Jubilee Academic Center, Inc. v. School Model Support, LLC D/B/A Athlos Academies
04-23-00603-CV
| Tex. App. | Jun 20, 2024Background
- Jubilee Academic Center, Inc., a Texas nonprofit operator of charter schools, contracted with School Model Support, LLC (Athlos) to provide school services, including physical education and athletics, via a School Services Agreement.
- The agreement provided for Athlos to receive monthly service fees from Jubilee, calculated as a percent of state and local revenues for each school, and granted a limited license to Athlos trademarks.
- Jubilee paid fees for three campuses, but allegedly failed to pay Athlos for services rendered at the Highland Hills campus from February 2017 onward.
- Athlos sued Jubilee for breach of contract, seeking unpaid service fees, anticipated future profits from the contract, and attorney’s fees.
- Jubilee asserted immunity from suit, arguing that all claimed damages were unrecoverable lost profits (consequential damages) under Texas law, and moved for summary judgment. The trial court denied the motion; Jubilee appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is Jubilee immune from suit for breach of contract damages under Chapter 271? | Immunity is waived because Athlos has direct damages for unpaid work and attorney’s fees. | Immunity is not waived as all damages are unrecoverable consequential damages (lost profits). | Immunity is waived as to unpaid fees for work performed and attorney’s fees, but not for future lost profits. |
| Are Athlos's damages for unpaid services direct damages or consequential lost profits? | Damages are direct, benefit-of-the-bargain damages due for work performed. | All claimed damages are lost profits (consequential) and barred by statute. | Damages for past work performed are recoverable; damages for future lost profits are not. |
| Can Athlos recover future lost profits under the contract? | Seeks to recover future profits as part of breach of contract damages. | Future profits are consequential and therefore statutorily barred. | No recovery for future lost profits; summary judgment granted for Jubilee on this claim. |
| Is Athlos entitled to attorney’s fees for breach of contract? | Entitled as a prevailing party under statute for breach of contract. | Not entitled because damages are not recoverable and immunity survives. | Entitled to seek attorney’s fees related to unpaid service fees. |
Key Cases Cited
- Tooke v. City of Mexia, 197 S.W.3d 325 (Tex. 2006) (damages for work not performed under a contract with a governmental entity are not recoverable under Chapter 271)
- Zachry Const. Corp. v. Port of Houston Auth. of Harris County, 449 S.W.3d 98 (Tex. 2014) (damages recoverable under Chapter 271 are limited to amounts due for work performed, not lost profits or consequential damages)
- El Paso Educ. Initiative, Inc. v. Amex Properties, LLC, 602 S.W.3d 521 (Tex. 2020) (charter schools have governmental immunity, subject to statutory waivers)