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April 1, 2016

April 1, 2016

This week, the Texas Supreme Court issued twelve opinions and two grants. One opinion is of particular interest as it clarifies the extent of governmental immunity in the context of breach of contract actions.

Wasson Interests Ltd. V. City of Jacksonville; No. 14-0645

This case involves a contract dispute arising from a municipality’s lease of real property to a private party. Specifically, Wasson Interests Ltd. brought suit against the City of Jacksonville for breach of contract after the City issued an eviction notice. In Texas, it is clear that municipalities are immune from tort suits arising from functions performed in their governmental capacity but not from tort suits arising from functions performed in their proprietary capacity. The issue presented in this case is whether government immunity extends to a municipality being sued for breach of contract for an alleged proprietary function.

The court of appeals determined that the distinction between governmental and proprietary functions does not apply to a breach of contract action; therefore, unlike in the context of tort-claims actions, a municipality is immune from suit for proprietary acts in the contract-claims context.

The Texas Supreme Court reversed and held that the distinction between governmental and proprietary functions applies in both tort-claims context and contract-claims context. The Court remanded this case to the court of appeals for determination of whether the lease contract was entered into in the city’s proprietary or governmental capacity.

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