CHW-Lattas Creek, L.P. by GP Alice Lattas Creek, L.L.C. v. City of Alice, 565 S.W.3d 779

Background

In 2013 CHW-Lattas Creek, L.P. (CHW) and the City of Alice executed a Development Agreement under which CHW conveyed/sold/dedicated ~70 acres to the City and the City agreed to construct infrastructure and facilities (aquatic center, amphitheater, roads, utilities) to promote development under Chapter 380.
The Agreement contains a recital stating it is subject to Tex. Loc. Gov’t Code ch. 271 and includes an express clause “Waiver of Immunity” purporting to waive the City’s sovereign immunity for breach-of-contract claims.
CHW sued (2017) alleging breach of contract, declaratory relief, and fraud, claiming the City failed to complete required improvements.
The City filed a plea to the jurisdiction asserting governmental immunity: (1) the Agreement is not a contract for providing goods or services to the City under §271.152, (2) §271.152 does not waive immunity for declaratory relief, and (3) fraud is an intentional tort not waived.
The trial court sustained the City’s evidentiary objections to CHW’s manager’s affidavit, granted the plea, and dismissed for lack of subject-matter jurisdiction. CHW appealed only the breach-of-contract and declaratory-relief rulings.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the City acted in a proprietary (discretionary) or governmental capacity when it entered the Development Agreement	CHW: City acted in a proprietary capacity, so immunity is waived for proprietary acts	City: Agreement was for community/economic development (Chapter 380) — a governmental function, so immunity remains	Held: Entering into the Chapter 380 development agreement was a governmental function; immunity applies
Whether §271.152 waives the City’s sovereign immunity because the Development Agreement is a contract for providing goods or services to the City	CHW: The Agreement is subject to ch. 271 and CHW provided services to the City, so immunity waived	City: The Agreement does not obligate CHW to provide services to the City nor does the City promise payment; §271.152 waiver inapplicable	Held: No waiver under §271.152 — the Agreement did not require CHW to provide services to the City
Whether courts must defer under municipal legislative-discretion principles to the City’s actions in executing the Development Agreement	CHW: Execution involves municipal legislative discretion; courts should not interfere absent abuse of discretion	City: The argument concerns ordinance/zoning precedents, not negotiation/execution of a contract	Held: Legislative-discretion caselaw concerning ordinances/zoning is inapplicable to the City’s contractual execution here
Whether the City is estopped from asserting immunity despite its written waiver in the Agreement	CHW: City should be estopped from claiming immunity because it contractually waived immunity and its officials misled CHW	City: Only the Legislature can waive sovereign immunity; jurisdiction cannot be conferred by agreement; estoppel against governmental units is disfavored	Held: No estoppel; exceptional-case estoppel does not apply because CHW had no viable §271 claim and parties were aware of governing law

Key Cases Cited

Tex. Dep’t of Parks & Wildlife v. Miranda, 133 S.W.3d 217 (Tex. 2004) (standards for plea to the jurisdiction review)
Wasson Interests, Ltd. v. City of Jacksonville, 489 S.W.3d 427 (Tex. 2016) (governmental/proprietary dichotomy extends to contract claims)
Lubbock Cty. Water Control & Imp. Dist. v. Church & Akin, L.L.C., 442 S.W.3d 297 (Tex. 2014) (§271.152 waiver typically applies where governmental entity contracts to pay for goods or services provided to it)
Zachry Constr. Corp. v. Port of Houston Auth. of Harris Cty., 449 S.W.3d 98 (Tex. 2014) (limitations on damages recoverable under §271.153)
City of Galveston v. State, 217 S.W.3d 466 (Tex. 2007) (presumption favoring governmental immunity and legislative primacy to define waivers)
City of Hutchins v. Prasifka, 450 S.W.2d 829 (Tex. 1970) (general rule that governmental units are not estopped while exercising governmental powers)
Roberts v. Haltom City, 543 S.W.2d 75 (Tex. 1976) (limited exception: estoppel applied where city officials affirmatively misled and claim would otherwise be extinguished)
City of San Antonio v. Schautteet, 706 S.W.2d 103 (Tex. 1986) (same; notice-of-claim estoppel where city conduct induced inaction that destroyed rights)
URI, Inc. v. Kleberg Cty., 543 S.W.3d 755 (Tex. 2018) (contract interpretation is a question of law; extrinsic evidence only if ambiguous)