The 15th Court of Appeals, apply a recent ruling in an almost identical case, has held that the State has immunity against a breach of lease claim because the statutory waiver of immunity for “state agencies” does not apply to it.
State of Texas, Acting By and Through the Texas Facilities Commission, For and On Behalf of the Texas Health and Human Services Commission, et al. v. 8317 Cross Park, LLC (No. 15-25-00012-CV; April 21, 2026) arose from a dispute between the State and its landlord over a lease agreement. In 2002 the State leased office space for HHSC from Cross Park’s predecessor. The end date of the lease was later extended to August 31, 2028, contingent on enough appropriations to cover the full term and cost of the lease. If there weren’t, the State had the right to terminate the lease or adjust it on written notice “if it cannot find another state agency to at least partially fill the office space.” The lease further gave Cross Park the ordinary remedies if the State defaulted. After the 2023 session, the Facilities Commission’s executive director sent a notice of termination to Cross Park effective September 1, 2023 for lack of appropriated funds. HHSC also certified that it didn’t have available funds for the Cross Park lease and four others. Cross Park sued, alleging violations of the lease, non-payment of rent, and ultra vires against various state officials. Defendants filed a plea to the jurisdiction. The trial court granted the plea as to the Comptroller and the executive commissioner of HHSC, but denied it as to everyone else. The State appealed.
In an opinion by Justice Farris, the court of appeals reversed in part and affirmed in part. The State argued that since it was the party to the lease and not the various agencies involved, the waiver of immunity in § 114.003, CPRC, did not apply. The court agreed, holding that “only the State entered into the Cross Park lease and that Chapter 114 does not apply to TFC and HHSC because they did not enter into the lease.” Chapter 114 waives immunity only for state agencies, and the State is not a “state agency.”
Plaintiff argued that the deputy executive commissioner of HHSC acted ultra vires “by allegedly failing to certify to TFC that HHSC had funds available to pay rent for the Cross Park lease.” The State countered that the deputy commissioner had discretion to determine whether appropriated funds were available for the lease payments and that he acted within his statutory authority. The court again agreed with the State. The commissioner was statutorily required to certify to TFC, at least 60 days before the beginning of each fiscal biennium, that “money is available to pay for the lease until the end of the next fiscal biennium.” § 2167.101, Government Code. As the court held in a similar case, State v. Broadmoor Austin Associates, No. 15-25-00013-CV, 2026 WL 66824 (Tex. App. [15th Dist.] Mar. 10, 2026, no pet. h.), the statute “provides no criteria for [the commissioner] to use in determining what makes funds available to pay for lease rentals. This lack of ‘precision and certainty’ renders this determination a matter of discretion,” rather than a ministerial act. The court also noted that Plaintiff’s effort to recover past retrospectively was barred by immunity unless specifically waived by the Legislature.
The court, however, agreed with Plaintiff that TFC’s executive director acted ultra vires when he violated TFC regulations by issuing the termination notice. Again, as the court held in Broadmoor, TFC regulations required the executive director to “(1) receive a written determination from HHSC regarding whether it occupied idle facilities or has idle capacity based upon specified factors and (2) receive evidence from HHSC that it notified the Office of the Governor.” And, as in Broadmoor, he didn’t do either of those things. The court further held that Cross Park sought only rental payments going forward, not retrospectively, so the immunity bar didn’t apply. Finally, the court ruled that Plaintiff’s claim for a declaratory judgment that the Legislature appropriated enough funds to pay the rent was barred by sovereign immunity.
The court thus reversed the trial court’s order denying the State’s plea to the jurisdiction as to Cross Park’s breach of lease claim, its ultra vires claim against the HHSC executive commissioner, and its UDJA claim against the State and the executive commissioner. That left Cross Park’s ultra vires claim against TFC’s executive director still alive in the case. The court did not reach Cross Park’s issue of whether the executive director actually acted ultra vires (only that Cross Park stated a claim) or Cross Park’s UDJA against him. Now the case heads back to the Travis County district court from whence it came.
