Mike Morath, Commissioner of Education v. Sterling City Independent School District, Highland Independent School District, and Blackwell Consolidated Independent School District

IN THE SUPREME COURT OF TEXAS
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NO . 14-0986
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MIKE MORATH, COMMISSIONER OF EDUCATION, PETITIONER,
v.

STERLING CITY INDEPENDENT SCHOOL DISTRICT, HIGHLAND
INDEPENDENT SCHOOL DISTRICT, AND BLACKWELL CONSOLIDATED
INDEPENDENT SCHOOL DISTRICT, RESPONDENTS

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ON PETITION FOR REVIEW FROM THE
COURT OF APPEALS FOR THE ELEVENTH DISTRICT OF TEXAS
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JUSTICE BROWN , concurring.

I agree with the dissent that “the Commissioner’s decision to clawback several million dollars

from the [D]istricts was not a determination authorized by . . . section 42.2516” of the Education

Code, and thus “the [D]istricts’ claims were for ultra vires acts of the Commissioner.” Post at __.

However, because I also agree with the plurality that “[t]he Finality Provision precludes the Districts’

challenges to the Commissioner’s decision,” ante at __, I concur in the judgment.

I

As discussed by the plurality, the dispute in this case arises from the Commissioner of

Education’s decision to clawback excess revenue from several school districts (“Districts”) pursuant

to former section 42.2516(h) of the Education Code (“Clawback Provision”). The Clawback

Provision requires the Commissioner to “reduce the amount of state aid provided to [a] district . . .
by an amount equal to the excess revenue, as determined by the commissioner” when the “amount

of state and local revenue per student . . . exceeds the amount to which a district is entitled . . . for

[the] school year” as a consequence “of increases to the equalized wealth level . . . , the basic

allotment . . . , and the guaranteed level.” TEX . EDUC. CODE § 42.2516(h) (2006). Here, the

Commissioner concedes that his determination of “excess revenue” was based in large part on

increases in the Districts’ tax revenues. As “tax revenue” is not one of the three categories listed in

the statute, the Districts allege the Commissioner acted ultra vires.

A

We said in Houston Belt & Terminal Railway v. City of Houston that “governmental

immunity bars suits complaining of an exercise of absolute discretion but not suits complaining of

. . . an officer’s exercise of . . . limited discretion without reference to or in conflict with the

constraints of the law authorizing the official to act.” __ S.W.3d __, __ (Tex. 2016). Without much

discussion, the plurality concludes that “[t]he Clawback Provision . . . did not prohibit [the

Commissioner] from recovering revenue that . . . exceeded target levels” for reasons other than

increases to the equalized wealth level, basic allotment, and guaranteed level. Ante at __. But as the

dissent points out, by enumerating three specific categories, the plain language of section 42.2516(h)

operates to “limit[] the Commissioner’s discretion as to what he may consider” when recovering

excess revenue. Post at __.

Similar to the grant of authority to the Director of Public Works in Houston Belt, section

42.2516(h) provides the Commissioner with “some authority” to determine whether a district has

excess revenue, but “he does not have authority to make that determination in a way that conflicts

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with [the statute].” See Houston Belt, __ S.W.3d at __; see also TEX . EDUC. CODE § 42.2516(h)

(2006) (allowing the Commissioner to recover excess revenue under the statute “as determined by

the commissioner”). Not only does the plurality’s reading of the Clawback Provision contradict the

statute’s plain language, but it also renders the language listing the three categories superfluous and

is inconsistent with the principle of expressio unius est exclusio alterius—the naming of one or more

implies the exclusion of others. See PAJ, Inc. v. Hanover Ins. Co., 243 S.W.3d 630, 640 (Tex. 2008)

(Willett, J., joined by Hecht, J., dissenting). Accordingly, I would hold that by employing categories

other than the three specifically listed in section 42.2516(h) to determine “excess revenue,” the

Commissioner “acted beyond the limits of the discretion he was actually granted,” making his

actions ultra vires. See Houston Belt, __ S.W.3d at __.

B

Absent additional language in the relevant statute, Houston Belt dictates that the Districts

pleaded viable ultra vires claims; but section 42.2516 contains a finality provision. That provision

plainly states that “[a] determination by the commissioner under this section is final and may not be

appealed.” TEX . EDUC. CODE § 42.2516(l) (2006) (emphasis added). There was no similar provision

at issue in Houston Belt. As the plurality notes, we stated in Houston Municipal Employees Pension

System v. Ferrell that “[t]he words ‘final and binding,’ when used to describe an administrative

decision, preclude judicial review.” Ante at __ (quoting Hous. Mun. Emps. Pension Sys. v. Ferrell,

248 S.W.3d 151, 158 (Tex. 2007)). Similar to the plurality, I find “final and may not be appealed”

to be indistinct from “final and binding.” Thus, “[a]bsent a conspicuous and irreconcilable conflict”

between the Commissioner’s actions and his authority under section 42.2516(h), “any further

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consideration of the matter would impermissibly encroach on the unreviewable, discretionary

authority afforded to the [Commissioner] under [section 42.2516].” See Klumb v. Hous. Mun. Emps.

Pension Sys., 458 S.W.3d 1, 11 (Tex. 2015). That standard is necessarily higher than that for

pleading an ultra vires claim, and, like the plurality, I would not foreclose that standard being met.

But as the plurality concludes, there is no such conflict present here. See ante at __.

The dissent argues that because the finality provision is limited to determinations made

“under this section,” and “the Commissioner’s determination . . . was outside the clawback authority

granted to him by section 42.2516(h), his determination was not ‘under’ section 42.2516,” making

the finality provision inapplicable. See post at __. But we said in Houston Belt that an official can

commit an ultra vires act when he “mak[es] the type of determination which [he] ha[s] authority to

make,” but “in a way the law [does] not allow.” See __ S.W.3d at __ (emphasis added) (discussing

City of El Paso v. Heinrich, 284 S.W.3d 366, 371–78 (Tex. 2009)). Thus, here, while the

Commissioner’s determination under section 42.2516(h) was ultra vires, it was nonetheless a

determination under section 42.2516 to which the finality provision applies. Adopting the dissent’s

interpretation of the finality provision renders it meaningless, as decisions the Commissioner makes

within his legal authority are already immune from judicial review. See Heinrich, 284 S.W.3d at 372

(“To fall within [the] ultra vires exception, a suit . . . must allege . . . that [an] officer acted without

legal authority.” (emphasis added)). As the dissent acknowledges, “[i]n construing a statute, we must

give effect to each word.” Post at __ (citing Columbia Med. Ctr. of Las Colinas, Inc. v. Hogue, 271

S.W.3d 238, 256 (Tex. 2008) (“The Court must not interpret the statute in a manner that renders any

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part of the statute meaningless or superfluous.”)). Therefore, I would read the finality provision as

including ultra vires acts, but—per Ferrell and Klumb—not irreconcilably conflicting ones.

* * *

While I would find that the Commissioner acted ultra vires by including tax revenues in his

determination of excess revenue under section 42.2516(h), I would also find that the finality

provision in section 42.2516(l) exempts the Commissioner’s actions from judicial review except in

very limited circumstances which are not applicable here. Accordingly, I concur only in the

judgment.

_____________________________
Jeffrey V. Brown
Justice

OPINION DELIVERED: June 24, 2016

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