Chambers-Liberty Counties Navigation District v. State

Supreme Court of Texas.

CHAMBERS–LIBERTY COUNTIES NAVIGATION DISTRICT, et al., Petitioners,

v.

STATE of Texas, Respondent

In re Sustainable Texas Oyster Resource Management, L.L.C., Relator

No. 17-0365, No. 17-0404

|

Argued January 23, 2019

|

OPINION DELIVERED: May 10, 2019

*341 ON PETITION FOR REVIEW FROM THE COURT OF APPEALS FOR THE THIRD DISTRICT OF TEXAS

ON PETITION FOR WRIT OF MANDAMUS

Opinion

Justice Blacklock delivered the opinion of the Court.

This appeal pits two government entities asserting influence over oyster production in and around Galveston Bay. The Chambers–Liberty Counties Navigation District (“District”) leased submerged land to Sustainable Texas Oyster Resource Management, L.L.C., (“STORM”) for oyster production. The State of Texas sued the District and STORM, seeking to invalidate the lease under the theory that Texas law affords the Texas Parks and Wildlife Department (“Department”), not the District, the sole power to decide who may and may not cultivate oysters in the disputed area. The State also sought monetary relief against both defendants under 12.303 of the Parks and Wildlife Code.

This is an interlocutory appeal arising from the District’s plea to the jurisdiction, and we must once again navigate the turbulent waters of governmental immunity. The court of appeals allowed the State’s money-damages claims and its ultra vires claims to proceed. We conclude that immunity bars the State’s claim for monetary relief against the District but does not bar its ultra vires claim that the District’s *342 officers exceeded their authority by entering into the oyster lease. We therefore reverse the judgment of the court of appeals in part and affirm in part. We also deny a related mandamus petition.

I. Background

A. Facts

The Legislature created the Chambers–Liberty Counties Navigation District in 1944. The District operated as a navigation district authorized by Article XVI, Section 59, of the Texas Constitution.”).

In 1957 and 1967, the State of Texas conveyed to the District by General Land Office patent more than 23,000 acres of submerged land in and around Galveston Bay. The submerged land contains areas suitable for oyster cultivation. These conveyances were authorized by TEX. REV. CIV. STATS. ANN. art. 8225 (1925), which stated in part:

Any Navigation District heretofore or hereafter organized under this title or any General Law under which said subdivision may be created shall have the right to purchase from the State of Texas any lands and flats belonging to said State, covered or partly covered by the waters of any of the bays or other arms of the sea to be used by said District for the purposes authorized by law with the right to dredge out or to fill in and reclaim said lands or otherwise improve the same ....

In 2014, the District’s Commissioners authorized the District to lease most of its submerged land to STORM to cultivate, harvest, and store oysters. The District and STORM executed a lease (“Lease”), which states:

[STORM] is granted the rights to use and possession, and to protect against trespass and trespassers, which includes but is not limited to the right to deposit rock, shell or other material used to create an oyster bed, the right to use boats, equipment and tools to plant, seed, transplant, cultivate, store or harvest oysters, and the right to mark any private oyster bed (with stakes, pipes, buoys, etc.) and post signs warning the public not to interfere with or damage the oyster bed or take any oyster, rock, shell or thing from the oyster bed; and further includes any applicable littoral or riparian right of the District appurtenant to the Land for the stated purpose and use of this Lease and the exercise of the rights granted to [STORM] in this Lease.

The Lease covered approximately 23,000 acres. STORM pursued the construction of oyster beds. It also sent “No Trespass” notices to holders of oyster-production permits, known as “certificates of location,” issued by the Department to other oyster producers. The certificates covered locations within the Lease. These certificates authorize their holder “to plant oysters and make a private oyster bed in the public water of the state.” section 76.035 of the Parks and Wildlife Code.² Instead, the District claims that its fee simple ownership of the submerged land and its broad, general statutory authority empower it to lease the submerged land for oyster cultivation.

B. Trial Court Proceedings

The State of Texas sued the District, its Commissioners in their official capacities, and STORM. The State alleged that the Lease is void because it exceeds the lawful authority of the District and Commissioners, who acted ultra vires by entering into it. The State sought a declaratory judgment to that effect. The State also sought monetary damages, which it described as “restitution,” from the District and STORM under 12.303 of the Parks and Wildlife Code. Section 12.301 states:

A person who kills, catches, takes, possesses, or injures any fish, shellfish, reptile, amphibian, bird, or animal in violation of this code or a proclamation or regulation adopted under this code is liable to the state for the value of each fish, shellfish, reptile, amphibian, bird, or animal unlawfully killed, caught, taken, possessed, or injured.

Section 12.303(a) states:

The attorney general or the county attorney of the county in which the violation occurred may bring a civil suit under this subchapter in the name of the state to recover the value of each fish, shellfish, reptile, amphibian, bird, or animal unlawfully killed, caught, taken, possessed, or injured.

Id. Texas Rule of Civil Procedure 91a, asserting that the District’s immunity from suit bars the State’s claims. The trial court denied the plea and the motion.

C. Proceedings in the Court of Appeals

The District and its Commissioners brought an interlocutory appeal of the order denying their plea to the jurisdiction *344 and motion to dismiss. See District itself. 565 S.W.3d 1 (Tex. App.—Austin 2016). It otherwise affirmed the denial of the plea to the jurisdiction. The court of appeals held that the State could pursue a claim against the District for money damages under the Parks and Wildlife Code. It held that the State could not pursue ultra vires claims against the District itself but could pursue such claims against the Commissioners in their official capacity. The court of appeals concluded that the Lease exceeds the Commissioners’ lawful authority and that the State therefore pleaded a viable ultra vires claim against the Commissioners. STORM did not participate in the interlocutory appeal as a party and did not request party status. Nor did it seek mandamus relief in the court of appeals. Its only participation in the court of appeals was to submit an amicus curiae brief in support of the District’s motion for rehearing.

D. Proceedings in the Supreme Court

The District and Commissioners³ filed a petition for review in Case No. 17-0365. STORM also a filed a petition for review in Case No. 17-0365, arguing that it should be allowed to participate as a party under the doctrine of virtual representation. STORM separately filed a petition for writ of mandamus in Case No. 17-0404, raising the same substantive arguments regarding the validity of the Lease that it raised in its petition for review.

II. Analysis

A. Governmental Immunity

Sovereign immunity protects the State of Texas and its agencies from suit and liability, whereas governmental immunity provides similar protections to the State’s political subdivisions. Tooke, 197 S.W.3d at 332–33.

Sovereign and governmental immunity “shield the public from the costs and consequences of improvident actions of their governments.” Id. at 374–77.

Procedurally, the assertion of sovereign or governmental immunity implicates the trial court’s jurisdiction and may therefore be asserted in a plea to the jurisdiction. Molinet v. Kimbrell, 356 S.W.3d 407, 411 (Tex. 2011).

B. The Claim for Monetary Relief

At the outset, we note that the District’s immunity does not disappear merely because the plaintiff is the State of Texas. In City of Galveston, and the State does not ask us to reconsider it.

The court of appeals held that although the District is generally immune from suit even when the State is the plaintiff, Section 311.005(2) does define “person” broadly to include a “corporation, organization, government or governmental subdivision or agency, business trust, estate, trust, partnership, association, and any other legal entity.” However, the court of appeals erred by failing to adequately consider another element of the Code Construction Act and our decisions interpreting it.

Section 311.034 states, in part:

In order to preserve the legislature’s interest in managing state fiscal matters through the appropriations process, a statute shall not be construed as a waiver of sovereign immunity unless the waiver is effected by clear and unambiguous language. In a statute, the use of “person,” as defined by Section 311.005 to include governmental entities, does *346 not indicate legislative intent to waive sovereign immunity unless the context of the statute indicates no other reasonable construction.

Id. section 12.301’s use of the term “person” includes the District. The State reasons that because the statute penalizes all unlawful taking of shellfish, without exception, the statute’s reach must include all defendants, including political subdivisions like the District.

We previously rejected such an argument in Id. at 700.

section 12.301’s use of the word “person” does not waive the District’s immunity.

The State’s position is essentially that the District must be considered a “person” because otherwise it would escape the consequences of violating the law. But if that reasoning were enough, then 12.303 of the Parks and Wildlife Code waive the District’s immunity from the State’s claim for monetary relief.

The State argues that the District’s immunity from claims for money damages does not apply when the State seeks “restitution” as opposed to traditional money damages. The State cites no authority for drawing such a distinction, nor could it. “[R]etrospective monetary claims are generally barred by immunity.” Rolling Plains, 353 S.W.3d at 760 (holding that claims for fees, statutory penalties, and costs are claims for “retroactive monetary damages” barred by governmental immunity).

Finally, the State argues that immunity does not apply because the District has no immunity from the State’s “regulatory authority.” The State cites no Texas case in which immunity was found to be absent when the State sues a local governmental entity for money damages in a “regulatory” capacity. That is not surprising. In the complex realm of sovereign-immunity law, one simple and ancient default rule has stood the test of time: No money damages against the government. Id. at 375. But the State does not contend the Legislature has done so for all State-initiated regulatory actions against political subdivisions. Instead, the State asks us to hold that immunity is not implicated at all when the State seeks money damages in a regulatory action against a political subdivision.

The State previously asked for a similar limitation on immunity in City of Galveston, 217 S.W.3d at 469. Moreover,

when the State sues a private party, the general public stands to lose nothing; but when the State sues a city, a substantial part of the public will no longer be shielded “from the costs and consequences of improvident actions of their governments.” While this case involves $ 180,000 (a small amount relative to most government budgets), the rule we adopt today must apply even if the claim is for $ 180 million, or billion.

City of Galveston.

Through mechanisms like the Tort Claims Act, the Legislature has balanced competing public interests by making the government liable to some injured plaintiffs without exposing the taxpayers to financially crippling money judgments. City of Galveston, we decline the invitation.

Immunity bars the State’s claims against the District for monetary relief under the Parks and Wildlife Code. The court of appeals erred by holding otherwise.

C. The Ultra Vires Claims

In Id.

1. Claims Against the District

The court of appeals correctly held that the State’s ultra vires claim cannot proceed against the District itself. An ultra vires claim may name a government official in his official capacity, but the underlying governmental entity remains immune from suit. Id. at 373. We affirm the court of appeals’ judgment insofar as it held that immunity bars the ultra vires claim against the District itself.

2. Claims Against the Commissioners

We also affirm the court of appeals’ decision that the State’s ultra vires claim against the Commissioners in their official capacity may proceed. The court of appeals reasoned:

In light of the statutory grant of authority over oysters to the Department, the absence of any such statutory authority vested in the Commissioners, and the lease for a private commercial purpose, and construing the pleadings liberally in favor of jurisdiction, accepting the allegations as true, and applying the applicable statutory provisions to the facts before us, we conclude that the State has asserted that the Commissioners acted beyond their statutory authority by entering into the Lease with STORM and thus has properly asserted an ultra vires claim against the Commissioners.

565 S.W.3d at 11. We agree.

Under Id. at 164.

Under these authorities, the State has pleaded a cognizable ultra vires claim if its allegations establish that the Commissioners acted beyond their lawful authority by entering into the Lease with STORM. In other words, in order to determine whether the State’s ultra vires claim may proceed, we must determine whether, based on the limited record in this interlocutory appeal, we agree with the State that the Lease conflicts with state law.

Our analysis of the immunity questions raised in this interlocutory appeal requires a review of the Lease and other evidence and legal questions that necessarily implicate the underlying merits of the State’s case. But, as noted, this review is sometimes necessary at the jurisdictional stage. Bland Indep. Sch. Dist. v. Blue, 34 S.W.3d 547, 555 (Tex. 2000) (“[A] court deciding a plea to the jurisdiction is not required to look *350 solely to the pleadings but may consider evidence and must do so when necessary to resolve the jurisdictional issues raised.”).⁵

To determine whether the District, through its Commissioners, acted beyond its legal authority, we first examine the sources of that authority. The District’s authority derives from TEX. CONST. art. XVI, § 59(a). Section 59(b) states:

There may be created within the State of Texas, or the State may be divided into, such number of conservation and reclamation districts as may be determined to be essential to the accomplishment of the purposes of this amendment to the constitution, which districts shall be governmental agencies and bodies politic and corporate with such powers of government and with the authority to exercise such rights, privileges and functions concerning the subject matter of this amendment as may be conferred by law.

Id. Proctor v. Andrews, 972 S.W.2d 729, 733 (Tex. 1998)).

As noted above, the District was originally created under TEX. REV. CIV. STATS. ANN. art. 8225 (1925), under which the District was granted “the right to purchase from the State of Texas any lands and flats belonging to said State, covered or partly covered by waters of any of the bays or other arms of the sea, to be used by said District for the purposes authorized by law.” Again, this statute confirms that the District’s purposes are only those which are “authorized by law.” Navigation districts created by Article XVI, Section 59, of the Texas Constitution.”).

The District’s general authority to acquire and lease land is not in dispute. A district created under Chapter 62 may acquire land. Id. § 62.107(a). And it “may lease and grant easements on any part of the acquired land to any person and may charge for the lease or easement reasonable tolls, rents, fees, or other charges.” Id. § 62.107(b); see also id. § 60.038(a) (providing that a district organized under either TEX. CONST. art XVI, § 59(b).

The District’s lease authority must therefore be considered in conjunction with the numerous other statutory provisions establishing the District’s limited purpose: navigation. See Article XVI, Section 59, of the Texas Constitution, necessary or incidental to the navigation of ... coastal water.”); id. § 63.153 (listing powers that comprise the “general authority” of a navigation district, including the regulation of waterway and port facilities and the building and operation of things incidental or necessary to the development of ports and waterways); id. § 61.116(b) (authorizing the State to lease state-owned lands to navigation districts “only for purposes reasonably related to the promotion of navigation,” which means “marine commerce and immediately related activities” (emphasis added)).

The sources of legislative authority on which the Commissioners rely do not expressly mention oyster cultivation and harvesting. The closest the Commissioners come to a specific statutory source of such authority is Article XVI, Section 59.

Whether, standing alone, the District’s generic statutory authority to lease land and regulate commerce and wildlife for navigation purposes is sufficient to authorize it to go into business as an oyster landlord is perhaps a close question. But we need not answer that question because the District’s enabling statutes do not exist in a vacuum. To determine whether the Commissioners acted “consistently with the law,” Hous. Belt, 487 S.W.3d at 164, we must also examine other sources of state law that limit or enlarge the District’s legal authority. One such source is the Parks and Wildlife Code, which contains an extensive and exclusive grant of authority to the Department to regulate the harvesting and cultivation of oysters.

We have previously held that if the Legislature has enacted two statutory regimes that arguably govern the conduct of the parties, the regime that more narrowly and with more specificity covers the conduct at issue is presumed to govern. *352 Texas Mutual Insurance Co. v. Ruttiger, 381 S.W.3d 430 (Tex. 2012), the plaintiff-employee was denied medical benefits governed by the Workers’ Compensation Act. We held that the comprehensive and detailed procedures under the Workers’ Compensation Act precluded the plaintiff from seeking relief under more general provisions of the Insurance Code. Id. at 38–45.

Similarly, in today’s case, specific statutes give the Department—not the District— the authority under Texas law to regulate the conservation and harvesting of oysters. Id. § 12.001(a). Section 12.0011(a) states, again without reservation or an indication of shared responsibility, that “[t]he [Parks and Wildlife] department is the state agency with primary responsibility for protecting the state’s fish and wildlife resources.” Id. § 12.0011(a).

More specifically, the Parks and Wildlife Code has an entire chapter—Chapter 76—vesting the Department with detailed authority over the regulation of oysters. Among Chapter 76’s forty-plus provisions, section 76.003 provides that oyster beds and reefs other than natural oyster beds are “subject to location by the department.” Id. § 76.003. .70.

The detailed, specific regulatory authority described above does not give way when it comes into conflict with general provisions regarding the authority of navigation districts, none of which relate specifically to oysters. The conflict is more than theoretical. In this case, STORM has attempted to stop oyster cultivation by third parties to whom the Department has granted certificates of location. And the rights granted to STORM under the Lease purport to give it the right to cultivate and harvest oysters over an area vastly exceeding the area permitted under Chapter 76 of the Parks and Wildlife Code.

Given the extensive and exclusive regulatory authority vested in the Parks and Wildlife Department by the Legislature to decide who may cultivate and harvest oysters in state waters, we agree with the State and the court of appeals that, on the limited record in this interlocutory appeal, the Commissioners exceeded their authority by entering into a Lease that purported to grant to STORM the exclusive right to cultivate and harvest oysters on submerged land beneath state waters. The authority to grant such rights rests exclusively with the Department. If it were shared with the District and other similarly situated local governments, the Department could not carry out its statutory obligations unfettered by local interference.

The Commissioners and STORM contend that the District’s ownership of the submerged lands in fee simple gives it a property right to lease its land free from the Department’s interference. They argue that the District’s alleged right to lease its submerged land for oyster cultivation, even though the State regulates the oysters, is like the right of a rancher to lease his land for deer hunting even though the State regulates the wild deer. STORM, in particular, contends that if the District cannot lease its submerged land as it wishes, then no landowner is safe from the Parks and Wildlife Department’s interference with property rights. This line of argument is specious. The District is not a private property owner. It is the government. This case has nothing to do with private property rights. The only real estate at issue is public. Unlike private landowners, whose fundamental private property rights pre-date the constitution and are protected by several provisions of it, navigation districts have no private property rights. Any “rights” a navigation district can be said to have come directly from the Legislature, and the Legislature may cabin or limit those “rights” as it sees fit. To the extent the Legislature may have given the District some oblique grant of power to execute oyster-cultivation leases under the Water Code, it took that power away in the Parks and Wildlife Code by vesting specific and exclusive regulatory authority over oyster cultivation in the Department. The statutory-interpretation question before the Court has nothing to do with property rights and everything to do with the scope of authority granted by the Legislature to various components of government. By contrast, a private landowner objecting to state interference with his right to lease his land would have all manner of constitutional, statutory, and common-law arguments that the District does not, and cannot, make. Such a case would look nothing like this one.

*354 Finally, the Commissioners argue that even if the Lease is inconsistent with the Parks and Wildlife Code, that does not make the District’s entry into the Lease an ultra vires act. Only the District’s violation of its “organic authority” in the Water Code or elsewhere could constitute an ultra vires act, according to the District. For this proposition, the District points to Id. at 242.

The Commissioners seize on Hall was that interpretation of federal privacy law, even if in error, had been delegated to McRaven and committed to his absolute discretion by a competent state-law authority, the Board of Regents. To put it plainly, under the unusual circumstances of that case, McRaven’s interpretation of federal law could not have been ultra vires because he had state-law authority to get federal law wrong.

Hall and prior cases.

To summarize, on the record presented in this interlocutory appeal, the State has adequately alleged that the Commissioners exceeded their statutory authority by entering into a lease that purports to grant STORM the exclusive right to cultivate and harvest oysters on the District’s submerged land. As a result, immunity does *355 not bar the State’s ultra vires claim—against the Commissioners in their official capacities—to prospectively enjoin the Lease. The trial court did not err in denying the plea to the jurisdiction on this claim, and the court of appeals correctly affirmed the trial court in this regard.

Although we must at the jurisdictional stage answer questions of law that closely resemble the questions that will dictate the ultimate outcome of the litigation, resolution of the merits remains a separate matter from resolution of this interlocutory appeal. Today we decide only that the State’s ultra vires claim against the Commissioners in their official capacities may proceed in the trial court, where the defendants may continue to defend against all the State’s remaining claims on the merits. We will remand the case accordingly.

D. Issues Specific to STORM

Like the District, STORM argues that the Lease is lawful. STORM’s attempted participation in this matter raises procedural questions, which we now address.

In Case No. 17-0365, the District’s interlocutory appeal of the denial of its plea to the jurisdiction, STORM seeks party status under the doctrine of virtual representation. STORM was not involved in the District’s plea to the jurisdiction and, as a private party, it could not file an interlocutory appeal under TEX. CIV. PRAC. & REM. CODE § 51.014(a)(8), which is reserved for orders that grant or deny “a plea to the jurisdiction by a governmental unit.”

STORM argues that it should be allowed to participate in Case No. 17-0365 as a party under the virtual-representation doctrine. The virtual-representation doctrine is an equitable doctrine allowing a party to “intervene” on appeal in circumstances where “it will be bound by the judgment, its privity of interest appears from the record, and there is an identity of interest between the litigant and a named party to the judgment.” In re Lumbermens Mut. Cas. Co., 184 S.W.3d 718, 722 (Tex. 2006) (orig. proceeding). STORM asserts that it meets these requirements. The State disputes this.

The State argues that the virtual-representation doctrine is limited to situations where a named party whose interest would otherwise overlap with the virtual party’s interest has abandoned its position. The State cites numerous cases where it contends the abandonment rationale applied.⁶ It argues the doctrine is inapplicable here because the District has steadfastly maintained its litigation posture in a manner entirely consistent with STORM’s arguments. We do not address whether the virtual-representation doctrine only applies where the party with the same interests as the party seeking intervention has abandoned its position. However, we agree with the State that STORM’s request for virtual-representation status would be much stronger if the District had for some reason abandoned its litigation posture, leaving STORM without appellate review of arguments it wishes to make to preserve its interest in defending the validity of the Lease. As it stands, the District has remained an able advocate, throughout the appellate process, for the validity of the *356 Lease. STORM has every opportunity to have its arguments considered as an amicus curiae, but it provides no compelling reason it needs to be granted party status.

Even if STORM had made a good case for party status under the virtual-representation doctrine, that status should be denied for procedural reasons. STORM did not seek party status in the court of appeals. Instead, it only filed an amicus curiae brief at the rehearing stage in that court. STORM fails to explain why we should excuse this delay even if it otherwise deserves party status under the virtual-representation doctrine. In considering the timeliness of a party’s effort to invoke appellate rights under the virtual-representation doctrine, we consider “the length of time during which the would-be intervenor should have known of its interest in the case before attempting to intervene.” Lumbermens, 184 S.W.3d at 726. We decline to apply this equitable doctrine here because it was not timely invoked and there are otherwise no equitable considerations that compel its invocation.

STORM’s separate mandamus action in Case No. 17-0404 suffers from a similar infirmity. In re Masonite Corp., 997 S.W.2d 194, 197, 199 (Tex. 1999). STORM does not demonstrate extraordinary circumstances that make its participation as a party—as opposed to an amicus curiae—essential to a just resolution of the case.

STORM understandably wants to be heard by this Court. It has been. But we need not take the unusual procedural steps of treating it as a party or formally taking up its mandamus petition in order to carefully consider its arguments. Treating STORM’s briefing and the arguments of its counsel as those of an amicus curiae, we have understood the impact of our decision on STORM and have fully considered STORM’s arguments in deciding this appeal.

III. Conclusion

For the reasons discussed, in Case No. 17-0365, we reverse the portion of the court of appeals’ judgment that allowed the Department’s claim for monetary relief against the District to proceed. We render a take-nothing judgment on this claim. We affirm the portion of the court of appeals’ judgment rejecting the ultra vires claim against the District itself. We render a take-nothing judgment on this claim. We affirm the portion of the court of appeals’ judgment allowing the ultra vires claim against the Commissioners to proceed in the trial court. We remand the case to the trial court for further proceedings consistent with this opinion. In Case No. 17-0404, we deny the petition for writ of mandamus.