Supreme Court of Texas, No. 17-0336 (March 15, 2019)
Opinion by Justice Devine (linked here)
Hays Street Restoration Group v. City of San Antonio
Supreme Court of Texas, No. 17-0423 (March 15, 2019)
Opinion by Chief Justice Hecht (linked here)
City of Denton v. Rushing involved a claim against the City for breach of a unilateral contract based on a City policy referenced in the City’s employment manual promising pay for “on-call” services, where the manual expressly disclaimed that its provisions were contractual. The issue was whether the claim is encompassed by the waiver of immunity provided in Local Government Code § 271.052:
A local governmental entity that is authorized by statute or the constitution to enter into a contract and that enters into a contract subject to this subchapter waives sovereign immunity to suit for the purpose of adjudicating a claim for breach of contract, subject to the terms and conditions of this subchapter.The district court denied the City’s plea to the jurisdiction, and the Fort Worth Court of Appeals affirmed. The core issue was whether the employment manual was a “contract subject to this subchapter,” defined as “a written contract stating the essential terms of the agreement for providing goods or services to the local governmental entity that is properly executed on behalf of the … entity.” §271.151(2). The Court of Appeals held the “unilateral contract” reflected in the employment manual was subject to the statute, and affirmed the trial court’s denial of the City’s plea to the jurisdiction. The Supreme Court reversed, holding that the City’s policy did not create an enforceable contract because the disclaimer effectively negated any intent to do so.
In Hays Street Bridge Restoration Group v. City of San Antonio, it was undisputed that a contract was formed by a Memorandum of Understanding between the parties concerning funding for restoration of the Hays Street Bridge and creation of a park. When the City decided not to use the property for a park and sold it to Alamo Beer Company, the Restoration Group sued for specific performance of the MOU. The City claimed immunity, but the trial court rejected that argument and entered judgment requiring the City to comply with the agreement. The San Antonio Court of Appeals reversed and rendered judgment for the City. The Supreme Court, citing its 2014 Zachry Construction opinion, held that Local Government Code § 271.153 limited damages that can be awarded against the City for breach of contract, and thus narrowed the waiver of immunity provided by § 271.152 (quoted above). However, because § 271.153 says nothing about the equitable relief of special performance, § 271.152 waives the City’s immunity for such claims. The Court remanded to the Court of Appeals for consideration of other defenses raised by the City that had not previously been addressed.
