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City of Leon Valley Economic Development Corp. v. Little

Court of Appeals of Texas, Fourth District, San Antonio

December 31, 2013

CITY OF LEON VALLEY ECONOMIC DEVELOPMENT CORPORATION, Appellant
v.
Larry LITTLE, Appellee

From the 37th Judicial District Court, Bexar County, Texas Trial Court No. 2011-CI-17823 Honorable Peter A. Sakai, Judge Presiding

Karen Angelini, Justice, Sandee Bryan Marion, Justice Patricia O. Alvarez, Justice

OPINION

Patricia O. Alvarez, Justice

Appellant City of Leon Valley Economic Development Corporation (LVEDC) was sued by Appellee Larry Little for breach of contract. LVEDC asserted immunity from suit and filed a plea to the jurisdiction and a motion to dismiss. The trial court denied the plea, and LVEDC filed this interlocutory appeal. On June 19, 2013, this court issued an opinion dismissing this appeal for want of jurisdiction. LVEDC filed a motion for en banc reconsideration, and Little filed a response to the motion. By separate order of this date, the en banc court denied the motion for en banc reconsideration. Acting sua sponte, we withdraw our opinion and order of June 19, 2013, and substitute this opinion and judgment. We affirm the trial court's order.

Background

LVEDC is a Type B economic development corporation (EDC) created under the Development Corporation Act of 1979 (the Act). See Act of May 15, 2007, 80th Leg., R.S., ch. 885, § 3.01, 2007 Tex. Gen. Laws 2082 (codifying the Development Corporation Act of 1979 as Title 12 of the Local Government Code). LVEDC was organized to promote economic growth and development for the City of Leon Valley, Bexar County, Texas. Little is a commercial real estate developer.

This case arises out of communications[1] between Little and LVEDC relating to the acquisition of certain real properties in conjunction with the Leon Valley Town Center Project. LVEDC approached Little about the possibility of Little purchasing real property for the proposed project, and LVEDC later purchasing the property from Little. The parties executed two sales contracts for unimproved real property for LVEDC to purchase the properties from Little. Both sales were subject to LVEDC obtaining third-party financing at a specified rate. However, LVEDC did not obtain financing or purchase the property. Little contends LVEDC was approved for a loan to purchase the property and breached the sales contracts by refusing to obtain the loan. LVEDC asserts it did not complete the purchase because it did not receive third-party financing at the rate required by the Commercial Contract Financing Addendums by the closing date.

Little sued LVEDC for breach of contract. LVEDC filed a plea to the jurisdiction, claiming immunity from suit and liability under the Act. See Tex. Loc. Gov't Code Ann. § 505.106 (West Supp. 2013). LVEDC also counterclaimed for declaratory relief and attorney's fees and costs. The trial court denied the plea to the jurisdiction and LVEDC filed this interlocutory appeal. See Tex. Civ. Prac. & Rem. Code Ann. § 51.014(a)(8) (West Supp. 2013) (authorizing interlocutory appeal by certain governmental units from a trial court's denial of a plea to the jurisdiction).

Appellate Jurisdiction

LVEDC asserts it is a governmental unit and is entitled to an interlocutory appeal of the trial court's denial of its plea to the jurisdiction. See Tex. Civ. Prac. & Rem. Code Ann. § 51.014(a)(8); Tex. A & M Univ. Sys. v. Koseoglu, 233 S.W.3d 835, 841–42 (Tex. 2007). We have appellate jurisdiction over this appeal if LVEDC is a governmental unit for purposes of this appeal and meets the other requirements of the statute. See Koseoglu, 233 S.W.3d at 843. To determine whether LVEDC is a governmental unit for purposes of interlocutory appeal, we begin by reviewing the characteristics of an EDC.

A. Characteristics of an EDC

An EDC is a corporation organized "for the promotion and development of new and expanded business enterprises to provide and encourage employment." Tex. Loc. Gov't Code Ann. § 501.004 (West Supp. 2013). It "has the powers, privileges, and functions of a nonprofit corporation." Id. § 501.054(a). Inter alia, it can issue bonds; buy, lease, and sell property; and sue and be sued. Id. § 501.054(b) (citing authorizing sections). Its powers are created and circumscribed by statute. E.g., id. §§ 501.004, .054, .055, .153; cf. LTTS Charter Sch., Inc. v. C2 Constr., Inc., 342 S.W.3d 73, 80 (Tex. 2011) (addressing the statutorily circumscribed characteristics of a charter school). It "is not a political subdivision . . . for purposes of the laws of this state." Tex. Loc. Gov't Code Ann. § 501.055(b). A municipality that creates an EDC "may not delegate to [the EDC] any of the [municipality's] attributes of sovereignty." Id. § 501.010.

B. EDC Eligibility for Interlocutory Appeal

Civil Practice and Remedies Code section 51.014(a)(8) authorizes an appeal from a trial court's interlocutory order that "denies a plea to the jurisdiction by a governmental unit as that term is defined in Section 101.01." Tex. Civ. Prac. & Rem. Code Ann. § 51.014(a)(8); LTTS Charter Sch., 342 S.W.3d at 75–76. Section 101.001(3) defines four categories of entities that are governmental units for purposes of the Texas Tort Claims Act:

(A) the state and its agencies,
(B) political subdivisions of the state,
(C) emergency service organizations, and
(D) "any other institution, agency, or organ of government the status and authority of which are derived from . . . laws passed by the legislature under the constitution."

Tex. Civ. Prac. & Rem. Code Ann. § 101.001 (West Supp. 2013); LTTS Charter Sch., 342 S.W.3d at 75–76. An EDC does not fit any of the definitions in subparagraphs (A)–(C); it is neither the state nor its agency, not a political subdivision of the state, nor an emergency service organization. However, section 101.001(3)(D) is a category with a "broad definition" of "governmental unit." See LTTS Charter Sch., 342 S.W.3d at 75–76, 82.

An EDC's powers, privileges, and functions are specified and circumscribed by statute. E.g., Tex. Loc. Gov't Code Ann. §§ 501.004, .054, .055, .153. That is to say, its "status and authority . . . are derived from . . . laws passed by the legislature." See Tex. Civ. Prac. & Rem. Code Ann. § 101.001(3)(D); cf. LTTS Charter Sch., 342 S.W.3d at 81 (characterizing an open-enrollment charter school as a governmental unit in part because its powers and authority are derived from statute and "emanate from legislative command"). Therefore, an EDC falls within the broad definition of governmental unit established by the legislature. Thus, we hold that an EDC is a governmental unit ...


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