Here’s the long story short in Metropolitan Theater, LLC v. YES Prep Public Schools, Inc, No. 01-15-00480 (Feb. 25, 2016), a decision from the Texas Court of Appeals:
The theater sued “YES Prep Public Schools” because (allegedly), the school screwed up the theater’s agreement to buy a parcel of land from a third party. How did the school screw up the contract? By purchasing the property from the third party itself, and for more money. The theater claimed breach of contract, fraud, and similar. The school responded that as a “public enrollment charter school” it is a governmental entity, immune from such suits. In response, the theater added a claim that if the school is a governmental entity, then it also was liable for a taking of the theater’s property (the theater’s contract to purchase the land). The trial court dismissed the takings claim, and the theater appealed.
Affirmed. The court agreed the school could be liable for a taking since it is an “open enrollment charter school,” and therefore a governmental entity for purposes of the state tort claims act and for takings claims. So far, so good. The court, however, concluded that the when the school entered into its contract with the third party to buy the land — thus thwarting the theater’s purchase — the school was acting in its private contractual capacity, and did not have the necessary intent to take the property, an element of the claim under Texas law. “Based on the record before us, we conclude that Metropolitan has not affirmatively shown that YES Prep had the requisite intent to take property under its sovereign powers as required for a constitutional takings claim. Therefore, YES Prep is not subject to suit under Article I, Section 17 of the Texas Constitution.” Slip op. at 12-13.