Rosenberg Development Corporation v. Imperial Performing Arts, Inc.

IN THE SUPREME COURT OF TEXAS
══════════
No. 17-0660
══════════

ROSENBERG DEVELOPMENT CORPORATION, PETITIONER,
V.

IMPERIAL PERFORMING ARTS, INC., RESPONDENT
═══════════════════════════════════════════════════════
ON PETITION FOR REVIEW FROM THE
COURT OF APPEALS FOR THE FOURTEENTH DISTRICT OF TEXAS
═══════════════════════════════════════════════════════

Argued October 11, 2018

JUSTICE GUZMAN delivered the opinion of the Court.

CHIEF JUSTICE HECHT filed a concurring opinion.

The sovereign immunity doctrine prohibits suits against the government without the state’s

consent. Though rooted in the feudal fiction that the “king can do no wrong,” 1 modern

justifications for sovereign immunity are political, pecuniary, and pragmatic. 2 Among other

benefits, sovereign immunity maintains equilibrium among the branches of government by

honoring “the allocation of responsibility” for resolving disputes with the state. 3 The immunity

doctrine also protects the public coffers by deferring to the Legislature’s policy decisions about

1
Wasson Interests, Ltd. v. City of Jacksonville (Wasson I), 489 S.W.3d 427, 431 (Tex. 2016) (observing rationales
for sovereign immunity originated from the English legal fiction that “[t]he King can do no wrong” (quoting 1
WILLIAM BLACKSTONE, COMMENTARIES 246)).
2
See Fed. Sign v. Tex. S. Univ., 951 S.W.2d 401, 413-16 (Tex. 1997) (Hecht, J., concurring) (exploring
considerations underlying modern justifications for sovereign immunity).
3
Id. at 416 (Hecht, J., concurring); see State v. Snyder, 18 S.W. 106, 109 (1886) (sovereign immunity is premised
on the conclusive presumption that, absent express waiver of immunity from suit, the state “fully recognizes every
just claim the citizen has against it, that in its own way it will do justice in reference thereto, and that it has ability to
do so”); Borden v. Houston, 2 Tex. 594, 611 (1847) (“sovereignty” and “coercion” are incompatible).
“when to allow tax resources to be shifted ‘away from their intended purposes toward defending

lawsuits and paying judgments.’” 4 But while the doctrine “shield[s] the public from the costs and

consequences of [the] improvident actions of their government,” 5 protecting the purse comes at

the expense of ensuring accountability under the law for the government’s breaches. 6 To facilitate

equipoise in the doctrine’s operation, “[t]he judiciary determines the applicability of immunity in

the first instance and delineates its boundaries,” but we defer to the Legislature to waive immunity

when it exists. 7

As an extension of sovereign immunity, governmental immunity protects political

subdivisions performing governmental functions as the state’s agent. 8 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. The Texas

Development Corporation Act 9 authorizes political subdivisions to create nonprofit corporations

to undertake projects designed to spur economic growth and reduce unemployment, 10 but at the

same time expressly (1) denies those corporate entities status as political subdivisions and

(2) forbids authorizing municipalities from delegating any attributes of sovereignty to those

4
Brown & Gay Eng’g, Inc. v. Olivares, 461 S.W.3d 117, 121 (Tex. 2015) (quoting Tex. Nat. Res. Conservation
Comm’n v. IT-Davy, 74 S.W.3d 849, 854 (Tex. 2002) (plurality op.)).
5
Tooke v. City of Mexia, 197 S.W.3d 325, 332 (Tex. 2006).
6
See Brown & Gay Eng’g, 461 S.W.3d at 121 (sovereign immunity places the burden of shouldering the “costs
and consequences of improvident actions” on injured parties); see TEX. CONST. art. 1, § 13 (“All courts shall be open,
and every person for an injury done him, in his lands, goods, person or reputation, shall have remedy by due course
of law.”).
7
Wasson I, 489 S.W.3d at 435.
8
Ben Bolt–Palito Blanco Consol. Indep. Sch. Dist. v. Tex. Political Subdivisions Prop./Cas. Joint Self-Ins. Fund,
212 S.W.3d 320, 323-24 (Tex. 2006); Tooke, 197 S.W.3d at 343, 345.
9
TEX. LOC. GOV’T CODE §§ 501.001-507.202.
10
Id. §§ 501.004, .054(a).
2
entities. 11 Consistent with these express indicators of legislative intent and with the immunity

doctrine’s underlying purposes, we hold economic development corporations are not

governmental entities in their own right and therefore are not entitled to governmental immunity.

We accordingly affirm the court of appeals’ judgment denying the economic development

corporation’s plea to the jurisdiction.

I. Background

Rosenberg Development Corporation (RDC) is a Type B economic development

corporation created by the City of Rosenberg under the authority of the Development Corporation

Act (the Act). 12 RDC was incorporated “exclusively for the purposes of . . . promoting, assisting[,]

and enhancing economic and industrial development activities and . . . promot[ing] or develop[ing]

new or expanded business enterprises, including public facilities . . . .”

In March 2012, RDC executed a contract (Performance Agreement) with Imperial

Performing Arts, Inc. (Imperial), a nonprofit organization that promotes and produces performance

and visual art. RDC agreed to pay Imperial $500,000 to, among other things, (1) lease, renovate,

and reopen an arts center by the end of September 2012, (2) arrange to renovate and open a historic

theater by the end of 2014, and (3) promote RDC as an underwriter of six events at each facility.13

Under the contract’s terms, RDC’s board of directors retained sole discretion to grant an extension

of the opening date for each location, but permission could not be “unreasonably withheld.”

11
Id. §§ 501.010, .055(b).
12
Id. §§ 505.001–.355.
13
Imperial characterizes the payments as “‘seed money’ for its cultural and performing arts initiative in
Rosenberg, Texas.”
3
 In accordance with the Performance Agreement, RDC paid Imperial $500,000 in two equal

payments. However, both projects turned out to be more time-consuming and expensive than

contemplated, with the theater requiring so much work that the “renovation” would effectively

require rebuilding at an alleged cost of up to $5 million over the course of up to five years. Despite

these challenges, Imperial completed and opened the arts center in November 2012 after receiving

an extension from RDC. But when Imperial asked RDC to extend the deadline to complete the

theater’s renovation and also to amend the Performance Agreement to allow Imperial to either

select or construct an alternative venue, RDC allegedly refused. Imperial ceased work on the

theater project in June 2014, and this legal dispute followed.

The litigation has a complicated procedural posture and involves myriad claims,

counterclaims, and third-party claims, 14 but the immunity issue on appeal is limited to Imperial’s

breach-of-contract and declaratory-judgment claims. The former asserts that RDC breached the

Performance Agreement by “unreasonably refusing to grant [Imperial] an extension,” while the

latter requests a declaration that the $500,000 RDC paid under the contract was an unconditional

and absolute grant of those funds to Imperial that need not be refunded.

Assuming its immunity from suit, RDC filed a plea to the jurisdiction arguing that

(1) Imperial’s consequential-damages claims are barred by section 271.153 of the Texas Local

Government Code; (2) Imperial failed to plead a valid waiver of governmental immunity because

the breach-of-contract immunity waiver in section 271.152 of the Local Government Code applies

14
Imperial initially asserted tort and declaratory-judgment claims against RDC and two of its directors. After
RDC sought discovery about Imperial’s expenditures, Imperial nonsuited its complaint. On the same day as the
nonsuit, but before the trial court signed a dismissal order, RDC filed counterclaims against Imperial and, alternatively,
asserted claims as an intervening counter-plaintiff against Imperial and several of its directors. Imperial then
reasserted its claims against RDC.
4
only to political subdivisions not economic development corporations; 15 (3) RDC is immune from

liability for damages under section 505.106 of the Local Government Code as to its performance

of governmental functions; and (4) RDC did not waive immunity from suit by asserting claims

against Imperial. The trial court granted the plea in part but denied it in most respects, allowing

Imperial’s breach-of-contract and declaratory-judgment claims to move forward. RDC appealed.

The court of appeals affirmed the trial court’s order denying RDC’s plea to the

jurisdiction. 16 As a preliminary matter, the court addressed sua sponte its jurisdiction over the

interlocutory appeal, holding RDC satisfied the statutory definition of “governmental unit” for

purposes of the interlocutory-appeal statute. 17 Then, because RDC’s appellate arguments assumed

its immunity from suit—a matter implicating subject-matter jurisdiction—the court considered sua

sponte whether RDC actually enjoys such immunity. 18

The court first determined that RDC, which is neither a state agency nor a political

subdivision, is not immune from suit under the common law. 19 The court then examined the

Development Corporation Act’s provision limiting liability for Type B economic development

corporations and held the Legislature did not purport to grant economic development corporations

immunity from suit for non-tort claims. 20 Section 505.106 of the Act provides:

15
See id. §§ 271.151(3) (defining “local governmental entity”), .152 (waiver of immunity from suit for certain
claims against a “local governmental entity”), .153 (limitation on amount and type of damages in an adjudication
against a “local governmental entity”), § 501.055(b) (“A corporation is not a political subdivision or a political
corporation for purposes of the laws of this state . . . .”).
16
526 S.W.3d 693, 709 (Tex. App.—Houston [14th Dist.] 2017).
17
Id. at 698-701.
18
Id. at 701.
19
Id. at 704-06.
20
Id. at 708-09.
5
 (a) The following are not liable for damages arising from the performance of a
governmental function of a Type B corporation or the authorizing
municipality:
(1) the corporation;
(2) a director of the corporation;
(3) the municipality;
(4) a member of the governing body of the municipality; or
(5) an employee of the corporation or municipality.
(b) For purposes of Chapter 101, Civil Practice and Remedies Code, a Type B
corporation is a governmental unit and the corporation’s actions are
governmental functions. 21

Applying the statute’s plain language, the court held: (1) subsection (a) provides immunity only

from liability—not from suit—and only for claims arising from an economic development

corporation’s performance of governmental functions, and (2) subsection (b) “invoke[s] the

common law doctrine of governmental immunity” for economic development corporations, but

only for tort claims covered by the Texas Tort Claims Act, not the non-tort claims at issue here. 22

In so holding, the court distinguished cases from other Texas appellate courts RDC cited

as immunizing economic development corporations from liability or suit. 23 The court disapproved

of the analysis in Weir Bros., Inc. v. Longview Economic Development Corp., which affirmed a

judgment granting an economic development corporation’s jurisdictional plea on fraud, antitrust,

and breach-of-contract claims. 24 Though finding subject-matter jurisdiction lacking, the Weir

court only considered whether subsection (a) sheltered the corporation from liability, not immunity

21
TEX. LOC. GOV’T CODE § 505.106 (emphasis added); see id. § 504.107 (similar provision applicable to Type A
corporations).
22
526 S.W.3d at 708-09 (citing City of Leon Valley Econ. Dev. Corp. v. Little, 422 S.W.3d 37, 44 (Tex. App—
San Antonio 2013, no pet.).
23
Id. at 706-07.
24
373 S.W.3d 841, 843 (Tex. App.—Dallas 2012, no pet.) (applying a similarly worded liability limitation
applicable to Type A economic development corporations).
6
from suit. 25 Here, the lower court observed that treating immunity from liability as a jurisdictional

matter is erroneous because immunity from liability is an affirmative defense that is not a proper

basis for a jurisdictional plea. 26 The court of appeals also distinguished City of Weslaco v. Borne

as involving tort claims and thus invoking subsection (b) and its limitations, 27 which are

inapplicable to the non-tort claims at issue in this case. 28

We granted RDC’s petition for review to address whether economic development

corporations are governmental entities immune from suit.

II. Discussion

A. Economic Development Corporations

Economic development corporations are authorized under and subject to the Development

Corporation Act (Title 12, Subtitle C1 of the Local Government Code). 29 The Act authorizes

municipalities like the City of Rosenberg to form economic development corporations for the

limited purpose of promoting and developing enterprises that, in turn, promote and encourage

employment and the public welfare. 30 In adopting the Act, the Legislature found “the present and

prospective right to gainful employment and the general welfare of the people of this state” require

25
See id. at 846 (concluding the corporation was “immune from liability”).
26
526 S.W.3d at 707; accord State v. Lueck, 290 S.W.3d 876, 880 (Tex. 2009) (“[I]mmunity from liability is an
affirmative defense that cannot be raised by a plea to the jurisdiction.”).
27
210 S.W.3d 782, 788 n.1 (Tex. App.—Corpus Christi 2006, pet. denied).
28
526 S.W.3d at 707.
29
TEX. LOC. GOV’T CODE §§ 501.001–507.202. The Development Corporation Act defines “corporation” as any
corporation “organized under [the Act],” id. § 501.002(5), which includes “county alliance corporations” and
“spaceport development corporations,” id. §§ 506.001–.202, 507.001–.202. But only Type A and Type B
corporations are referred to as “economic development corporations.” E.g., Type A and B Economic Development
Corporations Overview, TEXAS COMPTROLLER, https://comptroller.texas.gov/economy/local/type-ab/index.php.
30
TEX. LOC. GOV’T CODE §§ 501.004(a)(6), .051(c).
7
these activities “as a public purpose.” 31 The Legislature has therefore determined that establishing

and funding economic development corporations is “in the public interest” and “serve[s] a public

purpose.” 32

Depending mainly on the size of the authorizing municipality, economic development

corporations are categorized as either Type A or Type B. 33 Each type is authorized to finance “one

or more projects” that may be funded, in part, by local taxes or the proceeds of revenue bonds. 34

“Projects” are delineated by the statute, but broadly defined. All economic development

corporations are authorized to undertake projects related to creating or retaining primary jobs, job

training, and improving infrastructure. 35 Type B corporations, like RDC, may also undertake

projects related to recreational or community facilities, affordable housing, water-supply facilities,

water-conservation programs, and airport facilities. 36

The corporations are specifically empowered to lease or sell a project, 37 donate property to

a higher-education institution, 38 issue bonds to defray the costs of a project, 39 and sue or defend a

suit in their corporate name. 40 However, economic development corporations may only incur

financial obligations that can be paid from bond proceeds, revenue realized from the lease or sale

31
Id. § 501.004(a)(1).
32
Id. § 501.004(a)(1), (4), (6).
33
Id. §§ 504.001–.002; 505.001–.002.
34
Id. §§ 501.151, .201, 504.251–.254, 505.251–.254, .302; see also TEXAS COMPTROLLER, BIENNIAL ECONOMIC
DEVELOPMENT CORPORATION REPORT 2016-2017, at 2, https://comptroller.texas.gov/transparency/reports/economic-
development-corporation/ (breaking down economic development corporations’ source of funds).
35
TEX. LOC. GOV’T CODE §§ 501.101-103.
36
Id. §§ 505.152-.154, 505.161.
37
Id. § 501.153.
38
Id. § 501.154.
39
Id. § 501.201.
40
Id. § 501.060.
8
of a project, revenue realized from a loan to finance or refinance a project, or money granted under

contract with a municipality. 41

The Development Corporation Act characterizes economic development corporations as

nonprofit corporate entities with “the powers, privileges, and functions of a nonprofit corporation,”

except to the extent of any conflict between the Act and the laws governing nonprofits. 42 Even

though the corporations are private entities, 43 the Legislature demands transparency with regard to

corporate endeavors by requiring compliance with the Texas Open Meetings Act and the Texas

Public Information Act. 44 And along with public oversight afforded under the open-government

laws, authorizing municipalities have some supervisory control over economic development

corporations. 45 Ultimately, however, “[a]ll of the powers of [the] corporation are vested in” the

corporation’s board of directors. 46

The Act does not speak to governmental immunity directly, but in section 505.106, the

Legislature has declared that (1) a Type B corporation is “not liable for damages arising from the

performance of a governmental function of a Type B corporation or the authorizing municipality,”

and (2) “[f]or purposes of Chapter 101, Civil Practice and Remedies Code, a Type B corporation

41
Id. § 501.008.
42
Id. §§ 501.053–.054.
43
See id. §§ 504.102, 505.102 (authorizing Type A and Type B corporations to “contract with another private
corporation” for certain purposes (emphasis added)).
44
Id. § 501.072.
45
See, e.g., id. § 501.054(b)(2) (with respect to projects, the corporation’s exercise of power is “subject to the
control of the governing body of the corporation’s authorizing unit”), .073 (“The corporation’s authorizing unit will
approve all programs and expenditures of a corporation and annually review any financial statements of the
corporation.”), .073(a) (the corporation’s authorizing unit may access the corporation’s records at any time).
46
Id. § 501.062(a). A Type B corporation’s seven-member board is appointed by the authorizing municipality;
none of the board members are required to be employees, officers, or members of the governing body and at least
three cannot be; and any member of the board of directors may be removed by the governing body without cause.
Id. §§ 505.051, .052.
9
is a governmental unit and the corporation’s actions are governmental functions.” 47 Notably,

however, an economic development corporation “is not a political subdivision or a political

corporation for purposes of the laws of this state . . . .” 48 And the Legislature has forbidden

authorizing municipalities from bestowing on the corporation any “attributes of sovereignty.” 49

B. Sovereign and Governmental Immunity

Sovereign immunity has long been described as one of the “attributes of sovereignty.” 50

Unless waived, sovereign immunity protects the state and its agencies from lawsuits for damages. 51

In Texas, the immunity doctrine has two aspects: (1) immunity from suit even when the

sovereign’s liability is not disputed and (2) immunity from liability even though the sovereign has

consented to the suit. 52 Immunity from suit recognizes the judiciary’s limited authority over its

sovereign creator and thus implicates the courts’ subject-matter jurisdiction to resolve a dispute

against the state. 53 In comparison, immunity from liability only protects the state from money

judgments, is not jurisdictional, and must be raised as an affirmative defense rather than by

47
Id. § 505.106.
48
Id. § 501.055(b).
49
Id. § 501.010 (“A unit may not delegate to a corporation any of the unit’s attributes of sovereignty, including
the power to tax, the power of eminent domain, and the police power.”).
50
See City of Galveston v. State, 217 S.W.3d 466, 477 (Tex. 2007) (noting states joining the federal system had
forfeited certain attributes of sovereignty, but not traditional immunity from private suits, “an inherent attribute of
sovereignty”); Wichita Falls State Hosp. v. Taylor, 106 S.W.3d 692, 695 (Tex. 2003) (describing sovereign immunity
from private suit without consent as “one of the attributes of sovereignty” (quoting The Federalist No. 81, at 487
(Alexander Hamilton) (Clinton Rossiter ed. 1961)); Herring v. Hous. Nat’l Exch. Bank, 269 S.W. 1031, 1032 (Tex.
1925) (describing immunity as “an attribute of sovereignty”); Bd. of Land Comm’rs v. Walling, Dallam 524, 526 (Tex.
1843) (“That it is one of the essential attributes of sovereignty not to be amenable to the suit of a private person without
its own consent has grown into a maxim, sanctioned as well by the laws of nations as the general sense and practice
of mankind.”).
51
E.g., Rusk State Hosp. v. Black, 392 S.W.3d 88, 93 (Tex. 2012).
52
See id.
53
Nazari v. State, 561 S.W.3d 495, 500 (Tex. 2018).
10
jurisdictional plea. 54 As a common-law doctrine, the judiciary determines whether immunity

exists in the first instance, and if it does, we defer to the Legislature to waive or abrogate it. 55

Political subdivisions of the state—such as counties, cities, and school districts—are not

sovereign entities, but under the governmental-immunity doctrine, 56 they share the state’s

immunity when performing governmental functions as the state’s agent. 57 Governmental

immunity applies to municipalities, like the City of Rosenberg, because they are quasi-public in

nature with powers “pertaining to the administration of general laws made to enforce the general

policy of the state.” 58 And when enforcing the state’s laws, municipalities “stand as does

sovereignty, whose agents they are.” 59 Unlike the state, however, municipalities can exercise their

broad powers in two different capacities: proprietary and governmental. 60 Because governmental

immunity extends “as far as the state’s [immunity] but no further,” no immunity exists for acts

performed in a proprietary, non-governmental capacity. 61

The threshold issue on appeal here is whether RDC—a municipality’s statutorily

authorized corporate creation—is immune from suit under the common law even though RDC is

neither a sovereign entity nor a political subdivision of the state. Though RDC claims both

54
Fort Worth Transp. Auth. v. Rodriguez, 547 S.W.3d 830, 840 (Tex. 2018); State v. Lueck, 290 S.W.3d 876, 880
(Tex. 2009).
55
Wasson I, 489 S.W.3d 427, 435 (Tex. 2016); Tooke v. City of Mexia, 197 S.W.3d 325, 332 (Tex. 2006).
56
Though the terms are often used interchangeably, sovereign immunity and governmental immunity protect
distinct entities. See, e.g., Wichita Falls State Hosp. v. Taylor, 106 S.W.3d 692, 694-95 & n.3 (Tex. 2003).
57
Wasson I, 489 S.W.3d at 429-30.
58
City of Galveston v. Posnainsky, 62 Tex. 118, 127-28 (1884).
59
Id. at 127.
60
Gates v. City of Dallas, 704 S.W.2d 737, 738 (Tex. 1986).
61
Wasson I, 489 S.W.3d at 430, 433-34 (proprietary acts “are not done as a branch of the state, but instead ‘for
the private advantage and benefit of the locality and its inhabitants’” (citations omitted)).
11
immunity from suit and immunity from liability, the latter is not properly before us on a plea to

the jurisdiction, and we do not consider it.

We also do not consider the existence vel non of RDC’s statutory immunity under the

Development Corporation Act because section 505.106 does not purport to grant immunity. More

specifically, subsection (a)’s plain terms only seek to limit an economic development corporation’s

liability for certain remedies—that is, “damages” arising from the corporation’s performance of

any governmental functions—without reference to the corporation’s “governmental status” or

“immunity.” 62 And subsection (b) merely imports the Texas Tort Claims Act’s limitations on

liability and damages. As we have observed, “the Tort Claims Act does not create sovereign

immunity[;] it provides a limited waiver of that immunity,” such that an entity may be sued and

damages had on the terms specified in the Tort Claims Act. 63 Because section 505.106 merely

purports to limit the remedies available when economic development corporations perform

governmental functions, we need not consider whether the Legislature can confer immunity by

statute or only waive it. 64

C. Interlocutory Appeal Jurisdiction

As a preliminary matter we must determine whether the interlocutory order denying RDC’s

plea to the jurisdiction is immediately appealable. Jurisdiction over interlocutory appeals is

62
TEX. LOC. GOV’T CODE § 505.106(a); see Fort Worth Transp. Auth. v. Rodriguez, 547 S.W.3d 830, 841 (Tex.
2018) (noting the Legislature did not purport to grant immunity to independent contractors under a similar statute that
caps contractors’ liability for performing governmental functions because “neither ‘governmental status’ nor
‘immunity’ appears in the statute”) (citing TEX. TRANSP. CODE § 452.056(d)); cf., e.g., Sharyland Water Supply Corp.
v. City of Alton, 354 S.W.3d 407, 423 (Tex. 2011) (distinguishing remedies at law, like money damages, from equitable
relief, like an injunction or specific performance).
63
Brown & Gay Eng’g, Inc. v. Olivares, 461 S.W.3d 117, 123 n.6 (Tex. 2015) (quoting Tex. Dep’t of Parks &
Wildlife v. Miranda, 133 S.W.3d 217, 224 (Tex. 2004)) (internal quotation marks omitted); see also TEX. LOC. GOV’T
CODE § 505.106(b).
64
See Rodriguez, 547 S.W.3d at 842 n.2 (reserving judgment on that issue); LTTS Charter Sch., Inc. v. C2 Constr.,
Inc., 342 S.W.3d 73, 78 n.44 (Tex. 2011) (same).
12
limited, 65 but section 51.014(a)(8) of the Texas Civil Practice and Remedies Code permits an

appeal from an interlocutory order granting or denying “a plea to the jurisdiction by a

governmental unit as that term is defined in Section 101.001” of the Texas Tort Claims Act. 66

Section 101.001’s definition of “governmental unit” does not include economic

development corporations by name or by reference to the Development Corporation Act.

Subsection (3)(D), however, broadly applies the governmental-unit label to any “institution,

agency, or organ of government the status and authority of which are derived from the Constitution

of Texas or from laws passed by the legislature under the constitution.” 67 The court of appeals

undertook an analysis of subsection (3)(D)’s definition as applied to economic development

corporations, 68 but we find it unnecessary to do so because section 505.106(b) of the Development

Corporation Act states that “[f]or purposes of Chapter 101, Civil Practice and Remedies Code [the

Texas Tort Claims Act], a Type B corporation is a governmental unit . . . .” 69 Because the

Legislature expressly expanded section 101.001’s governmental-unit definition to include

economic development corporations, RDC is a governmental unit for purposes of the interlocutory

appeal authorized by section 51.014(a)(8). 70

65
See TEX. CIV. PRAC. & REM. CODE § 51.014.
66
Id. § 51.014(a)(8) (citing id. § 101.001); see Univ. of the Incarnate Word v. Redus, 518 S.W.3d 905, 906 (Tex.
2017) (observing the term “governmental unit” for purposes of section 51.014(a)(8) has the same meaning as it does
in the Texas Tort Claims Act).
67
TEX. CIV. PRAC. & REM. CODE § 101.001(3)(D).
68
526 S.W.3d at 698-701.
69
TEX. LOC. GOV’T CODE § 505.106(b). A nearly identical provision applies to Type A corporations.
See id. § 504.107(b).
70
Until recently, this Court’s jurisdiction over most interlocutory appeals had been limited to those involving a
conflict or dissent. See Pidgeon v. Turner, 538 S.W.3d 73, 81 (Tex. 2017) (citing former TEX. GOV’T CODE
§ 22.225(c)). But for orders issued after September 1, 2017, the restraints on our interlocutory-appeal jurisdiction
have been lifted. See TEX. GOV’T CODE § 22.001, as amended by Act effective Sept. 1, 2017, 85th Leg. Ch. 150, § 1,
sec. 4(1), 2017 Tex. Gen. Laws 291, 292 (codified as TEX. GOV’T CODE § 22.001 et. seq.); see TEX. GOV’T CODE
§ 22.225, as amended by Act effective September 1, 2017, 85th Leg. Ch. 150, § 1, sec. 4(3), 2017 Tex. Gen. Laws
291, 292 (codified at TEX. GOV’T CODE § 22.225). We generally apply jurisdictional statutes as they exist at the time
13
 D. Immunity from Suit

“[W]hether an entity is entitled to an interlocutory appeal and whether an entity has

sovereign immunity are separate questions with separate analytical frameworks.” 71 Accordingly,

we turn now to the main issue presented: whether a corporation organized and formed by a

municipality under the Development Corporation Act enjoys governmental immunity from suit as

an arm of the state. We begin by looking to the Act to determine whether the Legislature intended

such an entity to have discrete governmental-entity status separate and apart from its authorizing

municipality. 72 We conclude it did not.

An entity claiming governmental immunity must ordinarily be a political subdivision.

RDC is not. In the Development Corporation Act, the Legislature explicitly rejects an economic

development corporation’s political-subdivision status. 73 Taking the matter one step further, the

Legislature prohibits an authorizing municipality from delegating “any of [its] attributes of

sovereignty, including the power to tax, the power of eminent domain, and the police power” to

the corporation. 74

of our judgment, see Texas Mun. Power Agency Pub. Util. Comm’n of Tex., 253 S.W.3d 184, 198 (Tex. 2007),
“[b]ecause application of a new jurisdictional rule generally takes away no substantive right but simply impacts a
tribunal’s power to hear the case,” Univ. of Tex. Sw. Med. Ctr. v. Estate of Arancibia, 324 S.W.3d 544, 548 (Tex.
2010). We have jurisdiction over this appeal under the current jurisdictional statute and, to the extent a conflict would
have been required under the former statute, the jurisdictional analysis and disposition in Weir Bros., Inc. v. Longview
Economic Development Corp., 373 S.W.3d 841, 843 (Tex. App.—Dallas 2012, no pet.), conflicts with the court of
appeals’ holding in this case that dismissal on jurisdictional grounds is not appropriate on the basis of an entity’s
immunity from liability. See former TEX. GOV’T CODE § 22.225(c), (e).
71
Univ. of the Incarnate Word v. Redus, 518 S.W.3d 905, 911 (Tex. 2017).
72
Ben Bolt–Palito Blanco Consol. Indep. Sch. Dist. v. Tex. Political Subdivisions Prop./Cas. Joint Self-Ins. Fund,
212 S.W.3d 320, 324-25 (Tex. 2006) (examining various statutory provisions to determine whether statutorily
authorized governmental self-insurance fund’s “‘nature, purposes and powers’ demonstrate legislative intent that it
exist as a distinct governmental entity entitled to assert immunity in its own right for the performance of a
governmental function” (quoting Harris Cty. Flood Control Dist. v. Mann, 140 S.W.2d 1098, 1101 (Tex. 1940)).
73
TEX. LOC. GOV’T CODE § 501.055(b).
74
Id. § 501.010.
14
 Nonetheless, “where the governing statutory authority demonstrates legislative intent to

grant an entity the ‘nature, purposes, and powers’ of an ‘arm of the State government,’ that entity

is a government unit unto itself” and is entitled to assert immunity in its own right as to the

performance of governmental functions. 75 In determining whether the Legislature intended

economic development corporations to exist as distinct governmental entities, we find analytical

guidance in Ben Bolt–Palito Blanco Consolidated Independent School District v. Texas Political

Subdivisions Property/Casualty Joint Self-Insurance Fund, which involved a self-insurance fund

composed of several political subdivisions. 76 We held the fund itself was a governmental entity

in its own right and was therefore entitled to immunity on equal footing with its constituent

members. 77

In so holding, we identified several indicia of legislative intent in the Texas Interlocal

Cooperation Act and the Texas Government Code’s self-insurance provisions. First, under the

Interlocal Cooperation Act’s special definitions, the fund was a “local government.” 78 That

enactment also “expressly authorized combinations of political subdivisions”—like the fund—“to

perform governmental functions and services,” which were defined as including “governmental

functions in which the contracting parties are mutually interested.” 79 We noted that local

governments have an interest in guarding against risk and the Legislature explicitly authorized

political subdivisions to combine to provide self-insurance and “use available money to finance a

75
Ben Bolt–Palito, 212 S.W.3d at 325-26.
76
Id. at 320.
77
Id. at 320, 326.
78
Id. at 324-25 (citing TEX. GOV’T CODE § 791.003(4)(A), (E)).
79
Id. at 324-25 (citing TEX. GOV’T CODE § 791.003(3)(N), (4)(E), .011(a)) (emphasis added).
15
self-insurance pool” “as a ‘public purpose’ of the governmental unit.” 80 Thus, although the fund

was simply a collection of other political subdivisions, the fund’s “nature, purposes, and powers”

demonstrated the Legislature’s intent that the fund exist as a distinct governmental entity. 81

The statutes in Ben Bolt–Palito are distinguishable in terms of the Legislature’s

characterization of the entity. While the self-insurance fund fell within the Interlocal Cooperation

Act’s definition of a local government, economic development corporations are described as

private, nonprofit corporations and empowered as such. 82 More significantly, the Legislature has

expressly denied economic development corporations significant governmental characteristics—

political-subdivision status and attributes of sovereignty. In a telling comparison, the Local

Government Code identifies another type of local economic-development initiative—the

“municipal management district”—as “a governmental agency, a body politic and corporate, and

a political subdivision of the State.” 83 The Development Corporation Act thus evinces clear

legislative intent that an economic development corporation is not an arm of state government.

Both RDC and amicus Midland Development Corporation direct us to other aspects of the

Development Corporation Act they assert bear contrary indicia. They point out that economic

development corporations are not “ordinary” nonprofits because they are subject to statutory

restrictions and requirements that do not generally apply to non-governmental organizations, such

as certain open-government requirements. But heavily regulating an entity does not equate to

conferring governmental-entity status. On this front, the statute is, at best, a “mixed bag,” but

80
Id. at 325.
81
Id. 325-26 & n.3.
82
See TEX. LOC. GOV’T CODE §§ 501.053, .054.
83
Id. § 375.004(a).
16
there is precious little in the statute to overcome the Legislature’s clear and express directives,

which are notably unique in and of themselves. 84

Although the Development Corporation Act describes promoting and developing business

enterprises and job training as public purposes, 85 merely engaging in an act that serves a public

purpose says nothing about the nature of the entity itself 86—as our opinion in Brown & Gay

Engineering, Inc. v. Olivares makes clear. 87 Serving public purposes, as many nonprofits and

public contractors do, does not ipso facto equate to status as a governmental entity for

governmental immunity purposes. By and large, the projects an economic development

corporation are authorized to pursue have a governmental flair, but not so uniquely or so

definitively that only a governmental entity would engage in those activities.

Our holding today does not imply that the Legislature could de facto grant an entity

immunity simply by designating it as a “governmental entity.” The common-law rule of immunity

is exclusively for the judiciary to define, and in doing so, we do not just consider whether the entity

performs governmental functions, but also the “nature and purposes of immunity.” 88 Aside from

the statutory indicators of legislative intent, granting immunity to economic development

84
Indeed, section 501.010 of the Act appears to be the only statute referring to sovereign attributes, one way or
the other, and the directness of section 501.005 in denying political-subdivision status is similarly unmatched
elsewhere.
85
Id. § 501.004(a).
86
An activity may constitute a governmental function for one type of political subdivision but not for another.
See Guillory v. Port of Houston Auth., 845 S.W.2d 812, 814-15 (Tex. 1993) (distinguishing water-improvement
districts from municipalities by focusing on “the creation of the governmental unit instead of its function,” and noting
the governmental function performed by the port authority, a political subdivision, might be a proprietary function if
performed by the municipality).
87
461 S.W.3d 117, 127 (Tex. 2015) (rejecting the private contractor’s contention that it was entitled to share in
the toll road authority’s sovereign immunity solely because the authority was statutorily authorized to engage the
contractor’s services and would have been immune had the authority performed those services itself).
88
Wasson I, 489 S.W.3d 427, 432 (Tex. 2016).
17
corporations is not necessary to satisfy the political, pecuniary, and pragmatic policies underlying

our immunity doctrines. Governmental immunity benefits the public by preventing disruptions of

key governmental services, but economic development corporations are not tasked with

performing essential services. 89 Rather, these entities are authorized for the limited purpose of

promoting and developing enterprises to encourage employment and the public welfare. 90 And

while the immunity doctrine respects the separateness of the branches of government, the

Legislature expressly chose not to imbue economic development corporations with indicia of

status as a distinct governmental entity. The Legislature simply did not grant these entities “powers

of government” to perform essential governmental functions or activities.

Public fisc concerns likewise do not justify extending immunity from suit to economic

development corporations. Economic development corporations may (but are not required to)

fund projects using a percentage of local taxes, but even if the municipality elects to fund projects

by assessing a tax, “[s]overeign immunity has never been defended as a mechanism to avoid any

and all increases in public expenditures.” 91 Rather, sovereign immunity is “designed to guard

against the unforeseen expenditures associated with the government’s defending lawsuits and

paying judgments.” 92 Because an economic development corporation’s activities center on

89
Whether a governmental function is “essential” is usually specified by statute. See, e.g., TEX. HEALTH &
SAFETY CODE § 772.113 (“The [emergency communication] district [in certain counties] is a public body corporate
and politic, exercising public and essential governmental functions . . . .”); TEX. TRANSP. CODE § 452.052(a) (“[A
regional transportation] authority: (1) is a public political entity and corporate body; . . . and (3) exercises public and
essential governmental functions.”); TEX. WATER CODE § 67.0105(b) (“The furnishing of a water supply and fire
hydrant equipment by a governmental entity or a volunteer fire department directly or through another entity . . . is an
essential governmental function . . . .”). The Development Corporation Act contains no similar language.
90
See TEX. LOC. GOV’T CODE § 501.051(c) (“The specified public purpose must be limited to the promotion and
development under this subtitle of enterprises to promote and encourage employment and the public welfare.”).
91
Brown & Gay Eng’g, 461 S.W.3d at 123.
92
Id. (internal quotation marks omitted).
18
specific “projects” that have been designated in advance and memorialized by performance

agreements and because the statutory scheme itself contains provisions limiting liability and

financial exposure, 93 we perceive no genuine risk of unforeseen expenditures to be visited on the

government.

When evaluating the nature and purposes of immunity, we remain ever mindful that

“sovereign immunity places the burden of shouldering [the] costs and consequences [of

improvident actions] on injured individuals.” 94 Considering the Development Corporation Act as

a whole, we conclude that the Legislature did not authorize municipalities to create economic

development corporations as distinct governmental entities entitled to assert immunity in their own

right. We have suggested, but never held, that a non-governmental entity can share a political

subdivision’s immunity derivatively. 95 The circumstances under which derivative immunity might

exist are ill-defined in our jurisprudence, except to the extent we have held that the absence of any

governmental control over a private contractor’s work affirmatively precludes it. 96 Derivative

immunity is a distinct analytical inquiry that the parties have not briefed—and the record is not

developed on this point—so we do not consider it. We hold only that RDC does not independently

possess governmental immunity as an arm of the state.

III. Conclusion

Governmental immunity does not extend like ripples from a pebble tossed into a pond but,

instead, is limited to those entities acting as an arm of state government. Despite fulfilling public

93
See TEX. LOC. GOV’T CODE §§ 501.008 (limiting the incurrable financial obligations), 505.106 (limiting
liability).
94
Brown & Gay Eng’g, 461 S.W.3d at 121 (internal quotation marks and citation omitted).
95
Id. at 126.
96
Id.
19
purposes, economic development corporations do not exist quite like an arm of the state

government, imbued with aspects of sovereignty such as immunity from suit. Moreover, the

fundamental purposes of governmental immunity do not countenance immunizing economic

development corporations like RDC from suit nor does the Development Corporation Act purport

to contemplate the same. We therefore affirm the court of appeals’ judgment.

_______________________________
Eva M. Guzman
Justice

OPINION DELIVERED: March 8, 2019

20