# the Texas Education Agency and Mike Morath, Commissioner of Education, in His Official Capacity v. Academy of Careers and Technologies, Inc. D/B/A Academy of Careers and Technologies Charter School > Texas Court of Appeals, 3rd District (Austin) · October 20, 2015 URL: https://www.frixlaw.com/law-library/cases/4074428 ## Case - **Court:** Texas Court of Appeals, 3rd District (Austin) - **Decided:** October 20, 2015 - **Precedential status:** Published - **Opinion:** Opinion - **Cited by:** 0 later opinions in the Frix Law Library ## Citator (automated) - No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases. - Full citator and citing cases: https://www.frixlaw.com/law-library/cases/4074428 ## How later opinions describe it (automated extraction) - concluding a nontenured university professor had no property interest in his position because "State law ... clearly leaves the decision whether to rehire a nontenured teacher for another year to the unfettered discretion of university officials." ## Opinion text ACCEPTED 03-15-00528-CV 7458584 THIRD COURT OF APPEALS AUSTIN, TEXAS 10/20/2015 3:01:39 PM JEFFREY D. KYLE CLERK No. 03-15-00528-CV _____________________________ FILED IN 3rd COURT OF APPEALS IN THE COURT OF APPEALS AUSTIN, TEXAS FOR THE THIRD JUDICIAL DISTRICT 10/20/2015 3:01:39 PM _____________________________ JEFFREY D. KYLE Clerk TEXAS EDUCATION AGENCY AND MICHAEL WILLIAMS, COMMISSIONER OF EDUCATION, IN HIS OFFICIAL CAPACITY, Appellants, VS. ACADEMY OF CAREERS AND TECHNOLOGIES, INC. D/B/A ACADEMY OF CAREERS AND TECHNOLOGIES CHARTER SCHOOL, Appellee. ______________________________ On Appeal from the 200th Judicial District Court of Travis County, Texas Cause No. D-1-GN-15-002879 ______________________________ BRIEF OF APPELLANTS ______________________________ KEN PAXTON Attorney General of Texas ERIKA M. LAREMONT Texas Bar No. 24013003 CHARLES E. ROY Assistant Attorney General First Assistant Attorney General General Litigation Division P.O. Box 12548, Capitol Station JAMES E. DAVIS Austin, Texas 78711-2548 Deputy Attorney General for Civil (512) 463-2120 (PHONE) Litigation (512) 320-0667 (FAX) ANGELA COLMENERO ATTORNEYS FOR APPELLANTS Division Chief ORAL ARGUMENT REQUESTED October 20, 2015 IDENTITY OF PARTIES AND COUNSEL Pursuant to Rule 38.1(a) of the Texas Rules of Appellate Procedure, Appellants herein provides this Court with the following list of parties and the names and addresses of all trial and appellate counsel: Defendants-Appellants: Texas Education Agency (“TEA”) and Michael L. Williams, in his Official Capacity as the Commissioner of Education Trial & Appellate Attorney for ERIKA M. LAREMONT Defendants-Appellants: Texas Bar No. 24013003 Assistant Attorneys General Office of the Attorney General General Litigation Division P.O. Box 12548, Capitol Station Austin, TX 78711-2548 PHONE: (512) 463-2120 FAX: (512) 320-0667 Plaintiff-Appellee: Academy of Careers and Technology, Inc., d/b/a Academy of Careers and Technology Charter School Trial and Appellate Attorneys D. TODD SMITH For Plaintiff-Appellee: Texas Bar No. 00797451 Smith Law Group LLLP 1250 Capital of Texas Highway South T Three Cielo Center, Suite 601 Austin, Texas 78746 STEPHEN M. FOSTER Texas Bar No. 00792511 9013 Magna Carta Loop Austin, Texas 78754 PHONE: (512) 784-4367 ii TABLE OF CONTENTS IDENTITY OF PARTIES AND COUNSEL ........................................................ ii TABLE OF CONTENTS ...................................................................................... iii INDEX OF AUTHORITIES ................................................................................... v STATEMENT OF THE CASE ............................................................................... 1 STATEMENT REGARDING ORAL ARGUMENT ........................................... 2 ISSUE PRESENTED ............................................................................................... 2 BRIEF OF APPELLANTS ..................................................................................... 3 STATEMENT OF FACTS ...................................................................................... 4 I. 2012 SUNSET ADVISORY COMMISSION AND CHANGES TO TEXAS EDUCATION CODE. .................................................................... 4 II. THE TEXAS EDUCATION CODE PROVIDES FOR A LIMITED APPEAL PROCESS. ................................................................................. 7 A. Appeal of academic and financial accountability ratings. ......................................................................................... 7 B. Appeal of revocation decision. ................................................ 10 III. ACT FAILED TO MEET THE FINACIAL AND/OR ACADEMIC ACCOUNTATIBLITY RATING FOR THREE CONSECUTIVE YEARS. ........................................................................ 11 IV. THE TEXAS EDUCATION CODE MANDATES REVOCATION OF ACT’S CHARTER SCHOOL .......................................................... 14 SUMMARY OF ARGUMENTS........................................................................... 16 ARGUMENT .......................................................................................................... 17 I. STANDARDS OF REVIEW...................................................................... 17 A. Plea to the Jurisdiction ............................................................ 17 B. Temporary Injunction ............................................................. 18 C. Statutory Construction ............................................................ 19 II. ACT HAS FAILED TO IDENTIFY THE VEHICLE IN WHICH IT MAY SEEK JUDICIAL REVIEW........................................................ 19 A. ACT Failed to Identify a Statutory Basis for Judicial Review of TEA’s Accountability Ratings or Decision to Revoke ................................................................................... 21 iii 1. There is no statutory provision which allows this court to review TEA’s rating decisions ................... 21 2. There Is No Statutory Provision Which Allows This Court to Review TEA’s Revocation Decision ....................................................... 21 B. ACT Failed to Demonstrate a Due Process Violation. .................................................................................................... 23 1. ACT does not have a vested right in the charter contract .............................................................. 23 2. ACT failed to alleged a viable procedural- due-process claim ........................................................... 30 3. TEA applied the Texas Education Code neither arbitrarily nor capriciously in connection with ACT’s accountability ratings or revocation ................................................................... 32 C. No Violation of Some Other Constitutional Right ................ 34 1. ACT failed to demonstrate a property interest to substantiate its takings claim ..................................... 34 2. The Texas Education Code does not violate the Open Courts Provision ............................................. 37 III. ACT’S ULTRA VIRES CLAIMS ARE MERITLESS, BARRED BY SOVEREIGN IMMUNITY, AND DO NOT SUPPORT THE DISTRICT COURT’S FINDING THAT ACT WOULD LIKELY SUCCEED ON THE MERITS OF ITS CLAIMS ......................................... 38 A. ACT failed to allege that the Commissioner acted without legal authority or failed to perform a ministerial act ............................................................................. 38 B. ACT is seeking retroactive relief which is unavailable in an ultra vires action .................................................................... 41 IV. ACT FAILED TO DEMONSTRATE THE TRIAL COURT’S JURISDICTION AND, THEREFORE, THE TRIAL COURT ERRED BY DENYING TEA’S PLEA. ..................................................... 43 PRAYER ................................................................................................................. 44 CERTIFICATE OF COMPLIANCE .................................................................. 46 CERTIFICATE OF SERVICE ............................................................................ 46 iv INDEX OF AUTHORITIES Cases Adler v. Duval County School Bd., 112 F.3d 1475 (11th Cir. 1997) ........................41 Bacon v. Hist. Comm’n, 411 S.W.3d 161 (Tex. App.—Austin 2013, no pet.) ..................................................................................................................20 Bd. of Regents v. Roth, 408 U.S. 564 (1972) .................................................... 23, 24 Byers v. Patterson, 219 S.W.3d 514 (Tex.App.—Tyler 2007, no pet.) ..................32 City of Beaumont v. Bouillion, 896 S.W.2d 143 (Tex. 1995) ..................................41 City of College Station v. Turtle Rock Corp., 680 S.W.2d 802 (Tex. 1984) .....................................................................................................................35 City of Dallas v. Trammel, 101 S.W.2d 1009 (Tex. 1937) ......................................26 City of El Paso v. Heinrich, 284 S.W.3d 366 (Tex. 2009) ................... 38, 39, 41, 42 City of El Paso v. Public Utility Comm'n of Tex., 883 S.W.2d 179 (Tex. 1994) ...........................................................................................................33 City of Elsa v. Gonzalez, 325 S.W.3d 622 (Tex. 2010) ...........................................18 City of Elsa v. M.A.L., 226 S.W.3d 390 (Tex. 2007) ...............................................41 City of Houston v. Carlson, 393 S.W.3d 350 (Tex. App.—Houston [14th Dist.] 2012, no pet.)......................................................................................30 City of Houston v. Northwood Mun. Util. Dist. No. 1, 73 S.W.3d 304 (Tex.App.—Houston [1st Dist.] 2001, pet. denied) ..............................................23 City of Marshall v. City of Uncertain, 206 S.W.3d 97 (Tex. 2006) ........................19 City of Port Arthur v. Southwestern Bell Tel. Co., 13 S.W.3d 841 (Tex.App.—Austin 2000, no pet.)........................................................................37 City of San Antonio v. City of Boerne, 111 S.W.3d 22 (Tex. 2003) ........................19 Coastal Habit Alliance v. Pub. Util. Comm’n, 294 S.W.32d 276 (Tex. App.—Austin 2009, no pet.) ................................................................................31 Combs v. City of Webster, 311 S.W.3d 85 (Tex.App.—Austin 2009, pet. filed)........................................................................................................ 23, 38 Conn. Bd. of Pardons v. Dumschat, 452 U.S. 458 (1981) .......................................23 v Creedmoor–Maha Water Supply Corp. v. Tex. Comm'n on Envtl. Quality, 307 S.W.3d 505 (Tex.App.—Austin 2010, no pet.) ........... 20, 38, 39, 41 Creedmoor-Maha, 307 S.W.3d 505 (Tex. App.—Austin 2010, no pet.) .......................................................................................................... 20, 37, 38 Employees Ret. Sys. v. Jones, 58 S.W.3d 148 (Tex. App.—Austin 2001, no pet.) ........................................................................................................19 Ex parte John M. Abell, 613 S.W.2d 255 (Tex. 1981) ..................................... 24, 27 Fed. Sign v. Tex. S. Univ., 951 S.W.2d 401 (Tex. 1997) .................................. 37, 38 Gerst v. Nixon, 411 S.W.2d 350 n. 8 (Tex. 1966) ...................................................33 Graham Mortg. Corp. v. Hall, 307 S.W.3d 472 (Tex. App.—Dallas 2010, no pet.) ........................................................................................................18 Hawkins v. El Paso First Health Plans, Inc., 214 S.W.3d 709 (Tex. App.—Austin 2007, no pet.) ................................................................................17 Hot Rod Hill Motor Park v. Triolo, 276 S.W.3d 565 (Tex. App.— Waco 2008, no pet.)..............................................................................................18 Houston Belt & Terminal Ry. Co. v. City of Houston, 424 S.W.3d 663 (Tex.App.–Houston [14th Dist.] 2014, pet. filed) .................................................39 In re Gamble, 71 S.W.3d 313 (Tex. 2002) ..............................................................18 Indian Beach Prop. Owners’ Ass’n v. Linden, 222 S.W.3d 682 (Tex. App.—Houston [1st Dist.] 2007, no pet.) .............................................................18 KEM Tex., Ltd. v. Texas Dep't of Transp., No. 03-08-00468-CV, 2009 Tex. App. LEXIS 4894 (Tex. App.—Austin 2009, no pet.) ................................20 Klumb v. Houston Mun. Emp. Pension Sys., 405 S.W.3d 204 (Tex. App.—Houston [1st Dist.] 2013, pet. filed) ................................................... 25, 27 Lazarides v. Farris, 367 S.W.3d 788 (Tex.App.—Houston [14th Dist.] 2012, no pet.) ........................................................................................................42 Lee v. Tex. Workers’ Compensation Comm’n, 272 S.W.3d 806 (Tex.App.—Austin 2008).............................................................................. 24, 26 McAllen Hosps., L.P. v. Suehs, 426 S.W.3d 304 (Tex. App.— Amarillo 2014, no pet.) ................................................................................. 25, 27 Mikeska v. City of Galveston, 451 F.3d 376 (5th Cir. 2006) ....................................32 vi Olim v. Wakinekona, 461 U.S. 238 (1983) ..............................................................24 Paul v. Davis, 424 U.S. 693 (1976) .........................................................................23 Phillips v. Washington Legal Foundation, 524 U.S. 156 (1998) ............................23 Pinnacle Charter Sch. v. Bd. of Regents, 108 A.D.3d 1024, 969 N.Y.S.2d 318 (2013) ............................................................................................28 Pool v. River Bend Ranch, LLC, 346 S.W.3d 853 (Tex. App.—Tyler 2011, pet. denied) .................................................................................................18 Project Reflect, Inc. v. Metro Nashville Bd. of Pub. Educ., 947 F. Supp. 2d 868 (M.D. Tenn. 2013) .................................................................. 28, 29 Project Sch. v. City of Indianapolis, 2012 WL 3114573 (S.D. Ind. July 31, 2012) ........................................................................................................ 28, 30 Railroad Comm’n v. Texas Citizens for a Safe Future & Clean Water, 336 S.W.3d 619 (Tex. 2011) ................................................................................19 Reach Academy for Boys & Girls, Inc. v. Delaware Dept. of Educ., 46 F.Supp.3d 455 (D.Del. 2014) ...............................................................................28 Reich v. Occupational Safety & Health Review Comm’n, 102 F.3d 1200 (11th Cir. 1997) ............................................................................................41 Sch. Dist. of Kansas City v. Williamson, 141 S.W.3d 418 (Mo. Ct. App. 2004) ............................................................................................................28 Scott v. Alphonso Crutch LSC Charter Sch., Inc., 392 S.W.3d 165 (Tex. App.—Austin 2010, pet. denied) (mem. op.) .......................... 23, 25, 27, 28 Seguin v. Bexar Appraisal Dist., 373 S.W.3d 699 (Tex. App.—San Antonio 2012, pet. denied) ............................................................................ 25, 27 Sheffield Devel. Co. v. City of Glenn Heights, 140 S.W.3d 660 (Tex. 2004) .....................................................................................................................35 Simi Inv. Co. v. Harris County, 236 F.3d 240 (5th Cir. 2000) .................................32 Society of Separationists, Inc. v. Herman, 959 F.2d 1283 (5th Cir.), cert. denied, 506 U.S. 866 (1992).........................................................................42 Spring Branch Indep. Sch. Dist. v. Stamos, 695 S.W.2d 556 (Tex.1985) ............................................................................................................23 Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83 (1998) ...................................41 vii Suryanto v. Att'y Gen. of U.S., 398 Fed.Appx. 830 (3rd Cir. 2010) .........................23 Sw. Pharmacy Solutions, Inc. v. Tex. Health & Human Servs. Comm’n, 408 S.W.3d 549 (Tex. App.—Austin 2013, pet. denied) .............. 19, 40 Tarrant County v. Ashmore, 635 S.W.2d 417 (Tex. 1982) .....................................35 Tex. Dep’t of Protective & Regulatory Servs. v. Mega Child Care, Inc., 145 S.W.3d 170 (Tex. 2004) ........................................................... 20, 23, 38 Texas Dep’t of Parks & Wildlife v. Miranda, 133 S.W.3d 217 (Tex. 2004) .....................................................................................................................17 Texas Dep’t of Transp. v. Jones, 8 S.W.3d 636 (Tex. 1999)...................................20 Texas Health Care Info. Council v. Seton Health Plan, Inc., 94 S.W.3d 841 (Tex.App.—Austin 2002, no pet.)....................................................42 Town of Castle Rock v. Gonzales, 545 U.S. 748 (2005) ..........................................24 Triantaphyllis v. Gamble, 93 S.W.3d 398 (Tex. App.—Houston [14th Dist.] 2002, pet. denied) .......................................................................................18 United States v. Or. State Med. Soc’y, 343 U.S. 326 (1952) ...................................41 Univ. of Tex. Med. Sch. v. Than, 901 S.W.2d 926 (Tex. 1995) ...............................31 Walker v. Packer, 827 S.W.2d 833 (Tex. 1992) ......................................................18 Walling v. Metcalfe, 863 S.W.2d 56 (Tex. 1993) ....................................................18 Statutes 19 TEX ADMIN. CODE §157.1183 (2015) .................................................................10 19 TEX. ADMIN. CODE §109.1001 (a)(4) ..................................................................12 19 TEX. ADMIN. CODE §109.1001(a)(1) (2015) .........................................................7 19 TEX. ADMIN. CODE §109.1001(d)(1) (2015) .........................................................8 19 TEX. ADMIN. CODE §109.1002(i)(2) ...................................................................31 19 TEX. ADMIN. CODE §97.101(b) ...........................................................................31 TEX. CIV. PRAC. & REM. CODE §51.014(a)(4).........................................................16 TEX. CIV. PRAC. & REM. CODE §51.014(a)(8) ........................................................16 TEX. CIV. PRAC. & REM. CODE §6.001 ....................................................................16 viii TEX. CONST. ART. I, §13 ..........................................................................................36 TEX. CONST. ART. I, §17 ..........................................................................................34 TEX. EDUC. CODE §12.101 .......................................................................................26 TEX. EDUC. CODE §12.106 .......................................................................................34 TEX. EDUC. CODE §12.107 .......................................................................................35 TEX. EDUC. CODE §12.115 (c-1) ..........................................................................7, 10 TEX. EDUC. CODE §12.115(a) ............................................................................ 15, 26 TEX. EDUC. CODE §12.115(c) .................................................................. 6, 10, 13, 26 TEX. EDUC. CODE §12.115(c)(3) ..............................................................................14 TEX. EDUC. CODE §12.116(a) ...................................................................................13 TEX. EDUC. CODE §12.116(c) ...................................................................................22 TEX. EDUC. CODE §12.116(c)(2) ....................................................................... 14, 15 TEX. EDUC. CODE §12.1161 .............................................................................. 35, 36 TEX. EDUC. CODE §12.128 .......................................................................................34 TEX. EDUC. CODE §12.128(a)(2) ..............................................................................35 TEX. EDUC. CODE §12.128(c) ...................................................................................36 TEX. EDUC. CODE §39.053 .......................................................................................43 TEX. EDUC. CODE §39.054(b) ..................................................................................21 TEX. EDUC. CODE §39.082(g) ..............................................................................8, 31 TEX. EDUC. CODE §39.116(a) .....................................................................................7 TEX. EDUC. CODE §39.116(e) .....................................................................................7 TEX. EDUC. CODE §39.116(f) .....................................................................................7 TEX. EDUC. CODE §39.151 .......................................................................................31 TEX. EDUC. CODE §39.151(b) ....................................................................................9 TEX. EDUC. CODE §39.151(d) ..................................................................................21 TEX. EDUC. CODE §39.151(e) ...............................................................................9, 21 ix TEX. EDUC. CODE §39.152(a) ...................................................................................10 TEX. EDUC. CODE §39.152(c)(3) ....................................................................... 10, 14 TEX. GOV’T CODE §311.021.....................................................................................19 Texas Civil Practive and Remedies Code §51.014(a)(4)...........................................1 Texas Civil Practive and Remedies Code §51.014(a)(8)...........................................1 Rules TEX. R. APP. P. 29.1(b) .............................................................................................16 Tex. R. App. P. 9.4(i)(3) ..........................................................................................45 x STATEMENT OF THE CASE Nature of the Case: Appellee Academy of Careers and Technology, Inc., d/b/a Academy of Careers and Technology Charter School (“ACT”), is an open-enrollment charter school that sued TEA and the Commissioner of Education (“Commissioner”) challenging the revocation of its charter. ACT alleges, inter alia, that TEA violated its substantive and procedural due process rights, and that the Commissioner acted ultra vires by revoking its charter. Trial Court: 200th District Court, Travis County, Texas The Honorable Gisela D. Triana Trial Court The trial court denied Appellants’ plea to the Disposition: jurisdiction and granted Appellee’s Request for Temporary Injunction. CR at 440-41 (order). Parties Below: Academy of Careers and eTechnologies, Inc., d/b/a Academy of Careers and Technologies Charter School, Plaintiff Texas Education Agency (“TEA”) and Michael L. Williams, in his Official Capacity as the Commissioner of Education, Defendants Jurisdiction: Following the trial court’s denial of TEA’s plea to the jurisdiction and grant of ACT’s Request for Temporary Injunction, Appellants bring this appeal pursuant to Texas Civil Practive and Remedies Code §51.014(a)(4) and (8). 1 STATEMENT REGARDING ORAL ARGUMENT This case is factually similar to Texas Education Agency and Michael Williams, Commissioner of Education, in his Official Capacity, v. American Youthworks, Inc., d/b/a American Youthworks Charter School, Honors Academy, Inc., d/b/a Honors Academy, and Two Azleway, Inc. d/b/a/ Azleway Charter School Nos. 03-14-00283-CV and 03-14-00360-CV, which are currently on appeal before this Court. Oral Arguments were heard in these cases on September 24, 2015. This case shares the same subject matter as In Re Academy of Careers and Technology, Inc., d/b/a Academy of Careers and Technology Charter School, Case No. 03-15-00570-CV, in which ACT filed a petition for writ of mandamus and sought emergency relief, which this Court granted and remains in effect. Because the isues presented to the Court in this case are similar to the issues presented in the above-referenced cases, Appellants do not believe that oral argument will materially assist the Court in disposing of this matter. However, should Appellee request oral arguments which is then granted by this Court, Appellants request equal time for argument. ISSUE PRESENTED 1. Whether the district court erred when it denied the Commissioner’s and the Texas Education Agency’s plea to the jurisdiction and when it found that ACT demonstrated a probable right to the relief sought. 2 No. 03-15-00528-CV _____________________________ IN THE COURT OF APPEALS FOR THE THIRD JUDICIAL DISTRICT _____________________________ TEXAS EDUCATION AGENCY AND MICHAEL WILLIAMS, COMMISSIONER OF EDUCATION, IN HIS OFFICIAL CAPACITY, Appellants, VS. ACADEMY OF CAREERS AND TECHNOLOGIES, INC. D/B/A ACADEMY OF CAREERS AND TECHNOLOGIES CHARTER SCHOOL, Appellee. ______________________________ On Appeal from the 200th Judicial District Court of Travis County, Texas Cause No. D-1-GN-15-002879 ______________________________ BRIEF OF APPELLANTS ______________________________ TO THE HONORABLE COURT OF APPEALS: For the reasons that follow, Appellants Texas Eduction Agency (“TEA”) and Commissioner Michael Williams (“Commissioner”, jointly referenced as “TEA” or “Appellants”) respectfully show why this Court should reverse the trial court’s September 4, 2015 order, and dismiss this case for lack of jurisdiction or dissolve the temporary injunctions and remand this case for trial. 3 STATEMENT OF FACTS I. 2012 SUNSET ADVISORY COMMISSION AND CHANGES TO TEXAS EDUCATION CODE. The Sunset Advisory Commission (“Sunset Commission”) reviewed the Texas Education Agency in October 2012, preceding the commencement of the 83rd Texas Legislature. The Sunset Commission noted that charter schools are public schools that “operate under decreased state regulation in exchange of increased accountability for results.” CR at 316. 1 In its review of charter schools, the Sunset Commission identified the following issue: “TEA lacks a full range of tools to effectively address poor academic performance and financial mismanagement at low-performing charter schools.” Id. While many charter schools meet TEA educational expectations, charter schools experience higher rate of “academically unacceptable level than school districts.” CR at 317-18. Further, the Sunset Commission noted that “[c]harter schools receive about 80 percent of their revenues in state aid, as compared to 41 percent for traditional school districts,” and “[m]any charter schools also have poor financial performance, underscoring the importance of oversight of expenditure of state funds.” CR at 118. Significantly, the Sunset Commission found, “Charter schools have far more accountability problems requiring assignment of interventions and sanctions, and ultimately, revocation of the charter. Charter schools represent more than two-thirds, 71 percent, of schools 1 For the convenience of the Court, the clerk’s record will be referenced as, “CR at __” and the reporter’s record will be referenced as, “RR at __.” 4 assigned with sanctions, even though charter schools make up only 17 percent of the total number of districts and charters.” CR at 318-19. The Sunset Commission further observed that “TEA lacked authority to revoke a charter for a school that is imminently insolvent and fails to plan for its student’s education,” leaving students susceptible to a charter school possibly closing mid-year due to lack of funds. CR at 320. Although TEA had the authority to close a charter school and revoke the charter, the Sunset Commission criticized the process as unworkable, leaving students to be educated at underperforming charter schools. CR at 319. Of particular concern was the issue of “protracted litigation” concerning TEA’s ability to timely revoke a charter and close an underperforming charter school. The report noted the two to three years it took to close a charter school prior to Sunset review, leaving students to be educated by an underperforming school. Id. Based on these findings, the Sunset Commission recommended a change in statute that required the automatic revocation of a charter for failure to meet basic academic or financial accountability standards for three years in a row. CR at 326. It recommended that no appeal be permitted from the revocation determination. Id. According to the Sunset Commission, such a change in the law would: Allow the State to more quickly shut down the poorest performing charters, without years of litigation during which time the school remains open. The recommendation would also ensure students do not continue to attend a school lacking a quality education or with 5 serious financial problems that could affect the school and, ultimately, a student’s academic progress. Id. The findings of the Sunset Commission demonstrate that there is a compelling state need to identify and close poor-performing charter schools in order to improve the choices available to parents and students. Thus, based on the Sunset Commission’s recommendation, in 2013 Texas Legislature amended section 12.115 of the Texas Education Code to make mandatory the revocation of any open- enrollment charter school’s charter if the school fails to meet financial and/or academic performance ratings in certain years. The Commissioner is now required to revoke a school’s charter if one of three scenarios arises: (1) the charter holder has been assigned an unacceptable performance rating under Subchapter C, Chapter 39 [of the Education Code] for the three preceding years; (2) the charter holder has been assigned financial accountability performance rating under Subchapter D, Chapter 39, indicating financial performance lower than satisfactory for the three preceding school years; or (3) the charter holder has been assigned any combination of the [unacceptable ratings under either subchapter]. TEX. EDUC. CODE §12.115(c). Chapter 39, Subchapter C (academic performance) ratings allowed for 2009- 2010 and 2010-2011 to be retroactively considered but specifically excluded ratings 6 for 2011-2012.2 Id. §12.115(c-1); see also TEX. EDUC. CODE §39.116(a), (e), and (f) (allowing Commissioner to suspend academic performance rating during transition period, but authorizing sanctions during the 2011-12 school year based on prior year performance ratings). The Subchapter D (financial accountability) ratings to be considered are those assigned to the school for 2010-2011, 2011-2012, 2012- 2013 and all years subsequent to the 2013 amendment. TEX. EDUC. CODE §12.115 (c-1). II. THE TEXAS EDUCATION CODE PROVIDES FOR A LIMITED APPEAL PROCESS. A. Appeal of academic and financial accountability ratings. Every public school or open-enrollment charter school is required to submit an audited annual financial report (“AFR”) to TEA. 19 TEX. ADMIN. CODE §109.1001(a)(1) (2015). This mandate is to ensure that “school districts and charter schools are spending [taxpayer] money appropriately and within the guidelines related to purchasing and required expenditures on programs and various other regulatory matters.” RR at 106: 22-p. 107: 7. The AFR is required to be audited by an independent certified public accountant (“CPA”). RR at 108: 2-5; RR at 110: 2- 4. The school should prepare the financial statements and the auditor should then 2 This provision was necessary because ratings were essentially “held over” during the 2011-12 school year, so a charter school that earned a failing rating in 2009-10 and 2010-11, could have been treated as having three strikes in 2011-12, but for the express exclusion of ratings for that year from 12.115(c). See TEX. EDUC. CODE §39.116(e) (authorizing the imposition of sanctions during the 2011-12 school year for districts that had unacceptable performance during the prior school year). 7 review that information to ensure its accuracy and “free of material misstatements.” RR at 108: 6-19; RR, Def. Ex. 1, p. 1. TEA uses the information contained in the AFR to calculate the school’s financial accountability thus it is crucial that the information be true and correct. 19 TEX. ADMIN. CODE §109.1001(d)(1) (2015). To further to goal of access to true and correct information, the Texas Education Code §39.082(g) states: Before assigning a final rating under the system, the commissioner shall assign each district or open-enrollment charter school a preliminary rating. A district or school may submit additional information to the commissioner relating to any indicator on which performance was considered unsatisfactory. The commissioner shall consider any additional information submitted by a district or school before assigning a final rating. If the commissioner determines that the additional information negates the concern raised by the indicator on which performance was considered unsatisfactory, the commissioner may not penalize the district or school on the basis of the indicator. An AFR also includes opinions of the auditor regarding compliance. RR, Def. Ex. 1, p. 16-17. If the auditor makes comments that are negative or that the school disputes, the charter school may submit an AFR that is disapproved by the charter school board. RR at 110: 11-24. Furthermore, should a charter school submit the data prior to the deadline, it has up until the deadline to make any corrections necessary. RR at 38: 19-23; 114: 16-22. However, once the deadline passes, the information submitted by the school becomes final. The appeal process is not intended to correct mistakes made by the submitting school, but rather to correct errors made by TEA. RR at 113: 23 - p. 114: 3. Indeed, by the deadline to submit 8 the financial data, the information contained in the AFR has been reviewed by an independent CPA auditor and verified by the school. RR at 114: 8-10. TEA does not and cannot second-guess the information provided by school districts and charter schools. Id. at 114: 11-15. After a school district or charter school receives its accountability or financial ratings, it has an opportunity to appeal the ratings to the Commissioner. TEX. EDUC. CODE § 39.151(a). Should a charter school seek to appeal a financial or academic rating and notify the Commissioner of such, the Commissioner must appoint a committee to make recommendations to the Commissioner on any challenge made to an agency decision. TEX. EDUC. CODE §39.151(b). After considering the committee’s recommendation, the Commissioner makes a final decision. TEX. EDUC. CODE §39.151(d). The Commissioner’s decision following any appeal is final, and the Legislature expressly prohibited any additional appeal from this final determination in “any other proceeding” if the charter “has had an opportunity to challenge the decision under [section 31.151]. TEX. EDUC. CODE §39.151(e). An accountability rating becomes final if a school does not appeal or after TEA considers the appeal. Once a rating is final, it is not subject to further appeal. TEX. EDUC. CODE §39.151(e). TEA uses final accountability ratings to make accreditation decisions. CR at 318 (“Continued poor performance on academic and financial accountability ratings can lower a district’s or charter’s accreditation status….”). A school is required to be accredited to operate, so once TEA has final 9 accountability ratings, it can determine which schools may or may not open the next school year. RR at 114: 22- p. 115: 8. B. Appeal of revocation decision. If a charter school earns an unacceptable financial accountability rating or lower than satisfactory academic accountability rating or any combination of the two for three consecutive years, the Commissioner must begin proceedings to revoke the school’s charter. TEX. EDUC. CODE §12.115(c), (c-1). This process begins when TEA notifies the charter school of its intent to revoke, specifying the reasons for the revocation decision and explaining that the “charter holder has the right to request an informal review regarding the Commissioner’s intent to revoke the charter and appoint a conservator.” CR at 61-64. The notice also states that if the charter school requests an informal hearing but the Commissioner’s decision to revoke does not change, that the charter school may appeal the Commissioner’s decision to close a school to the State Office of Administrative Hearings (“SOAH”). TEX. EDUC. CODE §39.152(a). The school must file a petition for review and meet certain requirements for the petition to be granted. 19 TEX ADMIN. CODE §157.1183 (2015). The decision of the administrative law judge is final and may not be appealed. TEX. EDUC. CODE §39.152(c)(3). 10 III. ACT FAILED TO MEET THE FINACIAL AND/OR ACADEMIC ACCOUNTATIBLITY RATING FOR THREE CONSECUTIVE YEARS. Academy of Careers and Technologies Charter School (hereinafter “ACT”) was originally issued a state charter in 1998. CR at 333-340. In 2012, 2013, and 2014 TEA found that ACT failed to meet the state’s financial accountability standards. CR 342-349; see also CR 4-5. A passing financial accountability score is 50. CR at 346-348. ACT scored a 47 in 2012 based on its financial data for the 2010-11 school year. CR at 346. It scored a 45 in 2013 related to financial information for the 2011-12 school year. CR at 347. In 2014, ACT received a 0 score related to financial information for the 2013-14 school year. CR at 348. The evidence demonstrated that: (1) ACT, not some third-party, submitted each of the financial reports at issue to TEA (RR at 37: 11-16); (2) ACT provided the information that was reviewed by the auditor ACT hired (RR at 37: 7-10); (3) ACT also was aware that the auditor it hired found deficiencies with ACT’s internal controls (RR at 40: 5-19); (4) in 2013, prior to submitting the annual financial report to TEA, ACT was aware that the auditor it hired found “that ACT was failing to properly recognize fixed assets, loan proceeds and loan disbursements” (RR at 41: 7-13); (5) the auditor noted that ACT “failed to remit federal payroll taxes to the Internal Revenue Service (IRS)” and that at the time of the 2014 audit, ACT owed $308,628 (including penalties and interest) for taxes owned for the fourth quarter of 2011, all of 2012 and the first two quarters of 2013 (RR, Def. Ex. 3, p. 11); (6) prior 11 to the submission to TEA, ACT reviewed and approved the each of the disputed annual financial and compliance reports (RR at 35: 5-17; RR at Def. Ex. 1, Certification page; 44: 24-p. 45: 6 (“Correct.”)); and (7) ACT accepted responsibility for the information contained in the annual financial reports once submitted to TEA. RR at 36: 16- p. 37: 2. According to Paula Applin, Chairman of the Governing Board of ACT, who also holds a degree in finance (RR at 19: 3-4; 20:3-7), ACT received a failing score on its financial accountability rating in 2010-11 due, in part, to ACT’s failure to properly account for a property loan, an issue identified by the auditor prior to submission to TEA. RR at 41: 14-20. Indicator 14 asks: Was the charter school’s administrative cost ratio less than the threshold ratio? ACT received a “0” score on this indicator in 2012 and 2013 because the administrative costs ACT reported exceeded the Finaincial Integrity Rating System of Texas (“FIRST”)3 rating threshold ratio for that indicator. However, years later, in March 2015 ACT filed an appeal with TEA and for the first time argued that it accidently included debt services as part of their administrative costs rather than include it as “debt services” which is a separate 3 “FIRST” is the financial accountability rating system administered by the TEA in accordance with Texas Education Code §39.082 and §39.085. The system provides additional transparency to public education finance and meaningful financial oversight and improvement for school districts (School FIRST) and open-enrollment charter schools (Charter FIRST). See 19 TEX. ADMIN. CODE §109.1001 (a)(4). 12 indicator4 in its 2011 and 2012 AFR. RR at 47: 12-21. ACT believes that it should be permitted to make the correction which would allow them to receive the full five (5) points allotted to Indicator 14 which would give them a passing scores on the 2012 and 2013 financial accountability rating. CR at 77. In 2014, ACT once again failed the financial accountability rating for failing to disclose that it was in default on a debt, which resulted in an automatic failure. The issue in 2014 was ACT failure to disclose payroll tax liability. RR, Def. Ex. 3, p. 18; RR at 52: 20- 536. ACT timely appealed only to present evidence of the tax liability. RR, Def. Ex. 4. Thus, its appeal was dismissed. However, ACT again sought to appeal the issue regarding the tax liability with another, albeit untimely, appeal in March 2015. CR at 112-117. In 2014, ACT also received a failing academic performance rating. CR at 349. It failed to meet the “post-secondary readiness” index and received an accountability rating of “Improvement Required.” Id. An “Improvement Required” rating is “an unacceptable performance rating under the accountability system used by the Texas Education Agency . . . .” CR at 358, ¶5. Based on ACT’s failing accountability ratings, TEA issued a notice of revocation in December 2014 pursuant to Texas Education Code, Section 12.115(c). ACT requested an informal review of the revocation by TEA. RR at 63; 21-23; see 4 It should be noted that ACT included part of the January 2010 TEA Resource Guide as part of its March 2015 appeal. That guide clearly stated that principal and interest on long-term debt should be included as “debt service.” 13 also TEX. EDUC. CODE §12.116(a). However, TEA reaffirmed the revocation. CR at 355. ACT also appealed its revocation to SOAH. RR at 64: 3-5; CR at 361-376. The Administrative Law Judge (“ALJ”) affirmed ACT’s revocation. CR at 362. The ALJ’s determination is final and may not be appealed. TEX. EDUC. CODE §12.116(c)(2). IV. THE TEXAS EDUCATION CODE MANDATES REVOCATION OF ACT’S CHARTER SCHOOL. The Commissioner had no discretion but to revoke ACT’s charter, since its failings in 2012, 2013 and 2014 represented three consecutive years of failure as defined by Texas Education Code §12.115(c)(3). The Commissioner and TEA notified ACT of this fact on December 8, 2014. CR at 342-349. ACT sought an informal hearing regarding the revocation. CR at 5 (3rd full paragraph). A review was conducted, but the decision to revoke ACT’s charter was upheld. CR at 355-357. ACT also availed itself of an appeal before SOAH. CR at 5 (4th full paragraph). Because there were no material factual issues in dispute, TEA filed a Motion for Summary Disposition, which provided the basis for a final decision and order of SOAH upholding the Commissioner’s decision to revoke ACT’s charter. CR at 361-376. This decision is not subject to appeal. TEX. EDUC. CODE §39.152(c)(3). 14 Put simply, in December 2014, ACT failed to meet minimum financial and academic accountability standards for three consecutive years, the Commissioner of Education revoked its charter, an action he was required by law to take. See TEX. EDUC. CODE §12.115(a). ACT availed itself of an informal review by the TEA and then sought review before the SOAH. On May 21, 2015, the ALJ upheld the revocation of ACT’s charter. By law, the ALJ’s decision may not be appealed. Id. §12.116(c)(2). More than two months after the revocation became final, and seven months after it received notice of the revocation, ACT sued in district court asserting that TEA and the Commissioner violated its rights to substantive and procedural due process, takings, and violation of the open courts provision, in addition to seeking declaratory relief and a temporary injunction prohibiting the Commissioner from engaging in various alleged ultra vires actions. CR at 3-20. Specifically, ACT sought judicial review of the appeals process only as it relates to the accountability ratings. CR at 3-20. ACT did not challenge the process by which TEA revokes charters; it only sought to have another chance to submit corrected financial data related to its failing rating in 2012 and/or 2013. TEA and the Commissioner (hereinafter “TEA” or “Appellants”) filed a Plea to the Jurisdiction and an Amended Plea to the Jurisdiction and Repsonse to ACT’s Request for Temporary Injunction. CR at 293-407. A court hearing on ACT’s 15 temporary injunction was heard on August 13, 2015 (RR at 3) and the court considered TEA’s Plea by submission. RR at 134. On August 21, 2015, the Friday before the start of the school year, the trial court notified the parties of its intent to enter a temporary injunction effectively prohibiting TEA from taking any action to wind up the failed charter school. CR at 421. The injunction was entered on September 4, 2015, two weeks after the start of the school year. CR at 440-441. The injunction ordered ACT to remain open; permits ACT to retain state-owned property for its own use; forces the State to fund a financially and academically unsuccessful school; and keeps children in a school that is not delivering a minimally accredited education. Id. TEA filed an appeal of the temporary injunction and the denial of its Plea to the Jurisdiction pursuant to TEX. CIV. PRAC. & REM. CODE §§51.014(a)(4) and (8). The appeal automatically superseded the temporary injunction. TEX. R. APP. P. 29.1(b); TEX. CIV. PRAC. & REM. CODE §6.001. SUMMARY OF ARGUMENTS ACT failed to establish jurisdiction for its collateral attack of final accountability ratings as the basis for revocation of its charter. ACT also failed to establish a constitutionally-protected property interest which is required for its due process and takings claims. Likewise, the evidence presented to the trial court clearly demonstrated that the Commissioner acted pursuant to the statute, which 16 mandated a certain course of action and was, therefore, protected by sovereign immunity. This defeats ACT’s ultra vires claims. Like many charter schools before it, ACT’s suit simply seeks to attack final, non-appealable administrative accountability ratings. This Court has repeatedly held that such an attack is jurisdictionally barred, and the Uniform Declaratory Judgments Act cannot be used to make an end-run around the jurisdictional bar. As a result, ACT failed to show that the trial court had subject-matter jurisdiction to consider any of its claims, and the trial court erred by denying Appellants’ Plea to the Juridiction. ARGUMENT I. STANDARDS OF REVIEW. A. Plea to the Jurisdiction. A plea to the jurisdiction challenges the trial court’s authority to determine the subject matter of a specific cause of action. Hawkins v. El Paso First Health Plans, Inc., 214 S.W.3d 709, 716 (Tex. App.—Austin 2007, no pet.). Whether a court has subject-matter jurisdiction and whether a plaintiff has affirmatively demonstrated subject-matter jurisdiction are questions of law that are reviewed de novo. Texas Dep’t of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 226 (Tex. 2004). In deciding a plea to the jurisdiction that challenges the pleadings, the reviewing court determines whether the pleader has alleged facts that affirmatively 17 demonstrate the court's jurisdiction to hear the cause. Id. The pleadings are liberally construed in the plaintiffs favor. Id. If a plea to the jurisdiction challenges the existence of jurisdictional facts, the court considers relevant evidence submitted by the parties when necessary to resolve the jurisdictional issues raised. Id. at 227. A trial court’s order granting a temporary injunction is reviewed for abuse of discretion. Walling v. Metcalfe, 863 S.W.2d 56, 57 (Tex. 1993). “A trial court has no ‘discretion’ in determining what the law is or applying the law to the facts.” See Walker v. Packer, 827 S.W.2d 833, 840 (Tex. 1992) (orig. proceeding). Accordingly, questions of law, including whether a trial court has subject matter jurisdiction, are reviewed de novo. City of Elsa v. Gonzalez, 325 S.W.3d 622, 625 (Tex. 2010). B. Temporary Injunction. To obtain a temporary injunction, the applicant must plead and prove: (1) a cause of action against the defendant; (2) a probable right to the relief sought; and (3) a probable, imminent, and irreparable injury in the interim. Walling, 863 S.W.2d at 57. Because an injunction is an equitable remedy, a court must balance the competing equities at stake. See In re Gamble, 71 S.W.3d 313, 317 (Tex. 2002); Indian Beach Prop. Owners’ Ass’n v. Linden, 222 S.W.3d 682, 690 (Tex. App.— Houston [1st Dist.] 2007, no pet.); Pool v. River Bend Ranch, LLC, 346 S.W.3d 853, 860 (Tex. App.—Tyler 2011, pet. denied); Graham Mortg. Corp. v. Hall, 307 S.W.3d 472, 478 (Tex. App.—Dallas 2010, no pet.). Consideration of the equities 18 involves weighing the public interest against the injury to the parties from the grant or denial of injunctive relief. See Hot Rod Hill Motor Park v. Triolo, 276 S.W.3d 565, 568 (Tex. App.—Waco 2008, no pet.); Triantaphyllis v. Gamble, 93 S.W.3d 398, 401–02 (Tex. App.—Houston [14th Dist.] 2002, pet. denied). C. Statutory Construction. An agency’s construction of a statute that it is charged with enforcing is entitled to serious consideration by reviewing courts so long as that construction is reasonable and does not contradict the statute’s plain language of the statute. Railroad Comm’n v. Texas Citizens for a Safe Future & Clean Water, 336 S.W.3d 619 (Tex. 2011); Sw. Pharmacy Solutions, Inc. v. Tex. Health & Human Servs. Comm’n, 408 S.W.3d 549, 560-62 (Tex. App.—Austin 2013, pet. denied); Employees Ret. Sys. v. Jones, 58 S.W.3d 148, 151 (Tex. App.—Austin 2001, no pet.). Additionally, when construing a statute, courts must consider the statute in its entirety, assume the entire statute is effective, and avoid an absurd result. TEX. GOV’T CODE §311.021; City of Marshall v. City of Uncertain, 206 S.W.3d 97, 105 (Tex. 2006) (citing City of San Antonio v. City of Boerne, 111 S.W.3d 22, 29 (Tex. 2003)). II. ACT HAS FAILED TO IDENTIFY THE VEHICLE IN WHICH IT MAY SEEK JUDICIAL REVIEW. ACT does not believe the Commissioner and TEA should have revoked its charter because two to three years after-the-fact, it uncovered purported clerical 19 errors to its 2012 and/or 2013 AFR that it attributes to either a third party and/or TEA. It contends that these errors resulted in two of the four failing accountability ratings it received from 2012-2014. TEA’s accountability ratings are considered administrative decisions or action. See Creedmoor–Maha Water Supply Corp. v. Tex. Comm'n on Envtl. Quality, 307 S.W.3d 505, 524 (Tex.App.—Austin 2010, no pet.). In Texas there is no inherent right to judicial review of agency orders. Texas Dep’t of Transp. v. Jones, 8 S.W.3d 636, 638 (Tex. 1999); Bacon v. Hist. Comm’n, 411 S.W.3d 161, 173-74 (Tex. App.—Austin 2013, no pet.) (“One implication of these principles is that there is no general right to challenge or seek review of a state agency order or decision in Texas state court; to the contrary, state agency decisions generally cannot be challenged in court unless the Legislature has enacted a statute expressly authorizing such review.”); Creedmoor-Maha, 307 S.W.3d 505, 515 (Tex. App.—Austin 2010, no pet.) (UDJA actions “that seek declaratory or injunctive relief against agency orders from which the legislature has not granted a right of judicial review” are barred by state sovereign immunity); KEM Tex., Ltd. v. Texas Dep't of Transp., No. 03-08-00468-CV, 2009 Tex. App. LEXIS 4894, at *8-18 (Tex. App.—Austin 2009, no pet.) (challenge to non-appealable agency order barred by sovereign immunity). A person may obtain judicial review of a final decision issued after a contested case or if the action adversely affects a vested property right or otherwise violates a constitutional right. Tex. Dep’t of Protective & Regulatory Servs. v. Mega Child Care, Inc., 145 S.W.3d 170, 196-98 (Tex. 2004). 20 A. ACT Failed to Identify a Statutory Basis for Judicial Review of TEA’s Accountability Ratings or Decision to Revoke. 1. There is no statutory provision which allows this court to review TEA’s rating decisions. Chapter 39 of the Texas Education Code, entitled “Public School System Accountability,” governs the financial and academic performance system used to review both traditional public schools and charter schools. See TEX. EDUC. CODE §39.054(b). Section 39.151, however, limits the review of any accountability determination to review by the Commissioner and expressly exempts the decision from review by SOAH or a State District Court. See id., at §§39.151(d) & (e). Thus, there is no statute affording ACT the right to judicial review of its accountability ratings. 2. There Is No Statutory Provision Which Allows This Court to Review TEA’s Revocation Decision. Section 12.115(c) of the Texas Education Code provides: The commissioner shall revoke the charter of an open-enrollment charter school if: (1) the charter holder has been assigned an unacceptable performance rating under Subchapter C, Chapter 39, for the three preceding years; (2) the charter holder has been assigned an unacceptable financial accountability rating under Subchapter D, Chapter 39, indicating financial performance lower than satisfactory for the three preceding school years; or 21 (3) the charter holder has been assigned any combination of the ratings described by Subdivision (1) or (2) for the three preceding school years. TEX. EDUC. CODE §12.115(c). The Legislature directed that the Commissioner’s decision to revoke a charter can be reviewed only by SOAH, and that an ALJ’s review of that charter-revocation decision is final and unappealable. Section 12.116(c) provides: A decision by the commissioner to revoke a charter is subject to review by the State Office of Administrative Hearings. Notwithstanding Chapter 2001, Government Code: (1) the administrative law judge shall uphold a decision by the commissioner to revoke a charter unless the judge finds the decision is arbitrary and capricious or clearly erroneous; and (2) a decision of the administrative law judge under this subsection is final and may not be appealed. TEX. EDUC. CODE §12.116(c). Accordingly, the Commissioner’s revocation decision is final unless it is appealed to SOAH, and the SOAH ALJ’s decision either upholding or reversing the Commissioner’s decision is unappealable. Thus, ACT had no right to judicial review of the revocation decision, the district court lacked jurisdiction over this claim, and the district court clearly erred in denying TEA’s Plea to the Jurisdiction. 22 B. ACT Failed to Demonstrate a Due Process Violation. 1. ACT does not have a vested right in the charter contract. ACT argues that the statutory procedures related to accountability ratings employed by TEA violated their substantive and procedural due process rights. CR at 11-14. ACT must be able to demonstrate that it possessed a vested property right as the basis of its due process claim. See Combs v. City of Webster, 311 S.W.3d 85, 92 (Tex.App.—Austin 2009, pet. filed) (citing Spring Branch Indep. Sch. Dist. v. Stamos, 695 S.W.2d 556, 560–62 (Tex.1985); Texas Department of Protective and Regulatory Services v. Mega Child Care, Inc., 145 S.W.3d at 173; City of Houston v. Northwood Mun. Util. Dist. No. 1, 73 S.W.3d 304, 311 (Tex.App.—Houston [1st Dist.] 2001, pet. denied)). ACT cannot establish such an interest. To have a property interest in a benefit, a person clearly must have more than an abstract need or desire” and “more than a unilateral expectation of it. He must, instead, have a legitimate claim of entitlement to” the continuation of the charter. Bd. of Regents v. Roth, 408 U.S. 564, 577 (1972). Such entitlements are, “‘of course . . . not created by the Constitution. Rather, they are created and their dimensions are defined by existing rules or understandings that stem from an independent source such as state law.’” Paul v. Davis, 424 U.S. 693, 709 (1976) (quoting Roth, supra, at 577,); see also Phillips v. Washington Legal Foundation, 524 U.S. 156, 164 (1998). 23 Further, a right is “vested” when it has some definitive, rather than potential, existence. Scott v. Alphonso Crutch LSC Charter Sch., Inc., 392 S.W.3d 165, 170- 71 (Tex. App.—Austin 2010, pet. denied) (mem. op.). As a general matter, “[w]hen the decision to grant or withhold a benefit is entrusted to the discretion of a government actor, one has no constitutional property interest in obtaining that relief.” Suryanto v. Att'y Gen. of U.S., 398 Fed.Appx. 830, 834 (3rd Cir. 2010) (citing Conn. Bd. of Pardons v. Dumschat, 452 U.S. 458, 464 (1981)). “If the decisionmaker is not ‘required to base its decisions on objective and defined criteria,’ but instead ‘can deny the requested relief for any constitutionally permissible reason or for no reason at all,’ the State has not created a constitutionally protected . . . interest.” Olim v. Wakinekona, 461 U.S. 238, 249 (1983) (finding no legitimate claim of entitlement where there were “no standards governing the administrator’s exercise of his discretion” to transfer an inmate) (citation omitted); Lee v. Tex. Workers’ Compensation Comm’n, 272 S.W.3d 806, 817 (Tex.App.— Austin 2008) (citing Olim, 461 U.S. at 249). In other words, there is no protected property interest where the decision to remove a benefit is left to the “unfettered discretion” of the government actor. See Roth, 408 U.S. at 566–67 (concluding a nontenured university professor had no property interest in his position because “State law . . . clearly leaves the decision whether to rehire a nontenured teacher for another year to the unfettered discretion of university officials.”); Lee, 272 S.W.3d 817-18. 24 Thus, if the decision to grant the charter is left to the discretion of the commissioner, no property interest is created by granting the charter. See Town of Castle Rock v. Gonzales, 545 U.S. 748, 756 (2005) (“Our cases recognize that a benefit is not a protected entitlement if government officials may grant or deny it in their discretion.”); see also Ex parte John M. Abell, 613 S.W.2d 255, 262 (Tex. 1981) (“When the authority granting the right has the power and discretion to take that right away, it cannot be said to be a vested right”); Seguin v. Bexar Appraisal Dist., 373 S.W.3d 699, 709 (Tex. App.—San Antonio 2012, pet. denied) (taxpayer did not have vested property right in disabled-veteran tax exemption that was “legislatively revocable”); Klumb v. Houston Mun. Emp. Pension Sys., 405 S.W.3d 204, 226 (Tex. App.—Houston [1st Dist.] 2013, pet. filed) (“[A] pensioner in a statutory pension plan does not have a vested right to his pension.”); McAllen Hosps., L.P., d/b/a McAllen Medical Center and d/b/a Edinburg Regional Medical Center and d/b/a Edinburg Children’s Hospital and d/b/a McAllen Heart Hospital and Fort Duncan Medical Center, L.P., d/b/a Fort Duncan Regional Medical Center v. Thomas Suehs, Executive Commissioner of the Texas Health and Human Services Commission, Douglas Wilson, Inspector 2 General of the Health and Human Services Commission; Texas Health and Human Services Commission, et al., 426 S.W.3d 304, 313 (Tex. App.—Amarillo 2014, no pet.) (hospitals lack vested property right/interest in Medicaid reimbursement payments that were “contingent and potential rather than definitive and unconditional” prior to utilization review); 25 Robert Scott, Commissioner of Education v. Alphonso Crutch LCS Charter Sch., Inc., 392 S.W.3d at 170-71 (concluding that, because allocation to which charter school was entitled for a given time period was subject to change depending on updated attendance figures during school year, the school’s “interest in a definite amount” was not vested and “remain[ed] contingent rather than unconditional, and potential rather than definitive”). ACT’s mistakenly believes that its interest in the continuation of its charter contact is sufficient to vest a property interest. CR at 4. However, the expectation of continuing its charter is not a vested interest, but rather a “mere expectancy created by the law and liable to be revoked or destroyed by the same authority.” City of Dallas v. Trammel, 101 S.W.2d 1009, 1012 (Tex. 1937) (quoting John D. Dillon, Municipal Corporations § 431 (5th Ed. 1911)); see Lee, 272 S.W.3d at 818 (“It is well established that the legislature, ‘which creates the property interest in the first place, may also take it away.’”). The Legislature created charters, and the ability to grant a charter is left entirely up to the discretion of the Commissioner. TEX. EDUC. CODE §12.101. Thus, even if a charter school meets all of the statutory requirements, the Commissioner may still deny the charter. Moreover, notwithstanding section 12.115(c), has required the Commissioner to revoke a school’s charter when the school materially violates the terms of the charter, fails fiscal or academic accountability standards, fails to protect students enrolled in the school, or becomes imminently insolvent. Id. 26 §12.115(a)(1)-(6).5 Moreover, nothing in the statute or in ACT’s charter prohibits the Legislature from changing those standards, and the Legislature could abolish the charter-school system entirely if it chose to do so. See Ex parte John M. Abell, 613 S.W.2d at 262 (“When the authority granting the right has the power and discretion to take that right away, it cannot be said to be a vested right.”); Seguin, 373 S.W.3d at 709 (taxpayer did not have vested property right in disabled-veteran tax exemption that was “legislatively revocable”); Klumb, 405 S.W.3d at 226 (“[A] pensioner in a statutory pension plan does not have a vested right to his pension.”); McAllen Hosps., L.P. v. Suehs, 426 S.W.3d at 304 (hospitals lack vested property right/interest in Medicaid reimbursement payments that were “contingent and potential rather than definitive and unconditional” prior to utilization review); Robert Scott, Commissioner of Education v. Alphonso Crutch LCS Charter Sch., Inc., 392 S.W.3d at 170-71 (concluding that, because allocation to which charter school was entitled for a given time period was subject to change depending on updated attendance figures during school year, the school’s “interest in a definite amount” was not 5 ACT’s charter contract mirrors this statutory framework, expressly providing that: the “commissioner in his sole discretion make take any action authorized by Section 39.131, TEC or Chater 29, TEC relating to the charter contract.” See, e.g. CR at 189; and the “Board in its sole discretion may modify, place on probation, revoke or deny timely renew of a charter for cause (“adverse action.”). Id. “Adverse Actions” include (a) a material violation of the terms of the charter listed in paragraphs 2 and 3, including accountability provisions; (b) failure to satisfy generally accepted accounting standards of fiscal management; or (c) failure to comply with an applicable law or rule.” Id. The charter holders agree to these terms, understand their obligations under the contract and the law, and should know that any rights to the charter are conditioned upon the law and satisfaction of the contractual terms. 27 vested and “remain[ed] contingent rather than unconditional, and potential rather than definitive”). At present, there is no Texas state case directly dealing with a charter school’s right to its charter contract,6 but see Robert Scott, Commissioner of Education v. Alphonso Crutch LCS Charter Sch., Inc., 392 S.W.3d at 170-71, other jurisdictions have determined that a charter contract does not create a property interest. See Reach Academy for Boys & Girls, Inc. v. Delaware Dept. of Educ., 46 F.Supp.3d 455, 457 (D.Del. 2014) (“[T]he renewal of Reach’s charter, is not an interest protected by the Fourteenth Amendment’s Due Process Clause.”); Project Reflect, Inc. v. Metro Nashville Bd. of Pub. Educ., 947 F. Supp. 2d 868, 878-79 (M.D. Tenn. 2013) (concluding that a charter school did not have a constitutionally protected interest in its charter under Tennessee law because the statutory provision governing charter revocation “uses the language of discretion, not entitlement, and only minimally conditions that exercise of discretion”); Project Sch. v. City of Indianapolis, 2012 WL 3114573, at *3 (S.D. Ind. July 31, 2012) (concluding that there was no protected property interest in a charter under Indiana law because “the charter school statute frames the decision to revoke a charter as a discretionary matter”); Pinnacle Charter Sch. v. Bd. of Regents, 108 A.D.3d 1024, 969 N.Y.S.2d 318, 320 (2013) (“[T]he 6 Currently pending before this Court is Texas Education Agency and Michael Williams, Commissioner of Education, in his Official Capacity, v. American Youthworks, Inc., d/b/a American Youthworks Charter School, Honors Academy, Inc., d/b/a Honors Academy, and Two Azleway, Inc. d/b/a/ Azleway Charter School Nos. 03-14-00283-CV and 03-14-00360-CV, in which Appellees assert the same property interest in the charter. 28 New York Charter Schools Act . . . creates no constitutionally protected property interest in the renewal of a charter. . . .”); State ex rel. Sch. Dist. of Kansas City v. Williamson, 141 S.W.3d 418, 427 (Mo. Ct. App. 2004) (“[J]ust as a prospective charter school has no protected property interest at stake regarding an initial charter application, the school also has no protected property interest under the Charter Schools Act with regard to renewal of its charter.”). In Project Reflect, Inc. Smithson Craighead Middle School v. Metropolitan Nashville Board of Public Education, 947 F.Supp.2d 868, (M.D. Tennessee, 2013), the Tennessee district court considered whether a charter school sponsor (an entity similar to a charter holder in Texas) had a protected property interest in continuation of a charter school. In determining the charter lacked such an interest, the court noted that: [T]he statutory language and the charter agreement do not support Plaintiff's claim of a property interest protected by state law. “[A] party cannot possess a property interest in the receipt of a benefit when the state’s decision to award or withhold the benefit is wholly discretionary.” The charter agreement incorporates [the Tennessee Public Charter Schools Act of 2002, recovation or renewal section], which provides that “A public charter school agreement may be revoked or denied renewal by the final chartering authority if the chartering authority determines that the school . . . (2) Received identification as a priority school, as defined by the state’s accountability system.” “The word ‘may’ customarily connotes discretion.” Id. at 878 (citations omitted). It went on to state: [T]he Tennessee charter school statute repeatedly declares its purpose and intention to provide the state department of education and local 29 school systems with “options,” “alternative means,” and “flexibility”— hardly the language of a statute creating a property interest. The law constrains this discretion only by requiring the chartering authority to state its reason(s) for revoking the charter. If, as in this case, the revocation occurs because of the school's priority status, no appeal is permitted—again emphasizing state discretion, not the charter holder’s property rights. Id. at 879 (citations omitted). Similarly, in Project School v. City of Indianapolis, the district court held that Indiana’s charter school statue and the facts in the case repudiated the plaintiff charter school’s argument that it had a protected property interest in its continued ability to operate a school. No. 1:12-cv-01028-SEB-DKL, 2012 WL 3114573, *3 (S.D. Indiana, July 31, 2012). Because the charter was subject to revocation if certain conditions were met and because the sponsor was not required to grant a charter to an organizer to operate a charter school in the first place, the court held that the charter’s “argument that somehow its existence is a ‘property right’ for purposes of the Fourteenth Amendment due process is a nonstarter.” Id. at *4. For all of these same reasons, ACT has failed to identify a vested property interest that did not receive procedural or substantive due process consideration. 2. ACT failed to alleged a viable procedural-due-process claim. Even if ACT demonstrated a property interest in its charter, it received all the process it was due regarding the accountability ratings and revocation. If an order deprives a person of vested property rights without due process, the order may be set aside even absent an express provision for judicial review. See City of Houston 30 v. Carlson, 393 S.W.3d 350, 361-62 (Tex. App.—Houston [14th Dist.] 2012, no pet.). In this case, ACT received notice of its accountability ratings and the revocation decision along with an opportunity to be heard, which is all that due process requires. “Procedural due process requires notice and ‘an opportunity to be heard at a meaningful time and in a meaningful manner.’” Coastal Habit Alliance v. Pub. Util. Comm’n, 294 S.W.32d 276, 285 (Tex. App.—Austin 2009, no pet.) (quoting Univ. of Tex. Med. Sch. v. Than, 901 S.W.2d 926, 930 (Tex. 1995)). What process is due is measured by a flexible standard that depends on the practical requirements of the circumstances. This flexible standard includes three factors: (1) the private interest that will be affected by the official action; (2) the risk of an erroneous deprivation of such interest through the procedures used, and the probable value, if any, of additional or substitute procedural safeguards; and (3) the government’s interest, including the function involved and the fiscal and administrative burdens that the additional or substitute procedural requirement would entail. University of Texas Medical School at Houston, John C. Ribble, M.D., and M. David Low, M.D. v. Allan Than, 901 S.W.2d at 930-31 (citations omitted). ACT was given notice and an opportunity to appeal each of the three financial accountability ratings. CR at 350; see also TEX. EDUC. CODE §39.082(g); 19 TEX. ADMIN. CODE § 109.1002(i)(2) (financial accountability rating appeals). It was also provided notice and an opportunity to appeal its substandard academic accountability rating. CR at 358; see also TEX. EDUC. CODE §39.151; 19 TEX. ADMIN. CODE §97.101(b) (academic accountability rating appeals). 31 ACT was also given notice and an opportunity to appeal the decision to revoke its charter. CR at 342-349. It requested an informal review which was conducted by TEA. CR at 355-357. It filed a petition for review to SOAH which upheld TEA’s decision to revoke. CR at 360-376. 3. TEA applied the Texas Education Code neither arbitrarily nor capriciously in connection with ACT’s accountability ratings or revocation. A violation of substantive due process occurs only when the government deprives individuals of constitutionally protected rights by an arbitrary use of its power. Simi Inv. Co. v. Harris County, 236 F.3d 240, 249 (5th Cir. 2000), cert. denied, 534 U.S. 1022 (2001). A claimant prevails on a substantive due process claim by establishing it holds a constitutionally protected property right to which the Fourteenth Amendment’s due process protection applies and by establishing that the challenged governmental action is not rationally related to furthering a legitimate state interest. Byers v. Patterson, 219 S.W.3d 514, 525 (Tex.App.—Tyler 2007, no pet.) (citing Simi Inv., 236 F.3d at 249-50 and Mikeska v. City of Galveston, 451 F.3d 376, 379 (5th Cir. 2006)). The court must then review the government’s actions against the deferential “rational basis” test that governs substantive due process claims. Simi Inv., 236 F.3d at 249. ACT claims that TEA has created a system of rating review and revocation that is devoid of a meaningful opportunity for review. CR at 7. It further claims that the accountability ratings TEA assigned in 2012-2104 were arbitrary because ACT 32 identified the errors it submitted and was not permitted to submit corrected data. Id. ACT argues, with no supporting evidence, that TEA did this specifically and arbitrarily to ACT. Id. ACT further claims that the current “mechanism for evaluating charter schools . . . allows TEA and Commissioner to change standards after the fact without any regard for a connection with a legitimate government purpose or rational relationship on a consistent basis.” CR at 14. Again, ACT relied on the erroneous assumption that the renewal of its charter was automatic or vested which it is not. Id. An agency’s decision is arbitrary or results from an abuse of discretion (i.e is capricious) if the agency: (1) failed to consider a factor the legislature directs it to consider; (2) considers an irrelevant factor; or (3) weighs only relevant factors that the legislature directs it to consider but still reaches a completely unreasonable result. City of El Paso v. Public Utility Comm'n of Tex., 883 S.W.2d 179, 184 (Tex. 1994) (citing Gerst v. Nixon, 411 S.W.2d 350, 360 n. 8 (Tex. 1966)). Though ACT clearly opposed the results of the accountability ratings it received, it never argued that the ratings, based on the evidence actually received by TEA, were erroneous. It simply believes that it should be afforded an opportunity to correct incorrect data that it supplied years before, in an effort to avoid revocation now. ACT presented the trial court with no evidence that TEA considered factors beyond those the legislature directed it to consider: ACT’s financial and academic performance ratings. ACT presented no evidence that TEA considered a factor that 33 was irrelevant which led to the failing ratings. Finally, ACT failed to present any evidence that TEA considered the appropriate factors but reached a completely unreasonable result. In short, there is no evidence that TEA acted arbitrarily or capriciously when it reviewed the information ACT presented to it to reach the result that ACT did not meet its financial or academic benchmark for 2012-2014. There is no evidence that the Commissioner considered anything but the criteria found in the Texas Education Code when he issued the notice of intent to revoke. Indeed, a charter school is given numerous opportunities to provide correct information at or near the time the AFR is due. What ACT seeks to do is appeal ratings that are 2-3 years old, disrupting the finality of those accountability ratings as well as the accreditation process. Allowing a charter school to submit untimely appeals of years-old accountability ratings (specifically at the point of revocation) frustrates one of the purposes of the 2013 statutory amendments which was to close down underperforming charter schools efficiently. CR at 319. C. No Violation of Some Other Constitutional Right. 1. ACT failed to demonstrate a property interest to substantiate its takings claim. Notwithstanding the fact that ACT failed to demonstrate a property interest in the continuation of its charter, ACT also claimed a property interest in the property and funds that it has in its possession which are subject to seizure by TEA as a result of the charter revocation. CR at 15. Article I, section 17 of the Texas Constitution 34 provides that “[n]o person’s property shall be taken, damaged or destroyed or applied to public use without adequate compensation being made . . . .” TEX. CONST., ART. I, §17. Absent a cognizable property interest, a claimant is not entitled to compensation under article I, section 17. See Tarrant County v. Ashmore, 635 S.W.2d 417, 422 (Tex. 1982). The takings provision of the Texas Constitution is comparable to the federal takings clause. See Sheffield Devel. Co. v. City of Glenn Heights, 140 S.W.3d 660, 669 (Tex. 2004). Both provisions recognize that, while “all property is held subject to the valid exercise of the police power,” a regulation may, under some circumstances, constitute a taking requiring compensation. Id. at 670 (quoting City of College Station v. Turtle Rock Corp., 680 S.W.2d 802, 804 (Tex. 1984)). Texas Education Code §12.128 states that all property purchased or leased with funds received by the charter holder under TEX. EDUC. CODE §12.106 is considered to be public property for all purposes under state law and is held in trust for the students of the open-enrollment charter school. ACT’s contract for its charter has been revoked, and, by law, a revoked charter school may not continue to operate under Subchapter D of Texas Education Code Chapter 12 (providing for the operation of an open-enrollment charter school) and may not continue to receive funds. See TEX. EDUC. CODE §12.1161 ACT’s year ending August 31, 2011 AFR, ACT clearly listed as state property: all of its cash, land, buildings and improvements, vehicles and 35 approximately 92% of its furniture and equipment. RR, Def. exh. 1, p. 12; RR at 38: 24 – p. 39: 16. For the year ending August 31, 2012, ACT again listed as state property: all of its cash, land, buildings and improvements, vehicles and approximately 92% of its furniture and equipment. RR, Def. exh. 2, p. 12; RR at 46: 23 – p. 47: 11. Again, in the year ending on August 31, 2013, ACT listed all of its cash, land, buildings and improvements, vehicles and approximately 90% of its furniture and equipment as being state owned. RR, Def. exh. 3, p. 14. Moreover, ACT’s 2014 AFR acknowledged that 100% of its land and improvements, building improvements, vehicles, furniture and equipment were state or federally owned. CR at 395. The law is clear: public property may only be used in the operation of a public school. TEX. EDUC. CODE §12.128(a)(2). Additionally, section 12.107 of the Education Code clearly provides that funds received by a charter holder pursuant to section 12.106 are public funds held in trust by the charter holder for the benefits of students of the open-enrollment charter school. TEX. EDUC. CODE §12.107. Since ACT may not continue to operate a public school after revocation, pursuant to TEX. EDUC. CODE §12.1161, ACT must return this state property as directed by the Commissioner. TEX. EDUC. CODE §12.128(c). In this case, the only property subject to return to TEA would be the property identified by ACT as being owned by the state, and any state funds held in trust by the former charter holder that no longer operates an open-enrollment charter. 36 2. The Texas Education Code does not violate the Open Courts Provision. ACT claims that the regulations regarding individual ratings violate the Open Courts provision of the Texas Constitution by not allowing charter schools the opportunity to seek redress from the courts. CR at 15. The Open Courts Provision provides that “all courts shall be open, and every person for any injury done him, in his lands, goods, person or reputation, shall have remedy by due course of law.” Fed. Sign v. Tex. S. Univ., 951 S.W.2d 401, 410 (Tex. 1997) (quoting TEX. CONST. ART. I, §13). The Open Courts provision affords three distinct protections. First, courts must be open and operating. Id. Second, citizens must have access to the courts unimpeded by unreasonable financial barriers. Id. Finally, the law must afford meaningful legal remedies to Texas citizens, so the Texas legislature may not abrogate the right to assert a well-established common-law cause of action. Id. The Open Courts provision applies only to statutory restrictions of a cognizable common law cause of action. Id. However, “there is no common-law cause of action for judicial review of an agency’s administrative act.” Creedmoor–Maha, 307 S.W.3d at 524 (quoting City of Port Arthur v. Southwestern Bell Tel. Co., 13 S.W.3d 841, 845 (Tex.App.—Austin 2000, no pet.)). Further, ACT only cites a violation of the Open Courts Provision with regard to its non-existent property interest in its charter. CR at 15. Finally, and most importantly, ACT has demonstrated no right to judicial review of TEA’s 37 accountability ratings appeals or revocation decision. Thus, ACT failed to plead a violation of the Open Courts Provision. III. ACT’S ULTRA V IRES CLAIMS ARE MERITLESS, BARRED BY SOVEREIGN IMMUNITY, AND DO NOT SUPPORT THE DISTRICT COURT’S FINDING THAT ACT WOULD LIKELY SUCCEED ON THE MERITS OF ITS CLAIMS. A. ACT failed to allege that the Commissioner acted without legal authority or failed to perform a ministerial act. To proceed in a suit against State entities and officials, the plaintiff must either plead and prove a waiver of sovereign immunity or allege that the State official acted without legal authority, or ultra vires, which is a suit where sovereign immunity is not implicated because a State official’s illegal or unauthorized actions are not considered acts of the State. City of El Paso v. Heinrich, 284 S.W.3d 366, 370-72 (Tex. 2009) (citing Fed. Sign v. Tex. S. Univ., 951 S.W.2d 401, 404 (Tex. 1997); Creedmoor–Maha, 307 S.W.3d at 514; Combs v. City of Webster, 311 S.W.3d 85, 94 (Tex.App.—Austin 2009, pet. denied). The law distinguishes between suits that implicate sovereign immunity and those that do not. “[A] suit challenging a specific administrative order implicates sovereign immunity because it seeks to control state action — it seeks to restrain the State or its officials in the exercise of discretionary statutory or constitutional authority.” Creedmoor–Maha, 307 S.W.3d at 515 (citing Texas Dept. of Protective and Regulatory Services v. Mega Child Care, Inc., 145 S.W. 3d at 198). Conversely, 38 an ultra vires suit must allege that a state actor acted without legal authority. Heinrich, 284 S.W.3d at 372-73. “A suit asserting that a government officer acted without legal authority or seeking to compel him to comply with statutory or constitutional provisions is an ultra vires suit and is not subject to pleas of governmental immunity. Such a suit, in effect, does not seek to alter government policy; it seeks to reassert the control of and enforce existing policy of the governmental entity.” Houston Belt & Terminal Ry. Co. v. City of Houston, 424 S.W.3d 663, 668 (Tex.App.–Houston [14th Dist.] 2014, pet. filed) (citing Heinrich, 284 S.W.3d at 371–72). A suit that does not allege that a state actor acted without legal authority, “implicates sovereign immunity because it seeks to ‘control state action,’ to dictate the manner in which officers exercise their delegated authority.’” See Heinrich, 284 S.W.3d at 372; Creedmoor–Maha, 307 S.W.3d at 515–16. In other words, unless a suit alleges that a state official acted without legal authority or failed to perform a ministerial duty, then the assumption is that the state official acted with discretionary, legal authority and the suit seeks to control this lawful conduct. See Creedmoor–Maha, 307 S.W.3d at 515–16. ACT requested that the trial court enter declarations specifically (i) reversing the administrative decision of the Commissioner to revoke its charter; and (ii) challenging TEA’s use of what it considered was incorrect data to calculate ACT’s 39 financial and academic accountability ratings without giving ACT the opportunity to submit correct information well after the deadline to do so. The Commissioner did not act ultra vires in revoking ACT charter or by considering the data originally submitted by ACT to determine ACT’s accountability ratings considering the plain language of the Texas Education Code and the facts of this case. The information provided by ACT was reviewed by ACT’s auditor who specifically noted ACT’s deficiencies. RR at 40: 5-19; RR, Def. Ex. 3, p. 11. However, instead of addressing those deficiencies, ACT simply reviewed the AFR and affirmed that the information was true and correct prior to submitting it to TEA. RR at 35: 5-17; RR at Def. Ex. 1, Certification page; 44: 24-p. 45: 6 (“Correct.”); RR at 36: 16- p. 37: 2. Based on this information, TEA determined that ACT was underperforming financially for three years in a row and also found that ACT needed substantial improvement of its academic accountability based on its 2013 information. CR at 358, ¶5. Because ACT had four failing accountability ratings in the last three years, the Commissioner was mandated to revoke its charter, and the Commissioner, therefore, acted under such statutory authority in revoking ACT’s charter. See, e.g. Sw. Pharmacy Solutions, Inc. v. Tex. Health & Human Servs. Comm’n, 408 S.W.3d 549, 561-62 (Tex. App.—Austin 2013, pet. denied) (rejecting ultra vires claim where agency’s construction of statute was reasonable); see also supra, Statement 40 of Facts, Part I, (Sunset Commission recommending statute be amended to “ensure students do not continue to attend a school lacking a quality education or with serious financial problems that could affect the school and, ultimately, a student’s academic progress.”). B. ACT is seeking retroactive relief which is unavailable in an ultra vires action. Sovereign immunity does not generally shield governmental agencies from suits for equitable relief for a violation of constitutional rights. See Heinrich, 284 S.W.3d at 373 n. 6; City of Elsa v. M.A.L., 226 S.W.3d 390, 392 (Tex. 2007); City of Beaumont v. Bouillion, 896 S.W.2d 143, 149 (Tex. 1995) (determining that no private right for damages was permitted for violations of state constitutional rights and vacating jury award of damages). However, ACT seeks an injunction that addresses past decisions. CR at 18-20. If the relief sought by ACT effectively seeks to control the TEA’s or the Commissioner’s lawful, discretionary actions, then sovereign immunity is still implicated and the trial court erred in denying TEA’s Plea to the Jurisdiction based on sovereign immunity. Heinrich, 284 S.W.3d at 370- 72; Creedmoor–Maha, 307 S.W.3d at 515. “Equitable relief is a prospective remedy, intended to prevent future injuries,” Adler v. Duval County School Bd., 112 F.3d 1475, 1477 (11th Cir. 1997), and for that reason “[t]he sole function of an action for injunction is to forestall future violations.” United States v. Or. State Med. Soc’y, 343 U.S. 326, 333 (1952); see 41 also Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 109 (1998) (“Because respondent alleges only past infractions . . . and not a continuing violation or the likelihood of a future violation, injunctive relief will not redress its injury.”); Reich v. Occupational Safety & Health Review Comm’n, 102 F.3d 1200, 1202 (11th Cir. 1997) (“injunctive relief . . . addresses only ongoing or future violations”); Heinrich, 284 S.W.3d at 376 “[A] claimant who successfully proves an ultra vires claim is entitled to prospective injunctive relief, as measured from the date of injunction.”). Generally, the purpose of injunctive relief is to halt wrongful acts that are threatened or in the course of accomplishment, rather than to grant relief against past actionable wrongs or to prevent the commission of wrongs not imminently threatened. See Texas Health Care Info. Council v. Seton Health Plan, Inc., 94 S.W.3d 841, 853 (Tex.App.—Austin 2002, no pet.); see also Webb v. Glenbrook Owners Ass’n, 298 S.W.3d 374, 384 (Tex.App.—Dallas 2009, no pet.) (injunction not available to “prevent commission of wrongs not imminently threatened.”). A party seeking injunctive relief preventing alleged ultra vires acts must plead and prove, among other things, existence of imminent harm, irreparable injury, and absence of adequate remedy at law. See Lazarides v. Farris, 367 S.W.3d 788, 803 (Tex.App.—Houston [14th Dist.] 2012, no pet.); Texas Health Care Info. Council, 94 S.W.3d at 853. “To obtain equitable relief for past wrongs, a plaintiff must demonstrate either continuing harm or a real and immediate threat of repeated injury 42 in the future.” Society of Separationists, Inc. v. Herman, 959 F.2d 1283, 1285 (5th Cir.), cert. denied, 506 U.S. 866 (1992). ACT specifically sought a declaration regarding factors the Commissioner used in his accountability assessment which led to the revocation of ACT’s charter. CR at 18. It sought to have the trial court declare certain factors in ACT’s favor and then reapply those factors to its final accountability ratings for years prior to suit. Id. ACT did not request prospective (future-seeking) relief, but rather retrospective relief, seeking to remedy past harm it alleged that TEA committed against it by not allowing alleged corrected data to be considered for the 2011, 2012, and 2013 accountability ratings. These forms of requested relief are solely to remedy past alleged harm, which cannot be granted through an injunction. IV. ACT FAILED TO DEMONSTRATE THE TRIAL COURT’S JURISDICTION AND, THEREFORE, THE TRIAL COURT ERRED BY DENYING TEA’S PLEA. The Commissioner revoked ACT’s charter because of academic or financial substandard performance, or a combination of the two. Substandard academic performance ratings are issued only when a critical mass of a charter school’s students are not meeting standards on assessment instruments or are dropping out or not completing high school. TEX. EDUC. CODE §39.053. Similarly, the Texas Education Code requires that charter schools be assigned the lowest financial accountability ratings when they show signs of financial stress or insolvency. Id. §39.082(f). 43 The Legislature clearly chose to automatically revoke the charters of schools that fail to meet accountability standards for three years in a row. The Commissioner complied with the statute, and ACT’s revocation should have been effective on June 30, 2015. CR at 355. ACT sought the temporary injunction to delay the revocations citing meritless constitutional and ultra vires claims, none of which demonstrated that the trial court possessed jurisdiction to consider. PRAYER For the foregoing reasons, Commissioner Williams and the Texas Education Agency respectfully request the Court reverse the trial court’s denial of their Plea to the Jurisdiction and dismiss this case for lack of subject-matter jurisdiction. Alternatively, Commissioner Williams and the TEA request the Court hold the trial court’s September 4, 2015 temporary injunction order is void, to dissolve it, and remand the case to the district court for further proceedings. 44 Respectfully submitted, KEN PAXTON Attorney General of Texas CHARLES E. ROY First Assistant Attorney General JAMES E. DAVIS Deputy Attorney General for Civil Litigation ANGELA COLMENERO Division Chief /s/ Erika M. Laremont ERIKA M. LAREMONT Attorney in Charge Texas Bar No. 24013003 Office of the Attorney General General Litigation Division P.O. Box 12548, Capitol Station Austin, TX 78711-2548 PHONE: (512) 475-4196; FAX: (512) 320-0667 Erika.Laremont@texasattorneygeneral.gov ATTORNEYS FOR APPELLANTS 45 CERTIFICATE OF COMPLIANCE Pursuant to Tex. R. App. P. 9.4(i)(3), I certify that this brief contains 12,478 words, exclusive of the exempted portions in Tex. R. App. P. 9.4(i)(1). /s/ Erika M. Laremont ERIKA M. LAREMONT Assistant Attorney General CERTIFICATE OF SERVICE I certify that a copy of the above Brief of Appellants was served by certified mail, return receipt requested, on October 20, 2015 upon the following individuals at the listed address: D. Todd Smith State Bar No. 00797451 SMITH LAW GROUP LLLP 1250 Capital of Texas Highway South Three Cielo Center, Suite 601 Austin, Texas 78746 Stephen M. Foster 9013 Magna Carta Loop Austin, Texas 78754 (512) 784-4367 /s/ Erika M. Laremont ERIKA M. LAREMONT Assistant Attorney General 46 No. 03-15-00528-CV _____________________________ IN THE COURT OF APPEALS FOR THE THIRD JUDICIAL DISTRICT _____________________________ TEXAS EDUCATION AGENCY AND MICHAEL WILLIAMS, COMMISSIONER OF EDUCATION, IN HIS OFFICIAL CAPACITY, Appellants, VS. ACADEMY OF CAREERS AND TECHNOLOGIES, INC. D/B/A ACADEMY OF CAREERS AND TECHNOLOGIES CHARTER SCHOOL, Appellee. ______________________________ On Appeal from the 200th Judicial District Court of Travis County, Texas Cause No. D-1-GN-15-002879 ______________________________ APPENDIX OF APPELLANT ______________________________ APPENDIX Tab A Amended Defendants’ Plea to the Jurisdiction and Response to Plaintiff’s Request for Temporary Injunction and Exhibits Tab B Plaintiff’s Response to Defendants’ Plea to the Jurisdiction Tab C Defendants’ Reply to Plaintiff’s Response to Defendants’ Plea to the Jurisdiction and Response to Plaintiff’s Request for Temporary Injunction Tab D Order Granting Temporary Injunction and Denying Defendant’s Amended Plea to the Jurisdiction Tab E-1 Adler v. Duval County School Bd., 112 F.3d 1475, 1477 (11th Cir. 1997) Tab E-2 Bd. of Regents v. Roth, 408 U.S. 564, 577 (1972) Tab E-3 Conn. Bd. of Pardons v. Dumschat, 452 U.S. 458, 464 (1981) Tab E-4 Mikeska v. City of Galveston, 451 F.3d 376, 379 (5th Cir. 2006) Tab E-5 Olim v. Wakinekona, 461 U.S. 238, 249 (1983) Tab E-6 Paul v. Davis, 424 U.S. 693, 709 (1976) (quoting Roth, supra, at 577,) Tab E-7 Phillips v. Washington Legal Foundation, 524 U.S. 156, 164 (1998) Tab E-8 Pinnacle Charter Sch. v. Bd. of Regents, 108 A.D.3d 1024, 969 N.Y.S.2d 318, 320 (2013) Tab E-9 Project Reflect, Inc. v. Metro Nashville Bd. of Pub. Educ., 947 F. Supp. 2d 868, 878-79 (M.D. Tenn. 2013) Tab E-10 Project School v. City of Indianapolis, 2012 WL 3114573, *3 (S.D. Indiana, July 31, 2012) Tab E-11 Reach Academy for Boys & Girls, Inc. v. Delaware Dept. of Educ., 46 F.Supp.3d 455, 457 (D.Del. 2014) Tab E-12 Reich v. Occupational Safety & Health Review Comm’n, 102 F.3d 1200, 1202 (11th Cir. 1997) Tab E-13 Simi Inv. Co. v. Harris County, 236 F.3d 240, 249 (5th Cir. 2000), cert. denied, 534 U.S. 1022 (2001). Tab E-14 Society of Separationists, Inc. v. Herman, 959 F.2d 1283, 1285 (5th Cir.), cert. denied, 506 U.S. 866 (1992). Tab E-15 Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 109 (1998) Tab E-16 Suryanto v. Att'y Gen. of U.S., 398 Fed.Appx. 830, 834 (3rd Cir. 2010) Tab E-17 Town of Castle Rock v. Gonzales, 545 U.S. 748, 756 (2005) Tab E-18 United States v. Or. State Med. Soc’y, 343 U.S. 326, 333 (1952) Tab F Tex. Educ. Code § 12.115 Tab G Tex. Educ. Code, Subchapter C Tab H Tex. Educ. Code, Subchapter D Tab I Tex. Admin. Code § 97.1001 Amended 8-7-13 (2) Tab J 19 TEX. ADMIN. CODE §109.1002, amended 10-18-11 Tab K 19 TEX. ADMIN. CODE §109.1002, amended 10-3-13 8/12/2015 3:38:21 PM Velva L. Price District Clerk Travis County CAUSE NO. D-1-GN-15-002879 D-1-GN-15-002879 Jessica Arzola ACDEMY OF CAREERS AND § IN THE DISTRICT COURT TECHNOLOGIES INC. d/b/a ACADEMY § OF CAREERS AND § TECHNOLOGIES CHARTER SCHOOL, § Plaintiffs, § § v. § 98TH JUDICIAL DISTRICT § TEXAS EDUCATION AGENCY and § MICHAEL WILLIAMS in his Official § Capacity as the Commissioner of § Education, § TRAVIS COUNTY, TEXAS Defendants. § AMENDED DEFENDANTS' PLEA TO THE JURISDICTION AND RESPONSE TO PLANTIFF'S REQUEST FOR TEMPORARY INJUNCTION TO THE HONORABLE JUDGE OF THE COURT: COME NOW Defendants, Texas Education Agency ("TEA") and Michael L. Williams, in his Official Capacity as the Commissioner ofEducation (individually "Williams" and, collectively with TEA, the "Defendants"), and file this Amended Plea to the Jurisdiction. I. BACKGROUND A. 2012 Sunset Advisory Commission and Changes to Texas Education Code. The Sunset Advisory Commission ("Commission") reviewed the Texas Education Agency in October 2012, preceding the commencement of the 83rd Texas Legislature. In its review, the Commission identified the following issue: "TEA lacks a full range of tools to effectively address poor academic performance and financial mismanagement at low-performing charter schools." Ex. 1. In identifying this issue, the Commission noted that "a higher rate of charter schools performed at an academically unacceptable level than school districts," and that "[ m ]any charter schools also have poor financial performance, underscoring the importance of oversight of 1 Tab A 293 expenditure of state funds." !d. at 70-71. Significantly, the Commission found: Charter schools have far more accountability problems requiring assignment of interventions and sanctions, and ultimately, revocation of the charter. Charter schools represent more than two-thirds, 71 percent, of schools assigned with sanctions, even though charter schools make up only 17 percent of the total number of districts and charters. !d. at 71-72. Although TEA had the authority to close a charter school and revoke the charter, the Commission criticized the process as unworkable, leaving students to be educated at underperforming charter schools. !d. at 72. Based on these findings, the Commission recommended a change in statute that required the automatic revocation of a charter for failure to meet basic academic or financial accountability standards for three years in a row. !d. at 79. It recommended that no appeal be permitted from the revocation determination. According to the Commission, such a change in the law would "allow the State to more quickly shut down the poorest performing charters, without years of litigation during which time the school remains open. The recommendation would also ensure students do not continue to attend a school lacking a quality education or with serious financial problems that could affect the school and, ultimately, a student's academic progress." !d. at 79. Thus, based on the Commission's recommendation, the 83rd Texas Legislature amended section 12.115 of the Texas Education Code to make mandatory the revocation of any open- enrollment charter school's charter if the school fails to meet financial and/or academic performance ratings in certain years. The Commissioner of Education ("Commissioner") is now required to revoke a school's charter if one of three scenarios arises: (1) the charter holder has been assigned an unacceptable performance rating under Subchapter C, Chapter 39 [of the Education Code] for the three preceding years; (2) the charter holder has been assigned financial accountability performance rating under Subchapter D, Chapter 39, indicating financial performance lower than satisfactory for the three preceding school years; or 2 294 (3) the charter holder has been assigned any combination of the [unacceptable ratings under either subchapter]. TEX. EDUC. CODE§ 12.115(c). Chapter 39, Subchapter C (academic performance) ratings to be considered are those assigned to the school for 2009-2010, 2010-2011, and 2012-2013 rating years. !d. § 112.115(c- 1). However, "[f]or the purposes of revocation under Subsection (c)(1), performance during the 2011-2012 school year may not be considered." !d.; see also TEX. EDUC. CODE § 39.116(a) and (f) (allowing commissioner of education to suspend academic performance rating during transition period). The Subchapter D ratings to be considered are those assigned to the school for the 2010- 2011, 2011-2012, and 2012-2013 rating years. TEX. EDUC. CODE§ 12.115(c-1). The findings of the Sunset Advisory Commission demonstrate that there is a compelling state need to identify and close poor-performing charter schools in order to improve the choices available to parents and students. B. The Appeal Process as Defined in the Texas Education Code. After a school district or charter school receives its accountability or financial ratings, it has an opportunity to appeal the ratings to the Commissioner of Education. TEX. EDUC. CODE § 39.151(a). Should a charter school seek to appeal a financial or academic rating and notifies the commissioner of such, the Commissioner must appoint a committee to make recommendations to the commissioner on any challenge made to an agency decision. TEX. EDUC. CODE §39.151(b). After considering the committee's recommendation, the Commissioner makes a final decision. TEX. EDUC. CODE §39.151(d). The commissioner's decision following any appeal is final, and the Legislature expressly prohibited any additional appeal from this final determination in "any other proceeding" if the charter "has had an opportunity to challenge the decision under [section 31.151]. TEX. EDUC. CODE §39.151(e). 3 295 A school district or charter school may also seek redress of the Commissioner's decision to close a school to the State Office of Administrative Hearings ("SOAH"). TEX. EDUC. CODE§ 39.152(a). The school must file a petition for review and include certain requirements for the petition to be granted. 19 TAC § 156.1183. The decision of the administrative law judge is final and may not be appealed. TEX. EDUC. CODE §39.152(c)(3). Strikingly absent is any mention of judicial review of TEA's ratings or decision to revoke a charter. C. The Texas Education Code Mandates Revocation of Plaintiff's Charter School. Plaintiff Academy of Careers and Technology, Inc., d/b/a Academy of Careers and Technology Charter School ("ACT") was originally issued a state charter in 1998. Ex. 2. In 2012, 2013, and 2014 TEA found that ACT failed to meet the state's financial accountability standards. Ex. 3; Ex. 4; see also Pl. Orig. Petition, pp. 2-3. ACT did not file an appeal to these ratings until 2015. The committee recommended that the appeals be dismissed, and the Commissioner followed the committee's recommendations. Ex. 5. ACT also failed to meet academic accountability standards in 2014 and appealed the 2014 academic accountability rating to the outside appeal committee. Ex. 6. The committee recommended that the appeal be dismissed, and the Commissioner followed the committee's recommendation. Ex. 6. Under the Texas Education Code, these decisions are not appealable. TEX. EDUC. CODE §39.151(e). Commissioner Williams had no discretion but to revoke ACT's charter, since its failings in 2012, 2013 and 2014 represented three consecutive years of failure as defined by Texas Education Code§§ 12.115(c)(3) & 12.115(c-1). The TEA notified ACT of this fact on December 8, 2014. Ex. 3. ACT sought an informal hearing regarding the revocation. Pl. Orig. Petition, p. 3. A review was conducted, but the decision to revoke ACT's charter was sustained. Ex. 5. It is 4 296 undisputed that ACT filed a petition for review seeking review of the revocation decision before the State Office of Administrative Hearings ("SOAH"). Pl. Orig. Petition, p. 3. Because there were no material factual issues in dispute, TEA filed a Motion for Summary Disposition, which provided the basis for a final decision and order of SOAH upholding the Commissioner's decision to revoke ACT's charter. Ex. 7. This decision is not subject to appeal. TEX. EDUC. CODE §39.152(c)(3). D. This Court Lacks Jurisdiction to Consider ACT's Claims. In its Original Petition for Declaratory Action and For Temporary Restraining Order and Temporary & Permanent Injunction, ACT's challenge fails to invoke the jurisdiction of this Court. The Legislature has broad latitude to shape and define the public school system in Texas. As a part of this discretion, the Legislature is free to have a stringent accountability system, and to even eliminate the charter system altogether. To this end, the Legislature has designated SOAH as the sole avenue for any administrative recourse a charter holder may seek in the event it disagrees with TEA's assessment of its performance in connection with an action to revoke the charter holder's charter. And, importantly, unlike many other administrative processes before SOAH, the Legislature has specifically exempted these SOAH proceedings from further review in the State District Courts, leaving SOAH as the ultimate arbiter of any charter holder's dispute with TEA on all issues relevant to the instant claims. II. ARGUMENTS AND AUTHORITIES A. Plea to the Jurisdiction- The Legal Standard The Texas Supreme Court has long recognized that sovereign immunity, unless waived, protects the State of Texas ("State"), its agencies, and its officials from lawsuits for damages, absent legislative consent to sue the State. Tex. A & M Univ. Sys. v. Koseoglu, 233 S.W.3d 835, 5 297 844 (Tex. 2007); Tex. Dep 't ofTransp. v. Jones, 8 S.W.3d 636, 638 (Tex. 1999) (per curiam); Fed. Sign v. Tex. S. Univ., 951 S.W.2d 401, 405 (Tex. 1997). Sovereign immunity embraces two principles: immunity from suit and immunity from liability. Fed. Sign, 951 S.W.2d at 638 (citing Missouri Pac. R.R. Co. v. Brownsville Navigation Dist., 453 S.W.2d 812, 813 (Tex.1970)). Immunity from suit prevents the State from being sued without legislative consent, even if the States' liability is not disputed. !d. (citing Brownsville Navigation Dist., 453 S.W.2d at 813). "Immunity from liability protects the State from judgments even if the Legislature has expressly given consent to the suit." !d. (citing Brownsville Navigation Dist., 453 S.W.2d at 813) (emphasis omitted). A party may challenge the trial court's subject matter jurisdiction by filing a plea to the jurisdiction. See Tex. Dep'tofParks & Wildlifev. Miranda, 133 S.W.3d217, 225-26 (Tex. 2004). In deciding a plea to the jurisdiction, a court may not weigh the claims' merits, but must consider only the plaintiff's pleadings and the evidence pertinent to the jurisdictional inquiry. County of Cameron v. Brown, 80 S.W.3d 549, 555 (Tex. 2002); see also Miranda, 133 S.W.3d at 227. If a defendant demonstrates that the trial court lacks jurisdiction, the burden shifts to the plaintiff to establish a fact question on the issue of jurisdiction. Mission Consol. Indep. Sch. Dist. v. Garcia, 372 S.W.3d 629, 635 (Tex. 2012). If the relevant evidence is undisputed and fails to present a fact question, the trial court should rule on the plea as a matter of law. !d. Texas courts defer to the legislature to waive immunity from suit because this allows the legislature to protect its policymaking function. Tex. Natural Res. Conservation Comm 'n v. IT- Davy, 74 S.W.3d 849, 854 (Tex.2002). Any waiver of immunity must be expressed by clear and unambiguous language. TEX. Gov'T CODE § 311.034. 6 298 B. The District Court Lacks Subject Matter Jurisdiction to Review Defendants' Final Decisions Regarding ACT's Financial and Academic Accountability Ratings and SOAH's Final Decision and Order Regarding Revocation. Through its Original Petition, ACT seeks judicial review of financial and academic ratings issued by the Commissioner in 2012, 2013, and 2014 as well as SOAR's final decision and order revoking the Plaintiff's contract for charter. Unless, the Texas Legislature has waived sovereign immunity, either by statute or legislative resolution, this Court does not have jurisdiction to consider Plaintiff's claims. Indeed, "[a] person may obtain judicial review of an administrative action only if a statute provides that right, or the action adversely affects a vested property right or otherwise violates a constitutional right." Tex. Dep 't of Protective & Regulatory Servs. v. Mega Child Care, Inc., 145 S.W.3d 170, 173 (Tex. 2004). Such a right must be articulated by the legislature through "clear and unambiguous language." !d. at 197. 1. There is no statutory provision which allows this Court to review TEA's rating decisions. Chapter 39 of the Texas Education Code, entitled "Public School System Accountability," governs the financial and academic performance system used to review both traditional public schools and charter schools. See TEX. EDUC. CODE§ 39.054(b). Section 39.151, however, limits the review of any accountability determination to the Commissioner and expressly exempts the decision from review by SOAH or a State District Court. See id., at§§ 39.151(d) & (e). Here, ACT has failed to point to any provision in the Texas Education Code or any other statutory provision that provides for judicial review of TEA's financial and academic ratings that form the basis of the decision to revoke. See Burkhalter v. Tx. State Bd. Of Med. Exam 'r, 918 S.W.3d 1, 3 (Tex. App.-Austin 1996)("The right to appeal from an administrative order to the courts is not a natural or inherent one but is one that may be granted or withheld at the discretion of the Legislature."). 7 299 ACT claims that it failed the 2012 and 2013 financial accountability ratings due to "third party" errors in its annual financial reports. See Pl. Orig. Petition, p. 2. The "third party" in question is the independent auditor that ACT hired to prepare its annual financial report (AFR). Ex. 8; see also TEC §44.008. In addition to preparing the report, ACT's Board of Trustees approved the reports in question, as well as the report that led to the 2014 failed accountability rating. TEC §44.008(d). While ACT characterizes the failures as "mutual" mistakes, the Agency relied on the financial information submitted by ACT, who was responsible for submitting correct data. Id at pp. 2-3. ACT claims that the TEA rules impermissibly limited the appeal to errors made by TEA and argues that the statute requires TEA to allow ACT to correct its allegedly erroneous data. Id at pp. 3-4. However, the statute clearly allows the Commissioner to adopt rules for the review of the accountability ratings. See TEC §39.151(a) " ... The Commissioner by rule shall provide a process for a ... open enrollment charter school to challenge an agency decision made under this chapter relating to an academic or financial accountability rating that affect the ... school."). The Commissioner reasonably interpreted the term "appeal" to mean an opportunity to challenge the Agency's rationale and methodology for issuing the rating, rather than an opportunity for ACT to re-submit data. An appeal is typically limited to the facts under which a decision was made, and frequently will not allow for additional evidence to be submitted. ACT, therefore, has no procedural or substantive due process right to re-submit its data. Finally, while ACT complains that the appeal was limited, ACT cannot and does not allege that it provided "corrected" financial information in its appeals. ACT did file appeals for all the accountability ratings at issue. Exs. 4 and 6. However, ACT does not allege that it provided new financial information in its appeals that the Agency rejected. Moreover, while ACT claims that 8 300 the audited financial statements it submitted were incorrect, it has not provided new audited financial statements to substantiate this claim. 2. There is no statutory provision which allows this Court to review TEA's revocation decision. Section 12.115(c) of the Texas Education Code provides: The commissioner shall revoke the charter of an open-enrollment charter school if: (1) the charter holder has been assigned an unacceptable performance rating under Subchapter C, Chapter 39, for the three preceding years; (2) the charter holder has been assigned an unacceptable financial accountability rating under Subchapter D, Chapter 39, indicating financial performance lower than satisfactory for the three preceding school years; or (3) the charter holder has been assigned any combination of the ratings described by Subdivision (1) or (2) for the three preceding school years. TEX. EDUC. CODE §12.115(c). The Legislature has mandated that the Commissioner's decision to revoke a charter can be reviewed only by SOAH, and that an ALJ's review of that charter-revocation decision is final and not subject to appeal. Section 12.116(c) provides: A decision by the commissioner to revoke a charter is subject to review by the State Office of Administrative Hearings. Notwithstanding Chapter 2001, Government Code: (1) the administrative law judge shall uphold a decision by the commissioner to revoke a charter unless the judge finds the decision is arbitrary and capricious or clearly erroneous; and (2) a decision of the administrative law judge under this subsection is final and may not be appealed. TEX. EDUC. CODE § 12.116(c). Accordingly, the Commissioner's revocation decision is final unless it is appealed to SOAH, and the SOAH ALJ's decision either upholding or reversing the Commissioner's decision is not subject to appeal. Because ACT has no right to judicial review of 9 301 the revocation decision, the district court lacks jurisdiction over this suit. See Texas Dep 't of Transp. v. Jones, 8 S.W.3d 636, 638 (Tex. 1999); Bacon v. Hist. Comm 'n, 411 S.W.3d 161, 173- 74 (Tex. App.-Austin 2013, no pet.) ("One implication of these principles is that there is no general right to challenge or seek review of a state agency order or decision in Texas state court; to the contrary, state agency decisions generally cannot be challenged in court unless the Legislature has enacted a statute expressly authorizing such review."); Creedmoor-Maha Water Supply Corp, 307 S.W.3d 505, 515 (Tex. App.-Austin 2010, no pet.) (UDJA actions "that seek declaratory or injunctive relief against agency orders from which the legislature has not granted a right of judicial review" are barred by state sovereign immunity.); KEM Tex., Ltd. v. Texas Dep't of Transp., No. 03-08-00468-CV, 2009 Tex. App. LEXIS 4894, at *8-18 (Tex. App.-Austin 2009, no pet.) (challenge to non-appealable agency order barred by sovereign immunity). C. ACT Has No Property Interest that Implicates a Due Process Violation. ACT complains that it did not receive all the process it was due regarding the accountability ratings. See Pl. Orig. Petition, p. 4. "Due process is implicated when the state or its agents deprive a person of a protected liberty or property interest." Bd. of Regents v. Roth, 408 U.S. 564, 569 (1972). At issue is whether ACT has a constitutionally-protected property interest in its charter or its accountability ratings. If a constitutionally-protected property interest is at stake, then the Court determines what process is sufficient to protect that interest. "To have a property interest in a benefit, a person clearly must have more than an abstract need or desire" and "more than a unilateral expectation of it. He must, instead, have a legitimate claim of entitlement to it." !d. at 577. Such entitlements are, "'of course ... not created by the Constitution. Rather, they are created and their dimensions are defined by existing rules or understandings that stem from an independent source such as state law.'" Paul v. Davis, 424 U.S. 693, 709 (1976) (quoting Roth, supra, at 577,); 10 302 see also Phillips v. Washington Legal Foundation, 524 U.S. 156, 164 (1998). Here, ACT asserts its property interest in its charter through the implication that such an interest was created in 1998 when ACT was granted its charter by the TEA. See Pl. Orig. Pet. at 2. Indeed, the ability to grant a charter is left entirely up to the discretion of the Commissioner.! The Texas Education Code §12.101 provides, "[T]he commissioner may grant a charter on the application of an eligible entity for an open-enrollment charter school to operate in a facility of a commercial or nonprofit entity, an eligible entity or a school district, including a home-rule school district." (emphasis added). Thus, even if a charter school meets all of the statutory requirements, the Commissioner may still deny the charter. However, the statute that granted ACT's charter does not create a constitutionally- protected property interest. "To determine whether a particular statute creates a constitutionally- protected property interest, we ask whether the statute or implementing regulations place 'substantive limitations on official discretion."' Lee v. Tex. Workers' Compensation Comm 'n, 272 S.W.3d 806, 817 (Tex.App.-Austin 2008) (citing Olim v. Wakinekona, 461 U.S. 238, 249 ( 1983)). If "the legislature leaves final determination of which eligible individuals receive benefits to the unfettered discretion of administrators, no constitutionally-protected property interests exists." !d. at 817-18 (citing Roth, 408 U.S. at 567). Thus, if the decision to grant the charter is left to the discretion of the commissioner, no property interest is, therefore, created by granting the charter. See Town of Castle Rock v. Gonzales, 545 U.S. 748, 756 (2005) ("Our cases recognize that a benefit is not a protected entitlement if government officials may grant or deny it in their discretion."); see also Ex parte Abell, 613 S.W.2d 255, 262 (Tex. 1981) ("When the authority granting the right has the power and discretion to take that right away, it cannot be said to be a 1 This power was formerly held by the State Board of Education. This authority was transferred to the Commissioner by Senate Bill2 in 2013. Acts 2013, 83rd Leg., ch. 1140 (S.B. 2), §9, effective September 1, 2013. 11 303 vested right"); Seguin v. Bexar Appraisal Dist., 373 S.W.3d 699, 709 (Tex. App.-San Antonio 2012, pet. denied) (taxpayer did not have vested property right in disabled-veteran tax exemption that was "legislatively revocable"); Klumb v. Houston Mun. Emp. Pension Sys., 405 S.W.3d 204, 226 (Tex. App.-Houston [1st Dist.] 2013, pet. filed) ("[A] pensioner in a statutory pension plan does not have a vested right to his pension."); McAllen Hasps., L.P. v. Suehs, 426 S.W.3d 304, 313 (Tex. App.-Amarillo 2014, no pet.) (hospitals lack vested property right/interest in Medicaid reimbursement payments that were "contingent and potential rather than definitive and unconditional" prior to utilization review); Scott v. Alphonso Crutch LCS Charter Sch., Inc., 392 S.W.3d 165, 170-71 (Tex. App.-Austin 2010, pet. denied) (concluding that, because allocation to which charter school was entitled for a given time period was subject to change depending on updated attendance figures during school year, the school's "interest in a definite amount" was not vested and "remain[ ed] contingent rather than unconditional, and potential rather than definitive"). Additionally, although there is no Texas case directly dealing with a charter school's right to its charter contract, there are two out-of-state federal district court cases that directly address the issue. See University of Tex. Med. Sch. v. Than, 901 S.W.2d 926, 929 (Tex.1995) (citing Mellinger v. City of Houston, 68 Tex. 37, 3 S.W. 249, 252-53 (1887) (following contemporary federal due process interpretations of procedural due process issues). In Project Reflect, Inc. Smithson Craighead Middle School v. Metropolitan Nashville Board of Public Education, the Tennessee district court considered whether a charter school sponsor (an entity similar to a charter holder in Texas) had a protected property interest in continuation of a charter school. 947 F.Supp.2d 868, (M.D. Tennessee, 2013). In determining the charter lacked such an interest, the court noted that: the statutory language and the charter agreement do not support Plaintiffs claim of a property interest protected by state law. "[A] party cannot possess a property 12 304 interest in the receipt of a benefit when the state's decision to award or withhold the benefit is wholly discretionary." The charter agreement incorporates Tenn. Code Ann. § 49-13-122(a), which provides that "A public charter school agreement may be revoked or denied renewal by the final chartering authority if the chartering authority determines that the school ... (2) Received identification as a priority school, as defined by the state's accountability system." "The word 'may' customarily connotes discretion." !d. at 878 (citations omitted). It went on to state: the Tennessee charter school statute repeatedly declares its purpose and intention to provide the state departme [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/4074428. Public record. Not legal advice.