The Tenth Court of Appeals held immunity waived for airport lease based on improvements made by tenant

 

Special contributing author Laura Mueller, City Attorney for Dripping Springs

City of Cleburne v. RT General, LLC, No. 10-20-00037-CV (Tex. App.—Waco  December 16, 2020) (mem. op.).

This is an interlocutory appeal from a trial court denial of the city’s plea to the jurisdiction on a breach of contract and related claims regarding an airport lease. The Waco Court of Appeals affirmed the denial.

The plaintiff sued the city after the city attempted to evict the plaintiff from the city’s airport under a lease agreement with the plaintiff.  The city and plaintiff entered into a lease agreement for airport facilities where the plaintiff could use the airport facilities at no charge for ten years because the plaintiff had expended over $300,000 in repairing the city’s airport facilities.  After the first ten years, the plaintiff was required to pay rent for use of the facilities.   Three years into the lease, the city sent a letter of eviction to the plaintiff, and the plaintiff sued the city for breach of contract, inverse condemnation, declaratory judgment, and fraud.  The city argued it had immunity from suit because the airport operation is a governmental function and the contract was missing an essential term, the rental payments for the first ten years.  The trial court denied the city’s plea to the jurisdiction.

Immunity is based on whether a function on which liability is based is a governmental or proprietary function.  Wasson Interests, Ltd. v. City of Jacksonville, 559 S.W.3d 142, 146 (Tex. 2018).  Operation of an airport is a governmental function.  Tex. Transp. Code § 22.021(a)(2).  Immunity from a governmental function can be waived by a contract claim if the contract falls within the provisions of Chapter 271 of the Local Government Code including stating the essential terms of the contract.  Tex. Loc. Gov’t Code § 271.152.  While price is an essential term of an agreement, the court of appeals held that past consideration could meet this requirement.  The court of appeals also held that claims for declaratory judgment and inverse condemnation can move forward on the same set of facts because immunity is waived under breach of contract.

Chief Justice Gray dissented by footnote stating that there was insufficient evidence that goods or services were provided to the city under the lease agreement.  Chief Justice Gray would also render judgment on the other claims as they are creative pleading efforts that should be dismissed as attempts to avoid the governmental immunity issue.

If you would like to read this opinion click here.   Panel consists of Chief Justice Gray and  Justices Davis and Neill. Opinion by John Neill and Chief Justice Gray dissenting by footnote within the opinion.