Texas appeals court upholds dismissal of developer's $4M lawsuit against City of Hutto

A Texas district appeals court has upheld the dismissal of a $4 million lawsuit against the City of Hutto.

The Texas Seventh District Court of Appeals has affirmed a Williamson County judge's decision to dismiss the lawsuit filed by developer Legacy claiming breach of contract.

Developers with Legacy had alleged in June 2020 that the City of Hutto breached its contract on a project that would have been anchored by Perfect Game. However, attorneys for the city argued that Legacy had failed to comply with a state government transparency law which invalidated the contract on the now defunct project, according to the city.

The city says that in 2019, city staff entered a contract with Legacy after it was approved by the then-city attorney, but the Hutto City Council did not approve the contract. There was also no verification whether Legacy had met its legal requirement to complete and file the 1295 Ethics Disclosure Form with the Texas Ethics Commission.

After Council changed law firms in 2020, the new city attorney found legal flaws in the Legacy contract and brought them to Council's attention, says the city. Initial attempts to settle failed and Legacy filed suit in Williamson County District Court.

The city says that this case was the first in Texas to rest largely on the 1295 ethics disclosure requirement and is one of a few similar suits it is pursuing to hold its contractors accountable and ensure they comply with all state laws, especially those which require transparency. 

Legacy now has 45 days to appeal the decision to the Texas Supreme Court.