                                NUMBER 13-07-00255-CV

                                COURT OF APPEALS

                    THIRTEENTH DISTRICT OF TEXAS

                       CORPUS CHRISTI - EDINBURG


THE DONNA INDEPENDENT SCHOOL
DISTRICT, ET AL.                                                                    Appellants,

                                                 v.

DAMON GRACIA                                                                           Appellee.


                 On appeal from the County Court at Law No. 2
                          of Hidalgo County, Texas.


                                        OPINION

         Before Chief Justice Valdez and Justices Garza and Vela
                     Opinion by Chief Justice Valdez

       The Donna Independent School District, the Donna Independent School District

Board of Trustees, and Joe Gonzalez, superintendent of schools, (collectively referred to

as “the District”) bring this interlocutory appeal of the trial court’s denial of the District’s plea

to the jurisdiction of a suit filed by Damon Gracia, appellee. See TEX . CIV. PRAC . & REM .
CODE ANN . § 51.014(a)(8) (Vernon 2008). By a single issue, the District contends that the

trial court erred in not dismissing Gracia’s suit because it enjoyed sovereign immunity from

suit. We reverse and render a dismissal for lack of jurisdiction.

                                        I. BACKGROUND

         Gracia was employed by the District as a teacher and freshman football coach. In

February 2005, a criminal investigation of hazing allegations in the high school boys’

athletic department was initiated. The investigation implicated Gracia, and the District

suspended him. The District later notified Gracia that his teaching contract for the following

year would not be renewed. In response to the District’s actions, Gracia requested a

hearing examiner under the education code. See TEX . EDUC . CODE ANN . § 21.253 (Vernon

2006).

         Before a hearing could take place, the District and Gracia entered into a settlement

agreement. In the agreement, Gracia promised to tender a letter of resignation for his

teaching contract and a motion to dismiss the hearing that he had requested. In return, the

District promised to provide a neutral recommendation to prospective employers who

inquired about Gracia’s employment history with the District. The agreement contained a

“miscellaneous” provision, that stated:

         Nothing contained in this Agreement shall constitute an acknowledgment that
         either DISD or Teacher have violated any laws, breached any agreements
         or acted improperly with respect to Teacher’s employment or termination of
         employment, [sic] with DISD. Teacher agrees and acknowledges that DISD,
         by entering into this Agreement and fulfilling its obligations hereunder, is not
         and shall not be considered an admission of any liability or wrongdoing by
         DISD. DISD agrees and acknowledges that Teacher, by entering into this
         Agreement and fulfilling its obligations hereunder, is not and shall not be
         considered an admission of any liability or wrongdoing by Teacher.

The agreement was executed by the parties on May 11, 2005. On May 19, 2005, Gracia
                                                2
was arrested.

        Gracia sued the District for breach of contract, promissory estoppel, and

negligence.1 The District answered with a general denial. Later, the District filed a plea

to the jurisdiction. After considering the District’s plea to the jurisdiction and Gracia’s

response, the trial court denied the plea. This interlocutory appeal followed.2

                                              II. DISCUSSION

A.      Standard of Review

        A plea to the jurisdiction is a proper way to challenge the subject-matter jurisdiction

of the trial court. See Tex. Dep’t of Transp. v. Jones, 8 S.W.3d 636, 638-39 (Tex. 1999)

(per curiam); City of Waco v. Williams, 209 S.W.3d 216, 219 (Tex. App.–Waco 2006, pet.

denied). Whether a trial court has subject-matter jurisdiction is a question of law subject

to de novo review. See Tex. Natural Res. Conservation Comm’n v. IT-Davy, 74 S.W.3d

849, 855 (Tex. 2002). In a case involving sovereign immunity, the court looks to the

plaintiff's pleadings and any relevant evidence to decide whether sovereign immunity has

been waived. Tex. Dep’t of Crim. Justice v. Millwer, 51 S.W.3d 583, 587 (Tex. 2001); Tex.

Natural Res. Conservation Comm’n v. White, 46 S.W.3d 864, 868 (Tex. 2001).

B.      Breach of Contract

        In the District’s plea to the jurisdiction, it argued that Gracia’s breach of contract

claim was barred by sovereign immunity and that the local government code’s waiver of

sovereign immunity dealing with contracts did not apply because the agreement was not
        1
          Gracia had also asserted claim s for fraud, fraudulent inducem ent, false arrest, and m alicious
prosecution. He, however, dropped those claim s in his live petition. See T EX . R. C IV . P. 65.

        2
          This case is subm itted on the District’s brief only. By order dated Novem ber 15, 2007, this Court
notified Gracia that his brief was past due and requested that he file a brief by Decem ber 17, 2007. To date,
Gracia has not filed a brief.
                                                      3
a contract for goods and services. See TEX . LOC . GOV’T CODE ANN . §§ 271.151(c), 271.152

(Vernon 2005). Section 271.152 waives sovereign immunity for local governmental entities

that enter into contracts that are “subject to this subchapter.” Id. § 271.152. A contract

subject to the applicable subchapter “means a written contract stating the essential terms

of the agreement for providing goods or services to the local governmental entity . . . .” Id.

§ 271.151(c). Gracia responded by arguing that the agreement resolved a termination

dispute that was premised on Gracia’s teaching contract; therefore, the agreement involved

a contract for services and waived the District’s sovereign immunity. The concurrence

subscribes to the District’s argument, and it would bar Gracia’s suit because it believes that

the underlying agreement is not premised on a contract for services.

        The issue, however, hinges on Gracia’s underlying claim. The Lawson case is the

prism through which we should view how breach of contract claims implicate sovereign

immunity. Tex. A&M Univ.-Kingsville v. Lawson, 87 S.W.3d 518 (Tex. 2002). In Lawson,

a university faculty member sued his employer for violations of the Whistleblower Act. Id.

at 518-19.3 A settlement agreement was reached between the parties; however, a dispute

arose shortly after the agreement was reached. Id. at 519. The faculty member sued the

university for breach of contract, and the university responded by filing a plea to the

jurisdiction. The Texas Supreme Court, in a plurality opinion, held that when a

governmental entity agrees to settle a lawsuit from which it is not immune, it is not immune

from a suit for breach of the settlement agreement. Id. at 518.


        3
          Suits against governm ental entities alleging violations of the W histleblower Act have been explicitly
authorized by the Texas Legislature. See T EX . G O V ’T C OD E A N N . § 554.0035 (Vernon 2004). However, a
public em ployee m ust initiate action under the grievance or appeal procedures of the em ploying governm ental
entity before suing under the W histleblower Act. Id. § 554.006.



                                                       4
        In rationalizing its decision, the supreme court noted that contractual claims against

governmental entities may be generally categorized as claims for which immunity is waived

and claims for which an administrative remedy is provided. Id. at 521. An action for a

breach of a settlement agreement, however, does not neatly fall into either category. Id.

The Lawson plurality found that:

        Allowing suit against the government for breach of an agreement settling a
        claim for which immunity has been waived does not interfere with the
        Legislature's policy choices. On the contrary, having determined to allow
        suits on such claims and prescribed the available remedies, the Legislature
        must surely have considered—indeed, hoped—that claims would often be
        settled. If anything, for the government to be immune from the enforcement
        of such settlements would impair the purposes of the waiver by limiting its
        effectiveness in cases not tried to a final judgment.

Id. at 522. Basing its decision on legislative intent, the plurality rejected the appellate

court’s waiver-by-conduct rationale, but ultimately affirmed the lower court’s decision to

allow Lawson’s suit to proceed. Id. at 522-23.

        Unlike Lawson, Gracia did not have a statutorily recognized claim pending in the trial

court when he entered into an agreement with the District. The settlement agreement in

this case was executed just as Gracia was instituting the administrative process that the

State created for challenging the termination of teaching contracts. In short, Gracia settled

a claim that, at that point in time, had no adjudicative value in our court system. If Gracia’s

allegations are true, it strikes us as unfair to allow the District to renege on its promises

without facing the legal consequences of its alleged actions.4 The Texas Supreme Court,

        4
          Texas law strongly favors and encourages voluntary settlem ent and orderly dispute resolution. See,
e.g., Schlumberger Tech. Corp. v. Swanson, 959 S.W .2d 171, 178 (Tex. 1997); Elbaor v. Smith, 845 S.W .2d
240, 250 (Tex. 1992). However, parties like Gracia, who settle claim s against governm ental entities while their
cases are in the adm inistrative process, cannot return to the adm inistrative process or turn to the courts when
a governm ental entity allegedly breaches a settlem ent agreem ent’s term s. W e call on the Legislature to
provide a viable m eans of enforcing settlem ent agreem ents that are forged during the adm inistrative process.



                                                       5
however, has forestalled the waiver-by-conduct exception to sovereign immunity in

situations where an administrative remedy is available. See IT-Davy, 74 S.W.3d at 857

(“Creating a waiver-by-conduct exception would force the State to expend its resources to

litigate the waiver-by-conduct issue before enjoying sovereign immunity's protections—and

this would defeat many of the doctrine’s underlying policies.”). Thus, the trial court erred

in not dismissing Gracia’s breach of contract claim.

C.     Promissory Estoppel

       The District argues that Gracia’s promissory estoppel claim is also barred by

sovereign immunity because the legislature has not provided a clear and unambiguous

waiver of such claims. In response, Gracia argued that equitable principles allowed his

claim to proceed. The general rule is that, when a municipality or other unit of government

is exercising its governmental powers, it is not subject to estoppel. City of Hutchins v.

Prasifka, 450 S.W.2d 829, 835 (Tex. 1970). However, a municipality may be estopped in

certain cases where justice requires the application of estoppel and there is no interference

with the exercise of the municipality’s governmental functions. Id. at 836 (citing City of

Dallas v. Rosenthal, 239 S.W.2d 636 (Tex. Civ. App.–Dallas 1951, writ ref'd n.r.e.)). This

exception is to be applied with caution and only in exceptional cases where the

circumstances clearly demand its application. Id.

       The City of Hutchins exception is narrow and has been applied to municipalities in

zoning and permitting cases where sovereign immunity was not a central issue. Id. (zoning

case); Maguire Oil Co. v. City of Houston, 69 S.W.3d 350, 367-370 (Tex. App.–Texarkana

2002, pet. denied) (drilling permit case). It has not been applied to cases involving school



                                             6
districts and implicating sovereign immunity. Gracia did not offer, and we cannot find, any

reason to extend this exception to the instant case. See Lamesa Indep. Sch. Dist. v. Booe,

251 S.W.3d 831, 834 (Tex. App.–Eastland 2008, no pet.) (op. on remand) (holding that

sovereign immunity barred estoppel or quantum meruit claims for monetary damages)

(citing IT-Davy, 74 S.W.3d at 860); see also Nussbaum v. Univ. of Tex. Med. Branch at

Galveston, No. 01-99-00871-CV, 2000 Tex. App. LEXIS 8549, at **8-9 (Tex. App.–Houston

[1 Dist.] Dec. 21, 2001, pet. denied) (not designated for publication) (providing that a claim

for promissory estoppel is similar to a contract claim and is governed by the doctrine of

sovereign immunity). The trial court, therefore, should have dismissed Gracia’s promissory

estoppel claim.

C.     Negligence

       Gracia’s final claim was that the District was negligent in ignoring the terms of the

agreement and pursing a criminal investigation of his alleged conduct when the agreement

provided otherwise. The Texas Tort Claims Act waives a governmental unit’s sovereign

immunity for property damage and personal injury proximately caused by the wrongful act

or omission or the negligence of an employee acting within the scope of her employment

if (1) the damage or injury arises from the operation or use of a motor-driven vehicle and

(2) the employee would be personally liable to the plaintiff according to Texas law. See

TEX . CIV. PRAC . & REM . CODE ANN . §§ 101.021, 101.051 (Vernon 2005).              Gracia’s

negligence claim does not fall within the legislature’s limited waiver of sovereign immunity

for property damage and personal injury. The trial court should have dismissed Gracia’s

negligence claim.




                                              7
       The District’s sole issue is sustained.

                                       III. CONCLUSION

       We reverse the trial court’s order denying the District’s plea to the jurisdiction and

render a dismissal of Gracia’s suit for lack of jurisdiction.




                                                   ROGELIO VALDEZ
                                                   Chief Justice

Concurring Memorandum Opinion by Justice Vela.

Opinion delivered and filed this
the 23rd day of October, 2008.




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