Court Opinion

ID: 2958901
Source: CourtListenerOpinion
Date Created: 2015-09-17 03:09:07.937888+00
Date Added: 2024-06-11T11:42:13.791627
License: Public Domain

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN

                                       NO. 03-11-00662-CV

        The City of Austin d/b/a Austin Energy; and Larry Weis, General Manager,
                                 Austin Energy, Appellants

                                                 v.

                        MET Center NYCTEX, Phase II, Ltd., Appellee

     FROM THE DISTRICT COURT OF TRAVIS COUNTY, 98TH JUDICIAL DISTRICT
      NO. D-1-GN-10-004269, HONORABLE GISELA D. TRIANA, JUDGE PRESIDING

                             MEMORANDUM OPINION

                In this interlocutory appeal, the City of Austin d/b/a Austin Energy, and Larry Weis,

General Manager, Austin Energy (jointly the City) challenge the trial court’s denial of their plea to

the jurisdiction based on governmental immunity. MET Center NYCTEX, Phase II, Ltd. (MET

Center) sued the City for breach of contract and declaratory relief regarding the parties’ rights and

obligations under the parties’ contract and certain city ordinances. Because we conclude that the

City has no immunity from this suit, we affirm the trial court’s denial of the City’s plea to

the jurisdiction.

                                         BACKGROUND

                MET Center, a commercial developer initiating a project targeting high technology

electric utility service users, and the City of Austin d/b/a Austin Energy (the City) entered into an
agreement whereby MET Center constructed a specialized conduit system known as an

“underground duct bank system” to carry high levels of electric service required by technology-based

users on Austin Energy’s electric distribution lines.1 MET Center constructed the duct bank to the

City’s specifications, and the City inspected and “accepted” it. Disputes subsequently arose over the

use of the duct bank, and MET Center sued the City alleging breach of contract, seeking declaratory

relief, and asserting ultra vires claims against the manager of Austin Energy. The City filed a plea

to the jurisdiction asserting that (1) it is immune from Met Center’s breach of contract claim because

section 271.152 of the Local Government Code, which provides a limited waiver of immunity for

certain contracts the City enters into, does not apply to the contract in this case, and (2) Met Center’s

claims for declaratory relief are merely an attempt to circumvent the City’s immunity to the breach

of contract claims. See Tex. Loc. Gov’t Code § 271.152; Tex. Civ. Prac. & Rem. Code § 37.004.

The trial court denied the City’s plea to the jurisdiction, and this appeal followed.

                                            DISCUSSION

                On appeal the City argues that it is immune from MET Center’s breach of contract

claim because section 271.152 of the Local Government Code does not apply so as to provide a

limited waiver of immunity, that MET Center’s claims for declaratory relief are an attempt to

circumvent the City’s immunity, and that MET Center failed to assert a proper ultra vires claim

        1
          The facts and procedural background of this case are well known to the parties, and we
therefore will not recite them in great detail in this opinion. See Tex. R. App. P. 47.1 (appellate
court opinions should be as “brief as practicable”), 47.4 (memorandum opinions should be “no
longer than necessary to advise the parties of the court’s decision and the basic reasons for it”).

                                                   2
against Austin Energy’s manager. However, because we conclude that the City has no governmental

immunity from MET Center’s claims, we do not reach the City’s issues.

                 Austin Energy is the name under which the City provides electric utility services to

its customers. It is well settled that with respect to tort claims, the operation and maintenance of a

municipal utility is a proprietary function, for which the municipality enjoys no governmental

immunity.2 See Tex. Civ. Prac. & Rem. Code § 101.0215(b)(1) (listing operation and maintenance

of municipal utility as proprietary function); Tooke v. City of Mexia, 197 S.W.3d 325, 343 (Tex.

2006) (municipality not immune from suits for torts committed in performance of proprietary

functions); San Antonio Indep. Sch. Dist. v. City of San Antonio, 550 S.W.2d 262, 264 (Tex. 1976)

(operation of public utility is proprietary function under common law). Recently, this Court held that

(1) under the common law, the proprietary-governmental dichotomy also applies to contract claims

and (2) Local Government Code section 271.152 did not abrogate the common law’s treatment of

that dichotomy. See City of Georgetown v. Lower Colo. River Auth., 413 S.W.3d 803, 810–11, 814

(Tex. App.—Austin 2013, pet. filed); see also City of Seguin v. Lower Colo. River Auth.,

No. 03-13-00165-CV, 2014 Tex. App. LEXIS 401, at *3–4 (Tex. App.—Austin Jan. 15, 2014,

no pet. h.) (mem. op.) (explaining holding of City of Georgetown and following its reasoning in

related case).

       2
          A proprietary function is one a municipality performs in its discretion for the benefit of its
inhabitants, as opposed to a governmental function, which is enjoined on a municipality by the state
to be exercised in the interest of the general public. See Tex. Civ. Prac. & Rem. Code § 101.0215(a),
(b); City of Georgetown v. Lower Colo. River Auth., 413 S.W.3d 803, 808–09 (Tex. App.—Austin
2013, pet. filed) (discussing history and rationale of proprietary-governmental dichotomy).

                                                   3
               In City of Georgetown, the Lower Colorado River Authority (LCRA) sued the city

for declaratory relief concerning the parties’ rights and obligations under a contract for the city’s

purchase of electricity from the LCRA for resale to the city’s retail customers through its municipal

utility. See 413 S.W.3d at 805–06. This Court concluded that the city was acting in its proprietary

capacity when it entered into its contract with the LCRA and therefore had no immunity from the

suit. Id. at 814 (citing Tex. Civ. Prac. & Rem. Code § 101.0215(b)(1) and Tooke, 197 S.W.3d at 344

(applying section 101.0215’s classification of municipal function in contract case)). Similarly, in

this case, we conclude that the City was acting in its proprietary capacity when it agreed with MET

Center to “collaborate about an underground duct bank system available for Austin Energy’s electric

distribution lines.” See Tex. Civ. Prac. & Rem. Code § 101.0215(b)(1); City of Georgetown,
413 S.W.3d at 805–06. Consequently, the City has no governmental immunity from MET Center’s

claims, and the trial court did not err in denying the City’s plea to the jurisdiction. See City of

Georgetown, 413 S.W.3d at 814; City of Seguin, 2014 Tex. App. LEXIS 401, at *4.

                                         CONCLUSION

               We affirm the trial court’s denial of the City of Austin’s plea to the jurisdiction.3

       3
         MET Center has filed a motion for temporary order pursuant to Texas Rule of Appellate
Procedure 29.3, and the City has filed a motion to strike MET Center’s motion for temporary orders
and an agreed motion for leave to file its amended motion to strike MET’s Center’s motion for
temporary orders, all of which are pending before this Court. These motions are dismissed as moot.

                                                  4
                                          _____________________________________________
                                          Melissa Goodwin, Justice

Before Justices Puryear, Henson, and Goodwin
  Justice Henson not participating

Affirmed

Filed: February 6, 2014

                                               5