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Supreme Court of Texas
February 27, 2018, Argued; October 5, 2018, Opinion Delivered
[*145] Justice Boyd delivered the opinion of the Court:
Having granted Petitioner's motion for rehearing, we withdraw the judgment and opinion we issued on June 1, 2018.
This case comes to us for the second time. As we explained the first time, "we have long held that] '[a] municipality is not immune from suit for torts committed in the performance of its proprietary functions, as it is for torts committed in the performance of its governmental functions.'" Wasson Interests, Ltd. v. City of Jacksonville (Wasson I), 489 S.W.3d 427, 430 (Tex. 2016) (quoting Tooke v. City of Mexia, 197 S.W.3d 325, 343 (Tex. 2006)).1 As a matter of first impression, we held that this governmental/proprietary dichotomy "applies in the contract-claims context just as it does in the tort-claims context." Id. at 439. The issue now is whether the contract claim arises from the municipality's performance of a governmental or proprietary function. We hold that it arises from the municipality's performance of a proprietary function, so governmental immunity does not apply. We reverse the court of appeals' judgment and remand the case to the court of appeals.
The City of Jacksonville constructed Lake Jacksonville in the [**2] late 1950s to serve as the City's primary source of water. Over the next several decades, the City developed the surrounding area and began leasing lakefront lots to private parties. In 1996, James and Stacy Wasson entered into long-term leases of City-owned lakefront lots and constructed a seven-bedroom house. The lease agreements incorporated the City's Rules & Regulations Governing Lake Jacksonville by reference. Those rules provide that all lots outside the City's corporate limits—which include the Wassons' lots—"shall be restricted to residential purposes only," and that no lot may be used to operate a "business or commercial enterprise." The rules also provide that breach of "any of the regulations . . . shall be grounds for cancellation of the lessee's lease."
The Wassons initially lived on the property but later moved and assigned the leases to Wasson Interests, Ltd. Planning to use the property as a bed-and-breakfast and event center, Wasson sought several variances from the Lake Jacksonville Advisory Board and the City Council, although it believed the variances were unnecessary. The Board denied the requests. Undeterred, Wasson began advertising and renting the property for [**3] short lease terms, weddings, and other events. The City determined these activities violated the leases' requirement that the property be used only for residential purposes and threatened to terminate the leases unless Wasson ceased the business-related rentals.
Full case includes Shepard's, Headnotes, Legal Analytics from Lex Machina, and more.
559 S.W.3d 142 *; 2018 Tex. LEXIS 999 **; 62 Tex. Sup. J. 24; 2018 WL 4838309
WASSON INTERESTS, LTD., PETITIONER, v. CITY OF JACKSONVILLE, TEXAS, RESPONDENT
Subsequent History: On remand at, Decision reached on appeal by, Remanded by, Costs and fees proceeding at Wasson Interests, Ltd. v. City of Jacksonville, 2019 Tex. App. LEXIS 8022 (Tex. App. Tyler, Aug. 30, 2019)
Prior History: [**1] ON PETITION FOR REVIEW FROM THE COURT OF APPEALS FOR THE TWELFTH DISTRICT OF TEXAS.
Wasson Interests, Ltd. v. City of Jacksonville, 2018 Tex. LEXIS 514 (Tex., June 1, 2018)Wasson Interests, Ltd. v. City of Jacksonville, 513 S.W.3d 217, 2016 Tex. App. LEXIS 13124 (Tex. App. Tyler, Dec. 9, 2016)
leases, municipality, proprietary, governmental function, proprietary function, immunity, governmental immunity, dichotomy, breached, court of appeals, lakefront, breach-of-contract, Lake, discretionary, contracts, residents, terminate, benefits, purposes, general public, proprietary capacity, lease agreement, functions, corporate limits, water supply, definitions, sovereign, parties
Governments, Local Governments, Claims By & Against, Torts, Public Entity Liability, Immunities, Sovereign Immunity, State & Territorial Governments, Legislatures, Business & Corporate Compliance, Types of Contracts, Contracts Law, Types of Contracts, Liability, State Tort Claims Acts, Breach, Breach of Contract Actions, Property, Governments, Local Governments, General Overview, Duties & Powers