Business recruiting of one city enticing a business to relocate may be proprietary and subject to tortious interference claim

City of Dallas v. City of Corsicana, Navarro County, and Navarro College, 10-14-00090-CV (Tex. App. – Waco, August 21, 2015).

This is a case involving pre-suit discovery and immunity under Tex. R. Civ. P. 202.  Essentially, the City of Corsicana, Navarro College, Navarro Count (collectively referred to by the court as “Navarro”) sued the City of Dallas alleging it lured a business (Home Depot) away causing it to breach a tax-abatement agreement with the Navarro entities. Essentially, Dallas convinced Home Depot to close its warehouse in Corsicana and open a new on within Dallas city limits.   Navarro sought pre-suit discovery under Rule 202 and obtained a pre-suit order. The City of Dallas filed a plea to the jurisdiction. The plea was denied.

Navarro asserted that luring Home Depot way for economic purposes is a proprietary act and therefore immunity does not apply. Dallas asserted that entering into a tax-abatement agreement is a governmental function. However, the court held the allegation Dallas tortuously interfered with the Navarro agreement with Home Depot to lure away business makes the governmental nature of a tax-abatement agreement irrelevant. Business recruiting is not expressly governmental and is something private persons can do. Further a Rule 202 petition must indicate a waiver or lack of immunity, but does not need to expressly establish it. As a result, the court did not err in denying the plea and the recruiting may be proprietary. The order allowing a Rule 202 petition is interlocutory and cannot be subject to direct interlocutory appeal when immunity is not the issue.  However under the mandamus relief, the court it did agree that the order impermissibly authorized unlimited discovery which is contrary to Rule 202. Therefore that part of the order is vacated.

If you would like to read this opinion click here. Panel: Chief Justice Gray, Justice Davis, and Justice Scoggins. Memorandum Opinion by Justice Davis.  The attorneys listed for the City of Dallas are Barbara E. Rosenberg, Warren M. S. Ernst and James B. Pinson.   The attorney listed for the Navarro entities is Terry L. Jacobson.