San Antonio Court of Appeals holds airport lease with City did not waive City’s immunity.
City of San Antonio v DHL Express, Inc., 04-22-00603-CV (Tex. App. – San Antonio, Jan. 25, 2023)
This is a contractual immunity case in relation to a lease at the San Antonio Airport. The Fourth Court of Appeals held entering into the lease agreement does not waive the City’s immunity.
DHL executed a five-year lease agreement for property at the eastern edge of the San Antonio International Airport. The agreement restricted the leased airport property to “only be used for aeronautical activities or those that directly support the aeronautical activities.” The City later declared DHL in default. The City claimed that DHL had stopped receiving air freight from flights landing in San Antonio. Instead, DHL’s flights landed at Austin-Bergstrom International Airport and then the freight was trucked to San Antonio International Airport for processing and distribution. DHL sought a declaratory judgment to determine whether it was in violation of the lease. The City filed a plea to the jurisdiction which was denied. The City appealed.
Immunity is waived for written contracts entered into to provide goods and services to the local governmental entity. Tex. Loc. Gov’t Code § 271.151. DHL asserted it was providing services to the City and therefore immunity had been waived. But “[w]hen a party has no right under a contract to receive services, the mere fact that it may receive services as a result of the contract is insufficient to invoke chapter 271’s waiver of immunity.” The Texas Legislature has determined that “the planning, acquisition, establishment, construction, improvement, equipping, maintenance, operation, regulation, protection, and policing of an airport” is a governmental function. Tex. Loc. Gov’t Code § 22.002(a). As a result, the lease was a governmental function. DHL asserted it was providing services to the City by constructing improvements. However, under the lease, DHL had the right to erect or modify buildings on the leased premises, subject to the City’s approval, but no language required DHL to do so. While DHL argued it also was to maintain and repair the leased premises. However, nothing in the lease required DHL to deliver goods or services to the City. The lease merely requires DHL to not degrade the premises it has leased from the City or any improvements to the premises that DHL may choose to make. As a result, the lease was not for goods or services. The plea should have been granted.