El Paso Education Initiative, Inc. v. Amex Properties, LLC, 052220 TXSC, 18-1167

Docket Nº:18-1167
Opinion Judge:JANE N. BLAND, JUSTICE
Party Name:The El Paso Education Initiative, Inc., d/b/a Burnham Wood Charter School, Petitioner, v. Amex Properties, LLC, Respondent
Judge Panel:James D. Blacklock, Justice joined by Chief Justice Hecht, concurring.
Case Date:May 22, 2020
Court:Supreme Court of Texas
 
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The El Paso Education Initiative, Inc., d/b/a Burnham Wood Charter School, Petitioner,

v.

Amex Properties, LLC, Respondent

No. 18-1167

Supreme Court of Texas

May 22, 2020

Argued April 8, 2020

On Petition for Review from the Court of Appeals for the Eighth District of Texas

OPINION

JANE N. BLAND, JUSTICE

In this case, we decide two issues. First, whether open-enrollment charter schools have governmental immunity. Second, whether that immunity is waived for a landlord's claim against one such school for anticipatory breach of a lease. Although the legislature has directed that open-enrollment charter schools have governmental immunity, we have not expressly held that they do.1We hold today that open-enrollment charter schools and their charter-holders have governmental immunity from suit and liability to the same extent as public schools.

Chapter 271 of the Local Government Code waives immunity for breach-of-contract claims against a "local governmental entity" if, among other requirements, the contract is "properly executed."2 The parties agree that the open-enrollment charter school district in this case qualifies as a local governmental entity, but they disagree about whether the school district "properly executed" the lease. Because the undisputed facts demonstrate that the district's governing board did not approve the lease, we hold that the lease was not "properly executed" as Chapter 271 requires. Accordingly, the district has immunity from this suit.

I

A

The Burnham Wood Charter School District operates open-enrollment charter schools in El Paso under charters from the Texas Education Agency.3 At a January 2008 board of directors' meeting, Iris Burnham, the president and superintendent of the district, told the board that the district planned to explore sites in east El Paso for a new open-enrollment charter school, Vista del Futuro. At the board's April meeting, Burnham reported that she had identified a site and had begun to negotiate a lease agreement with Amex Properties, LLC, through one of Amex's owners, Sylvia Martinez Aguirre. Burnham presented a proposal that included a "projected multi-year rent schedule and budget for Vista del Futuro." She requested permission to "continue to negotiate a lease" with Martinez, which the board granted. Burnham and Martinez signed a lease in late April. The lease required the district to pay approximately $3.4 million over an initial ten-year term. Amex agreed to construct two school buildings for the district's use. The lease specified that "[the district] shall use the Leased Premises solely for the purpose of conducting its business[, ] . . . described as a public charter school." The final paragraph states that each signatory "represents and warrants" that she has the authority to execute the lease and that it is "binding upon the entity" she represents: AUTHORITY OF SIGNATORIES. Each person executing this Lease individually and personally represents and warrants that he/she is duly authorized to execute and deliver the same on behalf of the entity for which he/she is signing (whether a corporation, general or limited partnership or otherwise) and that this Lease is binding upon the entity in accordance with its terms.

Burnham signed on behalf of "The El Paso Education Initiative, Inc.," as its president, and a notary attested that Burnham "executed the instrument on behalf of the El Paso Education Initiative, Inc."

Despite these representations, Amex understood that the district's board had to approve the lease to finalize it. In an April 27 email-sent three days after Burnham signed the lease-Amex's attorney wrote the district's attorney: When we spoke last week, you mentioned that you would be able to provide a resolution or minutes setting out that this deal has been approved by the governing board for the corporation and authorizing Ms. Burnham to negotiate and sign the lease. I will need to have that document as we hopefully get this thing done in the next day or so.4

Negotiations over the lease terms persisted after Burnham and Martinez signed it. Points of contention included the occupancy date for the first school building, whether the district could recover damages if Amex did not complete the building on time, and the district's deposit amount.

About two weeks later, on May 13, the district repudiated the lease. The district's attorney wrote Amex, stating that the district had "reject[ed] [Amex's] 28 April 2008 counteroffer for lease of this property," and that "by e-mail correspondence on the 8th of May we reiterated the position of [the district] that there is no lease agreement covering the property." He concluded: "[The district] rejects your assertion that there is any lease agreement between [the district and Amex]."

Burnham did not present the lease to the district's board for its approval. At a May 28 board meeting, Burnham reported that the Amex negotiations had been "unsuccessful."5 Despite the lack of board approval, Amex secured a construction contract to construct a building on its site, and the builder commenced construction activity. Amex ultimately leased the property to another tenant at a lower rate.

B

Amex sued the district for anticipatory breach of the lease, seeking damages that include some of the construction costs that Amex incurred in paying the third-party builder. Through a lengthy course of proceedings in the trial and appellate courts, the district filed multiple pleas to jurisdiction, asserting that it is immune from this suit.[6] In its jurisdictional plea for this appeal, the district contends that it is immune from suit to the same extent as public school districts and that no waiver of immunity exists for Amex's claim. In particular, the district argues that the lease was not "properly executed" as Local Government Code Chapter 271 requires.7 The district further contends that the construction costs that Amex incurred are consequential damages, which Chapter 271 excludes from its waiver of immunity.8

The trial court denied the district's jurisdictional plea on these issues, and the court of appeals affirmed.9 The court of appeals concluded that "Texas open-enrollment charter schools are governmental entities entitled to immunity from suit to the same extent as public-school districts, "10 but it held that fact issues existed at to whether the lease was "properly executed."11Based on the recitals in the lease, the court explained, "Burnham had at least some authority to enter into the Lease Agreement . . . ."12 The court further held that fact issues existed as to whether Amex's alleged damages for construction expenses were consequential.[13] We granted review.

II

A

Public school districts are generally entitled to governmental immunity from liability and suit.14 Immunity from liability bars enforcement of a judgment against a school district, and immunity from suit bars prosecution of a suit brought against it.15 Although we have identified the prospect, we have never recognized that open-enrollment charter schools are entitled to governmental immunity.16 Because the parties dispute the availability of a legislative waiver in this case, we consider first whether open-enrollment charter schools and charter-holders have governmental immunity to the same extent as public schools and then whether that immunity is waived.

Sovereign immunity is a common-law doctrine, "initially developed without any legislative or constitutional enactment."17 It therefore "remains the judiciary's responsibility to define the boundaries of the common-law doctrine and to determine under what circumstances sovereign immunity exists in the first instance."18

Though the courts determine governmental immunity's boundaries, the legislature informs that determination.[19] Thus, "where the governing statutory authority demonstrates legislative intent to grant an entity the 'nature, purposes, and powers' of an 'arm of the State government,' that entity is a government unit unto itself."20 Applying that principle in Ben Bolt-Palito Blanco Consolidated Independent School District v. Texas Political Subdivisions/Joint Self-Insurance Fund, we held that a self-insurance fund had governmental immunity because the fund's "governing statutory authority" granted it "purposes and powers" that "demonstrate legislative intent that it exist as a distinct governmental entity entitled to assert immunity . . . for the performance of a governmental function."21 In Rosenberg Development Corporation v. Imperial Performing Arts, Inc., we reached the opposite conclusion, examining the "express indicators of legislative intent" to hold that a municipally created "economic development corporation[]" was not a governmental entity.22

In deciding whether to extend immunity to a legislatively authorized entity, we also examine whether it would serve "the nature and purposes of immunity."23 In declining to extend immunity to the economic development corporation in Rosenberg, we observed that "the immunity doctrine's underlying purposes" were not served.24 We have identified two purposes in sovereign immunity's modern-day context: protecting the separation of government power and preserving the public treasury.25 Sovereign immunity respects "the relationship between the legislative and judicial branches of government" and "preserves separation-of-powers principles by preventing the judiciary from interfering with the Legislature's prerogative to allocate tax dollars."26

B

The Texas Constitution requires the legislature to "establish and make suitable provision for the support and maintenance of an efficient system of public free schools."27 Since 1995, the legislature has made open-enrollment charter schools "part of...

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