Texas Supreme Court holds specific performance is available remedy under waiver of immunity for certain contracts

Hays Street Bridge Restoration Group v City of San Antonio, 17-0423 (Tex. March 15, 2019)

This is a breach of contract case where the Texas Supreme Court held the waiver of immunity found in TEX. LOC. GOV’T CODE §§ 271.151–.160 (as it existed at the time the contract was executed) also applied to specific performance.

The Hays Street Bridge is a historic cultural landmark in San Antonio. In the 1980s, when the City closed the bridge and Union Pacific Railroad sought to demolish it, a group of citizens formed the restoration group to save the bridge. The City obtained a $2.89 million federal grant administered by the Texas Department of Transportation to fund restoration and the Restoration Group promised, through an MOU, to match any funds for restoration. Over the next decade, the Restoration Group raised and transferred to the City more than $189,000 in cash and arranged for significant in-kind donations.  However, in 2012, it adopted an ordinance authorizing the sale of the property to Alamo Beer Company as part of an economic-incentive package. The Restoration Group sued, alleging the transfer would breach the City’s promise in the MOU to use the funds for repair of the bridge. For its breach of contract claim, the Restoration Group sought only specific performance.  The trial court ordered specific performance, but the court of appeals reversed, holding the City was immune. The Texas Supreme Court granted review.

The Court, citing to its recent holding in Wasson Interests v City of Jacksonville (Wasson II), held the MOU was of a governmental nature and not proprietary. The MOU was made to support the City–State funding agreement for restoration of the bridge and revitalization of the surrounding area. Under the Wasson II four-part test, only the first factor (mandatory v discretionary) leans toward proprietary. As a result, the City maintains immunity unless waived. Section 271.152 of the Local Government Code “waives” the City’s immunity, but that waiver is limited by the provisions found in other portions of the Act. Section 271.153 limits damages, not remedies. Damages equates to money, and specific performance equates to equitable remedies. Since the waiver is not limited by §271.153 on the subject of specific performance, such relief is a remedy encompassed within the waiver.

If you would like to read this opinion, click here.  Opinion by Chief Justice Hecht.