### T E X A S C O U R T O F A P P E A L S , T H I R D D I S T R I C T , A T A U S T I N

NO. 03-15-00528- CV

The Texas Ed ucation Agency and Mike Morath, 1 Com m ission er of Edu cation, in h is Of fi cial Capacity, Appellants

v. Academ y of Career s and Technologies, In c. d/b/a Academ y of Career s and Technologies Charter School, App ellee

F ROM TH E DISTRI CT COURT O F TRAVIS CO UNTY, 200 TH JUDICI AL DISTRICT NO. D-1 -GN-1 5-0 0287 9, H ONO RAB LE GISELA D. TRI ANA, JUDGE P RESIDING

O P I N I O N

Afte r t h e Texas Educa tion Ag ency (TEA) and Mike Morath, Commi ssioner of Educa tion, notified the Aca demy of Caree rs and Tec hnologie s, I nc. d/b/a Aca demy of Caree rs and Tec hnologie s Charter School (ACT) t hat TEA intended to revoke ACT’s charter, A CT sued TEA and filed a motion for temporar y injunction to preve nt the revoc ation. The trial court g rante d ACT’s motion and denied TEA’s plea to the jurisdiction. Consist ent with this Court’s rec ent opinion in Texas Education Agenc

y v. American Y

outhW orks, Inc. , Nos. 03-14-00283- CV, 03-14-00360- CV, 2016 WL 3230661 (Tex. A pp.—Austin June 10, 2016, no pet. h.), we conclude that the trial court lacke d subject-matter jurisdiction. We will there fore vacate the trial court’s order g ranting the

Michae l L

. Wil liams was the Commi ssioner of Educa tion when this appea l was filed. His 1 succe ssor, Mike Morath, ha s been a utomatically

substitut ed. See Tex. R. App. P . 7.2(a)

.temporar

y injunction, dissolve the temporar y injun ct i o n , and rende r judgme nt dismiss ing ACT’s suit for want of jur isdiction.

BACK GR OUND

ACT is a n o n profit corpor ation that opera tes an open-e nrollment char ter school authorized under chapte r 12, subchapte r D of the Texas Educa tion Code. See generally Tex. Educ. Code §§ 12.101–.137. I n Dec ember 2014, TEA sent ACT a letter notify ing ACT that it intended to revoke ACT’s char

ter. The letter indicated that ACT had been assig ned the following perf ormanc e rating s:

• 2011–2012 financ ial acc ountability rating of “Substandar d Achieve ment”;

• 2012–2013 financ ial acc ountability rating of “Substandar d Achieve ment”;

• 2013–201 4 financ ial acc ountability rating of “Substandard Achieve ment”; and

• 2013–2014 aca demic ac countability rating of “I mprovement Require d.”

The letter also noted that these rating s subjected ACT to mandatory revoc ation. See id. § 12.115(c) (providing that TEA commissioner “ shall revoke the char ter of an open-e nrollment char ter school” if school rec eives unsatisfac tory perf ormanc e or financ ial acc ountability rating s for three prec eding school y ear s) (e mphasis added)

.

ACT exercised its rig ht t o o b tain informal revie w of TEA’s decision to revoke its char ter. See 19 Tex. Admin. C ode § 157.1123 (2014) (Tex. Educ. Age ncy , I nformal Review). I n Fe brua ry 2 0 14, following an informal revie w, TEA informed ACT that it would proce ed with

2revoc ation, which would be eff ective Aug ust 21, 2015, with the school to cea se opera tions no later than J une 30, 2015. ACT then submitt ed a petition for revie w of this decision, which was ref err ed
to the State Offic e of Administrative Hea ring s (SOAH). See Tex. Educ. Code § 12.116(c) (“A decision by the commissioner to revoke a char ter is subject to revie w by [S OAH].”). I n May 2015, the SOAH administrative law judge (AL J ) issued an o rd er u pholding TEA’s decision to revoke ACT’s char

ter. See id. § 12.116(c) (1) (providing that “the [AL J ] shall uphold a decision by the commissioner to revoke a cha rter unle ss the judge finds the dec ision is arbitra ry and ca pricious or clea rly err oneous”)

. I n J uly 2015 , AC T fi l ed this suit seeking decla ratory and injunctive relief

. ACT complained of alleg ed err ors in the acc ountability rating s on which TEA b as ed i t s revoc ation decision and arg ued that: TEA’s conduct was arbitrary and capr icious; the g overning reg ulatory scheme is overbr oad; Educa tion Code sections 12.115 and 12.116 are unconstitutionally retroa ctive; the char t er -r evocation and school-closing proce dures fail to satisfy due proce ss and amount to an unconstitutional taking ; the use of prior-y ear data for ca l cu lation of the following y ear ’s

acc ountability

rating s was an ultra vire s action; TEA’s a doption of rules limiti ng appea ls to errors attributable to TEA’s calc ulations was ultra vires; and ACT’s rig ht to open courts had been violated. I n response , TEA filed a plea to the jurisdiction, contending that sovere ign immunit y barr ed ACT’s suit beca use the leg islature has not waived immunit y . Among other things, TEA’s plea arg ued that

an AL J ’s revie w of a char ter-r evoca

tion decision is final and is not subject to judicial revie w in a district court, see id. § 12.116(c) (2) (providing that “a decision of the [AL J ] under this subsection

3is final and may not be appea led”) , and that ACT had no constitutionally protec ted proper ty interest in its charter

. The trial court deter mined that ACT’s suit prese nted important consti t u t i o nal issues, that ACT would suffe r irrepa rable harm if TEA re voked ACT’s char ter, and that sovere ign immunit y did not bar ACT’s suit to deter mine its constitutional rig hts. Acc ording ly , the trial court denied TEA’s plea to the jurisdiction and temporar ily enjoined TEA from revoking ACT’s char ter, taking over ACT’s bank acc ounts or other proper ty , or shutting down ACT ’s s ch o o l

. TEA now appea ls both the denial of i ts plea to the j urisdiction and the g ran t o f a t em p o ra ry injunction. See Tex. Civ. Prac. & Rem. Code § 51.014(a) (4), (8) (allowing interlocutory appea l from order g ranting temporar y injunction or deny

ing g overnme ntal unit’s jurisdictional plea). 2

STANDARD OF REVIEW The trial court’s subject-matter jurisdiction may be challeng ed throug h a plea to the jurisdiction. See Texas Dep’ t of Parks & W

ildlif e v. Miranda , 133 S.W .3d 217, 225–26 (Tex. 2004); Bland Indep. Sch. Dist. v. Blue , 34 S.W .3d 547, 554 (Tex. 2000). Whether a court has subject-matter jurisdiction is a question of law we revie w de novo. Miranda , 133 S.W .3d at 226. The plaintiff has the burde n of alleg ing f

acts that a ffirma

tively demonstrate the trial court’ s jurisdiction. Id.

ACT filed a motion to dismiss this appea l , contending that this Court lacks jurisdiction 2 beca use TEA filed its notice of appea l befor e the trial court signe d its order g ranting ACT’s motion for temporar

y injunction and deny ing TEA’s plea to the jurisdiction. Howeve r, TEA filed both a prema tu re notice of appeal before the trial court signed its order and an amende d notice of appea l afte r the court signe d its order

. Even disreg arding the amende d notice, TEA’s prema turely filed notice of appea l is now eff ective to vest jurisdiction in this Court. See Tex. R. Ap p . P

. 2 7

. 1 (a); Ja ckson v. W

right , No. 03-10-00391- CV, 2010 WL 5575924, at *1 (Tex. App.—Austin J an . 1 4 , 2011, no pet.) (pe r cur iam) (mem. op.) . We theref ore de ny ACT’s motion to dis miss the appeal. 4“A temporar y injunction’s purpose i s to prese rve the status quo of the litigation’s subject matter pending a trial on the merits.” Butnaru v. Ford Motor Co. , 84 S.W .3d 198, 204 (Tex. 2002). We revie w a trial court’s g rant of a temporar y i n j u n ct i o n for an abuse of discretion, id. , but revie w its construction of controlling law de novo, see City of Garland v. Dallas Morning News , 22 S.W .3d 351, 357 (Tex. 2000).

DISCUSSIO N Texas Education A gency v . Am erican You thWorks

, Inc. This Court’s rec ent decision in Texas Education Agenc y v. American Y

outhW orks, Inc. informs our analy sis in this case . See American Y outhW orks , 2016 WL 3230661. I n American Y outhW orks , org anizations that held the char ters for sever al open- enrollment char ter schools sued TEA to pr event the revoc ation of their char ters. The district court temporar ily enjoined TEA from revoking the char

ters, and TEA appea led. Id

. at * 7

. This Court conclude d that the district court lacke d subject-matter j u ri s diction and there fore vacated the district court’s order s, dissolved the injunctions, and rende red judgme nt dismiss ing the char ter holders’ suits for want of jurisdiction. Id. at *19. I n deter

mining that the district court lacke d jurisdiction over the char ter holders’ claims, this Court conclude d that: the char ter holders did not have a constitutionally protec ted proper ty interest in their charter s, see id. at *12; even assuming that t h e ch ar t er holders had some constitutionally protec ted prope r ty in te r est in their char

ters, their due-pr ocess claims and their claims
t h at Educa tion Code sections 12.115 and 12.116 are unconstitutionally retroa ctive still were n o t viable, see id. at *13–14; sovere ign immunit y barr ed the char ter holders’ ultra-vire s claims beca use
5they would require retrospe ctiv e re l i ef, see id. at *15–16; and the char ter holders’ ultra-vire s rule challeng es fail beca

use the Uniform Dec lara

tory J udg ments Act (UDJA) does not waive sovere ign immunit y for r ule cha lleng es and be cause those claims soug ht retrospe ctive re lief, see id. at *16. On t h e basis of our analy sis in American Y outhW orks , which we will not rep ea t i n detail, we conclude that ACT lacks a c onstitut ionally protec ted property interest in its char ter, it s 3 ultra-vire s claims wou l d require retrospe ctive relief , ACT rec eived due proce ss throug h TEA’s informal revie w and an appea l to SOAH, and the UDJA does n o t waive sovere ign immunit y for ACT’s rule challeng es. These conclusions require us to hold that the majority of ACT’s claims do n o t waive TEA’s sovere ign immunit y . Howeve r, ACT makes sever al claims not addre ssed in American YouthW

orks , and we will consider these claims below.

Section 12.128 and ACT’s Tak ings Clai m

I n addition to arg

uing that it has a constituti onally protec ted prope rty

interest in its char ter, an arg ument we ha

ve re jected a bove, ACT also a sserts that TEA’ s seizure of ACT’s bank

acc ounts and other proper ty , which would alleg edly occur when its char ter is revok ed , wo uld constitute an unconstitutional taking and a denial of due proce ss. ACT further arg ues that Educa tion Code section 12

. 1 2 8 , which allows the state to seize any proper ty paid for with state funds if a school’s cha

rter is re voked, is unconstitutional on its fac e. 4

See Tex. R. App. P . 47.1. 3 Section 12.128 provides: 4 (a) Property

purcha sed or lea sed with funds re ceive d by a cha rter holde r . . . (1) is consider ed to be public pr operty for a ll purposes under sta te law; 6We first consider A CT’s fac ial challeng e to the constitutionality of sec tion 12.128. “A statute is presumptively constitutional.” Brooks v. Northglen Ass’n , 141 S.W .3d 158, 170 (Tex. 2004). “I n a fac ial challeng e to a statute’s constitutionalit y , we consider the statute as written, rathe r than as it opera

tes in prac tice.” FM Pro

p s . Op er ating Co. v. City of Austin , 22 S.W .3d 868, 873 (Tex. 2000). On its fac e, section 12.128 direc ts the state to take possession only of char ter-sc hool proper ty that was purcha sed or lease d with state funds. See Tex. Educ. Code § 12.128(c)

. Charter schools are cre ature s of statute that are an integ ral part of Texas’s public-educ ation sy stem and may be considere d g overnme ntal units. See LTT S Charter Sch., Inc. v. C2 Constr., Inc. , 342 S.W .3d 73, 76 (Tex. 2011) (no t i n g t h at char ter schools “ar e indisputably part of the Texas public-educ ation

(2) is prope rty

of this state held i n trust by the cha rter holde r for

the bene fit of the students of the ope n-enr ollment charte r school; and (3) may be used only for a purpose for which a school district may use school district property

.

.... (c) The c ommissi oner sha ll: (1) take possession and assume control of the proper ty descr ibed by Subsection (a) o f an open-e nrollment char ter school that cea ses to opera te; and (2) supe rvise the disposition of the proper ty in acc ordanc e with law.

Tex. Educ. Code § 12.128(a) , (c)

. We unders t an d AC T t o be challeng ing the constitutionalit y of subsection (c) , which require s the commissioner to take possession of char ter-sc hool assets that wer e purcha sed with state funds if a char ter school c ease s to operate

.

7sy stem”); id. at 78 (noting that cha rt er s ch ools’ status and authority “der ive wholly from the

compre hensive statutory reg ime”); id. at 82 (“O pen-e nrollment char ter schools are go v er n m en tal

u n i t s fo r T ort Claims Act purposes . . . .”). As such, char ter schools exercise state authority , s ee HW Y 3 MHP, LLC v. Electric Reliability Council of Tex. , 462 S.W .3d 204, 210 (Tex. App.—Austin 2015, no pet.) (“open- enrollment charter schools should be treated as gove rnmental units beca use they are g iven taxpay er money to use when acc omplishi ng the public g oal of educating children and

are statutorily entitled to service s that public schools rec eive” ), and they are also subject to strict state oversig ht and control, see LTTS Char ter School , 342 S.W .3d at 80 (“[The c harte r school’s] use of state-f u n d ed p ro perty and state funds is also car efully circ umscribed.” ). As the Texas Supreme Court has pointed out, part of the car eful circ umscription of a char ter school’s authority is that “[p] roper ty purcha sed or lease d with state public funds

. . . is held i n trust for the benef it of the students an d ‘may be used only for a purpose for which a school district may use school district proper ty .’” LTT S Charter School , 342 S.W .3d at 80 (footnote omitted) (quoting Tex. Educ . Code § 12. 1 2 8(a) (3))

. Be cause the state provides funds to char ter schools to be used exclusively for a public purpose, there is nothing unconstituti o n al about its taking possession of proper ty that the char ter school purcha ses with those funds—“what the L eg islature g iveth, the L eg islature may taketh

awa y .” See I vey v. State , 277 S.W .3d 43, 47 (Tex. Crim. App. 2009). Our conclusion that section 12.128 i s constitutional is bolstered by the fact that, as discussed above, char

ter schools have no constitutionally protec ted proper ty in te r e s t in the ir char

ters, and it is their char

ters that allow them to rec eive state funds and purcha se or lease pro p er t y with those funds to use for public purposes. I t is further bolstered b y t h e fa ct t h at an open-e nrollment

8school char ter is a contract fr ee l y en t er ed into by the s tate and the charter holder. See Tex. Educ. Code § 12.112 (“A char

ter for an o pen-e nrollment char ter school shall be in the form of a written
contra ct signe d by

the commissioner and the chief opera ting of

fice r of the sc hool.”). The state, as

a party to the contr act, may condition the g rant of a char ter on a promise to return to the state proper ty that was funded by the state and used for state purposes, as section 12.128 require s. I n fac t, 5 the Educa tion Code provides that, by acc epting public funds, char ter holders are ag ree ing to be bound by statutory require ments. See id. § 12.1071 (providing that char ter holder who acc epts state funds “af ter the eff ective date of a provision of this subchapte r ag ree s to be subject to that provision, reg ardle ss of the date on which the char ter holder’s charter was gra nted” and “ag ree s to acc ept all liability under this subchapte r”)

. Moreove r, as this Court conclude d in American Y outhW orks , the char ter-r evocation proce dures established by statute and administrative rule provide notice and

an opportunity to be hea rd to char ter holders and there by satisfy the require ments of due proce ss. See A merican Yout hW

orks , 2016 WL 3230661 at *13. To the extent that ACT also ar gu es that TEA would commit an unconstitutional taking by seizing its proper ty once the char

ter is revoke d, we conclude that this taking s claim is not

ACT’s char

ter document is la

beled “Contrac t f

or Charter .” I t rec ites that the “contr act is 5 executed” betwee n the Texas State Boa rd of Educa tion an d AC T

. T h e contra ct for char ter also provides that “[t] he Boa rd in its sole discreti o n may modify , place on probation, revoke or deny timely rene wal of the char ter for cause ,” and it lists as cause s for such adv er s e actions “fa ilure to satisfy g eneral l y acc epted acc ounting standards or fiscal manag ement” and “fa ilure to comp l y wi t h an applicable law or rule.” See Texas Educ. Agenc y v. American Y

outhW orks, Inc. , Nos. 03-14-00283- CV, 03-14-00360- CV, 2016 WL 3230661, at *12 (Tex. App.—Austin J une 10, 2016, no pet. h.) (“U nder long- established Supreme Court jurisprudenc e, a benef it is not a protec ted entitlement if g overnme nt officials may g rant or deny it in their di scre tion

. . . . The c harte rs her e eac h include provisions that expli citly acknow ledg e and ag ree to the State’s unlimit ed discretion over the char

ters.”)

. 9y et ripe. “[T] aking s claims, like other cause s of action, must be ripe and they must be broug ht in a

court with subj ec t matter jurisdi ction over the claim.” City of Hous. v. Guthri e , 332 S.W .3d 578, 592 (Tex. App.—Houston [1st Dist.] 20 0 9 , p et

. denied) (citation omitted). “Unde r the ripene ss d o ctrine, courts must consider whether , at the time a lawsuit is filed , the fac ts are sufficie n t l y develope d so t h at an injury has occur red or is likely to occur , rathe r than being conting ent or remote.” Texas Quarter Horse Ass’n v. American Legion Dep’ t of Tex. , No. 03-15-00118- CV, 2016 WL 3230664, at *3 (Tex. App.—Austin J une 8, 2016, no pet. h.) (interna l quotation marks omitted). “T h e ripene ss doctrine emphasizes the need for a concr ete injury for a justiciable claim t o b e prese nted and examines when [an] action may be broug ht. I t focuse s on whether the case involves

uncer tain or conting ent future events that may not oc cur as anticipated, or indeed may not oc cur at all.” Bridgeport Indep. Sch. Dist. v

. W illiams , 447 S.W .3d 911, 917 (Tex. App.—Austin 2014, no pet.) (c itation and internal quotation marks omitted).

Her e, ACT arg ues that “close -out direc tives” sent from TEA indicate that the ag ency is “attempting to take title to [ACT’s] rea l proper ty , persona l proper

ty , and cash on hand.” Howeve r, those direc tives do not indicate that TEA plans to seize control of any assets that wer e not purcha sed

or lease d with state funds. I ndeed, one direc tive specifie s that ACT must transfe r to TEA title in rea l proper ty “held by the char

ter holder t hat was either purcha sed or lease d using state funds.” As discussed above, section 12.128 require s the state to seize such assets. We will not assume that TEA plans to t ak e p ro perty that was not purcha sed or lease d using state funds. I f, upon revoc ation of ACT’s cha

rter, T EA does e x cee d its statutory authority and take s proper ty that was not purc hased or lea sed using state funds, then A CT may have a ripe taking s claim—but not now.

10Be cause we de termine that ACT’s c onstitut ional challeng e to sec tion 12.128 is not

viabl e an d t h at its taking s claim is unripe, we conclude that these claims do not waive TEA’s

6

sovere ign immunity

. 7 Open Courts ACT also alleg es in its petition that “the TEA and Commi ssioner’s rules” violate the open-c ourts provision of the Texas Constit ution by “deny ing the m the rig ht to challeng e a c losure by making a SOAH de termination final without appea l.”

“The Texas Constit ution’s open courts g uara ntee provides that ‘[a]l l courts shall be open, and ever

y person for an injury done him, in his lands, g oods, person or reputa tion, shall have

reme dy by due course of law.’” Y ancy v. United Surgical Partners Int’l, Inc. , 236 S.W .3d 778, 783 (Tex. 2007) (quoting Tex. Const. art. 1, § 13). “Proof of an open courts violati o n re q u i res two elements: (1) a cognizable, common-law claim that is st at u t o ri l y restric ted, and (2) the restric tion is unreasona

ble or a rbitrar y when ba lance d ag ainst the statute’s purpose and basis.” Id. Her e, ACT’s p etition does not identify a cognizable common-law claim that could be proof of an open-c ourts violation. At most, AC T ’s petition may be rea d to alleg e that its dueSee Andrade v. NAACP of Austin , 345 S.W .3d 1, 11 (Tex. 2011) (conside ring substance 6 of equal- protec tion claim in plea- to-jurisdiction context and explaining that Secre tary of State reta ined immunit y from suit unless plaintiffs pleade d “viable claim”) ; Amer i ca n Y outhW orks , 2016 WL 32 3 0 6 6 1 , at * 14 (holding char ter holders’ constitutional claims wer e not viable and there fore barr ed by

sovere ign immunity ). For simil ar rea sons, we hold that ACT’s reque st for a decla ration that “it was improper and 7 a violation of ACT’s proper ty and constituti o n al ri gh t s to desig nate it as a ‘hig h risk’” does not waive TEA’s immunit y . ACT has no constitutionally protec ted proper ty interest in its char

ter, and, to the extent it challeng es TEA’s rules reg arding “hig h risk” entities, the UDJA d oes not waive immunit y for rule challeng es and the relief ACT seeks is retrospe ctive. See American Y outhW orks , 2016 WL 3230661, at *16. 11proce ss rig hts wer e violated beca use it could not appea l the AL J ’s order upholding TEA’s decision
to revoke its char

ter. Howeve r, as discussed above, ACT has no constitutionally protec ted proper ty interest in its char

ter and, even if it did, revie w by SOAH satisfied the require ments of due proce ss. Moreove r, “ther e is no common-law cause of action for judicial revie w of an ag ency ’s administrative act.” Creedmoor-M

aha W ater Supply Corp. v. Texas Comm’n on Envtl. Quality , 307 S.W .3d 505, 524 (Tex. App.—Austin 2010, no pet.) (holdin g t h at Water Code did not violate open-c ourts provision by prohibiting judicial revie w o f fi n al ag ency order ). There fore , ACT’s open-c ourts claim fa ils and does not waive sove reig n immunit y .
CONCLUSION We conclude that none of ACT’s cl ai m s waive TEA’s sovere ign immunit y . There fore , the trial court lacke d subject-matter jurisdiction a nd err ed in de ny ing TEA’s plea to the jurisdiction and in g ranting ACT’s motion for temporar y injunction. Acc ord i n gly , we vacate the trial court’s order g ranting the temporar y injunction, dissolve the temporar y injunction, and rende r judgme nt dismi ssing ACT’ s suit for want of jurisdiction.

__________________________________________ Scott K. Field, Just ice Be fore J ustices Pury ear , Goodwin, and F ield Vac ated a nd Rendere d Filed: Jul y

13, 2016

12