Green International, Inc. v. State

KIDD, Justice,

dissenting.

At this critical time in our nation’s history, when there is such widespread distrust of our basic institutions of government, it is a sad commentary that the majority opinion perpetuates the litany that “The King can do no wrong.” Green International, Inc. (“Green”) entered into a written contract with the State of Texas, the Texas Department of Criminal Justice, and the Board of Criminal Justice (collectively “the State”) to construct three prison units. It is apparent from this record that Green not only has performed its obligations under the contract, but also has performed other work outside the contract at the request of the State. The State now refuses to pay Green for the work performed. Our decision today denies Green even its day in court. For the reasons herein expressed, I respectfully dissent.

MUTUALITY OF CONTRACTUAL OBLIGATIONS

In its discussion of sovereign immunity, the majority quite properly observes that the State, by freely and voluntarily contracting with Green, has waived its immunity from liability, citing Fristoe v. Blum, 92 Tex. 76 , 45 S.W. 998 (1898). As far back as the last century, our Texas Supreme Court held that once the State becomes a party to a contract, it loses its immunity from liability. Id. 45 S.W. at 999 . I believe the court in Fristoe premised this holding on a basic cornerstone of contract law, that is, that two parties to a contract voluntarily agree to mutual obligations contained within the contract. Thus, the majority concedes, as it must, that the State is obligated to fully perform its payment obligations to Green under the contract. Consequently, the State may not hide behind the cloak of sovereign immunity to escape its legitimate contractual obligations. However, the majority denies Green access to the courts of Texas under the historical rubric that Green has not received permission from the State to bring its lawsuit. The majority relies upon this Court’s opinion in *440 Ferguson v. Johnson, 57 S.W.2d 372 (Tex.Civ.App.—Austin 1933, writ dism’d), issued over sixty years ago, which states, “The impotence of private individuals to enforce through the courts their contractual rights against the state, by reason of inability to sue the state without its consent, inheres in every such contract.” Id. at 376 .

In this modern age of sophisticated commerce, why should the State be accorded an unequal position under the law regarding mutual contractual obligations? There can be no doubt that if the State chose to sue Green on the contract, the State would face no impediment to suit. Why should Green face such an impediment? Our courts have declared that when the Legislature creates an agency with the ability to “sue or be sued,” the State waives its immunity from suit. See Industrial Constr. Management v. DeSoto Indep. Sch. Dist., 785 S.W.2d 160 (Tex.App.—Dallas 1989, no writ). This waiver is premised on the equitable principle that if an agency is entitled to take a private citizen to court, it is only just that a private citizen have the same rights against the State. Fristoe, 45 S.W. at 999 (observing that when the State “becomes a suitor in its own courts,” the same law applies to the State as governs a private citizen).

Based upon this rationale, I would refuse to follow Ferguson v. Johnson. Rather, I would hold that when the State voluntarily enters into a contract, it waives both immunity from liability and immunity from suit.

OPEN COURTS PROVISION

I also do not agree with the majority’s analysis of the open courts provision of the Texas Constitution, which states, “All courts shall be open, and every person for an injury done him, in his lands, goods, person or reputation, shall have remedy by due course of law.” Tex. Const. art. I, § 13. In the landmark case of Sax v. Votteler, 648 S.W.2d 661, 666 (Tex.1983), the supreme court set out a two-part test for determining a violation of the open courts provision: the litigant must show (1) “a cognizable common law cause of action that is being restricted,” and (2) that “the restriction is unreasonable or arbitrary when balanced against the purpose and basis of the statute.”

The majority begins with the wrong premise, I believe. It contends that “Green’s claims against the State would not have been cognizable at common law.” For this proposition it cites no authority. I contend that Green’s claim is one for simple breach of contract, which was a well-recognized common law cause of action long before the framing of the current Texas Constitution in 1875. Conversely, the doctrine of sovereign immunity is a creature of judge-made law which only became a part of the law of this state when it was first adopted by a Texas court. The majority certainly has not demonstrated to my satisfaction any authority for the proposition that, at the time of the enactment of the Texas Constitution, our courts would have absolved the State from liability for a breach of contract claim. Indeed, one of the first eases in that regard, Fristoe v. Blum, written in 1898, would not have extended immunity from liability to the sovereign in a contract dispute. Furthermore, the majority opinion is premised upon the immunity of the sovereign from suit, not from liability. Nowhere does the majority demonstrate that this schism involving sovereign immunity was engrafted upon our common law traditions prior to the ratification of the 1876 Texas Constitution.

Additionally, for more than a century, our Texas Supreme Court has jealously guarded access to the courts. See Dillingham v. Putnam, 109 Tex. 1 , 14 S.W. 303, 304 (1890) (“A law which practically takes away from either party to litigation the right to a fair and impartial trial in the courts ... denies a remedy by due course of law....”); LeCroy v. Hanlon, 713 S.W.2d 335 (Tex.1986) (holding that the right of access to the courts is a substantive right); Texas Ass’n of Business v. Texas Air Control Bd., 852 S.W.2d 440 (Tex.1993) (holding that the constitutional guarantee of open courts is a right of access to the courts). Most recently, in R. Communications, Inc. v. Sharp, 875 S.W.2d 314 (Tex.1994), the Texas Supreme Court held that conditioning a taxpayer’s right to initiate judicial review on the payment of taxes or the posting of a bond equal to twice the *441 alleged tax obligation violates the open courts provision.

For the above reasons, I would hold that denying Green’s right to proceed with its lawsuit violates the open courts provision of the Texas Constitution.

CONCLUSION

For all of the foregoing reasons, I would conclude that Green should be entitled to its day in court against the State, and I would reverse the trial court’s dismissal of this case.