Wasson Interests, Ltd. v. City of Jacksonville, Texas
489 S.W.3d 427
| Tex. | 2016Background
- Wasson Interests, Ltd. (WIL) acquired a long-term lease from the City of Jacksonville that limited use to residential purposes; WIL began short-term rentals in apparent violation.
- The City issued eviction notices and then entered a reinstatement agreement limiting short-term commercial rentals to stays of 30 days or more.
- The City later sought to evict again; WIL sued for breach of contract seeking injunctive and declaratory relief.
- The City moved for traditional and no-evidence summary judgment asserting, among other grounds, governmental (sovereign) immunity; the trial court granted summary judgment without specifying grounds.
- The court of appeals affirmed, holding the proprietary-governmental distinction did not apply to contract claims and treating immunity as the default; WIL appealed to the Texas Supreme Court.
- The Texas Supreme Court reversed: it held the proprietary-governmental dichotomy does apply to contract claims and remanded for the court of appeals to determine whether the lease/contract was governmental or proprietary (and to address alternative grounds for summary judgment).
Issues
| Issue | Plaintiff's Argument (Wasson/WIL) | Defendant's Argument (City of Jacksonville) | Held |
|---|---|---|---|
| Whether the proprietary-governmental dichotomy applies to breach-of-contract claims against municipalities | The dichotomy should apply to contracts as it does to torts; proprietary acts do not derive immunity from the State | Tooke and related authority establish a default rule of immunity for contract claims; municipalities enjoy immunity absent legislative waiver | Held: The dichotomy does apply to contract claims; municipalities lack derivative sovereign immunity for proprietary acts |
| Whether Tooke created a default presumption of governmental immunity for contract claims | Tooke did not decide the issue and should not be read to eliminate the dichotomy | Tooke established that immunity is the default and courts should defer to the Legislature | Held: Tooke did not create such a default rule; judiciary retains common-law role to determine applicability of immunity |
| Whether Chapter 271 (Local Government Code) abrogates or supplants the common-law dichotomy | Chapter 271 waives immunity for certain contracts but does not abolish common-law immunity boundaries | Chapter 271 reveals legislative intent that contract suits proceed only under that statutory scheme (implying no dichotomy) | Held: Chapter 271 does not show clear repugnance to the common-law dichotomy and therefore does not abrogate it |
| Whether the proprietary-governmental test is too unworkable to apply to contracts | The test is manageable and aided by TTCA definitions; courts have applied it for 130+ years | The test is imprecise and unworkable, making it unsuitable for contract disputes | Held: Workability concerns do not preclude applying the dichotomy; TTCA definitions can guide courts in contract cases |
Key Cases Cited
- Hosner v. DeYoung, 1 Tex. 764 (recognition of sovereign immunity in Texas)
- Alden v. Maine, 527 U.S. 706 (sovereignty and immunity principles)
- Reata Constr. Corp. v. City of Dallas, 197 S.W.3d 371 (Tex. 2006) (municipalities derive immunity from the State)
- Tooke v. City of Mexia, 197 S.W.3d 325 (Tex. 2006) (discussed limits of dichotomy; did not decide its applicability to contracts)
- City of Galveston v. State, 217 S.W.3d 466 (Tex. 2007) (courts cautious about declaring immunity nonexistent)
- Tex. Nat. Res. Conservation Comm’n v. IT-Davy, 74 S.W.3d 849 (Tex. 2002) (legislative role in waiving immunity)
- City of Houston v. Williams, 353 S.W.3d 128 (Tex. 2011) (municipal immunity flows from state sovereign immunity)