Opinion

IN THE SUPREME COURT OF TEXAS

IN THE SUPREME COURT OF TEXAS

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No. 05-0855

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South Texas Water Authority a/k/a/ South

Texas Water Authority Industrial Development Corporation, Petitioner,

v.

Romeo L. Lomas and Citizens

for Water Acquired Through Equal Rates, Respondents

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On Petition for Review from the

Court of Appeals for the Thirteenth District of

Texas

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PER CURIAM

Romeo L.

Lomas, individually, and other City of Kingsville residents organized as a

private non-profit association under the name WATER, [1] brought this declaratory-judgment and

damages action against South Texas Water Authority (STWA) challenging operating

expenses charged under a water-supply contract with the City. Finding neither

plaintiff had standing, the trial court granted summary judgment in STWA’s

favor. The court of appeals reversed in part, holding that Lomas had individual

standing to pursue monetary and declaratory relief, WATER had associational

standing to pursue declaratory relief, and both parties had standing as

third-party beneficiaries of the water-supply contract. ___ S.W.3d at ___. We

disagree, and reverse the court of appeals’ judgment.

STWA

constructed a water-transmission line from the City of Corpus Christi to furnish

treated water to municipal and industrial customers in a portion of South Texas,

and in 1981 entered into a contract with the City of Kingsville for that

purpose. Lomas and WATER contend the rates charged under the contract are

excessive and discriminatory, causing Kingsville ratepayers to bear a

disproportionate percentage of the operating expense of service compared to

users residing in other municipal districts that STWA services. Lomas and WATER

assert standing as third-party beneficiaries of the water-supply contract,

claiming the contract was intended to provide a direct benefit to the citizens

of Kingsville. [2] WATER additionally asserts

associational standing, and both Lomas and WATER contend they have standing to

bring suit as consumers and taxpayers. We hold that the plaintiffs fail to meet

the requirements necessary to establish standing under any of these

theories.

First, there

is a presumption against conferring third-party-beneficiary status on

noncontracting parties. MCI Telecomms. Corp. v. Tex. Utils. Elec. Co. ,

995 S.W.2d 647, 652 (Tex. 1999). In deciding whether a third party may enforce

or challenge a contract between others, it is the contracting parties’ intent

that controls. See Corpus Christi Bank & Trust v. Smith , 525 S.W.2d

501, 503-04 (Tex. 1975). The intent to confer a direct benefit upon a third

party “must be clearly and fully spelled out or enforcement by the third party

must be denied.” MCI Telecomms. Corp. , 995 S.W.2d at 651 . Incidental

benefits that may flow from a contract to a third party do not confer the right

to enforce the contract. Id . at 652. A third party may only enforce a

contract when the contracting parties themselves intend to secure some benefit

for the third party and entered into the contract directly for the third party’s

benefit. Id . at 651; Stine v. Stewart , 80 S.W.3d 586, 589 (Tex.

2002). To qualify as one for whose benefit a contract was made, the third party

must benefit more than incidentally; he must be either a donee or creditor

beneficiary. MCI Telecomms. Corp. , 995 S.W.2d at 651 . A person is a donee

beneficiary if the performance promised will come to him as a pure donation.

Id . If performance will come to satisfy a duty or legally enforceable

commitment owed by the promisee, then the third party is considered a creditor

beneficiary. Id .

In this case,

the water-supply contract provides that STWA agrees to sell, and the City of

Kingsville agrees to purchase, water under the contract’s terms and conditions.

The contract does not mention Lomas, WATER, or residents of the City of

Kingsville in general other than to specify the water’s intended use for sale to

municipal and industrial customers. The mere description of a product’s intended

use cannot confer third-party-beneficiary status on intended users, and there is

nothing more in the contract itself upon which third-party-beneficiary status

might be based. The court of appeals implicitly recognized as much by looking

beyond the contract’s terms to find the intended-benefit element in STWA’s

enabling legislation. ___ S.W.3d at ___. That legislation describes STWA’s

purpose to be “for the benefit of the people of this state and for the

improvement of their properties and industries, and [STWA], in carrying out the

purposes of this Act, will be performing an essential public function under the

constitution.” Id . (quoting 66th Leg., R.S., ch. 436, § 22, 1979 Tex.

Gen. Laws 995 ). In this language, and the water-supply contract’s reference to

STWA’s statutory powers, the court of appeals found the requisite intent to

confer a third-party benefit upon residents of the City of Kingsville.

It is true

that the Legislature, in creating STWA as a conservation and reclamation

district, intended generally to benefit the people of this state, as presumably

it intends with all legislation. But general beneficence does not create

third-party rights, else every Texan could challenge or seek to enforce any

government contract and the presumption against third-party-beneficiary

agreements would disappear. The enabling statute upon which the court of appeals

relied created no more than an incidental benefit to the public at large, the

very type of benefit we have said is insufficient to confer

third-party-beneficiary status. Thus, even if the enabling statute’s language

could be imported into the water-supply contract to discern the parties’ intent,

which the court of appeals held and we do not address, there is nothing in

either that would confer donee- or creditor-beneficiary standing upon the

plaintiffs to challenge the contract’s terms.

Neither are

Lomas nor WATER entitled to sue under general standing principles. Standing is a

constitutional prerequisite to filing suit for both individuals and

associations. See Williams v. Lara , 52 S.W.3d 171, 178 (Tex. 2001);

Tex. Ass’n of Bus. v. Tex. Air Control Bd. , 852 S.W.2d 440, 447

(Tex. 1993). The standing requirement’s constitutional underpinnings are found

in the separation-of-powers doctrine and, in Texas, the open-courts provision.

Tex. Air Control Bd. , 852 S.W.2d at 443 . Our separation-of-powers

article prohibits courts from issuing advisory opinions that decide abstract

questions of law without binding the parties, as that is a function of the

executive rather than the judicial branch. Tex. Const. art. II, § 1; Brown v.

Todd , 53 S.W.3d 297, 302 (Tex. 2001). And our constitution’s open-courts

provision contemplates access to the courts for only those litigants who have

suffered an actual injury, as opposed to one that is general or hypothetical.

Tex. Air Control Bd. , 852 S.W.2d at 444 . Thus, as a general rule,

to have standing an individual must demonstrate a particularized interest in a

conflict distinct from that sustained by the public at large. See

Williams , 52 S.W.3d at 178 ; Brown , 53 S.W.3d at 305 .

Here, the

court of appeals determined that Lomas had sufficiently pled a particularized

injury by claiming that, as a citizen and taxpayer of the City of Kingsville and

a regulated ratepayer of STWA, he was subjected to disproportionate and

discriminatory treatment under the water-supply contract. But there is nothing

to indicate that Lomas was treated differently than any other Kingsville

resident or suffered an injury peculiar to himself. See Tex. Dep’t of Transp.

v. City of Sunset Valley , 146 S.W.3d 637, 647 (Tex. 2004) (holding that

residents of city lacked standing to pursue equal protection claim based on

geographic disparate treatment). Nor does Lomas fit within the limited exception

to the particularized-injury rule that confers standing on taxpayers who seek

injunctive relief to prevent the illegal expenditure of public funds.

Williams , 52 S.W.3d at 179 . To meet this exception, a taxpayer must

demonstrate that the expenditure is illegal rather than merely “unwise or

indiscreet.” Id . at 180 (quoting Osborne v. Keith , 177 S.W.2d 198,

200 (Tex. 1944)). Neither Lomas nor WATER allege that the water-supply contract

is illegal; rather, they claim the contract is “misapplied,” which is not

sufficient to confer taxpayer standing. Id . Moreover, the funds paid to

STWA under the water-supply contract do not derive from taxes, thus Lomas lacks

taxpayer standing to challenge them. [3] See Franks v. Welch , 389 S.W.2d

142, 145 (Tex. App.–Houston [1st Dist.] 1965, writ ref’d n.r.e.) (holding

Houston residents lacked standing to sue because “appellants allege no damage

peculiar to themselves[,] . . . [and] do not contend in

their petition or their brief that any of the funds necessary for the

performance of the contract . . . will be raised by

taxation”); Houston Natural Gas Corp. v. Wyatt , 359 S.W.2d 257, 260 (Tex.

Civ. App.–Eastland 1962, no writ) (holding “Wyatt, as a taxpaying citizen of

Corpus Christi, cannot maintain this suit to enjoin execution of the contract in

question, which is payable only out of gas revenues”).

WATER

additionally asserts associational standing on behalf of its members. To have

standing as an association, WATER must show that (1) its members would have

standing to sue on their own, (2) the interests WATER seeks to protect are

germane to its purpose, and (3) neither the nature of the claim nor the relief

sought requires the participation of the individual members in the lawsuit.

See Tex. Air Control Bd. , 852 S.W.2d at 447 (citing Hunt v. Wash.

State Apple Advert, Comm’n , 432 U.S. 333, 343 (1977)). To meet the first

requirement, WATER must show that its members have standing to sue in their own

right. Id . As neither Lomas nor any other WATER member has demonstrated

individual standing to contest the water-supply contract, WATER lacks

associational standing to sue on behalf of its members.

We agree with

the plaintiffs that, when an organization supplies water, it must do so “without

discrimination between persons similarly situated.” City of Galveston v.

Kenner , 240 S.W. 894, 895 (Tex. 1922). But here, STWA supplies water to the

City of Kingsville pursuant to its wholesale contract with the City, which in

turn serves individual Kingsville residents as retail customers. Lomas has not

sued the City of Kingsville for discrimination, and lacks standing to bring such

a claim against STWA.

Accordingly,

without hearing oral argument pursuant to Rule 59.1 of the Texas Rules of

Appellate Procedure, we reverse the court of appeals’ judgment and dismiss the

case for lack of jurisdiction.

OPINION DELIVERED: April

27, 2007

[1] Citizens for Water Acquired Through Equal

Rates.

[2] As Lomas and WATER filed no response to STWA’s petition

for review or brief on the merits despite our request that they do so, we

recount arguments that they made in their briefs to the court of

appeals.

[3] The water-supply contract states:

[STWA] shall never have the right to demand payment by

City of any obligation assumed or imposed on it under and by virtue of this

Contract from funds raised or to be raised by taxation. City’s obligation under

this Contract shall never be construed to be a debt of City of such kind as to

require it under the laws of this State to levy and collect a tax to discharge

such obligation, it being expressly understood by the parties hereto that all

payments due by City hereunder are to be made from the revenues received by City

from its waterworks system.