Elizabeth Benavides Elite Aviation Inc. v. City of Laredo, Laredo Jet Center, LLC, John Holler ( 2020 )

Fourth Court of Appeals
San Antonio, Texas
MEMORANDUM OPINION
No. 04-19-00717-CV
ELIZABETH BENAVIDES ELITE AVIATION, INC.,
Appellant
v.
CITY OF LAREDO,
Appellee
From the 341st Judicial District Court, Webb County, Texas
Trial Court No. 2017CVK002669-D3
Honorable Beckie Palomo, Judge Presiding
Opinion by: Irene Rios, Justice
Sitting: Rebeca C. Martinez, Justice
Patricia O. Alvarez, Justice
Irene Rios, Justice
Delivered and Filed: April 29, 2020
AFFIRMED
Elizabeth Benavides Elite Aviation, Inc. (“Elite”) appeals the trial court’s order granting
the City of Laredo’s plea to the jurisdiction. Elite contends the trial court erred in granting the
City’s plea because the City was engaged in a proprietary function when it entered into a lease
agreement with Elite; therefore, the City is not immune from suit. We affirm the trial court’s order.
BACKGROUND
In 2006, Elite and the City entered into a lease agreement for a 2,500 square foot tract of
land at the Laredo International Airport. The lease provided the leased premises would be used
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“solely for the purpose of storage and dispensing of aviation fuels for fueling aircraft and no other
use of the leased premises is permitted.” Under the terms of the lease, Elite agreed to construct a
concrete fuel containment pad for the installation of aboveground fuel storage tanks.
In 2019, Elite filed a cross-claim against the City in a pending lawsuit originally filed by
Laredo Jet Center. At the time of the hearing on the City’s plea to the jurisdiction, Elite had filed
a third amended cross-claim. The only cross-claim asserted against the City in the live pleading
was a breach of contract claim. In its pleading, Elite alleged the City was acting in its proprietary
capacity when it entered into the lease agreement with Elite.
In its plea to the jurisdiction, the City asserted it was protected by governmental immunity
against Elite’s cross-claim and “did not waive immunity and consent to this suit and the allegations
made by Elite do not waive the governmental immunity afforded to [the] City.” In its response to
the City’s plea, Elite again asserted the City “was acting in its proprietary capacity at the time it
entered the lease contract with Elite.”
At the hearing on the City’s plea to the jurisdiction, the City’s attorney acknowledged the
City’s plea was based on the pleadings and the facts alleged in the pleadings. Elite’s attorney
relied on Elite’s written response but noted Elite alleged the City was acting in its proprietary
capacity when it entered the lease, thereby waiving its immunity. The trial court took the matter
under advisement and subsequently signed an order granting the City’s plea and dismissing Elite’s
cross-claim against the City. Elite appeals.
STANDARD OF REVIEW
“When a plea to the jurisdiction challenges the pleadings, we determine if the pleader has
alleged facts that affirmatively demonstrate the court’s jurisdiction to hear the cause.” City of El
Paso v. Heinrich, 284 S.W.3d 366, 378 (Tex. 2009) (internal quotation marks omitted). “Whether
a pleader has alleged facts that affirmatively demonstrate a trial court’s subject matter jurisdiction
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is a question of law reviewed de novo.” Tex. Dep’t of Parks & Wildlife v. Miranda, 133 S.W.3d
217, 226 (Tex. 2004) (emphasis in original).
GOVERNMENTAL/PROPRIETARY DICHOTOMY
“The governmental/proprietary dichotomy recognizes that immunity protects a
governmental unit from suits based on its performance of a governmental function but not a
proprietary function.” Wasson Interests, Ltd. v. City of Jacksonville, 559 S.W.3d 142, 146 (Tex.
2018). “[The] dichotomy is based on the reality that sovereign immunity is inherent in the State’s
sovereignty, and municipalities share that protection when they act as a branch of the State but not
when they act in a proprietary, non-governmental capacity.” Id. (internal quotation marks
omitted). Accordingly, the performance of a proprietary function subjects a municipality “to the
same duties and liabilities as those incurred by private persons and corporations.” Id. (internal
quotation marks omitted).
Under the Texas Constitution, the Legislature is authorized to “define for all purposes those
functions of a municipality that are to be considered governmental and those that are proprietary.”
TEX. CONST. art. XI, § 13. Exercising that authority, the Legislature enacted section 101.0215 of
the Texas Tort Claims Act (“Act”) which generally defines governmental functions as “those
functions that are enjoined on a municipality by law and are given it by the state as part of the
state’s sovereignty, to be exercised by the municipality in the interest of the general public.” TEX.
CIV. PRAC. & REM. CODE ANN. § 101.0215(a). The Act provides a non-exclusive list of thirty-six
governmental functions. Id.
The Act generally defines proprietary functions as “those functions that a municipality
may, in its discretion, perform in the interest of the inhabitants of the municipality.” Id.
§ 101.0215(b). The Act also provides a non-exclusive list of three proprietary functions. Id. The
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proprietary functions of a municipality do not include those governmental functions expressly
enumerated in section 101.0215(a) of the Act. Id. § 101.0215(c).
As the Texas Supreme Court has explained, the governmental functions of a municipality
generally “consist of a municipality’s activities in the performance of purely governmental matters
solely for the public benefit.” Wasson Interests, Ltd., 559 S.W.3d at 147 (internal quotation marks
omitted). Conversely, proprietary functions “are those performed by a city, in its discretion,
primarily for the benefit of those within the corporate limits of the municipality, and not as an arm
of the government.” Id. (internal quotation marks omitted). Proprietary functions are not
performed as a branch of the state but are performed by the municipality acting on its own behalf.
Id. at 149. As a result, proprietary functions are “usually activities that can be, and often are,
provided by private persons.” Id. at 147 (internal quotation marks omitted).
When the Act does not expressly enumerate a municipality’s activity as governmental or
proprietary, the Texas Supreme Court has “fleshed out” the general definitions and instructed the
courts to consider the following four factors in determining whether a City’s act was governmental
or proprietary: (1) was the City’s act “mandatory or discretionary,” (2) was the City’s act “intended
to benefit the general public or the City’s residents,” (3) was the City “acting on the State’s behalf
or its own behalf” in undertaking the activity; and (4) was the City’s act “sufficiently related to a
governmental function to render the act governmental even if it would otherwise have been
proprietary.” Hays St. Bridge Restoration Group v. City of San Antonio, 570 S.W.3d 697, 705
(Tex. 2019) (quoting Wasson Interests, Ltd., 559 S.W.3d at 150).
ANALYSIS
In this case, the issue presented is whether the City was acting in its proprietary capacity
in entering into the lease agreement with Elite, thereby waiving its immunity. As the Texas
Supreme Court has explained:
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We hold that, to determine whether governmental immunity applies to a breach-
of-contract claim against a municipality, the proper inquiry is whether the
municipality was engaged in a governmental or proprietary function when it entered
the contract, not when it allegedly breached that contract. Stated differently, the
focus belongs on the nature of the contract, not the nature of the breach.
Wasson Interests, Ltd., 559 S.W.3d at 149. 1
Although Elite’s brief focuses on the four factors the Texas Supreme Court has “fleshed
out” to be considered when the Act does not expressly enumerate a municipality’s activity as
governmental or proprietary, Hays St. Bridge Restoration Group, 570 S.W.3d at 705, we need not
resort to those factors in our analysis because both the Act and the Texas Transportation Code
expressly enumerate airports as a governmental function. See TEX. CIV. PRAC. & REM. CODE ANN.
§ 101.0215(a)(10); TEX. TRANSP. CODE ANN. § 22.002(a)(2). As the Texas Supreme Court has
explained, legislative enumerations of particular functions as governmental “aid our inquiry” in
cases involving contract claims as well as tort claims. Dallas/Fort Worth Int’l Airport Bd. v. Vizant
Techs., LLC, 576 S.W.3d 362, 367 (Tex. 2019). Although the Act simply lists “airports” as a
governmental function, TEX. CIV. PRAC. & REM. CODE ANN. § 101.0215(a)(10), the Code
identifies “the planning, acquisition, establishment, construction, improvement, equipping,
maintenance, operation, regulation, protection, and policing of an airport” as “public and
governmental functions, exercised for a public purpose, and matters of public necessity.” TEX.
TRANSP. CODE ANN. § 22.002(a)(2).
In Vizant Techs., LLC, the Texas Supreme Court applied the above-cited provisions of the
Act and the Code in analyzing whether a local governmental entity was engaged in a governmental
1
Because we focus on the nature of the contract, we disregard the arguments made in the City’s plea and at the hearing
regarding Elite’s alleged abandonment of the lease. Those arguments focused on actions Elite took after the execution
of the lease in allowing Laredo Jet Center and/or John Holler to use the leased premises and operate the fuel farm
sometime after the lease was signed and after Elite built the concrete fuel containment pad and installed two
aboveground fuel storage tanks.
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function in entering into a contract “to analyze [an] airport’s payment-processing costs (including
costs for processing credit-card payments) and to provide recommendations on how the airport
could reduce those costs.” 576 S.W.3d 364. Quoting the above-cited provisions from the Code
and the Act, the court held the entity was engaged in a governmental function in entering into the
contract because the contract was entered into “for the purpose of analyzing and reducing the
airport’s expenses.” Id. at 367.
Here, Elite attached both its lease with the City and the City’s ordinance approving the
lease to its third amended cross-claim. Having reviewed the terms of the lease and the facts alleged
by Elite regarding the nature of its operation, we hold the City was engaged in a governmental
function in entering into the lease. We note the recitals in the City’s ordinance state the lease was
being recommended for city council approval “in furtherance of the development of the Laredo
International Airport and as support to the maintenance and operation of the Laredo International
Airport.” We further note, the recitals in the lease agreement also state the City “has determined
that it is advantageous to itself, its citizenry, and the operation of its airport to lease the demise[d]
premises located on the airport to” Elite. Therefore, based on the allegations in Elite’s pleading
regarding its use of the leased premises at the airport, we hold the trial court properly granted the
City’s plea because the City was engaged in a governmental function in entering into the lease
with Elite.
CONCLUSION
The trial court’s order is affirmed.
Irene Rios, Justice
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