Legacy Hutto, LLC v. City of Hutto, Texas

Supreme Court of Texas
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No. 22-0973
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Legacy Hutto, LLC,
Petitioner/Cross-Respondent,
v.
City of Hutto, Texas, et al.,
Respondents/Cross-Petitioners

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On Petitions for Review from the
Court of Appeals for the Seventh District of Texas
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PER CURIAM

Legacy Hutto, LLC sued the City of Hutto, alleging that the City
owed Legacy about $3 million under a contract for Legacy’s work on a
city development project. The City responded that the law prohibits
governmental entities from entering into a contract without first
receiving a disclosure of interested parties, see TEX. GOV’T CODE
§ 2252.908(d), which Legacy had failed to submit. From that premise,
the City argued that it had lacked authority to enter into a contractual
relationship with Legacy. The City then observed that the Local
Government Code only waives a city’s immunity to suit when a contract
was “properly executed.” See TEX. LOC. GOV’T CODE § 271.151(2)(A).
Because a contract formed without authority could not have been
“properly executed,” the City reasoned, its governmental immunity had
not been waived. It filed a plea to the jurisdiction to that effect and also
filed a Rule 91a motion.
The district court granted the City’s plea and its Rule 91a motion.
The court then granted Legacy leave to replead and to include previously
unpleaded causes of action. Both parties appealed.
The court of appeals affirmed. It held that Legacy had not
presented any evidence that it complied with Section 2252.908, so its
contract with the City did not trigger Chapter 271’s waiver of immunity,
thus depriving the district court of subject-matter jurisdiction. ___
S.W.3d ___, 2022 WL 2811856, at *3-5 (Tex. App.—Amarillo July 18,
2022). The court of appeals then held that, because of the lack of
jurisdiction, the district court’s consideration of the Rule 91a motion was
“inappropriate” but that “any complaint regarding [that] error is
rendered moot.” Id. at *5. Finally, the court of appeals held that it
lacked jurisdiction to review the order granting Legacy leave to replead,
as that order was not final or otherwise appealable. Id. at *6.
Both parties filed competing petitions for review in this Court. The
Legislature then passed H.B. 1817, which took immediate effect after the
Governor signed it on June 9, 2023. See TEX. CONST. art. III, § 39; Act of
May 18, 2023, 88th Leg., R.S., H.B. 1817, § 4. The new statute, which
adds Section 2252.908(f-1) to the Government Code, applies to contracts
like this one—those described in Section 2252.908(b)—and makes them
voidable for failure to provide the disclosure of interested
parties required by this section only if:
(1) the governmental entity . . . submits to the
business entity written notice of the business entity’s
failure to provide the required disclosure; and

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(2) the business entity fails to submit to the
governmental entity . . . the required disclosure on or
before the 10th business day after the date the business
entity receives the written notice . . . .
We presume that statutes only apply prospectively. Subaru of
Am., Inc. v. David McDavid Nissan, Inc., 84 S.W.3d 212, 219 (Tex. 2002).
H.B. 1817, however, rebuts that presumption by expressly providing the
following specific rule for any “suit challenging the validity of a contract
described by Section 2252.908(b)” that was still “pending” when H.B. 1817
took effect: The “court . . . may require the governmental entity . . . to
provide the written notice required under Section 2252.908(f-1) . . . if the
court finds that failure to enforce that requirement would cause an
inequitable or unjust result for the parties to the suit.” Act of May 18,
2023, 88th Leg., R.S., H.B. 1817, § 2. The new statute further provides
that a contract executed before H.B. 1817 took effect “is presumed to have
been properly executed” under Section 2252.908 if, before that date, a
governmental entity had not filed “an action to void or invalidate the
contract” in a Texas court. Id. § 3.
H.B. 1817 modifies the law that applies to this case. The district
court should address the new statutory requirements in the first instance.
Accordingly, without hearing oral argument, TEX. R. APP. P. 59.1, we
grant the petitions for review, vacate the court of appeals’ judgment, and
remand the case to the district court “for further proceedings in light of
changes in the law.” TEX. R. APP. P. 60.2(f ).

OPINION DELIVERED: March 15, 2024

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