IN THE SUPREME COURT OF TEXAS

IN THE SUPREME COURT OF TEXAS

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No. 05-0340

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Ben Bolt-Palito = Blanco=20 Consolidated Independent School District, Petitioner,

Texas Political = Subdivisions=20 Property/Casualty Joint Self-Insurance Fund, Respondent

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On Petition for Review from = the

Court of Appeals for the Fourth = District of=20 Texas

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Argued March 22,=20 2006

Justice O=92Neill delivered = the opinion=20 of the Court, joined by Chief = Justice=20 Jefferson, Justice=20 Wainwright, Justice=20 Brister, Justice = Medina,=20 and Justice = Johnson.

Justice Willett delivered a = dissenting=20 opinion, joined by Justice=20 Hecht

Justice Green did not = participate in=20 the decision.

The = issue in=20 this insurance coverage dispute is whether a self-insurance fund = composed of=20 local political subdivisions enjoys governmental immunity against a fund = member=20 school district=92s coverage claim. In the suit underlying this appeal, = fund=20 member Ben Bolt-Palito Blanco Consolidated Independent School District = (=93Ben=20 Bolt=94) sued the Texas Political Subdivisions Property/Casualty Joint=20 Self-Insurance Fund (the =93Fund=94) after the Fund denied a claim for = benefits=20 under its policy. The Fund asserted immunity in a plea to the = jurisdiction,=20 which the trial court denied. A divided court of appeals reversed, = concluding=20 that the Fund is immune from suit. 163 S.W.3d 172, 176-77. We agree that = the=20 Fund possesses governmental immunity. However, after the court of = appeals=20 rendered its judgment, the Legislature enacted a limited immunity waiver = for=20 breach of contract claims against governmental entities.[1] We conclude that the = statutory waiver=20 applies to this insurance-coverage dispute. Accordingly, we reverse the = judgment=20 of the court of appeals.

I. Background

The = Texas=20 Interlocal Cooperation Act (the =93Act=94) allows political subdivisions = to contract=20 with one another to more efficiently share resources and = responsibilities. Tex. Gov=92t Code = =A7=A7 791.001-.033=20 (=93The purpose of this chapter is to increase the efficiency and = effectiveness of=20 local governments by authorizing them to contract, to the greatest = possible=20 extent, with one another and with agencies of the state.=94). Id. =A7 = 791.001. Under=20 the Act, a local government may contract with another local government = to=20 perform authorized governmental functions and services. Id.=20 =A7 791.011 Local governments under the Act include municipalities, = special=20 districts, counties, and other political subdivisions, as well as = combinations=20 of such entities. Id. =A7 791.003(4).

Ninety-two=20 local governmental entities formed the Fund involved in this dispute by = entering=20 into an Interlocal Cooperation Agreement to pool funds to provide = casualty=20 insurance to participants. The Fund provides a self-insurance risk pool = and=20 claim administration for its members. Participants in the Fund include = eight=20 counties, six municipalities, forty-three independent school districts, = and=20 various special districts and other political subdivisions.

Ben = Bolt, a=20 small school district in Jim Wells County, purchased an insurance policy = from=20 the Fund for a coverage period between April 2002 and 2003. In December = of 2002,=20 Ben Bolt sustained extensive water and mold damage to one of its school=20 facilities and submitted a claim to the Fund. Until that point Ben Bolt = had=20 paid, and the Fund had accepted, all premiums due under the policy. The = Fund=20 denied the claim on the basis that the alleged loss was not covered = under Ben=20 Bolt=92s policy. Ben Bolt then filed a declaratory-judgment action = seeking a=20 determination that the loss was a covered occurrence under the insurance = agreement=92s terms, and any =93other further relief=94 to which it = might be entitled.=20 In response, the Fund asserted immunity in a plea to the jurisdiction = and motion=20 to dismiss, which the trial court denied. The Fund then filed an = interlocutory=20 appeal. Tex. Civ. Prac. & = Rem.=20 Code =A7 51.014(a)(5). The court of appeals held that, as a=20 governmental entity, the Fund is entitled to immunity from suit; finding = no=20 legislative waiver of that immunity, the court of appeals reversed and = dismissed=20 the case for want of jurisdiction. 163 S.W.3d 172, 177.

In = its=20 petition to this Court, Ben Bolt contends the Fund is not a governmental = entity=20 entitled to immunity. Alternatively, Ben Bolt claims that any immunity = the Fund=20 may possess derives from its member political subdivisions and cannot be = asserted against its source. And even if the Fund may assert immunity = against=20 its members, Ben Bolt argues, that immunity has been waived in a number = of ways:=20 first, recently enacted section 271.152 of the Local Government Code is = a clear=20 expression of legislative intent to waive governmental immunity from = suit on=20 contract claims, Tex. Loc. = Gov=92t Code=20 =A7 271.152; second, the Act contains an implied waiver of = immunity from=20 suit for governmental units that contract under its authority, Tex. Gov=92t Code = =A7=A7 791.001-.033;=20 and third, even absent a statutory waiver, the Fund waived its immunity = from=20 suit by accepting payment of Ben Bolt=92s premiums and inducing = reliance. Finally,=20 Ben Bolt argues that the Legislature waived governmental immunity for = actions=20 brought under the Uniform Declaratory Judgments Act (=93UDJA=94).

The = Fund=20 counters that it is a governmental entity existing under the = Legislature=92s=20 authority and thus enjoys immunity in its own right irrespective of its = members.=20 Moreover, the Fund argues that Chapter 271 is not a clear and = unambiguous waiver=20 of immunity because it is unclear whether that waiver applies to the = Fund=92s=20 insurance agreement with its members, some of which are excluded from = the=20 waiver. The Fund also contends there is no implied waiver or waiver by = conduct,=20 and that the UDJA does not prevent the Fund from asserting immunity = here. We=20 granted Ben Bolt=92s petition for review to determine the nature and = extent of the=20 Fund=92s alleged immunity from suit.

II. Discussion

A. Standard of Review

Governmental=20 immunity from suit defeats a trial court=92s jurisdiction. = Tex. Dep=92t of=20 Transp. v. Jones, 8 S.W.3d 636, 638 (Tex. 1999). Whether a trial = court has=20 jurisdiction is a question of law subject to de novo review. = See Tex.=20 Natural Res. Conservation Comm=92n v. IT-Davy, 74 S.W.3d 849, 855 = (Tex. 2002).=20 Because the issue in this case is whether the trial court lacked = jurisdiction=20 due to the Fund=92s assertion of immunity, our review is de = novo.

B. Sovereign=20 and Governmental Immunity

Sovereign=20 immunity protects the State, its agencies, and its officials from = lawsuits for=20 damages.[2] See Tooke v. City of = Mexia, 197=20 S.W.3d 325, 331 n.11 (Tex. 2006); IT-Davy, 74 S.W.3d at 853-54; = Gen.=20 Serv. Comm=92n v. Little-Tex Insulation Co., Inc., 39 S.W.3d 591, = 594 (Tex.=20 2001); Fed. Sign v. Tex. S. University, 951 S.W.2d 401, 405 (Tex. = 1997).=20 Under this centuries-old common-law doctrine, the sovereign is immune = from=20 liability and also from lawsuits. See IT-Davy, 74 S.W.3d at 853;=20 Little-Tex, 39 S.W.3d at 594; Fed. Sign, 951 S.W.2d at = 405.=20 Immunity from liability shields the State from judgments. = IT-Davy, 74=20 S.W.3d at 853; Little-Tex, 39 S.W.3d at 594; Fed. Sign, = 921 S.W.2d=20 at 405. Immunity from suit prohibits a suit against the State unless the = Legislature grants consent. Little-Tex, 39 S.W.3d at 594. By = entering=20 into a contract the State waives its immunity from liability but not its = immunity from suit. Id. Thus, even if the State acknowledges = liability on=20 a claim, immunity from suit bars a remedy until the Legislature consents = to=20 suit. Taylor, 106 S.W.3d at 695.

The = State=92s=20 sovereign immunity extends to various divisions of state government, = including=20 agencies, boards, hospitals, and universities. Tooke, 197 S.W.3d = at 331;=20 Taylor, 106 S.W.3d at 694 n.3. The appurtenant common-law = doctrine of=20 governmental immunity similarly protects political subdivisions of the = State,=20 including counties, cities, and school districts. Taylor, 106 = S.W.3d at=20 694 n.3; see also Harris County v. Sykes, 136 S.W.3d 635, 638 = (Tex.=20 2004). A political subdivision enjoys governmental immunity from suit to = the=20 extent that immunity has not been abrogated by the Legislature. See=20 IT-Davy, 74 S.W.3d at 853.

It = is clear=20 that the Fund in this case is composed of members which, like Ben Bolt, = are=20 themselves governmental units entitled to immunity. However, the Fund = asserts=20 discrete governmental-unit status in its own right separate and apart = from its=20 members. If it is true, as the Fund contends, that the Fund itself = enjoys=20 immunity from suit, then the extent to which the Fund might derive = immunity from=20 its members is immaterial. Accordingly, we begin by examining the nature = of the=20 Fund.

C. The Fund

Chapter 2259=20 of the Texas Government Code authorizes =93governmental unit[s],=94 = which include=20 =93local government[s],=94 to self insure. TEX. GOV=92T CODE =A7=A7 = 2259.031=96.034;=20 2259.001. The issuance of public securities or use of money for the = purpose of=20 funding self insurance =93is a public purpose of the governmental = unit.=94=20 Id. =A72259.032. Chapter 2259 specifically provides that a = governmental=20 unit=92s establishment and maintenance of a self-insurance program =93is = not a=20 waiver of immunity.=94 Id. =A7 2259.002. Types of local = governments able to=20 self-insure under Chapter 2259 include a =93municipality or other = political=20 subdivision of this state or a combination of political subdivisions, = including=20 a combination created under Chapter 791.=94 Id. = =A7 2259.001(2).

Chapter 791=20 of the Government Code, known as the Interlocal Cooperation Act, allows = local=20 governments to contract with each other to collectively perform certain=20 governmental functions. Id. =A7 791.011(a). The Act defines = the term=20 =93local government=94 to mean a =93county, municipality, special = district, . . . or=20 other political subdivision of this state or another state=94 or a = combination of=20 two or more political subdivisions. Id. =A7 791.003(4)(A), = (E).=20 Because the term =93local government=94 includes a combination of = political=20 subdivisions, the Fund itself would appear to enjoy local-government = status=20 under the Act.[3] Further indication that the=20 Legislature intended such pooled entities to operate as distinct = governmental=20 units is found in the provisions of Chapter 2259, which allows local = governments=20 to self-insure, together with the provisions of Chapter 791 allowing = local=20 governments to pool resources for that purpose.

We = have said=20 that where the governing statutory authority demonstrates legislative = intent to=20 grant an entity the =93nature, purposes, and powers=94 of an =93arm of = the State=20 government,=94 that entity is a government unit unto itself. See = Harris County=20 Flood Control Dist. v. Mann, 140 S.W.2d 1098, 1101 (Tex. 1940) = (holding=20 statute creating flood-control District demonstrated legislative intent = that the=20 District be a state agency and a political entity distinct from the = County,=20 despite the identical boundaries of the District and County). A district = with=20 =93[s]uch powers of government and with the authority to exercise such = rights,=20 privileges and functions=94 to achieve its purpose is considered a = governmental=20 unit. Id. (quoting Tex. Const. art. XVI =A7 59(b)). In = Mann, the=20 District had a governmental purpose=97flood prevention, reclamation and=20 conservation of land=97and public funding to carry out its mission. = Id. We=20 reasoned that the =93nature, purposes and powers=94 of the Act creating = the=20 flood-control District showed legislative intent that =93this District = shall exist=20 and function as a governmental agency and a body politic and corporate,=20 separate, independent, and distinct within itself.=94 Id.

Similarly,=20 Chapter 2259 and the Interlocal Cooperation Act imbue self-insurance = pools with=20 nature, purposes, and powers reflecting the Legislature=92s intent that = the Fund=20 exist as a discrete governmental unit. An interlocal contract may = provide a=20 governmental function that each contracting party is authorized to = individually=20 perform. Tex. Gov=92t = Code =A7=20 791.011(c)(2). The Legislature has expressly authorized combinations of=20 political subdivisions formed under the Act =93to perform governmental = functions=20 and services.=94 TEX. GOV=92T = CODE=20 =A7=A7 791.003(4)(E), 791.011(a). The Act defines =93governmental = functions and=20 services=94 to include any =93governmental functions in which the = contracting=20 parties are mutually interested.=94 Id. =A7 791.003(3)(N). = Local=20 governments clearly have an interest in guarding against risk, and the=20 Legislature has explicitly authorized combinations of political = subdivisions=20 created under the Interlocal Cooperation Act to provide self-insurance. = TEX. GOV=92T CODE=20 =A7=A7 2259.001(1)-(2), 2259.031. The Legislature has also = authorized these=20 combinations to issue public securities and use available money to = finance a=20 self-insurance pool, which is defined as a =93public purpose=94 of the = governmental=20 unit. Id. =A7=A7 2259.001(1)-(2), 2259.031(b)(1), = 2259.032. In sum,=20 the Legislature has determined self-insurance to be a function of local=20 governments, and we see no reason why legislatively approved pooling of=20 resources to perform this function would diminish its governmental = character.=20 See Op. Tex. Att=92y Gen. No. MW-347 at 2 (1981) (stating = =93[s]elf-insurance=20 is a function of local governments if the government does not have=20 insurance.=94).

Many of our=20 courts of appeals have considered self-insurance pools, though composed = of=20 political subdivisions, to be distinct governmental entities apart from = their=20 membership. See, e.g., Campbell v. Tex. Employers=92 = Ins.=20 Ass=92n, 920 S.W.2d 323, 329-30 (Tex. App.=97Houston [1st Dist.] = 1995, no writ)=20 (citing with approval a Texas court of appeals case that refers to a=20 self-insurance risk pool as a governmental entity to hold that a private = company=20 that contracted to provide services to the Texas Association of School = Boards=92=20 self-insurance fund was not entitled to governmental immunity); TML=20 Intergovernmental Employees Benefits Pool v. Prudential Ins. Co. of = Am., 144=20 S.W.3d 600, 605-07 (Tex. App.=97Austin 2004, pet. denied) (holding an = insurance=20 pool bringing a declaratory judgment waived immunity from suit, = necessarily=20 implying possession of immunity in order to waive it); Milner v. City = of=20 Leander, 64 S.W.3d 33, 38-40 (Tex. App.=97Austin 2000, no pet.) = (treating=20 self-insurance fund as governmental entity and concluding that the = Legislature=20 did not waive its immunity); cf. Campbell, 920 S.W.2d at 329-31=20 (suggesting that school boards=92 self-insurance fund was a governmental = entity,=20 but immunity did not extend to private company providing = claims-adjustment=20 services to the fund); Tex. Workers=92 Comp. Comm=92n v. City of = Bridge City,=20 900 S.W.2d 411, 414 (Tex. App.=97Austin 1995, writ denied) (holding that = because=20 municipalities=92 risk pool derived its existence and powers from = legislative=20 enactments, it was subject to legislative control and supremacy to the = same=20 extent as other political subdivisions); GAB Bus. Servs., Inc. v. = Moore,=20 829 S.W.2d 345, 350-51 (Tex. App.=97Texarkana 1992, no writ) (intimating = that=20 municipalities=92 risk pool was a governmental entity, but holding that = immunity=20 did not extend to private company that contracted with pool to adjust = claims);=20 see also Tex. Mun. League Intergovernmental Risk Pool v. Tex. Workers = Comp.=20 Comm=92n, 74 S.W.3d 377, 384 (Tex. 2002) (noting that, in = determining whether=20 certain Labor Code provisions applied to the risk pool itself in = addition to its=20 1600 member municipalities, the Commission did =93not dispute that [the] = Risk Pool=20 itself qualifies as a political subdivision=94 within the meaning of = those=20 provisions).

We = conclude=20 that the Fund=92s =93nature, purposes and powers=94 demonstrate = legislative intent=20 that it exist as a distinct governmental entity entitled to assert = immunity in=20 its own right for the performance of a governmental function. With = regard to=20 that function, the Fund enjoys the same governmental immunity as other = political=20 subdivisions. Having concluded that the Fund enjoys immunity in its own = right,=20 we need not decide whether the Fund=92s immunity is also derivative of = its=20 members.

D. = Waiver of=20 Immunity

With the=20 Fund=92s governmental immunity shield, Ben Bolt=92s claims are barred = absent a=20 waiver of that immunity. It is the province of the Legislature to = consent to a=20 suit against a governmental entity. IT-Davy, 74 S.W.3d at 853. = =93We have=20 consistently deferred to the Legislature to waive sovereign immunity = from suit,=20 because this allows the Legislature to protect its policymaking = function.=94=20 IT-Davy, 74 S.W.3d at 854. Because immunity from suit protects = the public=20 coffers, =93the claims process is tied to the appropriations process, = and the=20 priorities that guide the latter should also inform the former.=94 = Tooke,=20 197 S.W.3d at 332. The exposure of governmental entities to liability = may shift=20 tax resources away from their intended purposes and toward defending = lawsuits=20 and paying judgments, thereby hampering government functions. = IT-Davy, 74=20 S.W.3d at 854. For this reason, the Legislature is better suited than = the courts=20 to weigh conflicting public policies associated with waiving immunity = and=20 subjecting the government to increased liability, the burden of which = the public=20 must bear. Id.

Ben = Bolt=20 argues that Section 271.152 of the Local Government Code provides a = clear and=20 unambiguous waiver of the Fund=92s immunity from suit for breach of its = insurance=20 agreement with Ben Bolt. That section provides:

A local=20 governmental entity that is authorized by statute or the constitution to = enter=20 into a contract and that enters into a contract subject to this = subchapter=20 waives sovereign immunity to suit for the purpose of adjudicating a = claim for=20 breach of the contract, subject to the terms and conditions of this = subchapter.=20

TEX. LOC. GOV=92T CODE = =A7 271.152.[4] The statute=92s plain = language allows=20 for enforcement of contracts against local governmental entities by = waiving=20 their immunity from suit. The Fund does not dispute that the statutory = waiver=20 language itself is clear and unambiguous. However, the Fund argues that = Section=20 271.152 provides only a limited waiver for some governmental units in = certain=20 circumstances, and does not apply to the Fund or its insurance = agreements.

First, the=20 Fund points out that Section 271.151(2) defines a =93[c]ontract subject = to this=20 subchapter [subchapter I of chapter 271]=94 as =93a written contract = stating the=20 essential terms of the agreement for providing goods or services to = the=20 local governmental entity that is properly executed on behalf of the = local=20 governmental entity.=94 Id. =A7 271.151(2) (emphasis added). = The Fund=20 argues that its insurance contract with Ben Bolt is not a =93[c]ontract = subject to=20 this subchapter=94 because, under the policy, no goods or services are = provided=20 to the Fund; rather, the Fund provides insurance to its = contracting=20 members in exchange for payments. Consequently, the Fund contends, the = insurance=20 agreement is not subject to the statutory waiver.

It = is true=20 that Ben Bolt is a consumer of insurance that the Fund offers. But the=20 relationship between the Fund and its members differs from the ordinary=20 consumer/seller relationship. As the Fund has acknowledged, its members = elect a=20 governing board, and a board subcommittee resolves claims disputes. To = that=20 extent, at least, the Fund=92s members provide services to the Fund. = Moreover, the=20 statute=92s legislative history indicates that, by enacting section = 271.152, the=20 Legislature intended to loosen the immunity bar so =93that all = local=20 governmental entities that have been given or are given the statutory = authority=20 to enter into contracts shall not be immune from suits arising from = those=20 contracts.=94 House Comm. On = Civil=20 Practices, Bill = Analysis,=20 Tex. H.B. 2039, 79th Leg., R.S. (2005) (emphasis added). There is no = indication=20 that the Legislature intended to exclude self-insurance fund agreements = from=20 enforcement. While the mere act of self-insuring does not itself = constitute a=20 waiver of immunity, see Tex.=20 Gov=92t Code =A7 2259.031, entering into =93a written contract = stating the=20 essential terms of [an] agreement for providing goods or [insurance] = services to=20 [a] local governmental entity=94 clearly does. Tex. Loc. Gov=92t Code =A7 = 271.151(2),=20 .152.

The = Fund next=20 contends Section 271.152 does not clearly and unambiguously waive its = immunity=20 from suit because some of the Fund=92s members, such as counties, do not = meet=20 Section 271.151(3)=92s definition of a =93local governmental entity.=94 = But as we have=20 said, the Fund itself is a discrete governmental unit separate and apart = from=20 its members, and its immunity derives from the performance of = governmental=20 functions, not from the immunities of those members that combined to = form it.=20 The only entities expressly excluded from the statutory waiver are = counties and=20 units of state government, and the Fund itself is neither of these.

Because the=20 Fund is a =93local governmental entity=94 as defined by Section = 271.151(3), and =93was=20 authorized . . . to enter=94 and did in fact enter into =93a written = contract=20 stating the essential terms of the agreement for providing [insurance] = services=20 to [a] local governmental entity,=94 which agreement was properly = executed, Tex. Loc. Gov=92t Code = =A7 272.151(2), we conclude that = the=20 statutory waiver applies to this insurance-coverage dispute.

Ben = Bolt=20 asserts a number of alternative grounds upon which it claims the = Fund=92s immunity=20 from suit was waived, but does not claim that success on these other = points=20 would afford it greater relief. Because we hold that Section 271.152 of = the=20 Local Government Code waives the Fund=92s immunity from suit, we do not = consider=20 them.

III. Conclusion

Because=20 Section 271.152 of the Local Government Code waives the Fund=92s = immunity from Ben=20 Bolt=92s claim arising out of the insurance agreement between the = parties, we=20 reverse the court of appeals=92 judgment and remand to the trial court = for further=20 proceedings.

__________________________________________

Harriet=20 O=92Neill

Justice

OPINION = DELIVERED:=20 December 29, 2006.

^[1] Act of May 23, 2005, 79th Leg., R.S., ch. = 604, =A7 1,=20 2005 Tex. Gen. Laws 1548 (codified at Tex Loc. Gov=92t Code=20 =A7=A7 271.151-.160).

^[2] Although the court of appeals termed the = immunity the=20 Fund possessed as =93sovereign,=94 political subdivisions of the State = actually=20 enjoy governmental immunity. Though closely related and often used=20 interchangeably, sovereign immunity and governmental immunity protect = distinct=20 entities. Wichita Falls State Hosp. v. Taylor, 106 S.W.3d 692, = 694 n.3=20 (Tex. 2003).

^[3] We note that this definition of =93local = government=94 does=20 not mean that the Fund is a governmental unit for all purposes, but only = for=20 purposes of the Interlocal Cooperation Act. Id. =A7 791.003 = (confining=20 the definition of =93local government=94 to =93[withi]n this = chapter=94). Indeed, within=20 the Government Code, the Legislature defines the term =93local = government=94 to=20 include and also to exclude school districts for different purposes. = Compare=20 Tex. Gov=92t Code=20 =A7 772.009(i) (defining =93local governmental entity=94 to = include a=20 school district concerning governmental planning), with Tex. Gov=92t Code = =A7 783.003(3)=20 (defining =93local government=94 to exclude school districts under the = Uniform Grant=20 and Contract Management Act).

^[4] Because Section 271.152 is partially = retroactive, it=20 would waive the Fund=92s immunity even though it was enacted after Ben = Bolt=20 purchased the insurance policy. See Tooke, 197 S.W.3d at 329 n.7 = (citing=20 Sections 271.152-.154 of the Local Government=20 Code).