                                  NO. 12-13-00262-CV

                          IN THE COURT OF APPEALS

               TWELFTH COURT OF APPEALS DISTRICT

                                     TYLER, TEXAS

WASSON INTERESTS, LTD.,                         §      APPEAL FROM THE 2ND
APPELLANT

V.                                              §      JUDICIAL DISTRICT COURT

CITY OF JACKSONVILLE, TEXAS,
APPELLEE                                        §      CHEROKEE COUNTY, TEXAS

                                            OPINION
       The Texas Supreme Court remanded this case to us to determine whether the City of
Jacksonville’s actions in terminating Wasson Interests, Ltd.’s (WIL) assumed ninety-nine year
lease of real property on the City’s water reservoir is a governmental or proprietary function. See
Wasson Interests, Ltd. v. City of Jacksonville, 489 S.W.3d 427, 439 (Tex. 2016). Because we
determine that the City’s acts that form the basis of this suit are part of four governmental
functions described in the Texas Tort Claims Act (TTCA), we affirm the trial court’s judgment.


                                          BACKGROUND
       The City of Jacksonville created Lake Jacksonville in the late 1950s as the City’s reservoir
to provide a healthy and sustainable municipal water supply. As described in the summary
judgment evidence before the trial court, rules and regulations were established by the City for its
reservoir “aimed at preserving: a safe and healthy municipal water supply, abundant recreational
fishing opportunities, a variety of recreational boating opportunities, and property values for the
improvements made upon lease lots for visitors, residents and community water users alike.” In
addition to these rules and regulations, the City’s zoning ordinance covered the lots around the
reservoir known as Lake Jacksonville.
         In 1996, James and Stacy Wasson assumed an existing ninety-nine year lease on lot 43 and
signed a ninety-nine year lease on lot 46 on the lake.1 Both leases contained the following
provision:


         ALL building restrictions, sanitary regulations, hunting and fishing regulations, safety regulations,
         zoning ordinances, and any and all other regulations and restrictions now in force, or which may be
         hereafter placed in force by Lessor regarding the use and occupancy of said premises and of Lake
         Jacksonville in general, are hereby made a part of this contract and incorporated herein by reference,
         and Lessee accepts said property and premises subject hereto and agrees to abide thereby. Lessee
         acknowledges receipt of a copy of all restrictions, regulations, and ordinances in effect on the date of
         this instrument.


The City’s zoning ordinance specifically defined what constituted impermissible commercial
activity on lots 43 and 46.
         The Wassons first used lots 43 and 46 as their primary residence, a permissible activity
under the City’s zoning ordinances. But after relocating to Tyler, they conveyed the two lots to
WIL. WIL rented the property to individuals for terms of a week or less. In response, the City
sent an eviction notice, notifying WIL that its short term rentals constituted a commercial use of
the property, which violated its zoning ordinances specified in WIL’s lease. The City and WIL
entered into a reinstatement agreement that specified the property’s acceptable uses under the
lease.
         WIL unsuccessfully sought a variance from the Lake Jacksonville Advisory Board and the
Jacksonville City Council to allow its commercial use of the two lots. The City later sent a second
eviction notice based on WIL’s continued commercial use of the property. The notice informed
WIL that its use of the property was a violation of the reinstatement agreement. WIL filed suit,
alleging that the City breached the lease by improperly terminating the lease and evicting WIL.
WIL also sought injunctive and declaratory relief. Following extensive discovery, the City filed a
combined motion for a traditional and a no evidence summary judgment. Among other arguments,
the City contended in the motion that it retained governmental immunity, and consequently, the
trial court lacked jurisdiction over the suit. The trial court granted the motion for summary
judgment without stating a reason.


         1
           The legal description for these two lots is LOT 43, LOT 46, BLOCK A, LAKE SPRINGS SUBDIVISION,
Lake Jacksonville, Cherokee County, Texas, according to the plat thereof recorded in Plat Cabinet A, Slide 102B, Plat
Records of Cherokee County, Texas. These two lots will be referred to as lot 43 and lot 46 throughout the remainder
of this opinion.


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                                    GOVERNMENTAL IMMUNITY
         On remand from the Texas Supreme Court, we are tasked with determining whether
enforcement of a zoning ordinance applied to lots 43 and 46 leased on the City’s reservoir and
used for its water supply is a governmental or proprietary function. WIL contends that this is a
proprietary function because the City made a discretionary decision to lease lots on its reservoir for
profit. The City contends that its enforcement of the lease’s land use restrictions under the zoning
ordinance is a governmental function. The City also contends that it acted to maintain and preserve
the reservoir, likewise a governmental function.
Standard of Review
         Subject matter jurisdiction is essential to a court’s power to decide a case. Bland Indep.
Sch. Dist. v. Blue, 34 S.W.3d 547, 553-54 (Tex. 2000). The absence of subject matter jurisdiction
may be raised in a motion for summary judgment. Id. at 554. Governmental immunity from suit
defeats a trial court’s jurisdiction. Ben Bolt-Palito Blanco Consol. Indep. Sch. Dist. v. Tex.
Political Subdivisions Prop./Cas. Joint Self-Ins. Fund, 212 S.W.3d 320, 323 (Tex. 2006).
         Normally, when both no evidence and traditional summary judgment motions are filed, we
address the no evidence motion first. Poag v. Flories, 317 S.W.3d 820, 825 (Tex. App.—Fort
Worth 2010, pet. denied). Here, we will review the propriety of granting the traditional summary
judgment first because it is dispositive. See id.
         We review a trial court’s summary judgment de novo. Traveler’s Ins. Co. v. Joachim, 315
S.W.3d 860, 862 (Tex. 2010). Whether a court has subject matter jurisdiction is a question of law
we must also review de novo. Wheelabrator Air Pollution Control, Inc. v. San Antonio, 489
S.W.3d 448, 451 (Tex. 2016).
Applicable Law
         Governmental immunity protects municipalities like the City of Jacksonville from lawsuits
for damages and from liability. See Ben Bolt-Palito Blanco Consol. Indep. Sch. Dist., 212
S.W.3d at 323-24. Municipalities have governmental immunity from suit unless the legislature has
expressly waived immunity by statute. City of Houston v. Williams, 353 S.W.3d 128, 134 (Tex.
2011).    The Texas Constitution authorizes the legislature to “define for all purposes those
functions of a municipality that are to be considered governmental and those that are proprietary,
including reclassifying a function’s classification assigned under prior statute or common law.”
Tooke v. City of Mexia, 197 S.W.3d 325, 343 (Tex. 2006) (quoting TEX. CONST. art. XI, § 13).



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       In the tort-claims context, the legislature has exercised that authority by enacting the
TTCA, which defines specific functions as proprietary or governmental. See Wasson Interests,
489 S.W.3d at 438-39 (citing TEX. CIV. PRAC. & REM. CODE ANN. § 101.0215 (West Supp. 2016)).
The TTCA generally defines governmental functions as those “that are enjoined on a municipality
by law and are given it by the state as part of the state’s sovereignty, to be exercised by the
municipality in the interest of the general public.”        TEX. CIV. PRAC. & REM. CODE ANN.
§ 101.0215(a). It then provides a nonexhaustive list, enumerating thirty-six legislatively-defined
governmental functions. See id.
       The legislature also defined proprietary functions as “those functions that a municipality
may, in its discretion, perform in the interest of the inhabitants of the municipality,” and the statute
sets forth a nonexclusive list of three proprietary functions. City of Houston v. Downstream
Envtl., 444 S.W.3d 24, 33 (Tex. App.—Houston [1st Dist.] 2014, pet. denied) (citing TEX. CIV.
PRAC. & REM. CODE ANN. § 101.0215(b)). Finally, the legislature specified that the “proprietary
functions of a municipality do not include those governmental activities listed under subsection
(a).” Id. (citing TEX. CIV. PRAC. & REM. CODE ANN. § 101.0215(c)).
       Although the TTCA was enacted with a tort-claims context in mind, the Texas Supreme
Court saw “no reason its definitional guidance cannot or should not also apply in the contract-
claims context.” Wasson Interests, 489 S.W.3d at 439. “In determining the boundaries of
immunity as it relates to whether a function is proprietary or governmental, therefore, courts
should be guided . . . by the TTCA’s treatment of the proprietary-governmental distinction.” Id.
       If a city’s actions are classified as a governmental function by the TTCA, we have no
discretion, regardless of the city’s motives, to declare the action as proprietary. City of Plano v.
Homoky, 294 S.W.3d 809, 814 (Tex. App.—Dallas 2009, no pet.).                 The TTCA specifically
classifies “reservoirs,” “waterworks,” and “water and sewer service” as governmental functions.
TEX. CIV. PRAC. & REM. CODE ANN. § 101.0215(a)(11), (19), (32) (West Supp. 2016). The
operation and maintenance thereof are likewise governmental functions. See City of Houston, 444
S.W.3d at 35. The enforcement of zoning ordinances and land-use restrictions is a valid exercise
of a city’s police powers and therefore a government function. See TEX. CIV. PRAC. & REM. CODE
ANN. § (a)(29); Truong v. City of Houston, 99 S.W.3d 204, 210-11 (Tex. App.—Houston [1st
Dist.] 2002, no pet.); see also Sefzik v. City of McKinney, 198 S.W.3d 884, 898 (Tex. App.—
Dallas 2006, no pet.) (“The police power may be loosely described as the power of the sovereign



                                                   4
to prevent persons under its jurisdiction from conducting themselves or using their property to the
detriment of the general welfare.”)
       The introduction of a proprietary element to an activity designated by the legislature as
governmental does not serve to alter its classification. City of Texarkana v. City of New Boston,
141 S.W.3d 778, 784 n.3 (Tex. App.—Texarkana 2004, pet. denied), abrogated on other grounds
by Tooke v. City of Mexia, 197 S.W.3d 325 (2006)). In regard to mixed functions, the rule is that
if any one component of a function is governmental, the entire function will be considered
governmental. See Tex. River Barges v. City of San Antonio, 21 S.W.3d 347, 357 (Tex. App.—
San Antonio 2000, pet. denied) (citing Christopher D. Jones, Comment, Texas Municipal Liability:
An Examination of the State and Federal Causes of Action, 40 BAYLOR L. REV. 595, 615 (1988)).
In other words, “actions related to a designated government function are reclassified as
governmental by the statute.” City of San Antonio v. Butler, 131 S.W.3d 170, 178 (Tex. App.—
San Antonio 2004, pet. denied).
Discussion
       In determining whether the City was performing a proprietary or governmental function,
we focus on the specific acts underlying WIL’s claims. See Canario’s, Inc. v. City of Austin, No.
03-14-00455-CV, 2015 WL 5096650, at *3 (Tex. App.—Austin Aug. 26, 2015, pet. denied) (mem.
op.) (citing Hudson v. City of Houston, 392 S.W.3d 714, 722–24 (Tex. App.—Houston [1st Dist.]
2011, pet. denied)).
       The development and maintenance of a reservoir is an integral part of the “waterworks” to
supply a safe water service to a city, which are all classified by the TTCA as governmental
functions. See TEX. CIV. PRAC. & REM. CODE ANN. § 101.0215(a)(11), (19), (32) (designating
“waterworks,” “dams and reservoirs,” and “water and sewer service” as governmental functions).
Moreover, the enforcement of a zoning ordinance to maintain these operations is also a
government function. See Id. § 101.021(a)(29). The act forming the basis of WIL’s claim is the
City’s use of its zoning ordinances and the lease restrictions to declare the lease of lots 43 and 46
on Lake Jacksonville terminated. This action was a proper use of the City’s police power to (1)
maintain a healthy and safe water supply for the general welfare of its residents; (2) protect local
residents from the ill effects of urbanization and enhance their quality of life; and (3) preserve and
maximize lease lot property values. See Truong, 99 S.W.3d at 210-11 (describing zoning’s proper
police power purpose and holding that city’s suit to enforce deed restriction restricting commercial
activity was akin to zoning, which is governmental function). Importantly, this action is consistent


                                                  5
with the Lake Jacksonville Rules and Regulations’ objective of “preserving[ ] a safe and healthy
municipal water supply, abundant recreational fishing opportunities, a variety of recreational
boating opportunities, and property values for the improvements made upon lease lots for visitors,
residents and community water users alike.”
         WIL contends that the City’s actions were proprietary functions because it exercised
discretion in leasing lots for profit on its reservoir. We disagree. This is similar to the plaintiff’s
contention in City of San Antonio v. Butler. There, the court explained “the city has discretion to
perform or not to perform many activities in connection with its government functions.” Butler,
131 S.W.3d at 178. “Neither that discretion nor the existence of a profit motive reclassifies one
aspect of a government function into proprietary conduct.” Id. The court explained that plaintiffs
are not able to split aspects of a government operation into discrete functions and recharacterize
certain of those functions as proprietary. Id.
         In the instant case, WIL attempts to split the City’s act of leasing the lake lots into a
discrete proprietary function. But we have already concluded that the act forming the basis of the
suit is the City’s enforcement of the zoning ordinance and the lease restrictions, which is a
legitimate exercise of the police power and a government function. In and of itself, a lease of real
property by a city could be a proprietary function in certain circumstances. But when it is on real
property used for a government purpose, it becomes part of that governmental function. See
Homoky, 294 S.W.3d at 815, n.1. Here, the City’s enforcement of the restriction serves the
governmental function of preserving “a safe and healthy municipal water supply . . . and property
values for the improvements made upon lease lots for visitors, residents and community water
users. . . .”
         We hold that the City’s act of enforcing its ordinance to prevent commercial activity and
terminate WIL’s lease of lots 43 and 46 was part of its government function to maintain a safe and
healthy water supply for its citizens and to preserve the property values of the lease lots.
Therefore, without a waiver of immunity from suit, the trial court lacked jurisdiction over this suit.
See Ben Bolt-Palito Blanco Consol. Indep. Sch. Dist., 212 S.W.3d at 323. Because that issue is
dispositive in this appeal, we need not address the challenge to the no evidence summary judgment
motion or any alternate grounds for this summary judgment. TEX. R. APP. P. 47.1.




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                                                    DISPOSITION
         Having determined that the acts forming the basis of WIL’s suit are part of the City of
Jacksonville’s governmental functions under the Texas Tort Claims Act, we affirm the judgment
of the trial court.

                                                                  JAMES T. WORTHEN
                                                                     Chief Justice


Opinion delivered December 9, 2016.
Panel consisted of Worthen, C.J., Hoyle, J., and Neeley, J.




                                                    (PUBLISH)




                                                              7
                                   COURT OF APPEALS

      TWELFTH COURT OF APPEALS DISTRICT OF TEXAS

                                           JUDGMENT

                                         DECEMBER 9, 2016


                                         NO. 12-13-00262-CV


                                 WASSON INTERESTS, LTD.,
                                         Appellant
                                            V.
                              CITY OF JACKSONVILLE, TEXAS,
                                         Appellee


                                  Appeal from the 2nd District Court
                      of Cherokee County, Texas (Tr.Ct.No. 2011-05-0389)

                       THIS CAUSE came to be heard on the appellate record and briefs filed
herein, and the same being considered, it is the opinion of this court that there was no error in the
judgment.
                       It is therefore ORDERED, ADJUDGED and DECREED that the judgment
of the court below be in all things affirmed, and that all costs of this appeal are hereby adjudged
against the Appellant, WASSON INTERESTS, LTD., for which execution may issue, and that
this decision be certified to the court below for observance.
                    James T. Worthen, Chief Justice.
                    Panel consisted of Worthen, C.J., Hoyle, J., and Neeley, J.
