City of Pharr, Texas v. Raul N. Garcia and R.N. Industries L.L.C. D/B/A Pajaro Promotions ( 2024 )

NUMBER 13-23-00120-CV
COURT OF APPEALS
THIRTEENTH DISTRICT OF TEXAS
CORPUS CHRISTI – EDINBURG
CITY OF PHARR, TEXAS, Appellant,
v.
RAUL N. GARCIA AND
R.N. INDUSTRIES L.L.C. D/B/A
PAJARO PROMOTIONS, Appellees.
ON APPEAL FROM THE 93RD DISTRICT COURT
OF HIDALGO COUNTY, TEXAS
MEMORANDUM OPINION ON REHEARING
Before Chief Justice Contreras and Justices Benavides and Longoria
Memorandum Opinion on Rehearing by Justice Longoria
Appellant City of Pharr (the City) appeals from the denial of its plea to the
jurisdiction seeking to dismiss a breach of contract claim brought by appellees Raul N.
Garcia and R.N. Industries L.L.C. D/B/A Pajaro Promotions (collectively, Pajaro
Promotions). In three issues, the City argues that the trial court erred in: (1) denying its
plea to the jurisdiction because the City is immune; (2) denying its plea to the jurisdiction
because the “alleged verbal agreement is unenforceable as there was no legal authority
to enter into this alleged verbal agreement”; and (3) denying its plea to the jurisdiction as
to Pajaro Promotions’ claim regarding “naming rights to the City’s events center.” We
reverse and render. 1
I. BACKGROUND
Pajaro Promotions filed its original petition in July 2017, in which it alleged that the
City breached its contractual duties regarding a Toby Keith concert held in the City on
August 14, 2014. According to Pajaro Promotions, the City failed to pay it for services it
rendered pursuant to a contractual agreement. The petition further alleged breach of
contact related to the naming rights of the Pharr Events Center.
The City answered, asserting various affirmative defenses, and later filed a plea to
the jurisdiction. In its plea, the City argued that Pajaro Promotions failed to show waiver
of governmental immunity. The City further stated that the alleged contracts are
“unenforceable as there is no legal authority for City employees to enter into such verbal
agreements without proper City Commission vote and approval.” To its plea, the City
attached the contract related to the Toby Keith concert (City-Pajaro Contract), along with
Garcia’s affidavit, various deposition testimony, and the contract between Toby Keith and
1 Appellees filed a motion for rehearing in this matter. After examining and fully considering the
issues raised in appellees’ motion, we deny the motion, withdraw our prior opinion and judgment, and issue
this opinion and judgment in their stead.
2
Pajaro Promotions (Keith-Pajaro Contract).
Pajaro Promotions responded to the City’s plea to the jurisdiction, arguing that the
City entered into written and oral agreements to organize and promote the Toby Keith
concert, specifically asserting the agreements required that the City reimburse Pajaro
Promotions for their costs and pay a twenty percent promoter’s fee. Pajaro Promotions
argued that there was no sovereign immunity because the City “was exercising propriety
functions.”
Following a hearing on the City’s plea, the trial court denied the plea to the
jurisdiction. This interlocutory appeal followed. See TEX. CIV. PRAC. & REM. CODE. ANN.
§ 51.014(a)(8).
II. PLEA TO THE JURISDICTION
A. Standard of Review & Applicable Law
“A plea to the jurisdiction is a dilatory plea, the purpose of which is to defeat a
cause of action without regard to whether the claims asserted have merit.” Bland Indep.
Sch. Dist. v. Blue, 34 S.W.3d 547, 554 (Tex. 2000). The plea challenges the trial court’s
subject matter jurisdiction over a pleaded cause of action. Tex. Dep’t of Parks & Wildlife
v. Miranda, 133 S.W.3d 217, 226 (Tex. 2004). Subject matter jurisdiction is a question of
law; therefore, we review the trial court’s ruling on a plea to the jurisdiction de novo. Id.A plaintiff has the initial burden to affirmatively demonstrate the trial court’s
jurisdiction. Town of Shady Shores v. Swanson, 590 S.W.3d 544, 550 (Tex. 2019). A plea
to the jurisdiction may challenge either the sufficiency of jurisdictional allegations in the
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pleadings or the existence of jurisdictional facts. Miranda, 133 S.W.3d at 226–27; see
Jones v. Turner, 646 S.W.3d 319, 325 (Tex. 2022). When a plea to the jurisdiction
challenges the pleadings, we determine if the plaintiff has alleged facts that affirmatively
demonstrate the court’s jurisdiction to hear the cause. Ryder Integrated Logistics, Inc. v.
Fayette County, 453 S.W.3d 922, 927 (Tex. 2015); Miranda, 133 S.W.3d at 226. We
construe the pleadings liberally in favor of the plaintiff and look to the pleader’s intent.
Ryder, 453 S.W.3d at 927. If the pleadings do not contain sufficient facts to affirmatively
demonstrate the trial court’s jurisdiction but do not affirmatively demonstrate incurable
defects in jurisdiction, the issue is one of pleading sufficiency and the plaintiff should be
afforded the opportunity to amend. Miranda, 133 S.W.3d at 226–27. If the pleadings
affirmatively negate the existence of jurisdiction, then a plea to the jurisdiction may be
granted without allowing the plaintiff an opportunity to amend. Id. at 227.
If the plaintiff meets its initial pleading burden and the governmental unit instead
challenges the existence of jurisdictional facts, then we consider the relevant evidence
submitted. Metro. Transit Auth. of Harris Cnty. v. Douglas, 544 S.W.3d 486, 492 (Tex.
App.—Houston [14th Dist.] 2018, pet. denied); see Mission Consol. Indep. Sch. Dist. V.
Garcia, 372 S.W.3d 629, 635 (Tex. 2012). When reviewing a plea to the jurisdiction in
which the pleading requirement has been met and evidence has been submitted to
support the plea that implicates the merits of the case, we take as true all evidence
favorable to the plaintiff. Douglas, 544 S.W.3d at 492; see Garcia, 372 S.W.3d at 635.
We indulge every reasonable inference and resolve any doubts in the plaintiff’s favor.
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Douglas, 544 S.W.3d at 492; see Miranda, 133 S.W.3d at 226. If the relevant evidence is
undisputed or if the plaintiff fails to raise a fact question on the jurisdictional issue, then
the trial court rules on the plea as a matter of law. Garcia, 372 S.W.3d at 635; see Harris
Cnty. Flood Control Dist. v. Kerr, 499 S.W.3d 793, 798–99 (Tex. 2016) (op. on reh’g).
B. Discussion
We first address Pajaro Promotions’ assertion that, because the City was acting in
a proprietary manner when it entered into the alleged contracts, immunity does not apply
and the City is amenable to suit on the breach of contract claim.
1. Governmental and Proprietary Functions
To “shield the public from the costs and consequences of improvident actions of
their governments,” sovereign immunity generally bars claims against the State and its
agencies. Tooke v. City of Mexia, 197 S.W.3d 325, 332 (Tex. 2006). Municipal
corporations often function in a governmental capacity on the State’s behalf but at other
times function as “a private corporation,” City of Tyler v. Ingram, 164 S.W.2d 516, 519
(1942), “for the private advantage and benefit of the locality and its inhabitants.” Wasson
Ints., Ltd. v. City of Jacksonville (Wasson I), 489 S.W.3d 427, 433 (Tex. 2016). Because
“sovereign immunity is inherent in the State’s sovereignty,” municipalities “share that
protection when they act ‘as a branch’ of the State but not when they act ‘in a proprietary,
non-governmental capacity.’” Wasson Ints., Ltd. v. City of Jacksonville (Wasson II), 559
S.W.3d 142, 146 (Tex. 2018) (quoting Wasson I, 489 S.W.3d at 430).
The Texas Supreme Court held in Wasson I that this dichotomy is implicated when
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cities are sued for breach of contract. See Wasson I, 489 S.W.3d at 439; see also City of
League City v. Jimmy Changas, Inc., 670 S.W.3d 494, 499 (Tex. 2023). “To determine
whether a municipality engaged in a governmental or proprietary function when it entered
into a particular contract, we look to both the common law and to Texas statutes.” Jimmy
Changas, 670 S.W.3d at 499; see Wasson II, 559 S.W.3d at 148.
Under the common law, proprietary functions are those that a city performs
“in its discretion,” “primarily for the benefit of those within the corporate limits
of the municipality,” and not as “an arm of the government” or “a branch of
the state” or “under the authority, or for the benefit, of the sovereign.”
Wasson II, 559 S.W.3d at 147 (quoting Wasson I, 489 S.W.3d at 427; Gates
v. City of Dallas, 704 S.W.2d 737, 739 (Tex. 1986); Dilley v. City of Houston,
148 Tex. 191, 222 S.W.2d 992, 993 (1949)). Proprietary functions “can be,
and often are, provided by private persons.” Id. (quoting Joe R. Greenhill &
Thomas V. Murto III, Governmental Immunity, 49 TEX. L. REV. 462, 463
(1971)).
Governmental functions under the common law are those that
involve “the performance of purely governmental matters solely for the
public benefit,” are “normally performed by governmental units,” and are
performed “as a branch of the state—such as when a city ‘exercise[s]
powers conferred on [it] for purposes essentially public . . . pertaining to the
administration of general laws made to enforce the general policy of the
state.’” Id. (quoting Wasson I, 489 S.W.3d at 433 (in turn quoting City of
Galveston v. Posnainsky, 62 Tex. 118, 127 (1884)); Tooke[, at] 343 [] (in
turn quoting Dilley, 222 S.W.2d at 993); Greenhill & Murto, 49 TEX. L. REV.
at 463).
Jimmy Changas, 670 S.W.3d at 499.
The Court went on to explain the statutory definitions as follows:
The Texas Constitution specifically authorizes the legislature to define
governmental and proprietary functions “for all purposes.” TEX. CONST. art.
XI, § 13. Exercising this authority, the legislature has addressed the
dichotomy for purposes of tort claims but not for claims for breach of
contract. Generally consistent with the common-law descriptions, the Tort
Claims Act defines proprietary functions as “those functions that a
municipality may, in its discretion, perform in the interest of the inhabitants
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of the municipality.” TEX. CIV. PRAC. & REM. CODE [ANN.] § 101.0215(b).
Statutorily, proprietary functions include, but are not limited to, “the
operation and maintenance of a public utility,” “amusements owned and
operated by the municipality,” and “any activity that is abnormally dangerous
or ultrahazardous.” Id.
By contrast, the Act 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.” Id. § 101.0215(a). In addition to this
general definition, the Act includes a non-exclusive list designating thirty-six
specific activities as governmental functions, ranging from “police and fire
protection and control” to “animal control.” Id. § 101.0215(a)(1), (33).
Jimmy Changas, 670 S.W.3d at 499–500.
The City argues it was engaged in a governmental function because the operation
of “civic, convention centers, or coliseums” is included among the statutorily defined
governmental functions. See TEX. CIV. PRAC. & REM. CODE ANN. § 101.0215(a)(16). Pajaro
Promotions responds that the City was acting in a proprietary function in providing
“amusement” to the inhabitants of the municipality. Pajaro Promotions relies upon the
Texas Administrative Code’s definition of “amusement services,” which includes “musical
concerts.” 34 TEX. ADMIN. CODE § 3.298(a)(1)(A)(v). This reliance, however, is misplaced.
While concerts are included in the Texas Administrative Code’s definition of amusement
services, when determining the definition of “amusement” to “aid in our inquiry” in deciding
a governmental versus proprietary distinction, we look to the Texas Tort Claims Act
(TTCA). See Wasson II, 559 S.W.2d at 148. The TTCA includes operation of “civic,
convention centers, or coliseums,” as designated governmental functions. TEX. CIV. PRAC.
& REM. CODE ANN. § 101.0215(a)(16). Our sister courts in San Antonio and Dallas have
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held that all actions related to a designated government function are reclassified as
governmental by the statute, “regardless of the city’s motive for engaging in the activity.”
City of San Antonio v. Butler, 131 S.W.3d 170, 177 (Tex. App.—San Antonio 2004, pet.
denied); see Tex. River Barges v. City of San Antonio, 21 S.W.3d 347, 356–57 (Tex.
App.—San Antonio 2000, pet. denied) (finding city’s removal of barge company from
marina was included within government function of operating a marina and park, even if
removal was motivated by desire to protect city’s profit by exclusive contract with another
barge company); City of Dallas v. Reata Constr. Corp., 83 S.W.3d 392, 395 (Tex. App.—
Dallas 2002, pet. filed) (finding that marking the location of water main is encompassed
by government function of “waterworks” and water services); Mitchell v. City of Dallas,
855 S.W.2d 741, 744 (Tex. App.—Dallas 1993) (noting activities related to the operation
of a city park may not be proprietary because TTCA lists “parks and zoos” as government
function), aff’d, 870 S.W.2d 21 (Tex. 1994). Accordingly, because the TTCA lists
operation of “convention centers” as a government function, we decline to find that
contracting to hold an entertainment concert at one of those centers converts the function
into one of a proprietary nature. See Mitchell, 855 S.W.2d at 744. We conclude that the
City’s activities as alleged in the lawsuit fall within the City’s governmental function of
owning, operating, or maintaining a civic or convention center. See TEX. CIV. PRAC. & REM.
CODE ANN. § 101.0215(a)(16); Butler, 131 S.W.3d at 178. 2 Therefore, the City is immune
2 While Pajaro Promotions’ appellate brief goes into great detail regarding the Wasson factors, we
note that those factors are particularly useful in contract cases “[w]hen a particular municipal activity is not
included in the statutory list of governmental functions.” City of League City v. Jimmy Changas, 670 S.W.3d
494, 503 (Tex. 2023) (emphasis added) (citing Wasson Ints., Ltd. v. City of Jacksonville (Wasson II), 559
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to Pajaro Promotions’ claims unless immunity has been waived.
2. Chapter 271 of the Local Government Code
“If immunity is applicable, then the judiciary defers to the legislature to waive such
immunity.” Wasson I, 489 S.W.3d at 435 (emphasis in original) (citing Tooke, 197 S.W.3d
at 332–33). Section 271.152 of the Local Government Code “waives” the City’s “sovereign
immunity to suit for the purpose of adjudicating a claim for breach of [certain] contracts,”
but only “subject to the terms and conditions of” the Act. TEX. LOC. GOV’T CODE ANN.
§ 271.152. In order for immunity to be waived under § 271.152, “the entity must in fact
have entered into a contract.” City of Houston v. Williams, 353 S.W.3d 128, 134 (Tex.
2011).
Section 271.151(2) effectively states five elements a contract must meet in
order for it to be a contract subject to section 271.152’s waiver of immunity:
(1) the contract must be in writing, (2) state the essential terms of the
agreement, (3) provide for goods or services, (4) to the local governmental
entity, and (5) be executed on behalf of the local governmental entity.
Id. “‘[A] court may determine, as a matter of law, that multiple documents comprise a
written contract.’” Id. at 137 (quoting Fort Worth Indep. Sch. Dist. v. City of Fort Worth, 22
S.W.3d 831, 840 (Tex. 2000)). Stated differently, a written contract may be embodied in
multiple documents. Id. at 138.
Pajaro Promotions concedes that it did not assert waiver of immunity pursuant to
chapter 271 of the local government code in its petition or response to the plea to the
jurisdiction, and it does not address the City’s governmental immunity arguments on this
S.W.3d 142, 150 (Tex. 2018). Here, where we have a governmental function included in the statutory list,
we need not address the Wasson factors.
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ground in this appeal. Therefore, this Court must conclude that, on this record, there has
been no established waiver under Chapter 271.
3. Evidence Affirmatively Negates Jurisdiction
Pajaro Promotions, in its prayer, requests the opportunity to replead to cure any
jurisdicitonal defects as determined by this Court. See Smith, 326 S.W.3d at 698; see
also City of Freeport v. Briarwood Holdings, L.L.C., No. 01-11-01108-CV, 2013 WL
1136576, at *5 (Tex. App.—Houston [1st Dist.] Mar. 19, 2013, no pet.) (mem. op.) (finding,
where pleadings did not affirmatively demonstrate or negate jurisdiction, that plaintiff was
entitled to a reasonable opportunity to amend). The City, however, challenges the
underlying jurisdictional facts, arguing that the evidence affirmatively negates jurisdiction.
A plea to the jurisdiction can properly challenge the existence of jurisdictional facts.
In those cases, the court can consider evidence as necessary to resolve any dispute over
those facts, even if that evidence “implicates both the subject-matter jurisdiction of the
court and the merits of the case.” Garcia, 372 S.W.3d at 635 (quoting Miranda, 133
S.W.3d at 226). If the defendant’s “evidence affirmatively negate[s] a jurisdictional fact,”
City of Waco v. Lopez, 259 S.W.3d 147, 150 (Tex. 2008), and the plaintiff “fails to raise a
fact question on the jurisdictional issue,” Garcia, 372 S.W.3d at 635; Miranda, 133 S.W.3d
at 228, the governmental unit’s immunity is not waived and the claim may be dismissed
for want of jurisdiction. See Garcia, 372 S.W.3d at 637; Lopez, 259 S.W.3d at 150;
Miranda, 133 S.W.3d at 228.
A plaintiff asserting a breach-of-contract claim must prove (1) the existence of a
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valid contract; (2) the plaintiff performed or tendered performance as the contract
required; (3) the defendant breached the contract by failing to perform or tender
performance as the contract required; and (4) the plaintiff sustained damages as a result
of the breach. USAA Tex. Lloyds Co. v. Menchaca, 545 S.W.3d 479, 501 n.21 (Tex. 2018)
(op. on reh’g). Here, the City asserted in its plea to the jurisdiction that Pajaro Promotions’
breach of contract claim necessarily fails to establish jurisdiction because the claims are
dependent on alleged verbal contracts. The Local Government Contract Claims Act
provides that a local government entity that “enters into a contract subject to this
subchapter” waives immunity “for the purpose of adjudicating a claim for breach of the
contract, subject to the terms and conditions of this subchapter.” TEX. LOC. GOV’T CODE
ANN. § 271.152. It is not disputed the City is a local government entity under the meaning
of the Local Government Contract Claims Act. The “subject to” phrase “incorporates the
other provisions of the Act to define the scope of its waiver of immunity.” Hays St. Bridge
Restoration Grp. v. City of San Antonio, 570 S.W.3d 697, 706 (Tex. 2019) (quoting Zachry
Constr. Corp. v. Port of Hous. Auth. of Harris Cnty., 449 S.W.3d 98, 108 (Tex. 2014)).
The City argued in its plea to the jurisdiction that the verbal contracts alleged by Pajaro
Promotions do not meet the statutory definition of a “contract subject to this subchapter.”
See TEX. LOC. GOV’T CODE ANN. § 271.151(2)(A) (defining term, in part, as “a written
contract stating the essential terms of the agreement for providing goods or services to
the local governmental entity that is properly executed on behalf of the local governmental
entity”). We agree. Because the alleged contracts upon which Pajaro Promotions bases
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its claims are verbal rather than written, there is no waiver of governmental immunity for
Pajaro Promotions’ breach-of-contract action. We conclude that Pajaro Promotions did
not bring its suit within the waiver provision of the Local Government Contract Claims Act.
See Zachry Constr. Corp., 449 S.W.3d at 108; see also Obasogie v. Harris Cnty. Hosp.
Dist., No. 14-19-00316-CV, 2021 WL 1184913, at *5 (Tex. App.—Houston [14th Dist.]
Mar. 30, 2021, pet. denied).
The City’s first issue is sustained. 3
III. CONCLUSION
We reverse the trial court’s judgment and render judgment dismissing appellees’
breach of contract claim for want of jurisdiction. 4
NORA L. LONGORIA
Justice
Delivered and filed on the
11th day of July, 2024.
3 Having determined the the City did not waive immunity and the trial court should have granted
the City’s plea to the jurisdiction, we need not address the City’s second issue. See TEX. R. APP. P. 47.1.
The parties agree in their appellate briefing that the City’s third issue is moot, as the breach of contract
claim complained of in issue number three was nonsuited prior to the plea to the jurisdiction.
4 We note that appellees filed a second amended petition after appellant’s notice of appeal was
filed in this Court challenging the denial of the plea to the jurisdiction. This opinion only disposes of those
claims presented in appellees’ plea to the jurisdiction.
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