Summary
**Governmental Immunity – Economic Development Corporations – Texas Development Corporation Act.** The Texas Supreme Court held that a municipally-created Type B economic development corporation is not a governmental entity entitled to governmental immunity from suit. The court reasoned that the Development Corporation Act expressly denies such corporations political subdivision status and prohibits delegating sovereign attributes, and that the statutory liability limitations in § 505.106 do not confer immunity. The court also determined that the corporation qualifies as a "governmental unit" for interlocutory appeal purposes under § 51.014(a)(8) because the Act designates it as such for the Texas Tort Claims Act.
Topics
Practice areas
Questions Presented
- Whether a municipally created economic development corporation is entitled to immunity from suit as if it were a political subdivision of the state.
- Whether RDC is a governmental unit for purposes of interlocutory appeal under Texas Civil Practice and Remedies Code section 51.014(a)(8).
Holdings
- RDC is a governmental unit for purposes of the interlocutory appeal because section 505.106(b) of the Texas Local Government Code expressly defines a Type B corporation as a governmental unit for purposes of Chapter 101 (the Texas Tort Claims Act).
- Economic development corporations are not governmental entities in their own right and therefore are not entitled to governmental immunity.
Key quotations
“The sovereign immunity doctrine prohibits suits against the government without the state's consent.” (738)
“The issue of first impression in this contract dispute is whether a municipally created economic development corporation is entitled to immunity from suit as if it were a political subdivision of the state.” (740)
“We hold economic development corporations are not governmental entities in their own right and therefore are not entitled to governmental immunity.” (749)
Factual background
Rosenberg Development Corporation (RDC) is a Type B economic development corporation created by the City of Rosenberg under the Texas Development Corporation Act. In March 2012, RDC entered into a Performance Agreement with Imperial Performing Arts, Inc., agreeing to pay $500,000 for Imperial to lease, renovate, and reopen an arts center and a historic theater. RDC paid the full amount. Imperial completed the arts center after an extension, but when Imperial requested an extension for the theater renovation and an amendment to allow an alternative venue, RDC allegedly refused. Imperial ceased work on the theater project in June 2014, leading to litigation.
Procedural history
Imperial Performing Arts, Inc. sued Rosenberg Development Corporation (RDC) for breach of contract and declaratory judgment. RDC filed a plea to the jurisdiction, which the trial court granted in part and denied in part, allowing the contract and declaratory-judgment claims to proceed. The court of appeals affirmed the denial of the plea. The Texas Supreme Court granted RDC's petition for review.