City of League City, Texas v. Jimmy Changas, Inc.

Issue

A city filed a petition with the Supreme Court of Texas after a district court affirmed that the municipality wasn’t immune from lawsuits after breaching an agreement to reimburse a Tex-Mex restaurant for taxes and development fees that were incurred upon expanding into the community.

September 30, 2022

The Restaurant Law Center and the Texas Restaurant Association filed an amici brief, arguing that cities are not entitled to immunity from suits when they enter into agreements that promise financial incentives to induce private businesses (here, a restaurant) to move into the area, invest in new operations and improvements, and generate business and taxes for the local community. Incentive agreements would be too risky for many restaurants if, as the City proposes, municipalities can unilaterally revoke economic incentives after they have induced private investment that might not otherwise have been economically feasible.

October 14, 2022

The owner of Jimmy Changas, Inc. filed a post oral argument brief, which further clarifies that governmental immunity does not apply when a city in Texas is performing a discretionary act primarily for the benefit of the local community, as the City did in this case.

June 9, 2023

The Texas Supreme Court held that the court of appeals correctly determined that League City engaged in a proprietary function when it entered into the Agreement with Jimmy Changas. As a result, governmental immunity does not apply to protect the City against Jimmy Changas’ claim for breach of that Agreement.