City immune from breach of community development agreement

Rebecca Schoffstall v. City of Corpus Christi, 13-13-00531-CV (Tex. App. – Corpus Christi, August 25, 2014).

This is a contractual immunity case involving a community development program. The 13th Court of Appeals affirmed the granting of the City’s plea to the jurisdiction.

Schoffstall is the daughter and executrix of Hortensia Hernandez, the party involved in the underlying suit. Hernandez received an interest free loan from the City to finance the demolition and construction of a new home as part of the City’s community development program. Bodine was a builder Hernandez hired for the work, but Hernandez and Bodine had a disagreement resulting in a suit. The City withdrew its loan resulting in Hernandez and Bodine suing the City. The City filed a plea to the jurisdiction asserting governmental immunity, which the trial court granted and Hernandez’ estate appealed.

The court first noted community development is a governmental function.  A community development agreement for a no interest loan is not a contract for providing goods or services “to” the City, so Chapter 271 of the Local Government Code does not waive immunity. References in the deed of trust accompanying the agreement which references the FTC Rule (placing the holder in the shoes of the seller) is likewise not a waiver, since only the legislature can waive immunity. And since the City has not obtained any benefits from the zero-interest loan, equitable estoppel and waiver-by-conduct do not apply, even if all other conditions of these exceptions existed. Finally, given the facts, there is no way to replead to establish a waiver, so no opportunity to replead is required. The trial court’s dismissal of Hernandez’ claims was affirmed.

If you would like to read this opinion click here. Panel: Justice Rodriguez, Justice Garza and Justice Benavides. Memorandum Opinion by Justice Garza. The attorneys listed for the City are Neely Balko,  John B. Martinez and Marion M. Reilly.  The attorney listed for Schoffstall is Thomas M. Schumacher

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