Hitchcock Industrial Development Corporation v. Cressman Tubular Products Corporation ( 2024 )

Affirmed and Majority and Concurring Opinions filed July 18, 2024.
In The
Fourteenth Court of Appeals
NO. 14-23-00254-CV
HITCHCOCK INDUSTRIAL DEVELOPMENT CORPORATION,
Appellant
V.
CRESSMAN TUBULAR PRODUCTS CORPORATION, Appellee
On Appeal from the 405th District Court
Galveston County, Texas
Trial Court Cause No. 21-CV-0375
MAJORITY OPINION
In this interlocutory appeal from the trial court’s denial of appellant’s plea to
the jurisdiction, we address whether Type A economic development corporations
created under the authority of Local Government Code chapter 504 have
governmental immunity as to tort claims for which their governmental immunity
has not been waived. Concluding that under Rosenberg Development Corporation
v. Imperial Performing Arts, Inc., 571 S.W.3d 738 (Tex. 2019), these corporations
do not enjoy governmental immunity, we affirm the trial court’s order.
I. FACTUAL AND PROCEDURAL BACKGROUND
The evidence before the trial court shows that appellant/third-party
defendant Hitchcock Industrial Development Corporation (the “Corporation”) at
all material times has been a Type A economic development corporation governed
by Local Government Code chapter 504. See Tex. Local Gov’t Code Ann. §
504.001, et seq. (West, Westlaw through 2023 4th C.S.). 1 The Corporation was
organized “for the specific public purpose of the promotion and development of
commercial, industrial and manufacturing enterprises to promote and encourage
employment and public welfare.”2
In May 2014 the City of Hitchcock, Texas (the “City”) and appellee/third-
party plaintiff Cressman Tubular Products Corporation entered into an “Economic
Development Agreement” (the “Agreement”). According to the Corporation,
Cressman agreed to develop a place of business in the City in return for a rebate of
certain sales taxes collected by the City for Cressman’s sales. 3 The Corporation
denies that it is a party to the Agreement, and we do not address that issue in this
opinion. The City filed suit against Cressman alleging that Cressman failed to have
1
The Corporation states in its brief that it is now known as “Hitchcock Economic Development
Corporation,” and that in 2022 voters elected to change the Corporation from a Type A to a Type
B economic development corporation.
2
In Rosenberg Development Corporation v. Imperial Performing Arts, Inc., the Supreme Court
discussed the difference between Type A and Type B economic development corporations:
“Depending mainly on the size of the authorizing municipality, economic development
corporations are categorized as either Type A or Type B. Each type is authorized to finance ‘one
or more projects’ that may be funded, in part, by local taxes or the proceeds of revenue bonds.
‘Projects’ are delineated by the statute, but broadly defined. All economic development
corporations are authorized to undertake projects related to creating or retaining primary jobs,
job training, and improving infrastructure. Type B corporations . . . may also undertake projects
related to recreational or community facilities, affordable housing, water-supply facilities, water-
conservation programs, and airport facilities.” 571 S.W.3d 738, 744 (Tex. 2019) (footnotes
omitted).
3
In this appeal we do not address the merits of the parties’ claims regarding the Agreement or
the rights or obligations of any party under the Agreement.
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a presence in the City sufficient to qualify for sales tax rebates and asserted claims
for breach of the Agreement, unjust enrichment, and fraud.
Cressman filed third-party claims against the Corporation for breach of the
Agreement, negligent misrepresentation, and fraud. The Corporation filed a plea to
the jurisdiction (“Jurisdictional Plea”) in which it asserted that the trial court
lacked subject-matter jurisdiction over Cressman’s negligent misrepresentation and
fraud claims (the “Tort Claims”) because under section 504.107(b) of the Local
Government Code, the Corporation has governmental immunity as to tort claims
and because its governmental immunity as to the Tort Claims has not been waived.
See Tex. Local Gov’t Code Ann. § 504.107(b) (West, Westlaw through 2023 4th
C.S.). The Corporation also moved for summary judgment as to Cressman’s claim
for breach of the Agreement. Cressman opposed the Jurisdictional Plea and the
summary-judgment motion. The trial court signed an order regarding the
Jurisdictional Plea and the summary-judgment motion, but the order lacked
decretal language and thus failed to rule on the plea or the motion. After we abated
this appeal to allow the trial court to sign an order ruling on the plea, the trial court
signed a nunc pro tunc order denying the Jurisdictional Plea and the summary-
judgment motion without stating its reasons. The Corporation has timely perfected
an interlocutory appeal under section 51.014(a)(8) of the Civil Practice and
Remedies Code from the trial court’s order denying its Jurisdictional Plea. See
Tex. Civ. Prac. & Rem. Code Ann. §51.014(a)(8) (West, Westlaw through 2023
4th C.S.).
II. ISSUES AND ANALYSIS
A. Does this court have appellate jurisdiction?
Section 51.014(a)(8) of the Civil Practice and Remedies Code provides for
an appeal from an interlocutory order of a district court denying a plea to the
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jurisdiction filed by a governmental unit as that term is defined in section 101.001
of the Civil Practice and Remedies Code. See Tex. Civ. Prac. & Rem. Code Ann.
§§ 51.014(a)(8), 101.001 (West, Westlaw through 2023 4th C.S.). Cressman has
not asserted that this court lacks appellate jurisdiction, but we are obligated to
review sua sponte issues affecting our appellate jurisdiction. See M.O. Dental Lab
v. Rape, 139 S.W.3d 671, 673 (Tex. 2004). At all material times, the Corporation
was a Type A economic development corporation. This type of corporation is a
governmental unit for the purposes of Civil Practice and Remedies Code chapter
101 (the “Tort Claims Act”), and the actions of a Type A economic development
corporation are governmental functions. See Tex. Local Gov’t Code Ann. §
504.107(b). Because the Legislature expressly expanded section 101.001’s
governmental-unit definition to include Type A economic development
corporations, the Corporation is a governmental unit for purposes of the
interlocutory appeal authorized by section 51.014(a)(8). See Tex. Civ. Prac. &
Rem. Code Ann. § 51.014(a)(8); Tex. Local Gov’t Code Ann. § 504.107(b);
Rosenberg Dev. Corp. v. Imperial Performing Arts, Inc., 571 S.W.3d 738, 747–48
(Tex. 2019) (holding that a Type B economic development corporation may appeal
under section 51.014(a)(8) because section 505.106(b) of the Local Government
Code, a statute nearly identical to section 504.107(b), provides that this type of
corporation is a governmental unit for the purposes of the Tort Claims Act);
Community Health Choice, Inc. v. ACS Primary Care Physicians Southwest, P.A.,
676 S.W.3d 150, 155 (Tex. App.—Houston [14th Dist.] 2023, pet. filed)
(following the Supreme Court’s opinion in Rosenberg and concluding that a
charitable organization created under Health and Safety Code section 281.0565
may appeal under section 51.014(a)(8) because section 281.0565(c) provides that
this type of organization is a local government unit for the purposes of the Tort
Claims Act). Therefore, this court has appellate jurisdiction over the Corporation’s
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interlocutory appeal from the trial court’s order denying the Jurisdictional Plea.
B. Did the trial court err in denying the Jurisdictional Plea?
The judiciary developed the doctrines of sovereign immunity and
governmental immunity under the common law, without any legislative or
constitutional enactment. See Wasson Interests, Ltd. v. City of Jacksonville, 489
S.W.3d 427, 431 (Tex. 2016). As the arbiter of the common law, the judiciary has
defined the boundaries of these common-law doctrines and determined under what
circumstances sovereign immunity or governmental immunity exists in the first
instance. See id. at 432. The judiciary has generally deferred to constitutional
provisions or legislative enactments to waive sovereign immunity or governmental
immunity that the judiciary has recognized. See id. at 432–33. “Sovereign
immunity” refers to the state’s immunity from suit and liability. Wichita Falls State
Hosp. v. Taylor, 106 S.W.3d 692, 694 n.3 (Tex. 2003). In addition to protecting the
state from liability, it also protects the various divisions of state government,
including agencies, boards, hospitals, and universities. Id. “Governmental
immunity” refers to the immunity from suit and liability of political subdivisions of
the State, including counties, cities, and school districts, as to acts performed as a
“branch of the state.” See Wasson Interests, Ltd., 489 S.W.3d at 429–30; Wichita
Falls State Hosp., 106 S.W.3d at 694 n.3.
On appeal, the Corporation argues that the trial court erred in denying its
Jurisdictional Plea as to the Tort Claims. In its first issue the Corporation asserts
that it has governmental immunity as to tort claims absent a waiver of its
governmental immunity because the legislature granted this immunity to Type A
economic development corporations under Local Government Code section
504.107(b). In its second issue the Corporation asserts that Cressman has not
shown a waiver of the Corporation’s governmental immunity as to the Tort Claims.
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The Corporation does not assert that it is entitled to governmental immunity or
immunity from suit under the common law. Instead the Corporation contends that
the Legislature granted governmental immunity and immunity from suit to Type A
economic development corporations under section 504.107(b) of the Local
Government Code, which provides that “[f]or purposes of [the Tort Claims Act], a
Type A [economic development] corporation is a governmental unit and the
corporation’s actions are governmental functions.” Tex. Loc. Gov’t Code Ann. §
504.107(b). We must decide whether under section 504.107(b), a Type A
economic development corporation has governmental immunity as to tort claims
for which a governmental unit’s governmental immunity has not been waived,
without any required showing of entitlement to governmental immunity under the
common law.
In Rosenberg Development Corporation v. Imperial Performing Arts, Inc., a
Type B economic development corporation (the “Type B Corporation”) argued
that it had governmental immunity from suit as to breach-of-contract and
declaratory-judgment claims asserted against it. See 571 S.W.3d 738, 741 (Tex.
2019). The Type B Corporation asserted that in Local Government Code section
505.106(b), the legislature conferred governmental immunity on Type B economic
development corporations. See Tex. Loc. Gov’t Code Ann. § 505.106(b) (West,
Westlaw through 2023 4th C.S.) Section 505.106(b) of the Local Government
Code, a provision nearly identical to section 504.107(b), provides that “[f]or
purposes of [the Tort Claims Act], a Type B [economic development] corporation
is a governmental unit and the corporation’s actions are governmental functions.”
Tex. Loc. Gov’t Code Ann. § 505.106(b).
In Rosenberg the Supreme Court of Texas held that “economic development
corporations are not governmental entities in their own right and therefore are not
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entitled to governmental immunity.” Rosenberg Dev. Corp., 571 S.W.3d at 741.
The high court said that it did not consider whether the legislature had conferred
governmental immunity on the Type B Corporation because section 505.106 does
not purport to confer immunity. See id. at 747. The Rosenberg court asserted that
section 505.106(b) “merely imports the Texas Tort Claims Act’s limitations on
liability and damages.” Id. The Supreme Court stated that, “[b]ecause section
505.106 merely purports to limit the remedies available when economic
development corporations perform governmental functions, we need not consider
whether the Legislature can confer immunity by statute or only waive it.” Id.
“Considering the Development Corporation Act as a whole,” the Rosenberg
court concluded “that the Legislature did not authorize municipalities to create
economic development corporations as distinct governmental entities entitled to
assert immunity in their own right.” Id. at 751. The high court emphasized that
under the Development Corporation Act, “an economic development corporation
‘is not a political subdivision or a political corporation for purposes of the laws of
this state,’” and “the Legislature has forbidden authorizing municipalities from
bestowing on the corporation any ‘attributes of sovereignty.’” Id. at 745 (citing
respectively, Tex. Loc. Gov’t Code Ann. §§501.055(b), 501.010 (West, Westlaw
through 2023 4th C.S.)); see Rosenberg Dev. Corp., 571 S.W.3d at 741, 748–49.
The Rosenberg court noted that governmental immunity has long been described as
one of the “attributes of sovereignty.” See id. at 745. The high court stated that the
Development Corporation Act was “notably unique” in the “directness” with
which the Legislature stated that economic development corporations are not
political subdivisions or political corporations and should not be given attributes of
sovereignty. See id. at 750.
In its opinion the Rosenberg court most of the time used the term “economic
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development corporation,” which includes both Type A and Type B economic
development corporations. See id. at 744–52. The Supreme Court noted that the
text of section 505.106(b) is nearly the same as the text of section 504.107(b),
which applies to Type A economic development corporations. See id. at 748, n.69.
The parts of the Development Corporation Act that the Rosenberg court cited
apply to both Type A and Type B economic development corporations. See Tex.
Loc. Gov’t Code Ann. §501.055(b) (stating that “a[n] [economic development]
corporation is not a political subdivision or a political corporation for purposes of
the laws of this state”); id. §501.010 (stating that “[a] unit may not delegate to a[n]
[economic development] corporation any of the unit’s attributes of sovereignty,
including the power to tax, the power of eminent domain, and the police power”);
id. §501.002(17) (defining a “unit” as “a municipality, county, or district that may
create and use a corporation under [the Development Corporation Act]”);
§501.002(5) (defining a “corporation” as “a corporation organized under [the
Development Corporation Act],” which includes both Type A and Type B
economic development corporations). Although Rosenberg involved a Type B
economic development corporation, Rosenberg’s reasoning and analysis apply
with equal force to a Type A economic development corporation. See Rosenberg
Dev. Corp., 571 S.W.3d at 744–52.
Before Rosenberg was decided, three sister courts of appeals concluded that
Local Government Code section 504.107(b), or its substantially similar
predecessor statute, conferred governmental immunity on Type A economic
development corporations. See Weir Bros., Inc. v. Longview Economic
Development Corp., 373 S.W.3d 841, 845–46 (Tex. App.—Dallas 2012, no pet.);
City of Weslaco v. Borne, 210 S.W.3d 782, 788 n.1 (Tex. App.—Corpus Christi
2006, pet. denied); Rayl v. Borger Econ. Dev. Corp., 963 S.W.2d 109, 114 (Tex.
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App.—Amarillo 1998, no pet.). But these cases conflict with the reasoning of the
Supreme Court’s opinion in Rosenberg, which we are bound to follow. See
Mitschke v. Borromeo, 645 S.W.3d 251, 256 (Tex. 2022); Lubbock Cnty., Texas v.
Trammel’s Lubbock Bail Bonds, 80 S.W.3d 580, 585 (Tex. 2002). Under the
Rosenberg precedent, the text of Local Government Code section 504.107(b) does
not purport to confer immunity and merely imports the Texas Tort Claims Act’s
limitations on liability and damages. See Rosenberg Dev. Corp., 571 S.W.3d at
747. Therefore, the Corporation does not have governmental immunity, and its
appellate arguments lack merit. See id.
III. CONCLUSION
The Supreme Court of Texas’s opinion in Rosenberg governs the disposition
of this case. Under that precedent this court has jurisdiction over this interlocutory
appeal under Civil Practice and Remedies Code section 51.014(a)(8). See
Rosenberg Dev. Corp., 571 S.W.3d at 748. Under that precedent, Local
Government Code section 504.107(b) does not confer governmental immunity and
merely imports the Texas Tort Claims Act’s limitations on liability and damages.
See id. at 747. Therefore, the Corporation’s appellate complaints lack merit. We
overrule the Corporation’s two issues and affirm the trial court’s denial of the
Jurisdictional Plea.
/s/ Randy Wilson
Justice
Panel consists of Justices Hassan, Poissant, and Wilson (Wilson, concurring).
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