opinionFrom the 37th Judicial District Court, Bexar County, Texas Trial Court No. 2017-CI-01954 Honorable Laura Salinas, Judge PresidingOpinion by: Sandee Bryan Marion, Chief JusticeSitting: Sandee Bryan Marion, Chief JusticeMarialyn Barnard, Justice Patricia O. Alvarez, JusticeDelivered and Filed: November 7, 2018REVERSED AND REMANDEDAppellant Konark Limited Partnership (“Konark”) appeals from the trial court’s order granting a joint plea to the jurisdiction based on governmental immunity filed by Appellees Basis Schools, Inc. (“Basis Schools”) and BTX Schools, Inc. (“BTX”). On appeal, Konark concedes the plea to the jurisdiction was correctly granted as to BTX but argues the trial court erred in granting the plea as to Basis Schools. In light of the supreme court’s opinion in Neighborhood Centers Inc. v. Walker, 544 S.W.3d 744 (Tex. 2018), we conclude Basis Schools is not entitled to governmental immunity in this case. Accordingly, we reverse the trial court’s order as it pertains to Basis Schools and remand the cause to the trial court for further proceedings on the merits.BackgroundKonark owns the Hyperion Apartments in San Antonio. Basis Schools owns a property next door to the Hyperion Apartments, which it leases to BTX to operate an open-enrollment charter school. BTX is a Texas nonprofit corporation and a “charter holder” under the Charter Schools Act. See Tex. Educ. Code Ann. § 12.1012(1). Basis Schools is an Arizona nonprofit corporation and the sole member of BTX.Konark sued BTX and Basis Schools, alleging improvements made to Basis Schools’ property resulted in “significant diversion of water” that damaged Konark’s property. Konark claimed BTX and Basis Schools were strictly liable for its damages pursuant to the Water Code, which provides: “No person may divert or impound the natural flow of surface water in this state, or permit a diversion or impounding by him to continue, in a manner that damages the property of another by the overflow of the water diverted or impounded.” Tex. Water Code Ann. § 11.086(a).BTX and Basis Schools filed a joint plea to the jurisdiction, arguing they have governmental immunity from suit and liability under section 12.1056(a) of the Charter Schools Act, which states: “[A]n open-enrollment charter school or charter holder is immune from liability and suit to the same extent as a school district, and . . . [a] member of the governing body of an open-enrollment charter school or of a charter holder is immune from liability and suit to the same extent as a school district trustee.” Tex. Educ. Code Ann. § 12.1056(a). BTX argued it is immune because it is a charter holder, and Basis Schools argued it is immune because it is a member of the governing body of a charter holder. Basis Schools argued it is also immune under Arizona common law. The trial court granted the plea to the jurisdiction, and Konark appeals. BTX and Basis Schools cross-appeal, arguing the trial court should have dismissed Konark’s claims with prejudice, rather than without prejudice.In its lead brief on appeal, Konark conceded BTX is immune from suit and liability. After Konark filed its lead brief but before BTX and Basis Schools filed their lead brief, the supreme court issued its opinion in Walker. We advised the parties to be prepared to address the impact of Walker during oral argument.Standard of ReviewKonark appeals from the trial court’s order granting a plea to the jurisdiction based on governmental immunity. A plea to the jurisdiction based on governmental immunity challenges the trial court’s subject matter jurisdiction. Tex. Dep’tof Parks & Wildlife v. Miranda, 133 S.W.3d 217, 225-26 (Tex. 2004). Whether the plaintiff has pleaded facts affirmatively demonstrating the trial court’s subject matter jurisdiction is a question of law we review de novo. Id. at 226. We construe the pleadings “liberally in favor of the plaintiff[] and look to the pleader['s] intent.” Id.DiscussionBasis Schools argues it has governmental immunity from suit and liability under section 12.1056(a) of the Charter Schools Act because it is a member of the governing body of a charter holder. In its recent opinion in Walker, however, the supreme court clarified how courts must apply section 12.1056(a) in light of the 2015 amendments to the Charter Schools Act. To put Walker in context, we discuss the evolution of governmental immunity for charter schools.A. The Charter Schools Act and open-enrollment charter schoolsThe Legislature enacted the Charter Schools Act as part of its 1995 overhaul of the Texas Education Code. Walker, 544 S.W.3d at 749. The Charter Schools Act authorizes the Commissioner of Education to grant contracts, or “charters,” to three types of charter schools: open-enrollment charter schools, home-rule school district charters, and campus or campus program charters. Id. at 745-46 (citing Tex. Educ. Code Ann. § 12.101(a)); see also Tex. Educ. Code Ann. § 12.002.Open-enrollment charter schools, like the one BTX operates, are generally open to the public, tuition-free, and operated by private, tax-exempt nonprofit corporations under charter with the Commissioner of Education. Walker, 544 S.W.3d at 750 (citing Tex. Educ. Code Ann. §§ 12.101, 12.112). Open-enrollment charter schools have “the powers granted to schools” by law, except the power to tax, and are generally entitled to state funding and services like a school district. Id. (citing Tex. Educ. Code Ann. §§ 12.102(4), 12.104(a), (c), 12.106). “An open- enrollment charter school is part of the public school system of this state.” Tex. Educ. Code Ann. § 12.105.Charter Schools Act sections 12.1051 through 12.1055 set forth circumstances in which an open-enrollment charter school is treated like a governmental entity for certain purposes. See id. §§ 12.1051-12.1055. Open-enrollment charter schools are: (1) “governmental bodies” for purposes of Open Meetings and Public Information Laws; (2) “local governments]” under laws related to local government records; and (3) “governmental entit[ies],” “political subdivisions],” and “local government[s]” for purposes of public purchasing and contracting laws. Id.B. LTTS Charter School, Inc. v. C2 Construction, Inc. (“LTTSII”)Because open-enrollment charter schools are treated like governmental entities in some circumstances, courts have faced the question of whether open-enrollment charter schools are immune from suit and liability in the same way that a governmental entity would be. For instance, in a 2011 decision subsequently known as “LTTS II,” the supreme court held an open-enrollment charter school is a “governmental unit” under the Tort Claims Act and, therefore, is permitted to take an interlocutory appeal from a trial court’s denial of its plea to the jurisdiction. LTTS Charter School, Inc. v. C2 Constr., Inc. (“LTTS II”), 342 S.W.3d 73, 74-75 (Tex. 2011). To reach its conclusion, the court analyzed the Charter Schools Act and noted that it contains numerous provisions likening open-enrollment charter schools to traditional public schools. Id. at 78. The court concluded:In sum, numerous provisions of Texas law confer “status” upon and grant “authority” to open-enrollment charter schools. Their status as “part of the public school system of this state”—and their authority to wield “the powers granted to [traditional public] schools” and to receive and spend state tax dollars (and in many ways to function as a governmental entity)—derive wholly from the comprehensive statutory regime [contained in the Education Code]. With this legislative backdrop in mind, we are confident that the Legislature considers [an open-enrollment charter school] to be an “institution, agency, or organ of government” under the Tort Claims Act and thus entitled to take an interlocutory appeal here.Id. (citing and quoting Tex. Educ. Code Ann. §§ 12.104(a), 12.105, 12.106, 12.107, 12.1053).A dissenting opinion, however, raised concerns that the majority “effectively answered an important substantive question that is not before us: what type of immunity does a privately run, open-enrollment charter school possess?” Id. at 83 (Guzman, J., dissenting). The dissent lamented that the majority opinion suggests open-enrollment charter schools are generally immune from suit, thereby permitting “a private, nonprofit corporation [to] take on the mantle of governmental immunity, leaving other litigants wrongfully deprived of their day in court and without an opportunity to have this issue addressed through the rigors of our adversarial system.” Id.On remand, the dissent’s concern was realized when the court of appeals held that “based on the supreme court’s analysis in [LTTS II], we conclude open-enrollment charter schools have governmental immunity from suit.” LTTS Charter School, Inc. v. C2 Constr., Inc. (“LTTS III”), 358 S.W.3d 725, 736 (Tex. App.—Dallas 2011, pet. denied). In a subsequent case, the court of appeals again relied on LTTS II to hold an open-enrollment charter school was a local governmental entity for purposes of a Texas Whistleblower Protection Act (“Whistleblower Act”) claim. Pegasus Sch. of Liberal Arts & Scis. v. Ball-Lowder, No. 05-13-00482-CV, 2013 WL 6063834, at *5 (Tex. App.—Dallas Nov. 18, 2013, pet. denied) (mem. op.), superseded by statute as recognized in Walker, 544 S.W.3d at 754.C. The 2015 amendments to the Charter Schools ActIn the wake of LTTS II and its progeny, the Legislature amended the Charter Schools Act in 2015 and, in doing so, squarely addressed the dissent’s concerns regarding whether and to what extent open-enrollment charter schools are immune from suit and liability.Charter Schools Act section 12.1056(a) originally provided that open-enrollment charter schools had the same immunity from liability (but not from suit) as a school district. Walker, 544 S.W.3d at 750. In 2015, the Legislature amended section 12.1056(a) to provide that open- enrollment charter schools are immune from both liability and suit to the same extent as a school district:In matters related to operation of an open-enrollment charter school, an open- enrollment charter school or charter holder is immune from liability and suit to the same extent as a school district, and the employees and volunteers of the open- enrollment charter school or charter holder are immune from liability and suit to the same extent as school district employees and volunteers. A member of the governing body of an open-enrollment charter school or of a charter holder is immune from liability and suit to the same extent as a school district trustee.Tex. Educ. Code Ann. § 12.1056(a).The 2015 Legislature also added sections 12.1056(b)-(d) and 12.1058(a)-(b) to expand the situations in which an open-enrollment charter school is considered a governmental entity. Walker, 544 S.W.3d at 752. The amendments make an open-enrollment charter school: a “governmental unit” under the Tort Claims Act and subject to the same liability under the Act as a school district; a “local government” under statutes regarding payment of tort claims, interlocal cooperation contracts, and self-insurance (except for issuing public securities); a “local governmental entity” under the Local Government Contract Claims Act and subject to the same liability as a school district; and a “political subdivision” for purposes of the Texas Political Subdivision Employees uniform Group Benefits Act, and at the school’s election, for purposes of extending workers’ compensation benefits. Id. (citing Tex. Educ. Code Ann. §§ 12.1056(b)-(d), 12.1058(a)-(b)).Importantly, the Legislature also added section 12.1058(c), which provides that notwithstanding the above provisions, “an open-enrollment charter school . . . is not considered to be a political subdivision, local government, or local governmental entity unless the applicable statute specifically states that the statute applies to an open-enrollment charter school.” TEX. Educ. Code Ann. § 12.1058(c) (emphasis added).D. Neighborhood Centers Inc. v. WalkerIn Neighborhood Centers Inc. v. Walker, the supreme court addressed the impact of the 2015 amendments. In that case, an employee of an open-enrollment charter school sued the school for violating the Whistleblower Act, which prohibits a “local governmental entity” from retaliating against a public employee for reporting a violation of law by the employer. 544 S.W.3d at 745 (citing Tex. Gov’t Code Ann. § 554.002). The Whistleblower Act defines “local governmental entity” as “a political subdivision of the state, including a . . . public school district,” and contains a clear waiver of immunity “to the extent of liability for the relief allowed under this chapter for a violation of this chapter.” Tex. Gov’t Code Ann. §§ 554.001(2), 554.0035. The defendant charter school filed a plea to the jurisdiction, arguing it is not a governmental entity subject to liability under the Whistleblower Act. The trial court denied the plea to the jurisdiction, and the school appealed.Like BTX and Basis Schools, the plaintiff in Walker argued Charter Schools Act section 12.1056(a) makes open-enrollment charter schools immune from suit and liability whenever school districts are immune, and section 12.1056(a) is the “applicable statute” under section 12.1058(c). Walker, 544 S.W.3d at 753. The supreme court rejected these arguments, concluding the addition of section 12.1058(c) makes it clear that the Legislature intended for open-enrollment charter schools to be treated as governmental entities only in the instances in which the Legislature expressly states they will be. Id. The court reasoned that a “blanket identification of open- enrollment charter schools with school districts makes unnecessary the [Charter Schools Act's] long list of specific instances in which an open-enrollment charter school is treated as a governmental entity or school district.” Id. Further, the court explained such a reading of section 12.1056(a) would completely nullify section 12.1058(c)’s prohibition against treating an open- enrollment charter school like a governmental entity unless an applicable statute specifically provides for it. Id. Finally, the court concluded sections 12.1056(a) and 12.1058(c) can be harmonized: “[A]n open-enrollment charter school is not to be treated as a governmental entity or school district unless a statute specifically states that it is, but when there is such a statute, the open-enrollment charter school’s immunity from liability and suit is the same as a school district’s.” Id. Therefore, under the court’s reasoning, an open-enrollment charter school is not treated like a governmental entity or a school district for purposes of a statute unless the statute or the Charter Schools Act specifically says it is.Reversing the trial court and the court of appeals, the supreme court held the Whistleblower Act does not create a cause of action against an open-enrollment charter school because: (1) the Whistleblower Act applies to local government entities, defined to include school districts, but does not expressly state that it applies to open-enrollment charter schools; and (2) the Charter Schools Act does not identify the Whistleblower Act as a statute under which an open-enrollment charter school is considered a local governmental entity. Id. at 754.[1]E. Whether a member of an open-enrollment charter school’s governing body is immune from suit and liability under Water Code section 11.086(a)In this case, BTX and Basis Schools argued BTX is a charter holder and Basis Schools is a member of a charter holder’s governing body. Konark concedes BTX is a charter holder but argues Basis Schools cannot be a member of BTX’s governing body because it is not a natural person. While Konark raises an interesting issue, we need not reach it today. Assuming without deciding that Basis Schools is a member of BTX’s governing body, the question presently before us in the wake of Walker and the 2015 amendments to the Charter Schools Act is whether a member of the governing body of an open-enrollment charter school is immune from suit and liability under section 11.086(a) of the Water Code.1. The parties’ argumentsBecause the supreme court issued its opinion in Walker while the parties were briefing the appeal in this case, we asked counsel to be prepared during oral arguments to address the impact of the decision. Counsel for Basis Schools argued Walker is inapplicable to this case because that opinion is limited to the context of Whistleblower Act claims. Like the plaintiff in Walker, Basis Schools also argued Charter Schools Act section 12.1056(a) stands on its own as the source of immunity from suit and liability of an open-enrollment charter school and members of its governing body.In a post-submission letter brief, the Texas League of Community Charter Schools (the “TLCCS”), as amicus curiae, expanded upon Basis Schools’ argument. The TLCCS argued Walker is inapposite here because the Whistleblower Act is distinct from the Water Code in that it both creates a cause of action against governmental entities and waives the sovereign immunity of those entities to which it applies. According to the TLCCS, because Walker held the Whistleblower Act does not create a cause of action against charter schools, it did not reach the secondary question of whether an open-enrollment charter school has governmental immunity from a such a claim. TLCCS argues Walker did not disturb the rule that charter schools’ governmental immunity is “coterminous with that of public school districts,” as set forth “in the Court’s prior opinion in LTTS II, and by the express language of Tex. Educ. Code § 12.1056(a).”We agree that the Water Code is unlike the Whistleblower Act in that the Water Code does not create a cause of action exclusively against governmental entities. However, for the reasons stated below, we do not believe we can disregard Walker’s analysis in this case.2. AnalysisKonark brought suit against BTX and Basis Schools under Water Code section 11.086(a), which prohibits a “person” from diverting or impounding the natural flow of surface water in a manner that injures another property. Tex. Water Code Ann. § 11.086(a). The Water Code adopts the Code Construction Act (Chapter 311 of the Government Code) definition of “person”:“Person” includes corporation, organization, government or governmental subdivision or agency, business trust, estate, trust, partnership, association, and any other legal entity.Tex. Gov’t Code Ann. § 311.005(2); see also Tex. Water Code Ann. § 1.002 (“The Code Construction Act (Chapter 311, Government Code) applies to the construction of each provision in this code . . . .”).Therefore, unlike the Whistleblower Act, Water Code section 11.086(a) creates a cause of action against both governmental and nongovernmental entities.[2] So, if Basis Schools is a “government or governmental subdivision or agency” for purposes of section 11.086(a), then it is immune from suit and liability to the same extent a school district trustee would be. See Tex. Educ. Code Ann. § 12.1056(a) (“A member of the governing body of an open-enrollment charter school or of a charter holder is immune from liability and suit to the same extent as a school district trustee.”). But if Basis Schools is not a “government or governmental subdivision or agency,” then we still must determine whether it is otherwise a “person” under section 11.086(a). If it is, then Konark has a cause of action from which Basis Schools is not immune.The supreme court’s analysis in Walker makes it clear that, in light of the 2015 amendments to the Charter Schools Act, section 12.1056(a) does not confer governmental status or immunity on open-enrollment charter schools. Walker, 544 S.W.3d at 753. Rather, some other provision of the Charter Schools Act or the applicable statute (here, the Water Code) must specifically state that an open-enrollment charter school is treated like a governmental entity or a school district for purposes of claims under that statute. Id. For instance, section 12.1056(b) of the Charter Schools Act specifically provides that an open-enrollment charter school is a “governmental unit” for claims brought under the Tort Claims Act. Tex. Educ. Code Ann. § 12.1056(b) (citing Tex. Civ. Prac. & Rem. Code Ann. ch. 101). However, no provision in the Charter Schools Act states an open-enrollment charter school is a “government or governmental subdivision or agency” for claims brought under the Water Code. Similarly, the Water Code itself does not provide that an open-enrollment charter school is a “government or governmental subdivision or agency” for claims brought under section 11.086(a). Accordingly, because Basis Schools is not a “government or governmental subdivision or agency” for purposes of a Water Code section 11.086(a) claim, it does not have immunity from liability and suit like a school district trustee. See Walker, 544 S.W.3d at 753.[3]Although Basis Schools is not a “government or governmental subdivision or agency” for purposes of section 11.086(a) of the Water Code, we still must determine whether Basis Schools is a “person” against whom a section 11.086(a) claim can be made. Unlike the Whistleblower Act, which only permits a cause of action against a governmental entity, the Water Code broadly defines “person” as, among other things, a corporation. Tex. Gov’t Code Ann. § 311.005(2); see also Black, 271 S.W.3d at 798 (“The Water Code’s provisions undoubtedly apply to private individuals and entities . . . .”). Therefore, because Basis Schools (like BTX) is a nonprofit corporation, it is a “person” against whom Konark may bring a section 11.086(a) claim.[4] For these reasons, we conclude the trial court erred in granting Basis Schools’ plea to the jurisdiction on the basis of governmental immunity under the Charter Schools Act.F. Whether Basis Schools is immune under Arizona common lawIn the alternative, Basis Schools argues that if it is not immune under the Charter Schools Act, it is immune under Arizona common law. Basis Schools relies on the Arizona education statute, which provides:O. A sponsor, including members, officers and employees of the sponsor, is immune from personal liability for all acts done and actions taken in good faith within the scope of its authority.GG. A charter school and its employees, including the governing body, or chief administrative officer, are immune from civil liability with respect to all decisions made and actions taken to allow the use of school property, unless the charter school or its employees are guilty of gross negligence or intentional misconduct. This subsection does not limit any other immunity provisions that are prescribed by law.Ariz. Rev. Stat. § 15-183(0), (GG).[5] The Arizona statute defines “charter school” as:a public school established by contract with the state board of education, the state board for charter schools, a university under the jurisdiction of the Arizona board of regents, a community college district or a group of community college districts pursuant to article 8 of this chapter to provide learning that will improve pupil achievement.Id. § 15-101(4) (internal footnote and citation omitted). Basis Schools does not specify whether it contends it is a charter school’s sponsor, member, or governing body under this statute.Basis Schools argues the trial court should extend it governmental immunity under the principle of interstate comity, citing Hawsey v. Louisiana Department of Social Services, 934 S.W.2d 723 (Tex. App.—Houston [1st Dist.] 1996, writ denied). In Hawsey, the plaintiff sued the Louisiana Department of Social Services and its director of child support enforcement for false light invasion of privacy, libel per se, and false imprisonment after he was arrested in Texas for unpaid child support. The court of appeals held the trial court did not err in sustaining the department’s special appearance because the principle of comity (extending immunity to a foreign government sued in Texas) supersedes any personal jurisdiction Texas may have. Id. at 727.Here, in contrast, Basis Schools is not a foreign government. Rather, Basis Schools is a nonprofit corporation conducting business in Texas. There is no dispute here, as there was in Hawsey, regarding whether a court in Texas has personal jurisdiction over Basis Schools based on its contacts with Texas. But more importantly, even under the Arizona charter school statute, it is not clear that Basis Schools is entitled to immunity as a “sponsor,” “member,” or “governing body” of a charter school, since the statute clearly defines “charter school” as a school established by contract with the State of Arizona (which BTX is not). For these reasons, to the extent the trial court based its order granting Basis Schools’ plea to the jurisdiction on this ground, the trial court erred.G. BTX’s and Basis Schools’ cross-issueBecause we conclude the trial court erred in granting Basis Schools’ plea to the jurisdiction, we need not address BTX’s and Basis Schools’ cross-issue as it relates to the dismissal of Konark’s claim against Basis Schools. And, as noted above, Konark does not appeal the trial court’s ruling granting BTX’s plea to the jurisdiction, so we may not disturb that ruling. We note, however, that nothing in the Charter Schools Act or the Water Code provides that an open-enrollment charter school or a charter holder like BTX is a “government or governmental subdivision or agency” for purposes of a Water Code section 11.086(a) claim. If BTX is not a “government or governmental subdivision or agency,” then the trial court has jurisdiction to consider a section 11.086(a) cause of action against it. Therefore, we decline to modify the trial court’s order to dismiss the claim against BTX with prejudice. Basis Schools’ and BTX’s cross-issue is overruled.ConclusionBecause we conclude Basis Schools is not entitled to governmental immunity in this case, we reverse the trial court’s order as it pertains to Basis Schools and remand the cause to the trial court for further proceedings on the merits. Konark has not appealed the trial court’s ruling granting BTX’s plea to the jurisdiction, so we do not disturb it. Basis Schools’ and BTX’s cross-issue is overruled.Sandee Bryan Marion, Chief Justice
