Texas Supreme Court
All Charters have Governmental Immunity
To the Same Extent as all Traditional ISDs
Ruling: 1) All Texas public charters have governmental immunity from being sued to the same extent as ISDs and 2) a charter has immunity from being sued over a campus lease agreement that its superintendent signed, but was never approved by the charter’s board. The El Paso Education Initiative, Inc., D/B/A Burnham Wood Charter School v. Amex Properties, No. 18-1167. Issued May 22.
The Texas Supreme Court (
TSC), in a unanimous main decision and a concurring decision:
- Concluded, for the first time in a TSC decision, that all Texas charter schools have the same rights to governmental immunity from being sued (and from being held liable for their actions) as do traditional ISDs.
- Ruled that because TEA rules require charter contracts to be approved by charter boards, charters have governmental immunity from being sued for breach of contract over contracts that have not been approved by their boards.Exception: A breach-of-contract suit against a charter could potentially succeed if the contract had been signed by the charter’s superintendent, but only if the education commissioner has approved an amendment to the charter’s charter allowing the superintendent to execute contracts on behalf of the charter in lieu of approval by the charter’s board.
Dismissed
The justices specifically dismissed the lawsuit that El Paso commercial real estate firm Amex Properties filed against Burnham Wood Charter School (and the nonprofit corporation that holds the assumed name for the charter) after the charter refused to honor a campus leasing agreement signed by an Amex co-founder and by Iris Burnham — the charter’s co-founder/president/superintendent.
The $3.4 Million Agreement
Note: The $3.4 million agreement, for an initial term of 10 years, called for the charter to lease two new buildings Amex would have built (and pay for) on Amex-acquired land. One of the buildings was to be constructed immediately and the other building would be constructed later.
Burnham never submitted the agreement to the board for consideration after negotiations over a few items that emerged after the agreement was signed — such as the targeted completion date for the first building and monetary damages Amex could be assessed for missing the construction deadlines — remained unresolved.
Despite being told by the charter’s lawyer, in late April and early May 2008, that there was no agreement because the board had not approved it, Amex went ahead and hired a third-party contractor to construct a building on the site, and ultimately leased the property to another tenant at a lower rate.
Amex sued the charter for “anticipatory breach of contract” and sought to recoup from the charter a portion of its construction costs.
Amex had pointed to stipulations in the agreement that Burnham had signed in April 2008 that, among other things, she was signing as a representative of the charter and that the agreement bound the signatories to the agreement’s terms.
Not “Properly Executed”
But, the TSC rejected Amex’s claims on findings that the agreement was not “properly executed” because the board never approved it, and because the charter was not operating under an education commissioner approved charter amendment allowing its superintendent to approve contracts on the charter’s behalf.