The City of Texarkana, Texas, told appeals court justices on Thursday it has protection from lawsuits and thinks a lower court opinion to keep alive a lawsuit filed by seven nearby cities should be overturned.

But the seven cities -- collectively known as member cities -- in a water supply contract with Texarkana, Texas, say the cloak of immunity falls off when one government sues another.

Texarkana has been sued by seven cities in Bowie and Red River counties -- New Boston, Hooks, DeKalb, Annona, Avery, Maud and Wake Village -- over alleged overbilling through Texarkana Water Utilities and a withholding of due water rights.

After losing a bid to ditch the lawsuit in state court, Texarkana filed an appeal with Texas' 6th Court of Appeals in Texarkana, Texas. Both sides showed up with their high-powered lawyers of national law firms on Thursday. An opinion will be released at a later date.

Oscar Rey Rodriguez, of Fulbright and Jaworski, defended Texarkana, Texas, telling the three-justice panel that this is a government powers and government relations case. He says the member cities want to "dip their hands into the city coffers."

"This literally has been a terrible burden on public resources," Rodriguez said.

The case, said the member cities' lawyer Christopher V. Popov, of Vinson & Elkins, centers around a 35-year-old contract in which Texarkana accepted a fiduciary responsibility to each individual city in the water supply agreement.

But Rodriguez said any responsibility it may have in contracts does not override its own duty to the citizens of Texarkana, Texas. He also argued that it cannot be sued for a simple function of government.

Popov argued that the function of government at issue is not to Texarkana's own residents but the side agreements it made with other geographic areas it is supplying water to. Also at issue was whether the city's charter gives lawsuit protection.

Rodriguez argued that Texarkana's charter did not have a "sue or be sued" enabling clause. If it had, it would, in effect, lose its waiver of protection from lawsuits.

Popov said that in some instances the city does have protection from lawsuits, but not in this one.

He says Texarkana has protection from third party private lawsuits but there is no protection for one entity of the state being sued by another entity of the state. He thinks the contract between the cities can be litigated in state court.

The purpose of sovereign immunity is to protect the "purse of the government," Povov said.

The member cities have already dropped the punitive damages claim, but Rodriguez still argues that money is a motivation because the cities want to get profits from TWU and participate in profit-making activities.

"They are still telling the district court that the City of Texarkana, Texas, is their servant," Rodriguez said. " ... This is an attempt to take over the government rights of the City of Texarkana, Texas, and get into the purse of the City of Texarkana, Texas. What they wanted here is a huge windfall. Someone is trying to get rich and it hasn't worked."