City retains immunity for possession and use agreement involved in condemnation suit says 4th Court of Appeals

City of San Antonio v. Alamo Aircraft Supply, Inc. et al, 04-14-00057-CV (Tex. App. – San Antonio, August 13, 2014.

At its core, this is a contract dispute involving sovereign immunity where a party sued for breach alleging the ability to enforce a settlement agreement on claims which have a waiver already attached. This is an interlocutory appeal where the Fourth Court of Appeals reversed the denial of the City’s plea to the jurisdiction and dismissed Plaintiffs’ claims.

As part of a street widening project, the City filed a condemnation suit in probate court against certain adjoining property owners. Afterwards the parties entered into a possession and use agreement (“PUA”). While the condemnation suit was still pending the property owners filed a separate suit against the City asserting breach of the PUA. The City file a plea to the jurisdiction claiming governmental immunity from such a breach claim. The trial court denied the plea and the City appealed.

The crux of the suit is a disagreement on the nature of the PUA, specifically whether it is a settlement of the condemnation suit over which the Plaintiffs can sue under a Lawson theory. Under the PUA, the City deposited certain funds into the court’s registry. In return, it received immediate possession subject to specified conditions. The parties agreed the only remaining issues to be litigated were (1) the amount of money each landowner was due and (2) the City’s right to take portions of their properties. As part of the project the contractor ended up obstructing access to the properties and required relocation of property. Plaintiffs sued for breach and asserted immunity is waived because the City initiated suit against them first. It also settled the claims for which immunity was waived, therefore they could sue to enforce the settlement.

The City agreed immunity for the condemnation dispute is waived under the Texas Constitution, but not for any breach of a PUA, which is only a temporary document to control while the overall dispute is going on. The court noted the express language within the PUA states the agreement does not prejudice in any way the outcome of the condemnation issues. It expressly disavows either the amount of adequate compensation or the City’s right to take the properties. As a result, it does not settle a claim for which immunity is already waived and the City retains immunity from suit.

If you would like to read this opinion click here. NOTE at the time of this posting the 4th Court was having website problems so you may not get to the opinion right away. Panel: Chief Justice Stone, Justice Barnard, and Justice Alvarez. Opinion by Justice Alvarez. The attorney’s listed for the City are Joe R. Hinojosa, Paul D. Barkhurst, and Daniel Pozza.  The attorney’s listed for Alamo Aircraft are S. Mark Murray, Melanie H. Phipps, and Daniel O. Kustoff.