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# EATTQRNEYGIENJ&AL OF TEXAS AUHTIN. T-s 78711

March 19, 1973 Honorable J. W. Edgar Commissioner of Education Texas Education Agency 201 E. Eleventh Street Austin, Texas 78701 Dear Dq. Edgar: Opinion No. H- 19 Re: Extent ofliability’on bonds of Proprietary Schools under Section 32,38(a),(b), and (c) of the Texas Education Code.
The Propri&ry School Act, enacted in 1971(Acts 1971, 62nd Leg. , Chapter 620, p. 2006) is found as Chapter 32 ofthe Education Code. Section 32.38(a) requires ,abond inthe amount of $25,,000. 00 conditioned uponthe payment by the parties thereto ‘@all damages or expenses which the State or any governmental subdivision thereof, or anyperson may sustain resulting from a violation of statutory provisions or rules or o,egulations adopted pursuant thereto. The bond is made payable to the State for the use andbenefit of anyperson or governmental subdivision ofthe State which may **suffer** expenses or damages. “The bond shall be filed with the administrator and shall be in such form as shall be approved **by** the administrator. I’ By your letter of January 19, 1973, you ask thcee questions:. : ., ‘!la. Is such abond limited to refunds due to.students
.. for prepaid tuition; or ” b. May liabilities such as teachers’ s&larieri rent for building and equipment, other liabilitiee incident to the school be included? ‘I

**“ 2.**  Would the total amount of tuition paid by students be refundable in closed school situations, or only apro rata portion based onthe part of the course completed? ” We have beenfurnished with a copy of the bond approved by the administrator. Itrecites thatthe condition of the obligation assumed by its e%ecution is that:

p. 91 ’Honorable J. W. Edgar, page 2(H-19).

“If the PRINCIPAL, its officers, agents and employees, shall faithfully discharge all obligations, dutiee and responsibilities contained in Section 32. 33, Section 32. 38, Section 32. 39, Section 32.61 andall other applicable sections of House Bill 333, Acts ofthe 62nd Leg., Chapter 32, Texas Education Code, andall amendments thereto, andall applicable rules and regulations of the State Board of Education adopted to carry outtheprovisions of House Bill 333
. . . ‘I Section 32. 33 sets out criteria for.determining whether or not a school will be certified. Among the criteria are those found in Subsection (b) that the school have adequate space, equipment. instructional material andpersonnel toprovide training of good quality; in Subsection(i) that the school be financially sound and capable of fulfilling its commitment for training; and so on. These are continuing obligations ofthe school. The administrator may revoke a certificate ifhe has reasonable cause tobelieve that the school is guilty of aviolation under Section 32. 36. Therefore, as we read the bond in connection with Sections 32. 33 and 32.38 ofthe Proprietary School Act, should anyperson be damaged or suffer expense as a result ofthe failure of the school to meet such obligations, he may recover damages and expense under the bond. The bond, by the provisions of Section 32. 38 ofthe Proprietary School Act, is for the benefit of “the State, any governmental 6ubdivision thereof or anyperson who sustains damage or expense. ” Liability is notlimited to apro rata share ofunused tuition. Students of a school which closes may very well incur damages in excess of the “unused” portion of the tuition paid, especially if other schools will not give credit for thework already done toward a Certificate of Completion. It is our opinion. therefore. that Section 32.39 of theAct, governing refunds under certain circumstances, does notlimit recovery by students ina “closed” school situation. The extent of damage is a fact question.

p. 92I I Honorable J. **W.** Edgar, page 3 (H-19:).,

SUMMARY Where abond issued pursuant to Section 32.38 of the Proprietary School Act provides that it is conditioned uponthe faithful discharge of all bbligations, duties and responsibilities, contained invarious sections of thatAct, including the responsibilityto maintain adequate space, equipment, instructional material andpersonnel, andto remain financially sound, upon closing ofthe school for financial reasons, the sureties onthebond are liable for all damages and expenses incurred by students and others resulting therefrom andnot merely for the refund of “unused” tuition. Very truly yours,

c/ Attorney General of Texas

DAVID M. KENDALL,, Chairman Opinion Committee

p. 93 .

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