Proprietary function of providing electricity applies to contract for electrical purchases

City of Georgetown, Texas v. Lower Colorado River Authority, 03-12-00648-CV (Tex. App. – Austin, August 23, 2013).

This is an interlocutory appeal from the denial of a plea to the jurisdiction in a case arising out of the City’s long-term contract to purchase electricity from LCRA. LCRA sought declaratory relief concerning the parties’ rights and obligations under the contract, and the City filed a plea. The key issues turned on the distinction between a governmental v proprietary function. The Austin Court of Appeals held sovereign immunity does not protect the City in this type of case.

The court first went through a history of the governmental-proprietary dichotomy. The court noted that before a court considers whether governmental immunity has been waived, the court must determine whether governmental immunity exists in the first place. However, the court expressed some admitted confusion due to Tooke v. City of Mexia, 197 S.W.3d 325, 332 (Tex. 2006) which has language indicating but not expressly holding that the dichotomy applies to torts and not contract disputes. Disagreeing with the San Antonio Court of Appeals case of City of San Antonio  v. Wheelabrator Air Pollution Control, Inc., 381 S.W.3d 597, 603–05 (Tex. App.—San Antonio 2012, pet. granted), it held the statutory changes to a waiver of immunity for contract disputes present in Tex. Loc. Gov’t Code ch 271 does not abrogate the common law dichotomy. As a result, the providing of electrical services is a proprietary function not entitling the City to any governmental immunity.  Since immunity does not exist in the first place, waiver is not relevant. The denial of the plea was therefore proper.

If you would like to read this opinion click here.