CHW-Lattas Creek, L.P. by GP Alice Lattas Creek, L.L.C. v. City of Alice

Fourth Court of Appeals
San Antonio, Texas
OPINION
No. 04-18-00251-CV
CHW-LATTAS CREEK, L.P. by GP Alice Lattas Creek, L.L.C.,
Appellant
v.
CITY OF ALICE,
Appellee
From the 79th Judicial District Court, Jim Wells County, Texas
Trial Court No. 17-01-56785-CV
Honorable Richard C. Terrell, Judge Presiding
Opinion by: Sandee Bryan Marion, Chief Justice
Sitting: Sandee Bryan Marion, Chief Justice
Luz Elena D. Chapa, Justice
Irene Rios, Justice
Delivered and Filed: October 31, 2018
AFFIRMED
CHW-Lattas Creek, L.P. appeals the trial court’s order granting a plea to the jurisdiction
filed by the City of Alice asserting the trial court erred in granting the City’s plea because: (1) the
City was engaged in a proprietary function for which the City’s immunity was waived; (2) the
Development Agreement between CHW and the City waived the City’s immunity under section
271.152 of the Texas Local Government Code; (3) courts cannot interfere with the exercise of
municipal legislative discretion; and (4) the City is estopped from claiming immunity. CHW also
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contends the trial court erred in granting the City’s objections to the affidavit of William W. Ochse,
the manager of CHW’s general partner. We affirm the trial court’s order.
BACKGROUND
Effective January 8, 2013, CHW and the City entered into a Development Agreement. The
Development Agreement recites CHW owns 352.753 acres of land in Jim Wells County, Texas
(the “Developer Property”), and the purpose of the agreement is “to promote economic
development as contemplated by Chapter 380 of the Texas Local Government Code whereby
[CHW] will sell 22 acres of land and dedicate 18 acres of land to the City and the City will, in
turn, construct a multi-use complex, including but not limited to an outdoor amphitheater, an
Aquatic Center [as defined in the agreement] and a conference center, and will facilitate the
construction of a hotel within said 40 acres.” The Development Agreement further recites the
parties “have in the manner provided by Tex. Loc. Gov’t Code 271.151 et seq. entered into a
written contract for providing goods and services to the local governmental entity.”
Under the terms of the Development Agreement, CHW agreed to sell the surface estate of
22 acres of the Developer Property to the City for a purchase price of $7,000 per acre (the
“Purchased Property”). CHW also agreed to dedicate the surface estate of 18 acres of the
Developer Property to the City (the “Dedicated Property”). Finally, CHW agreed to dedicate the
surface estate of 30.38 acres of the Developer Property to the City (the “Park Land Property”).
The Purchased Property, Dedicated Property, and Park Land Property are collectively defined as
the Conveyed Property.
With regard to the Purchased Property, the agreement provided the conveyance was
contingent upon: (1) the City completing construction of the Aquatic Center (as defined in the
agreement) within thirty-six months; and (2) substantially completing an amphitheater as described
in a master plan on file with the City’s secretary. Absent substantial completion of those structures,
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all or a portion of the Purchased Property was subject to being re-conveyed to CHW at the same
per acre price paid by the City. Similarly, although the City was only required to facilitate the
construction of a hotel by a third party, if the hotel was not constructed, CHW was granted a right
of first refusal to purchase the lot or lots on which the hotel was to be constructed in the event the
City sought to sell the lot or lots. The Park Land Property was limited to use as a city park but
was not subject to re-conveyance.
In the Development Agreement, CHW and the City agreed the Conveyed Property would
be developed in phases “commencing with the construction of the City Utility Improvements, City
Road Improvements, and the Aquatic Center.” With respect to the City Utility Improvements, the
City agreed to extend water lines and sanitary sewer mains from their existing termination points
to other points that would facilitate the development of the Developer Property. With respect to
the City Road Improvements, the City agreed to construct two roads to facilitate the development.
CHW and the City agreed to work together to develop a schedule for each phase of the
construction, and the City agreed to commence construction of the Aquatic Center, City Utility
Improvements, and City Road Improvements within 120 days after the closing on the Purchased
Property.
Also in the Development Agreement, CHW agreed to submit a petition for the voluntary
annexation of the Developer Property within 120 days from the effective date of the Development
Agreement. CHW and the City agreed to the regulations and zoning that would govern the
development of the Developer Property which the agreement contemplated could involve multiple
subdivisions. CHW and the City acknowledged their desire and intent “to provide for the planning,
development and construction of a first of its kind Master Planned Community providing for a mix
of uses and designs” and that CHW and the City would “work together to prepare a mutually
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acceptable Planned Unit Development plan for the Property to permit a mix of compatible land
uses.” Finally, the agreement contained the following provision entitled “Waiver of Immunity”:
The parties expressly agree that this Agreement is made and is subject to the
requirements of Tex. Loc. Gov’t Code Ann. Chapter 271, Subchapter 1 and that the
City is authorized to enter into this Agreement and expressly waives sovereign
immunity to suit for the purpose of adjudicating a claim for breach of contract.
On January 6, 2017, approximately four years after the effective date of the Development
Agreement, CHW sued the City alleging the City “failed to construct roads of such specifications
so as to adequately take care of Plaintiff’s subdivision and has failed to increase the much needed
water pressure to serve Plaintiff’s development lots and subdivision, and has failed to construct
the amphitheater required by the Agreements.” CHW alleged claims for breach of contract,
declaratory relief and fraud.
The City filed a plea and amended plea to the jurisdiction asserting immunity from suit.
First, the City asserted the Development Agreement was not a contract for providing goods and
services to the City as required for immunity to be waived under section 271.152 for a breach of
contract claim. Second, the City asserted section 271.152 does not waive immunity for a claim
for declaratory relief. Finally, the City asserted the fraud claim is an intentional tort for which
immunity is not waived. In support of its plea, the City attached excerpts from the deposition of
William W. Ochse, the manager of CHW’s general partner.
CHW filed a response to the City’s amended plea asserting immunity was waived for its
breach of contract claim under section 271.152 because the Development Agreement was a
contract for services. CHW further responded immunity was waived because the City was engaged
in proprietary functions in executing the Development Agreement. Finally, CHW responded the
City was estopped from claiming its immunity was waived. In support of its response, CHW
produced an affidavit signed by Ochse and the complete transcript of Ochse’s deposition.
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The City filed a reply to CHW’s response asserting it was not estopped from claiming
immunity from suit and objecting to Ochse’s affidavit. After CHW filed a sur-response, the trial
court held a hearing on the City’s amended plea and took the matter under advisement. The trial
court subsequently entered orders granting the City’s objections to Ochse’s affidavit and
deposition, granting the City’s amended plea, and dismissing the underlying cause for lack of
subject matter jurisdiction. CHW appeals; however, CHW only challenges the trial court’s order
with regard to its breach of contract and declaratory relief claims.
STANDARD OF REVIEW
We review a trial court’s ruling on a plea to the jurisdiction de novo. Sampson v. Univ. of
Tex. at Austin, 500 S.W.3d 380, 384 (Tex. 2016). If the plea to the jurisdiction challenges the
pleadings, we liberally construe the pleadings to determine if the plaintiff “has alleged facts that
affirmatively demonstrate the court’s jurisdiction to hear the cause.” Tex. Dep’t of Parks &
Wildlife v. Miranda, 133 S.W.3d 217, 226 (Tex. 2004). If the plea to the jurisdiction challenges
the existence of jurisdictional facts, “we consider relevant evidence submitted by the parties to
determine if a fact issue exists.” Suarez v. City of Tex. City, 465 S.W.3d 623, 632-33 (Tex. 2015).
“We take as true all evidence favorable to the nonmovant, indulge every reasonable inference, and
resolve any doubts in the nonmovant’s favor.” Id. at 633. “If the evidence creates a fact question
regarding jurisdiction, the plea must be denied pending resolution of the fact issue by the fact
finder.” Id. “If the evidence fails to raise a question of fact, however, the plea to the jurisdiction
must be granted as a matter of law.” Id.
GOVERNMENTAL V. PROPRIETARY FUNCTION
In its brief, CHW first contends the trial court erred in granting the City’s plea because the
City was engaged in a proprietary function when it entered into the Development Agreement for
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which its immunity from suit was waived. The City responds that it was engaged in governmental
functions and thereby retained its immunity.
In regard to governmental immunity, the Texas Supreme Court “has distinguished between
those acts performed as a branch of the state and those acts performed in a proprietary,
nongovernmental capacity.” Wasson Interests, Ltd. v. City of Jacksonville, 489 S.W.3d 427, 430
(Tex. 2016). A municipality is immune for acts done as a branch of the state referred to as
governmental functions. Id. at 433. Governmental functions are “functions that are enjoined on a
municipality by law ... to be exercised by the municipality in the interest of the general public.”
See TEX. CIV. PRAC. & REM. CODE ANN. § 101.0215(a) (West Supp. 2017).
“[S]overeign immunity does not[, however,] imbue a city with derivative immunity when
it performs proprietary functions.” Wasson Interests, Ltd., 489 S.W.3d at 439. Proprietary
functions are “functions that a municipality may, in its discretion, perform in the interest of the
inhabitants of the municipality.” See TEX. CIV. PRAC. & REM. CODE ANN. § 101.0215(b).
A city is not immune in performing a proprietary function regardless of “whether a city
commits a tort or breaches a contract, so long as in each situation the city acts of its own volition
for its own benefit and not as a branch of the state.” Wasson Interests, Ltd., 489 S.W.3d at 439.
Therefore, “the common-law distinction between governmental and proprietary acts—known as
the proprietary-governmental dichotomy—applies in the contract-claims context just as it does in
the tort-claims context.” Id.; see also Jamro Ltd. v. City of San Antonio, No. 04-16-00307-CV,
2017 WL 993473, at *3 (Tex. App.—San Antonio Mar. 15, 2017, no pet.) (mem. op.) (recognizing
the holding in Wasson Interests, Ltd. as extending the proprietary-governmental dichotomy to
contract claims).
“[T]o 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
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governmental or proprietary function when it entered the contract, not when it allegedly breached
that contract.” Wasson Interests, Ltd. v. City of Jacksonville, No. 17-0198, 2018 WL 2449184, at
*5 (Tex. June 1, 2018). “Stated differently, the focus belongs on the nature of the contract, not the
nature of the breach.” Id. “If a municipality contracts in its proprietary capacity but later breaches
that contract for governmental reasons, immunity does not apply.” Id. “Conversely, if a
municipality contracts in its governmental capacity but breaches that contract for proprietary
reasons, immunity does apply.” Id.
“The distinction between a municipality’s governmental and proprietary functions seems
plain enough, but the rub comes when it is sought to apply the test to a given state of facts.” Id. at
*2 (internal quotation omitted). “[D]etermining which functions are proprietary and which are
governmental is not always a cut-and-dried task.” Id. (internal quotation omitted).
“[T]he Texas Constitution authorizes the Legislature to ‘define for all purposes those
functions of a municipality that are to be considered governmental and those that are proprietary,
including reclassifying a function’s classification assigned under prior statute or common law.’”
Id. at *3 (quoting TEX. CONST. art. XI, § 13). “Exercising that authority, the Legislature has
defined and enumerated governmental and proprietary functions for the purposes of determining
whether immunity applies to tort claims against a municipality.” Id. Specifically, the Texas Torts
Claims Act “enumerates thirty-six governmental functions.” Id.
One of the governmental functions enumerated by the Legislature in the Act is “community
development or urban renewal activities undertaken by municipalities and authorized under
Chapters 373 and 374, Local Government Code.” TEX. CIV. PRAC. & REM. CODE ANN.
§ 101.0215(34). It cannot be disputed that the nature of the Development Agreement is a contract
for community development. However, CHW contends the Legislature limited the type of
community development that constitutes a governmental function to community development
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under Chapters 373 and 374. Because the Development Agreement recites its purpose is to
promote community development under Chapter 380, CHW argues section 101.0215(34) does not
apply. We disagree.
In its analysis of the 1997 enabling legislation that amended section 101.0215 to add
subsection 34, the House Committee on Civil Practice stated:
Community development activities, even though inherently governmental, are not
categorized in the [Texas Torts Claims Act] as either governmental or proprietary.
However, courts have found them to be proprietary (i.e., discretionary), resulting
in unlimited liability for the municipality. Consequently, lawsuits against
municipalities relating to community development activities diminish the funds
available for projects within the municipality. The designation of community
development activities as a governmental function should provide reasonable limits
on recoveries in this arena and avoid the potential of major losses which would
reduce funding of community development projects.
E. Hous. Estate Apartments, L.L.C. v. City of Hous., 294 S.W.3d 723, 732-33 (Tex. App.—
Houston [1st Dist.] 2009, no pet.) (quoting House Comm. on Civil Practices, Bill Analysis, Tex.
H.B. 2766, 75th Leg., R.S. 1997). It appears the language in the bill adding subsection 34 focused
on Chapters 373 and 374 of the Local Government Code because the two cases in which courts
had found community development activities to be proprietary involved community development
activities undertaken under those two chapters. See id. at 732 (noting amendment followed
decisions in City of Hous. v. Sw. Concrete Constr., Inc., 835 S.W.2d 728 (Tex. App.—Houston
[14th Dist.] 1992, writ denied) and Josephine E. Abercrombie Interests, Inc. v. City of Hous., 830
S.W.2d 305 (Tex. App.—Corpus Christi 1992, writ denied)). The logic for the amendment,
however, extends to all community development activities regardless of which chapter of the Local
Government Code applies. Because the list of governmental functions is nonexhaustive but
instructive, see Wasson Interests, Ltd., 2018 WL 2449184, at *3, we conclude community
development undertaken under Chapter 380 is a governmental function. See City of Lancaster v.
White Rock Commercial, LLC, No. 05-17-00583-CV, 2018 WL 3968484, at *1 (Tex. App.—
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Dallas Aug. 20, 2018, no pet. h.) (mem. op.) (holding city’s actions in entering into agreement
pursuant to section 380.001 were governmental because functions covered by agreement were
defined as governmental functions in section 101.0215); TEX. LOC. GOV’T CODE ANN. § 380.001
(West 2005) (authorizing programs “to promote state or local economic development”); see also
Op. Tex. Att’y Gen. No. DM-185 (1992) (concluding section 380.001 of the Local Government
Code was enacted by the Legislature pursuant to article III, section 52–a of the Texas Constitution
which authorizes the legislature to provide for the creation of programs “for the public purposes
of development and diversification of the economy of the state”); cf. Jamro Ltd., 2017 WL 993473,
at *3-4 (holding creation of reinvestment zone to promote development of an area that would not
occur through private investment was a governmental function); but see City of Westworth Vill. v.
City of White Settlement, No. 02-17-00211-CV, 2018 WL 3763908, at *13 (Tex. App.—Fort
Worth Aug. 9, 2018, no pet. h.) (holding development agreement entered into pursuant to chapter
380 was not “undertaken in a governmental capacity”). Because the purpose of the Development
Agreement was to promote economic development under Chapter 380, we hold the City was
engaged in a governmental function when it entered into the Development Agreement. 1
CHAPTER 271
CHW next argues that if this court determines the City was engaged in a governmental
function, the City’s immunity is waived under section 271.152 of the Local Government Code
because the Development Agreement is a contract for the provision of services to the City. The
1
We also note the specific activities the City agreed to undertake pursuant to the Development Agreement are
governmental functions. See TEX. CIV. PRAC. & REM. CODE ANN. §§ 101.0215(3), (13), (16), (23), (29), (32) (listing
street construction and design, parks, civic and convention centers, recreational facilities including swimming pools,
zoning, planning, and plat approval, and water and sewer service as governmental functions); see also Jamro Ltd.,
2017 WL 993473, at *4 (holding city engaged in governmental function in approving tax increment financing used
for improvements which were defined by section 101.0215 to be governmental functions).
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City responds CHW does not provide services to the City under the Development Agreement. We
agree with the City.
Section 271.152 of the Local Government Code provides that a local governmental entity
“waives sovereign immunity to suit for the purpose of adjudicating a claim for breach” of a
“contract subject to this subchapter.” TEX. LOC. GOV’T CODE ANN. § 271.152 (West 2016). In
pertinent part, section 271.151(2) defines a “contract subject to this subchapter” as “a written
contract stating the essential terms of the agreement for providing goods or services to the local
governmental entity.” Immunity is only waived under section 271.152, however, for damages
recoverable under section 271.153. Zachry Constr. Corp. v. Port of Houston Auth. of Harris Cty.,
449 S.W.3d 98, 110 (Tex. 2014). Under section 271.153, a successful claimant’s recovery is
limited to “‘the balance due and owed by the local governmental entity under the contract,’ plus
attorney’s fees and interest.” Lubbock Cty. Water Control & Imp. Dist. v. Church & Akin, L.L.C.,
442 S.W.3d 297, 304 (Tex. 2014) (quoting TEX. LOC. GOV’T CODE ANN. § 271.153(a)(1)(3)).
Section 271.153(b) expressly excludes the recovery of exemplary damages and most consequential
damages. TEX. LOC. GOV’T CODE ANN. § 271.153(b).
“[T]he term ‘services’ [as used in section 271.151] is broad and encompasses a wide array
of activities.” Lubbock Cty. Water Control & Imp. Dist., 442 S.W.3d at 305. However,
“[c]onstruing section 271.152’s waiver of immunity with section 271.153(a)’s limitation on
damages to which the waiver applies, the waiver will typically apply only to contracts in which
the governmental entity agrees to pay the claimant for the goods or services that the claimant
agrees to provide to the governmental entity.” Id. at 304. “While a party may agree to provide
goods or services in exchange for something other than payment, the absence of any agreement by
the governmental entity to pay for goods or services may indicate that the claimant did not in fact
agree to provide goods or services to the governmental entity.” Id. at 305.
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In East Hous. Estate Apartments, L.L.C., East Houston Estate Apartments, L.L.C. entered
into a loan agreement with the City of Houston with the proceeds being used to assist in
rehabilitating a 130 unit apartment complex. 294 S.W.3d at 726. Funding for the loan was
provided by the city through a federal program, and the community development activity was
authorized under Chapter 373 and/or 374 of the Texas Local Government Code. Id. East Houston
eventually sued the city for breach of contract, and the trial court granted the city’s plea to the
jurisdiction. Id. at 728-29. After holding the city was engaged in a governmental function, id. at
733-34, the Houston court next addressed East Houston’s argument that the city’s immunity was
waived under section 271.152. East Houston argued it was to provide the service of rehabilitating
the apartment complex to provide low-income housing for the city’s residents in exchange for the
funds allocated by the loan agreement. Id. at 734. The City argued the loan agreement did not
require East Houston to provide “anything that could be construed as a service to the City.” Id.
The Houston court agreed with the city, reasoning: “while the City would benefit in a general way
from having East Houston’s apartment units refurbished and from the availability of more housing
for low-income families, nothing in the contract obligated East Houston to provide any municipal
services directly to the City.” Id. at 736. The court asserted, “The City was thus a conduit of
federal funds and a facilitator of the project, but no services were provided directly to the City.”
Id.
Similarly, in this case, CHW and the City agreed to undertake various activities to develop
the Developer Property and to cooperate with each other in doing so. Just like the City of Houston,
the City in this case was a “facilitator of the project,” but the Development Agreement did not
obligate or require CHW to provide any services to the City, and the City did not agree to pay
CHW for any services. Lubbock Cty. Water Control & Imp. Dist., 442 S.W.3d at 303 (“When a
party has no right under a contract to receive services, the mere fact that it may receive services as
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a result of the contract is insufficient to invoke chapter 271’s waiver of immunity. At best, such
services are only an ‘indirect’ and ‘attenuated’ benefit under the contract.”); W. Travis Cty. Pub.
Util. Agency v. Travis Cty. Mun. Util. Dist. No. 12, 537 S.W.3d 549, 555 (Tex. App.—Austin
2017, pet. denied) (noting “ the governmental entity must in the first instance have a right under
the contract to receive services” for immunity to be waived) (emphasis in original); City of Paris
v. Abbott, 360 S.W.3d 567, 576 (Tex. App.—Texarkana 2011, pet. denied) (noting for contract to
be one for services under section 271.152 “there must be some obligation to perform” services for
the city). Although CHW points to the actions it took in furtherance of the development, these
actions were in furtherance of CHW’s desire to develop its land and were not services provided to
the City under the essential terms of the Development Agreement. Additionally, although the
Development Agreement recites that it is a written contract for providing goods and services to
the City, recitals cannot be used to contradict the operative terms of a contract. Griffith Techs.,
Inc. v. Packers Plus Energy Servs. (USA), Inc., No. 01-17-00097-CV, 2017 WL 6759200, at *4
(Tex. App.—Houston [1st Dist.] Dec. 28, 2017, no pet.) (mem. op.) (noting recitals “cannot be
used to contradict the operative terms of a contract”); All Metals Fabricating, Inc. v. Ramer
Concrete, Inc., 338 S.W.3d 557, 561 (Tex. App.—El Paso 2009, no pet.) (noting recitals “will not
control a contract’s operatives [sic] clauses unless those clauses are ambiguous.”). Therefore,
because the Development Agreement was not an agreement for providing services to the City, the
City’s immunity was not waived under the Development Agreement.
MUNICIPAL LEGISLATIVE DISCRETION
CHW next argues the Development Agreement involves municipal legislative discretion
and courts have no authority to interfere with a municipality’s exercise of its legislative discretion.
Quoting City of Brookside Vill. v. Comeau, 633 S.W.2d 790, 792 (Tex. 1982), CHW asserts
“‘courts have no authority to interfere unless [the municipal legislative act] is unreasonable and
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arbitrary—a clear abuse of municipal discretion.’” Quoting Patterson v. City of Bellmead, No. 10-
12-00357-CV, 2013 WL 1188929, at * 7 n.6 (Tex. App.—Waco Mar. 21, 2013, pet. denied) (mem.
op.), CHW asserts, “‘[A] court will not substitute its judgment for legislative discretion absent a
clear and palpable abuse of power.’”
The cases cited by CHW, however, involve ordinances or zoning regulations adopted by a
municipality. See City of Brookside Vill., 633 S.W.2d at 792 (addressing challenge to two
municipal ordinances); Patterson, 2013 WL 1188929, at *1 (addressing challenge to
constitutionality of city ordinance). “The enactment by a municipal corporation of an ordinance
is a legislative function, an expression of the will of the Legislature through the instrumentality of
the city council, upon which the Legislature has been fit to confer a part of the governmental power
reposed in it.” City of Grand Prairie v. Turner, 515 S.W.2d 19, 25 (Tex. Civ. App.—Dallas 1974,
writ ref’d n.r.e.) (internal quotation omitted); see also Howeth Invs., Inc. v. City of Hedwig Vill.,
259 S.W.3d 877, 904 (Tex. App.—Houston [1st Dist.] 2008, pet. denied) (noting municipal
ordinances are interpreted by the same rules of construction applicable to statutes and a court’s
primary duty is to carry out the intentions of the municipal legislative body). CHW does not cite
any cases holding a city’s execution of a development agreement is a legislative function or how
such an agreement is an enactment of a municipal legislative body. Because the City’s execution
of the Development Agreement did not involve the actions of the City as a municipal legislative
body, the law relating to the exercise of municipal legislative discretion does not apply to the facts
of this case.
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ESTOPPEL
CHW next argues the City should be estopped from asserting immunity or denying its
waiver. 2 As previously noted, the Development Agreement contains the following provision
entitled “Waiver of Immunity”:
The parties expressly agree that this Agreement is made and is subject to the
requirements of Tex. Loc. Gov’t Code Ann. Chapter 271, Subchapter 1 and that the
City is authorized to enter into this Agreement and expressly waives sovereign
immunity to suit for the purpose of adjudicating a claim for breach of contract.
The City responds that only the Legislature can waive immunity, and jurisdiction cannot be
conferred by agreement.
“The general rule has been in this state that when a unit of government is exercising its
governmental powers, it is not subject to estoppel.” City of Hutchins v. Prasifka, 450 S.W.2d 829,
835 (Tex. 1970). The general rule “derives from our structure of government, in which the interest
of the individual must at times yield to the public interest and in which the responsibility for public
policy must rest on decisions officially authorized by the government’s representatives, rather than
on mistakes committed by its agents.” City of White Settlement v. Super Wash, Inc., 198 S.W.3d
770, 773 (Tex. 2006). Stated differently, “barring estoppel helps preserve separation of powers;
legislative prerogative would be undermined if a government agent could—through mistake,
neglect, or an intentional act—effectively repeal a law by ignoring, misrepresenting, or
misinterpreting a duly enacted statute or regulation.” Id. As a result, “the interests of an individual
seeking to estop a governmental entity must at times yield to the general public’s interest in a
2
CHW does not argue the parties conferred jurisdiction on the trial court by their agreement, only that the City should
be estopped from claiming its immunity is not waived. See Rusk State Hosp. v. Black, 392 S.W.3d 88, 103 (Tex.
2012) (noting jurisdiction cannot be conferred by agreement); In re Liberty Mut. Fire Ins. Co., No. 04-14-00254-CV,
2014 WL 3747332, at *4 (Tex. App.—San Antonio July 30, 2014, orig. proceeding [mand. denied]) (recognizing
same).
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government that is not encumbered by the threat of unlimited liability” because barring estoppel
“protects the public fisc.” Id. at 774.
However, “[t]here is authority for the proposition that a municipality may be estopped in
those cases where justice requires its application, and there is no interference with the exercise of
its governmental functions.” Prasifka, 450 S.W.2d at 836. This exception, however, “is applied
with caution and only in exceptional cases where the circumstances clearly demand its application
to prevent manifest injustice.” Id.
In Meuth v. City of Seguin, No. 04-16-00183-CV, 2017 WL 603646, at *7 (Tex. App.—
San Antonio Feb. 15, 2017, pet. denied) (mem. op.), this court noted the Texas Supreme Court
clarified the exception to the general rule in Super Wash, Inc. and reiterated its limited
applicability, asserting:
In clarifying the exception, the court first noted it had only applied the
exception in two cases in which it held a city was estopped from enforcing a notice
of claim provision. 3 The court asserted those decisions “illustrate the types of cases
that may fall under the ‘justice requires’ exception” because evidence was
presented “that city officials may have affirmatively misled the parties seeking to
estop the city and that the misleading statements resulted in the permanent loss of
their claims against the cities.” “Evidence that city officials acted deliberately to
induce a party to act in a way that benefitted the city but prejudiced the party weighs
in favor of applying the exception articulated in Prasifka.” With regard to its
application of estoppel in the two decisions, the court noted the complaining parties
in those cases “would have been completely denied relief had the cities not been
3
In Roberts v. Haltom City, Roberts sued the city for injuries she sustained as a result of a fall on a street maintained
by the city. 543 S.W.2d 75, 76 (Tex. 1976). The city asserted Roberts’s claim was barred because she failed to give
city officials written notice of her claim within thirty days of the occurrence as required by the city charter. Id. The
Texas Supreme Court held a fact issue was raised regarding whether city officials led Roberts to believe the notice of
claim requirement was waived which would estop the city from asserting the notice requirement as a bar to her suit.
Id. at 78. As a result, summary judgment was improperly granted in favor of the city.
Similarly, in City of San Antonio v. Schautteet, 706 S.W.2d 103, 104 (Tex. 1986), the Schautteets sued the
city alleging the city negligently destroyed their house by fire. The insurance company paid the policy limit for the
loss, signed a subrogation agreement with the Schautteets, and intervened in the lawsuit. Id. The insurance company’s
attorney met with the city attorney who informed him the city would investigate the incident. Id. The city’s charter
contained a ninety-day notice of claim provision. Id. More than ninety days after the fire, a city representative called
the insurance company’s attorney and denied any liability. Id. The Texas Supreme Court held a fact issue was raised
regarding whether the city led the claimant to believe no further steps needed to be taken until the city completed its
investigation; therefore, summary judgment was improper because the city might be estopped from relying on the
notice of claim provision. Id. at 105.
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estopped, because only an equitable remedy could revive their otherwise
extinguished claims.”
Id. (internal citations omitted).
In each of the cases in which the Texas Supreme Court held the exception applied, the
plaintiff had a viable claim for which immunity was waived but would have been prevented from
asserting that claim because the plaintiff failed to timely provide formal notice of the claim based
on misleading statements made by city officials. Those cases are readily distinguishable from the
instant case. In this case, CHW did not have a viable claim for which immunity was waived
because the Development Agreement did not require CHW to perform any services for the City.
The ultimate question presented in this case is whether city officials should be permitted
to seemingly mislead a developer by contractually agreeing to waive the City’s immunity. We do
not believe a City should be estopped from asserting its immunity based on the “mistake, neglect,
or intentional act” of city officials. Super Wash, Inc., 198 S.W.3d at 733. Instead, parties who
enter into an agreement with a local governmental entity should be charged with the law regarding
the entity’s immunity and enter into the agreement at the parties’ own peril. As the Texas Supreme
Court has explained:
This heavy presumption in favor of immunity arises not just from
separation-of-powers principles but from practical concerns. In a world with
increasingly complex webs of government units, the Legislature is better suited to
make the distinctions, exceptions, and limitations that different situations require.
The extent to which any particular city, county, port, municipal utility district,
school district, or university should pay damages involves policy issues the
Legislature is better able to balance.
City of Galveston v. State, 217 S.W.3d 466, 469 (Tex. 2007). This balance is apparent in the
Legislature’s decision to enact section 271.152 to waive immunity for suits based on written
contracts. In enacting section 271.152, the Legislature chose not to enact a “blanket waiver” but
to limit the waiver to a specific type of contract and to “impose limits on damages.” Id. at 470.
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Ultimately, “‘[t]he decision as to who should bear responsibility for governmental employees’
misconduct should be made by the peoples’ representatives,’” not by the governmental employees
engaged in the misconduct. Id. at 471 (quoting Dallas Cty. Mental Health & Mental Retardation
v. Bossley, 968 S.W.2d 339, 341 (Tex. 1998)).
Based on the foregoing, although we do not condone the actions by the city officials in
agreeing to the inclusion of the immunity waiver in the Development Agreement, we hold the facts
in this case do not present an exceptional case for estopping the City. Both CHW and the city
officials engaged in negotiating the Development Agreement were clearly aware of the applicable
law. CHW knew the City’s immunity would only be waived if the agreement required CHW to
provide services to the City. CHW, however, did not negotiate an agreement in which they were
required to provide any such services. Cf. Nat’l Pub. Fin. Guarantee Corp. v. Harris Cty.-Hous.
Sports Auth., 448 S.W.3d 472, 484 (Tex. App.—Houston [1st Dist.] 2014, no pet.) (holding
governmental entity does not breach an agreement in which it agrees to waive immunity by
asserting immunity in a subsequent lawsuit because “only the Legislature can waive immunity”).
EVIDENTIARY RULINGS
As evidentiary support for its response to the City’s plea, CHW produced the affidavit of
William W. Ochse, the manager of CHW’s general partner. In the nine-page affidavit, Ochse
makes statements regarding his understanding of the Development Agreement and his opinion
regarding the services CHW provided to the City. The City filed objections to virtually every
statement contained in the affidavit. Among the City’s objections were objections that the
statements in the affidavit were conclusory, violated the best evidence and parol evidence rules,
were not within Ochse’s personal knowledge, and provided opinions on the legal effect of the
agreement which is a question of law. The trial court sustained all of the City’s objections.
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In its brief, CHW generally challenges the trial court’s ruling on the City’s objections
without relating the objections to the specific statements made in the affidavit. These general
challenges are not sufficient to preserve CHW’s complaints regarding the evidentiary rulings for
our review. See Ruffin v. Sanchez, No. 04-16-00759-CV, 2017 WL 4014651, at *1 (Tex. App.—
San Antonio Sept. 13, 2017, no pet.) (mem. op.) (noting brief must address specific objections);
TEX. R. APP. P. 38.1(i) (“The [appellant’s] brief must contain a clear and concise argument for
contentions made, with appropriate citations to authorities and to the record.”).
Furthermore, Ochse’s affidavit primarily attempts to explain his understanding of the
Development Agreement and the services CHW provided to the City in an effort to establish the
agreement waived the City’s immunity under section 271.152. The interpretation of an
unambiguous contract, however, is a question of law. URI, Inc. v. Kleberg Cty., 543 S.W.3d 755,
763 (Tex. 2018). In construing a contract, we consider the intent of the parties as expressed in the
written agreement. Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 662 (Tex. 2005). “Only
where a contract is first determined to be ambiguous may the courts consider the parties’
interpretation, and admit extraneous evidence to determine the true meaning of the instrument.”
Nat’l Union Fire Ins. Co. v. CBI Indus., Inc., 907 S.W.2d 517, 520 (1995) (internal citation
omitted). Because the Development Agreement is unambiguous, the trial court properly sustained
the objections to the portions of the affidavit providing Ochse’s interpretation. And, because the
only issue to which Ochse’s affidavit was relevant was whether CHW was obligated to provide
services to the City which presents a question of law for this court’s consideration, CHW does not
explain how the exclusion of the affidavit harmed it.
CHW also contends the trial court abused its discretion in sustaining the City’s objection
to Ochse’s deposition transcript, asserting the City objected on the grounds that offering the entire
deposition transcript was unfair. The City’s objection, however, was that CHW attached the entire
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deposition transcript without referring to any particular page or portion of the testimony. The City
asserted, “It is not feasible or fair to require the Court to comb through the entire deposition
transcript to look for some testimony that might be relevant to the issues raised by the Amended
Plea to the Jurisdiction.” Neither the trial court nor this court is required to wade through an entire
deposition transcript; instead, a party must specifically identify the supporting proof the party
seeks to have the trial court consider. See Gonzales v. Shing Wai Brass & Metal Wares Factory,
Ltd., 190 S.W.3d 742, 746 (Tex. App.—San Antonio 2005, no pet.); Blake v. Intco Invs. of Tex.,
Inc., 123 S.W.3d 521, 525 (Tex. App.—San Antonio 2003, no pet.).
CONCLUSION
The trial court’s order is affirmed.
Sandee Bryan Marion, Chief Justice
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