Co-author Kelley Clark Morris

Suing a state and its public officials is difficult because of the doctrine of sovereign immunity. There are exceptions. State of Texas v. Signal Drilling, et al. presents several of them.

The rules

The State and its agencies are immune from:

  • Suits seeking to construe or enforce contracts to which the State is a party,
  • Declaratory judgment actions,
  • Ordinary trespass to try title suits.

There are exceptions. For example:

  • Claims against a state official in his representative capacity for non-discretionary acts unauthorized by law (the ultra vires exception).
  • Claims for an unconstitutional taking of property without adequate compensation.
  • Suits to require state officials to comply with statutory or constitutional provisions.

The facts

The “Canadian River Mineral Boundary Agreement” was executed in 2002 between Texas Land Commissioner George P. Bush and a number of riparian tract owners along the Canadian River in the Texas Panhandle.

This dispute concerned the boundaries of riparian tracts adjacent to the river, which is considered “navigable” for the purposes of the State’s claim to the oil, gas and other minerals beneath the riverbed. Following the construction of the Sanford Dam forming Lake Meredith, the Canadian River substantially narrowed and decreased in flow. In order to eliminate substantial costs and confusion from litigation, the Boundary Agreement was executed.

In the Boundary Agreement:

  • The State relinquished its claim to certain properties that are no longer considered part of the official riverbed;
  • The riparian owners confirmed the State’s claims to properties within the banks;
  • The State released any existing mineral leases and replaced them with new, fixed ten-year leases, expiring Dec. 31, 2011, without standard “and as long thereafter” clauses that would permit the leases to be extended beyond their terms; and
  • The State conveyed its possibility of reverter in the underlying minerals so that, upon termination of the leases, the riparian owners would own, in fee, the minerals underlying the riverbed adjacent to their respective properties (subject to an NPRI retained by the State).

After Dec. 31, 2011, Commissioner unilaterally executed “renewals” of the leases. Signal obtained a top lease from one of the tract owners and sued the State, the General Land Office, and Commissioner Bush for trespass and conversion, trespass-to-try title against the Commissioner, and a constitutional takings claim against the State. .

Signal’s claim was that fee simple ownership of the contested minerals (including the executive right to lease the minerals, which had reverted to Signal’s lessors) automatically and immediately reverted to it when the amended lease expired.

The result

The court held that Signal raised a valid ultra vires claim to defeat the Commissioner’s assertion of sovereign immunity and raised a valid takings claim against the State.

To prevail on the ultra vires exception Signal had to allege (and ultimately will have to prove) that Commissioner Bush acted without legal authority or failed to perform a ministerial act. A state official acts without legal authority if he exceeds the bounds of his granted authority or if his actions conflict with the law itself. The court ruled that the Commissioner had no authority to renew the state lease.

The court rejected the State’s contention that Signal’s claims were nothing more than a contract dispute masquerading as other claims and that Signal failed to establish that the State intended to take the property without adequate compensation. The court rejected the first argument as a matter of law and the second because the State failed to preserve the argument at the trial court. Thus, Signal could proceed to trial on against Commissioner Bush and the State.

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For the four who are “in”

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For the rest.