12th Court joins 4th Court holding no proprietary-governmental dichotomy exists in contracts

Wasson Interests, Ltd. v. City of Jacksonville, Texas; Cause No. 12-13-00262-CV (Tex. App. –Tyler, July 9, 2014)

In this case the Tyler court of appeals joins the Fourth Court of Appeals in a split in the courts regarding whether the proprietary-governmental dichotomy exists in contracts. The Tyler Court of Appeals agrees no such dichotomy exists and immunity is the default.

Wasson was the successor in interest of a 99 year lease of property specified for residential use. Wasson began leasing the property for one week at a time. The City sent an eviction notice holding the weekly tenancy constituted a commercial use of the property in violation of the lease. After attempts at clarifying through an amended lease failed, Wasson sued the City for breach of contract. The City filed a traditional and no-evidence summary judgment which the trial court granted and Wasson appealed.

Wasson cited the Austin Court of Appeals arguing proprietary distinction exists in contracts and that the lease was a proprietary function of the City. The Tyler Court of Appeals analyzed the split in the courts of appeals and agreed with San Antonio’s holding no proprietary distinction exists in contracts. And since property leases are not contracts for which the waiver found in §271.152 of the Texas Local Government Code apply, the City maintains immunity in this case.

If you would like to read this opinion, click here.  Panel: Justice Worthen, Justice Griffith and Justice Hoyle. Opinion issued by Justice Worthen. Attorney for Appellant Wasson Interests, Ltd. is Jeffrey Pruitt. Attorneys for Appellee City of Jacksonville are David Brewer and Steven Guy.