguing that: (1) BMA possesses governmental immunity; (2) the BMA Directors are immune because SAWS failed to properly plead an ultra vires claim; and (3) the Public Utility Commission has exclusive jurisdiction. The trial court granted the plea to the jurisdiction and dismissed the suit.
The Court’s Holding
The Court of Appeals affirmed the dismissal on governmental immunity grounds. The court held that BMA, as a water control and improvement district created under Article XVI, Section 59 of the Texas Constitution, is a political subdivision of the state and therefore possesses governmental immunity from suit. The court emphasized that a political subdivision is immune from suit unless the legislature has expressly and unambiguously waived immunity, and bare allegations of immunity waiver are insufficient to establish jurisdiction.
On SAWS’ declaratory judgment claim, the court held that suits seeking to establish a contract’s validity, enforce performance, or impose contractual liabilities are suits against the state because they attempt to control state action. Because no statute expressly waives immunity for declaratory judgment claims challenging the validity of government contracts, and the Agreement is an interlocal cooperation contract expressly authorized by statute for governmental purposes, SAWS’ claim is barred by immunity regardless of its merits.
Regarding the ultra vires claims against the BMA Directors, the court held that a valid ultra vires claim must allege either that officers acted without legal authority or failed to perform a purely ministerial act. Acts within an official’s discretion—even if erroneous—are protected by immunity. Here, the Water Code expressly authorizes BMA’s board to adopt budgets and allocate “other available funds” of the district, and to purchase materials and supplies needed for district purposes. The SAWS payments constitute available revenues that the board has statutory authority to budget and spend. Because the board acted entirely within its delegated discretionary authority, SAWS’ claim actually seeks to invalidate a government contract—impermissibly seeking to control state action—and is therefore barred by governmental immunity. The court concluded repleading could not cure this jurisdictional defect.
Key Takeaways
- Governmental immunity bars suits seeking declaratory relief to invalidate contracts made by political subdivisions, even when the plaintiff argues the contract violates constitutional provisions like the Gift Clause.
- Ultra vires claims against government officials cannot be maintained when the challenged acts fall within the officials’ statutory discretionary authority, regardless of whether the plaintiff frames the issue in constitutional terms.
- Interlocal cooperation contracts between government entities are expressly authorized by statute for governmental purposes and are presumptively beyond judicial invalidation through immunity doctrines.
- A plaintiff asserting governmental immunity defects must affirmatively demonstrate a waiver of immunity; bare or conclusory allegations of waiver are insufficient to establish jurisdiction, and failure to do so cannot be cured through amendment.
Why It Matters
This decision significantly limits judicial review of contracts between governmental entities. While SAWS presented a plausible constitutional argument—that it was being forced to subsidize BMA through payments for water it could not use—the court’s immunity holding prevents any court from even reaching the merits of Gift Clause or contract validity challenges. The decision reinforces that government-to-government contracts, authorized by statute and made for governmental purposes, enjoy broad immunity from judicial scrutiny through direct challenge or ultra vires suits.
For public entities and contractors, the ruling clarifies that interlocal cooperation contracts cannot be attacked by fellow governmental entities on constitutional grounds. For water districts and similar political subdivisions, it confirms robust immunity protection for budgetary and expenditure decisions related to authorized statutory revenues. However, the decision leaves open narrower paths: SAWS might have pursued a breach of contract claim (which carries a statutory waiver under Texas Local Government Code § 271.152), though SAWS did not pursue that avenue.