Alleged Oral Agreement Regarding Toby Keith Does Not Waive Immunity

Still catching up on older cases. This one was decided in July.  

In City of Pharr, Texas v. Garcia, the court devoted very little time in its memorandum opinion on rehearing to the facts. Francisco E. Jimenez provides some background in this 2020 story on MyRGV.com. Mr. Garcia seems to be the principal behind Pajaro Productions (Pajaro) a local production company, which claims to have entered into an agreement with the city in 2014 in connection with a Toby Keith (left) concert. The concert did not sell out, and the parties lost a lot of money. Pajaro alleged the City failed to pay its $400,000 portion of the losses. Mr. Garcia also alleged that he had not been paid in connection with a $300,000 deal that he had negotiated for the City for naming rights for the City’s Events Center.

The City argued that the court lacked jurisdiction. The agreements, said the City, were verbal, and the law does not permit the waiver of governmental immunity through oral agreements. Government instrumentalities enjoy immunity when they act as a branch of the government but not when they act in a “proprietary, non-governmental” capacity. Texas law defines “proprietary functions” as . . . 

those functions that a municipality may, in its discretion, perform in the interest of the inhabitants of the municipality.” TEX. CIV. PRAC. & REM. CODE [ANN.] § 101.0215(b). Statutorily, proprietary functions include, but are not limited to, “the operation and maintenance of a public utility,” “amusements owned and operated by the municipality,” and “any activity that is abnormally dangerous or ultrahazardous.” Id.

A city performs a government function when it acts in the interest of the general public. 

I would just note that there is considerable overlap between these two supposedly distinct capacities of government instrumentalities. Maintaining public utilities is an action in the interest of the general public, or so one would hope. To make matters muddier, “amusement services,” including musical concerts are, by definition proprietary functions, but maintenance of venues is a designated government function, according to the Texas Torts Claim Act. In fact, the distinctions that the court relies upon between proprietary and governmental functions all relate to the Tort Claims Act. The court nonetheless ruled that the contracts related to the City’s governmental functions. Mr. Garcia did not allege that the City expressly waived jurisdiction.

However, waiver is automatic under the Local Government Contract Claims Act whenever the local government enters into a contract covered by the Act. One problem: The Act does not cover verbal agreements, and the court was persuaded that the contracts at issue here were verbal. If that is true, it is shocking. These contracts involved hundreds of thousands of dollars, and the Toby Keith concert was a complicated affair, involving multiple parties. How can it be that none of it was reduced to writing? If any readers know the underlying facts of the case, I would love to learn more.