On September 8, 2005, the City of San Antonio adopted a resolution expressing an intent to consider the creation of a tax increment reinvestment zone (“TIRZ”) to finance public improvements in the Palo Alto Trails Development (the “Project”).
On May 18, 2006, the City adopted an ordinance designating the Project area as a TIRZ, noting the City’s desire to support revitalization activities for the Project. On June 20, 2013, the City adopted an ordinance terminating the TIRZ.
On December 30, 2015, JAMRO, Ltd. filed the underlying lawsuit against the City alleging claims for breach of contract, quantum meruit, promissory estoppel, fraud, negligent misrepresentation, and negligence. JAMRO alleged it was in the process of developing property when City officials and agents approached JAMRO and asked it to apply to have the area being developed declared a reinvestment zone. JAMRO further alleged it complied with the request and made changes to JAMRO’s plans and specifications at the City’s request and completed the construction but was never notified the TIRZ had been terminated. JAMRO sought compensatory and punitive damages.
The City filed a plea to the jurisdiction asserting it was immune from the lawsuit because it never entered into a contract with JAMRO and immunity is only waived for contractual claims not for quasi-contractual claims like quantum meruit and promissory estoppel. The City further asserted immunity is not waived for intentional torts like fraud, and immunity is only waived for negligence claims for damages arising from an employee’s use of a motor vehicle.
JAMRO responded to the City’s plea, asserting the City was not entitled to immunity because the City was performing a proprietary function. JAMRO asserted “the City was acting as a Developer and private citizen seeking to finance for one company and individual a portion of their construction” and the City’s actions “could not be more proprietary in nature.”
After a hearing, the trial court signed an order granting the City’s plea. JAMRO appealed.
In its brief, JAMRO argued that the City’s actions were proprietary because it sought out a specific private developer “to spur development in a specific area of town for the benefit of only those inhabitants and the City itself.” JAMRO asserted the City “asked [JAMRO] to alter an existing subdivision plan to meet the City’s guidelines and [in] return promised tax benefits to [JAMRO].” The City responded that its actions were governmental functions.
The Court of Appeals affirmed the trial court’s order granting the City’s plea to the jurisdiction, finding that the City’s actions with regard to the TIRZ were governmental functions.
The Court noted that the City’s actions with regard to the TIRZ met the definition of a governmental function because Chapter 311 enjoined on the City the authority to create the TIRZ to serve a public purpose in the interest of the general public. The City’s actions with regard to the TIRZ were directed at financing public improvements which meet the definition of governmental functions.