       TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN


                                        NO. 03-00-00022-CV



                          Texas A&M University-Kingsville, Appellant

                                                  v.

                                    Grant M. Lawson, Appellee



      FROM THE DISTRICT COURT OF TRAVIS COUNTY, 126TH JUDICIAL DISTRICT
          NO. 99-01282, HONORABLE F. SCOTT McCOWN, JUDGE PRESIDING



               In this interlocutory appeal, Texas A&M University-Kingsville (TAMUK) challenges

the trial court’s denial of its plea to the jurisdiction asserting sovereign immunity from suit.1 Lawson

is suing TAMUK for breach of a settlement agreement. TAMUK contends that it did not waive its

immunity from suit (1) because the settlement agreement contained a void provision, and (2) because

the breach of a settlement agreement never waives the State’s immunity from suit. We will affirm the

district court’s order and remand this cause for further proceedings.


                                          BACKGROUND

               We determine the trial court’s jurisdiction from good-faith factual allegations made

by the plaintiff. See Brannon v. Pacific Employers Ins. Co., 224 S.W.2d 466, 469 (Tex. 1949);

Flowers v. Lavaca County Appraisal Dist., 766 S.W.2d 825, 827 (Tex. App.—Corpus Christi 1989,



  1
    We have jurisdiction over this appeal. See Texas Dep’t of Transp. v. Jones, 8 S.W.3d 636, 639
(Tex. 1999).
writ denied). Unless the defendant pleads and proves that such allegations were made fraudulently

to confer jurisdiction, courts accept them as true. See Flowers, 766 S.W.2d at 827; see also

Firemen’s Ins. Co. v. Board of Regents of the Univ. of Tex. Sys., 909 S.W.2d 540, 542 (Tex.

App.—Austin 1995, writ denied). TAMUK does not assert that the allegations are fraudulent. We

take our recitation of facts from Lawson’s pleadings.

               The dispute and litigation in this case have lingered far longer than Lawson’s

employment at TAMUK. Lawson worked as an instructor from 1989 until he was fired in September

1992.2 Lawson sued TAMUK for wrongful termination. In October 1994, the parties reached a

settlement agreement under which TAMUK agreed to pay Lawson $60,000 and use its best effort

to obtain approval for the payment by December 1994. By the time TAMUK obtained the warrant

in March 1995, Lawson had already declared TAMUK in “default” on the agreement. After a second

mediation in May 1995, TAMUK increased the settlement amount to $62,000 in exchange for

Lawson’s dismissal of the lawsuit and release of the defendants. TAMUK also agreed that its

personnel director would tell inquiring potential employers that Lawson had been an assistant

professor instead of an instructor;3 in his petition below, Lawson alleges that the agreement

“effectively promoted Dr. Lawson to Assistant Professor.”4

   2
      During Lawson’s employment, the university was called Texas A&I University. The name
changed in 1993 to reflect its affiliation with the Texas A&M University System.
   3
        The copy of the agreement in the appellate record also shows that, if TAMUK’s president
initiated contact with potential employers for the purpose of helping Lawson get hired, the president
would not have to say Lawson was an assistant professor.
   4
      TAMUK states that Lawson’s lack of a doctoral degree at the time of his dismissal in 1992
meant he was not qualified for the position of assistant professor when he was dismissed and that
representing him as such would thus be a fraud. Even accepting that as true, it does not dispense with
Lawson’s contention that the purpose of the settlement agreement was to confer the benefits that the

                                                  2
               The parties performed most of the agreement. After TAMUK paid him $62,000,

Lawson dismissed the lawsuit with prejudice to refiling and released the defendants. Lawson learned,

however, that TAMUK employees told other universities that he had been an instructor, not an

assistant professor. Lawson alleges that TAMUK’s failure to state that he was an assistant professor

caused the other universities to eliminate him from consideration.

               Lawson then filed this suit for breach of the settlement agreement. The district court

denied TAMUK’s plea that its immunity from suit deprived the court of jurisdiction.             This

interlocutory appeal ensued.


                                          DISCUSSION

               TAMUK denies that it has waived immunity from this suit. TAMUK argues that it

cannot waive sovereign immunity with regard to an agreement that settles a lawsuit. TAMUK also

contends that the breached provision in the settlement agreement cannot support waiver because it

is void for requiring TAMUK to misrepresent Lawson’s employment history.

               In addition to answering TAMUK’s contentions, Lawson makes the interesting

argument that a breached settlement agreement presents an even more compelling case for finding

waiver, at least when the court in the underlying suit denied a plea to the jurisdiction before the

settlement. Lawson’s argument in this Court may have been prompted by the district court’s

comments in open court when announcing its denial of the plea to the jurisdiction:




allegedly wrongful termination denied him: two years’ salary at $31,000 per year and the title of
assistant professor upon the conferring of the doctoral degree. We expressly do not pass on the
merits of that contention, but note that it is an issue for the trial on the merits.

                                                 3
       [W]hen somebody sues the state and the Court has jurisdiction over that case, which
       the Court did in Cause No. 92-149848 [the underlying wrongful termination suit], and
       that case is settled by the state and the state doesn’t live up to the settlement
       agreement, a plaintiff can bring a suit to enforce or seek damages for violation of that
       settlement agreement and that the state has waived its sovereign immunity, or doesn’t
       have any sovereign immunity, however you want to look at it when you’re talking
       about the settlement of a case within the Court’s jurisdiction.


TAMUK rejects this theory as an unwarranted erosion of sovereign immunity. Lawson argues that

TAMUK’s acceptance of the benefits of the settlement waives immunity under the theory of waiver

by conduct enunciated by this Court.5

               Sovereign immunity, unless waived, protects state entities like TAMUK from lawsuits

for damages, absent legislative consent to sue. See Federal Sign v. Texas S. Univ., 951 S.W.2d 401,

405 (Tex. 1997). Sovereign immunity embraces immunity both from liability and suit. Id. When the

State contracts with private citizens, it waives immunity from liability and is liable as if it were a

private person. Id. However, even if the State’s liability is undisputed, it retains immunity from suit

unless waived. Historically, courts have required a clear and unambiguous waiver of immunity by the

sovereign. Id. In Federal Sign, however, while concluding that Texas Southern did not waive

immunity from suit merely by contracting with a private party, the supreme court noted that “[t]here

may be other circumstances where the State may waive its immunity by conduct other than simply

executing a contract so that it is not always immune from suit when it contracts.” Id. at 408 n.1. The



  5
    TAMUK repeatedly states that it rejects the theory of waiver by conduct. Though the supreme
court on July 7, 2000 granted petitions for review in two of the cases in which we discuss the theory
of waiver by conduct, these cases remain binding precedent in this Court. See Aer-Aerotron, Inc. v.
Texas Dep’t of Transp., 997 S.W.2d 687, 691-92 (Tex. App.—Austin 1999, pet. granted); Little-Tex
Insulation Co. v. General Servs. Comm’n, 997 S.W.2d 358, 364 (Tex. App.—Austin 1999, pet.
granted).

                                                  4
court held that Texas Southern retained its immunity by canceling its contract to buy scoreboards

from Federal Sign before the scoreboards were delivered; Federal Sign’s partial construction of the

scoreboards was not sufficient to trigger a waiver of immunity from suit in the absence of any

acceptance of that performance by Texas Southern. See id. at 408.

               This Court has since found repeatedly that state agencies waive their immunity from

suit by accepting some of the benefits of a contract and refusing to pay for them. See Texas Natural

Resource Conservation Comm’n v. IT-Davy, 998 S.W.2d 898, 902 (Tex. App.—Austin 1999, pet.

filed); Aer-Aerotron, Inc. v. Texas Dep’t of Transp., 997 S.W.2d 687, 691-92 (Tex. App.—Austin

1999, pet. granted); Little-Tex Insulation Co. v. General Servs. Comm’n, 997 S.W.2d 358, 364 (Tex.

App.—Austin 1999, pet. granted). In these cases, we relied in part on similar decisions by other

appellate courts. See Alamo Community College Dist. v. Obayashi Corp., 980 S.W.2d 745, 749-50

(Tex. App.—San Antonio 1998, pet. denied); see also Texas S. Univ. v. Araserve Campus Dining

Servs., Inc., 981 S.W.2d 929, 935 (Tex. App.—Houston [1st Dist.] 1998, pet. denied).

               TAMUK contends that the above cases do not control this lawsuit because they all

concern goods and services, whereas this is a settlement agreement. In Aer-Aerotron, the state

agency tested radios, contracted to buy them, extended the term of the contract, trebled the number

of radio units ordered, accepted Aerotron's technical services, paid for some of the performance, and

acknowledged its financial obligations by twice promising to pay the balance due to Aerotron; instead

of continuing to pay, however, the agency announced it would return all radios accepted but not paid

for, demanded that Aerotron fix all the radios it had paid for or refund the entire amount paid, and

canceled all pending orders. Aer-Aerotron, 997 S.W.2d at 691-92. In IT-Davy, the construction



                                                 5
contractor alleged that it performed fully and did extra work at the Commission’s request; when it

sought, as allowed by the contract, additional compensation for extra expenses caused by unexpected

conditions at the site, the Commission refused to pay and rejected a request for arbitration. IT-Davy,

998 S.W.2d at 899-900. In Little-Tex, the Commission accepted part of Little-Tex’s performance

in abating asbestos in a building, partially paid, requested correction of some work, and refused to

pay for the remainder. Little-Tex, 997 S.W.2d at 360. In all three cases, this Court found that the

State waived its immunity from suit by accepting part of the company’s performance and refusing to

pay for it. See IT-Davy, 998 S.W.2d at 902; Aer-Aerotron, 997 S.W.2d at 692; Little-Tex, 997

S.W.2d at 364. We note that in all three cases, we determined only jurisdiction, not liability.

                We are not persuaded to treat this agreement differently from contracts for goods and

services. The parties’ settlement is essentially a contract for services, however brief. Lawson had

to dismiss his suit and release the defendants. Because the dismissal was with prejudice, Lawson

surrendered the right to reinstate the suit for damages. TAMUK benefitted from Lawson’s

performance because it did not have to defend itself from the suit. We do not characterize this

performance as significantly different from providing radios or abating asbestos, nor do we foresee

that this characterization will unleash a flood of similar suits. We prefer to believe that state agencies

do not often make settlement agreements, accept the full performance of the promissor, and then

refuse to perform their obligations. If they do, they should be held accountable under the theory of

waiver by conduct.

                We also conclude that the alleged voidness of the provision in dispute did not prevent

TAMUK from waiving its immunity. First, it is not clear that the agreement is void. The agreement



                                                    6
requires TAMUK to represent that Lawson was an assistant professor receiving $31,000 per year,

though he was an instructor while working there. Lawson alleges that the agreement “effectively

promoted” him to assistant professor. TAMUK asserts that it could not promote someone who no

longer worked there, but the record is unclear.6 Voidness affects whether Lawson can recover on

the agreement, not whether he can sue to enforce it. The waiver inquiry is limited to whether Lawson

has alleged that TAMUK accepted the benefits of the settlement agreement to his detriment. See IT-

Davy, 998 S.W.2d at 902.

               To hold that voidness promotes immunity would reward state officials who make void

contracts, accept the benefits, refuse to perform, and thereafter hide behind the shield of sovereign

immunity.7 Such reward would be especially unfair in the context of settlement agreements,

particularly when plaintiffs agree to dismiss their suits with prejudice. Voidness may be a basis for

summary judgment, but it is an untenable basis on which to preserve immunity.

               We need not reach Lawson’s argument favoring “continuing” jurisdiction over suits

for breach of contract because we conclude that TAMUK waived its immunity from suit by accepting

Lawson’s performance of the settlement agreement. Each side essentially agreed to do two things.

Lawson fully complied by dismissing his suit and releasing the defendants. TAMUK paid the

$62,000, but balked at performing its remaining obligation to represent that Lawson had been an



  6
       For example, the record does not show that TAMUK could not “rehire” Lawson, pay him two
years’ back salary, promote him to assistant professor, and release him; that is an issue of proof
affecting liability, not an immunity issue.
      7
        In no way do we imply that TAMUK entered the settlement agreement not intending to
perform. We are simply considering the possible impact of our decision on future actions by State
officials, as TAMUK invites us to do.

                                                 7
assistant professor. Thus, TAMUK has received the full benefit of its bargain while denying Lawson

half of what he bargained for. TAMUK dismisses the employment representation clause as a de

minimus part of the bargain, but the contentions in this case belie that assertion. Lawson bargained

for the employment representation clause and asserts that TAMUK’s refusal to perform has cost him

jobs; TAMUK claims that this “illegal” obligation is significant enough to render the contract void.

Whether the agreement can be enforced and whether it is of de minimus value are issues for the trial

court to decide upon further proceedings. We hold that TAMUK’s conduct exceeds the mere

execution of an agreement because TAMUK has accepted the full benefits of its settlement agreement

without performing its full obligations. Under the authority of Federal Sign, Aer-Aerotron, and their

progeny, we conclude that TAMUK has waived its sovereign immunity. See Federal Sign, 951

S.W.2d at 408 n.1; Aer-Aerotron, 997 S.W.2d at 691-92.


                                          CONCLUSION

               Having resolved all the issues against TAMUK, we affirm the district court’s denial

of the plea to the jurisdiction and remand the cause for further proceedings consistent with this

opinion. We emphasize that our recitation of the facts in this opinion is based on the pleadings in the

district court and representations made in this Court. Subsequent production of evidence may show

the objective truth to differ from these allegations, and nothing in our opinion restricts production of

such evidence or findings of fact differing from our recitations. By our opinion and judgment, we

merely affirm the district court’s ruling that TAMUK waived its immunity from suit.




                                                   8
                                            Bea Ann Smith, Justice

Before Chief Justice Aboussie, Justices Kidd and B. A. Smith

Affirmed

Filed: September 14, 2000

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